We have audited the accompanying interim balance sheet of
Fuhuiyuan International Group (Holdings) Limited. referred to as the Company)
as at June 30, 2013 and the related interim statements of operations,
stockholders equity and cash flows for the period from inception, May 14, 2013
to June 30, 2013. These interim financial statements are the responsibility of
the Companys management. Our responsibility is to express an opinion on these
interim financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the interim financial statements are free of material misstatement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the interim financial statements referred to
above present fairly, in all material respects, the financial position of the
Company as at June 30, 2013 and the results of its operations, changes in equity
and its cash flows for the period from inception, May 14, 2013 to June 30, 2013
in accordance with generally accepted accounting principles of the United States
of America.
/s/ K.R. Margetson Ltd.
NOTE 1
NATURE AND CONTINUANCE OF
OPERATIONS
Fuhuiyuan International Group (Holdings) Limited, (Fuhuiyuan
International or the Corporation) was incorporated in the territory of
British Virgin Islands on May 14, 2013. Fuhuiyuan International acts as the
international agent of Qingdao Fuhuiyuan Investment Co. Ltd. (Qingdao
Fuhuiyuan). Its business is to sell Qingdao Fuhuiyuans products, including
Yingcuicaoben
cosmetics, Fuyuan jewelry, and Dangcing
dresses, bags and shoes. Fuhuiyuan International will
collect payments
made by overseas customers on behalf of Qingdao Fuhuiyuan and will oversee all
related activities and expenditures. In addition, Fuhuiyuan International will
handle all affairs relating to overseas transportation, customs declaration,
customs clearance and payment of taxes.
NOTE 2
INTERIM REPORTING
The Company has elected a March 31 fiscal year end.
Operating results for the period ended June 30, 2013 are not
necessarily indicative of the results that can be expected for the year ended
March 31, 2014.
NOTE 3
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Revenue Recognition and Deferred Revenue
The Corporation recognizes revenue when persuasive evidence of
an arrangement exists, shipment has occurred or services rendered, the price is
fixed or determinable and payment is reasonably assured.
Fair Value Measurements
The Corporation follows FASB ASC 820,
Fair Value
Measurements and Disclosures
, for all financial instruments and
non-financial instruments accounted for at fair value on a recurring basis. This
new accounting standard establishes a single definition of fair value and a
framework for measuring fair value, sets out a fair value hierarchy to be used
to classify the source of information used in fair value measurement and expands
disclosures about fair value measurements required under other accounting
pronouncements. It does not change existing guidance as to whether or not an
instrument is carried at fair value. The Corporation defines fair value as the
price that would be received from selling an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date.
When determining the fair value measurements for assets and
liabilities, which are required to be recorded at fair value, the Corporation
considers the principal or most advantageous market in which the Corporation
would transact and the market-based risk measurements or assumptions that market
participants would use in pricing the asset or liability, such as inherent risk,
transfer restrictions and credit risk.
7
The Corporation has adopted FASB ASC 825,
Financial
Instruments
, which allows companies to choose to measure eligible financial
instruments and certain other items at fair value that are not required to be
measured at fair value. The Corporation has not elected the fair value option
for any eligible financial instruments.
Financial Instruments
Fair Value
The fair value of financial instruments consisting of cash and
cash equivalents, accounts payable and accrued liabilities and amounts due to
related party were determined to approximate their carrying values based on the
short-term maturity of these instruments. Unless otherwise noted, it is
managements opinion that the Corporation is not exposed to significant interest
or credit risks arising from these financial instruments.
Risks
Financial instruments that potentially subject the Corporation
to credit risk consist principally of cash. Management does not believe the
Corporation is exposed to significant credit risk. Management, as well, does not
believe the Corporation is exposed to significant interest rate risks during the
period presented in these financial statements.
Cash and Cash Equivalents
For purposes of the Statement of Cash Flows, management
considers liquid investments with an original maturity of three months or less
to be cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. The financial statements above reflect all of the costs of
doing business.
Derivative Instruments
The Corporation accounts for derivative instruments according
to FASB ASC topic 815
Derivative and Hedging.
This standard establish
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and also for hedging
activities.
If certain conditions are met, a derivative may be specifically
designated as a hedge, the objective of which is to match the timing of gain or
loss recognition on the hedging derivative with the recognition of:
8
|
(i)
|
the changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk or
|
|
(ii)
|
the earnings effect of the hedged forecasted
transaction.
|
For a derivative not designated as a hedging instrument, the
gain or loss is recognized in income in the period of change. The Corporation
has not entered into derivatives contracts to hedge existing risks or for
speculative purposes.
During the period ended July 31, 2013, the Corporation does not
possess a derivative instrument, which the Corporation accounts for under this
FASB ASC topic.
Net Income per Common Share
FASB ASC 260 requires dual presentation of basic and diluted
earnings per share (EPS) with a reconciliation of the numerator and denominator
of the EPS computations. Basic earnings per share amounts are based on the
weighted average shares of common stock outstanding. If applicable, diluted
earnings per share would assume the conversion, exercise or issuance of all
potential common stock instruments such as options, warrants and convertible
securities, unless the effect is to reduce a loss or increase earnings per
share. Diluted net income (loss) per share on the potential exercise of the
equity-based financial instruments is not presented where anti-dilutive. There
were no adjustments required to net loss for the period presented in the
computation of diluted earnings per share.
Income Taxes
The Corporation follows FASB ASC Topic 820,
Income
Taxes
, which requires the use of the asset and liability method of
accounting for income taxes. Under this method, deferred tax assets and
liabilities are recognized for future tax consequences attributable to temporary
differences between the financial statements carrying amounts of existing assets
and liabilities and loss carry forwards and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the year in which those temporary differences are
expected to be recovered or settled. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that, some portion or all of the deferred tax asset will not be realized.
Deferred tax assets and liabilities are adjusted for the effect of changes in
tax laws and rates on the date of enactment.
Comprehensive Income (Loss)
The Corporation adopted FASB ASC 220,
Reporting
Comprehensive Income
, which establishes standards for the reporting and
display of comprehensive income and its components in the financial statements.
Comprehensive income consists of net income and other gains and losses affecting
stockholder's equity that are excluded from net income, such as unrealized gains
and losses on investments available for sale, foreign currency translation gains
and losses and minimum pension liability. The Company has not had any
comprehensive income or loss.
Recent Accounting Pronouncements
The Corporation adopts new pronouncements relating to generally
accepted accounting principles applicable to the Corporation as they are issued,
which may be in advance of their effective date. Management does not believe
that any recently issued, but not yet effective accounting standards, if
currently adopted, would have a material effect on the accompanying financial
statements.
9
NOTE 4
CASH AND CASH EQUIVALENTS
As the Company does not yet have a bank account, cash is held
in trust by a related party.
NOTE 5
DUE TO RELATED PARTY
Due to related party represent amounts paid a shareholder on
the Companys behalf and are without interest nor specified repayment terms.
NOTE 6 -
CAPITAL STOCK
On May 14, 2013, the Corporation issued 50,000 common shares of
the Corporation for proceeds of $50,000.
As at June 30, 2013, there were no warrants or options
outstanding.
NOTE 7
SUBSEQUENT EVENTS
On July 19, 2013, the Corporation entered into a letter of
intent with Fuhuiyuan International Holdings Limited (Fuhuiyuan), formerly,
KWest Investment International Ltd. The letter of intent contemplates that, in
exchange for all the outstanding shares of the Corporation, Fuhuiyuan will issue
an aggregate of 7,500,000 shares of common stock of Fuhiuyuan to the
Corporations shareholders (the Acquisition).
On August 15, 2013, further to the letter of intent, the
Corporation entered into a share exchange agreement (the Definitive Agreement)
with Fuhuiyuan.
The completion of the Acquisition is subject to a number of
conditions precedent, including, but not limited to: (i) completion of
satisfactory due diligence by each of Fuhuiyuan and Fuhuiyuan International;
(ii) the approval of the Acquisition by each of Fuhuiyuans and Fuhuiyuan
Internationals respective board of directors and shareholders, if required;
(iii) the absence of any material change or change in a material fact which
might reasonably be expected to have a material adverse effect on the financial
and operational conditions or the assets of each of the parties to the
Definitive Agreement; and (iv) certain other conditions typical in a transaction
of this nature.
10
FUHUIYUAN INTERNATIONAL HOLDINGS LIMITED
(A
Development Stage Company)
Pro Forma Consolidated Financial Statements
June 30, 2013
Fuhuiyuan International Holdings Limited
PRO-FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
As at June 30, 2013
|
|
|
|
|
Fuhuiyuan
|
|
|
|
|
|
|
|
|
|
Fuhuiyuan
|
|
|
International
|
|
|
|
|
|
|
|
|
|
International
|
|
|
Group
|
|
|
|
|
|
|
|
|
|
Holdings
|
|
|
(Holdings)
|
|
|
Pro Forma
|
|
|
Consolidated
|
|
|
|
Limited
|
|
|
Limited
|
|
|
Adjustments
|
|
|
Pro
Forma
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
13,459
|
|
$
|
50,000
|
|
|
|
|
$
|
63,459
|
|
Due from related
party
|
|
46,193
|
|
|
-
|
|
|
|
|
|
46,193
|
|
Prepaid expenses
|
|
10,801
|
|
|
-
|
|
|
|
|
|
10,801
|
|
Total current assets
|
|
70,453
|
|
|
50,000
|
|
|
|
|
|
120,453
|
|
Property and equipment
|
|
3,445
|
|
|
-
|
|
|
|
|
|
3,445
|
|
Land for development
|
|
30,000
|
|
|
-
|
|
|
|
|
|
30,000
|
|
Total Assets
|
$
|
103,898
|
|
$
|
50,000
|
|
|
|
|
$
|
153,898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITES
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
$
|
466,060
|
|
$
|
1,500
|
|
|
|
|
$
|
467,560
|
|
Due to related
parties
|
|
149,144
|
|
|
1,000
|
|
|
|
|
|
150,144
|
|
Total current liabilities
|
|
615,204
|
|
|
2,500
|
|
|
|
|
|
617,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to related parties
|
|
274,074
|
|
|
-
|
|
|
|
|
|
274,074
|
|
Total Liabilities
|
|
889,278
|
|
|
2,500
|
|
|
|
|
|
891,778
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Stock
|
|
1,500
|
|
|
50,000
|
|
|
(49,250
|
)
|
|
2,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid in capital
|
|
73,262
|
|
|
-
|
|
|
49,250
|
|
|
122,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
|
(891,642
|
)
|
|
(2,500
|
)
|
|
|
|
|
(894,142
|
)
|
|
|
(816,880
|
)
|
|
47,500
|
|
|
|
|
|
(769,380
|
)
|
Equity attributable to noncontrolling
interest
|
|
31,500
|
|
|
-
|
|
|
|
|
|
31,500
|
|
Total Stockholders' Equity
|
|
(785,380
|
)
|
|
47,500
|
|
|
|
|
|
(737,880
|
)
|
Total Liabilities and Stocklholders' Equity
|
$
|
103,898
|
|
$
|
50,000
|
|
|
|
|
$
|
153,898
|
|
12
Fuhuiyuan International Holdings Limited
PRO-FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended
June 30, 2013
|
|
|
|
|
Fuhuiyuan
|
|
|
|
|
|
|
Fuhuiyuan
|
|
|
International
|
|
|
|
|
|
|
International
|
|
|
Group
|
|
|
|
|
|
|
Holdings
|
|
|
(Holdings)
|
|
|
Consolidated
|
|
|
|
Limited
|
|
|
Limited
|
|
|
Pro
Forma
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Commissions
|
$
|
9,000
|
|
$
|
-
|
|
$
|
9,000
|
|
Depreciation
|
|
861
|
|
|
-
|
|
|
861
|
|
Office and general
|
|
5,839
|
|
|
-
|
|
|
5,839
|
|
Professional fees
|
|
2,000
|
|
|
2,500
|
|
|
4,500
|
|
Rent
|
|
7,498
|
|
|
-
|
|
|
7,498
|
|
|
|
25,198
|
|
|
2,500
|
|
|
27,698
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) for period
|
$
|
(25,198
|
)
|
$
|
(2,500
|
)
|
$
|
(27,698
|
)
|
13
Fuhuiyuan International Holdings Limited
|
Notes to Pro Forma Consolidated Statement of Financial
Prosition
|
For the the
year ended June 30, 2013
|
1.
|
Basis of presentation
|
|
|
|
|
The unaudited pro forma consolidated statement of
financial position of Fuhuiyuan International Holdings Limited
(Fuhuiyuan or the Corporation) as at June 30, 2013 has been prepared
by management after giving effect to the transaction between Fuhuiyuan
International Holdings Limited and Fuhuiyuan International Group
(Holdings) Limited (Fuhuiyuan Group). The unaudited pro forma
consolidated statement of financial position is the effect of combining
the unaudited consolidated statement of financial position of the
Corporation as at June 30, 2013 and the unaudited statement of financial
position of the Guhuiyuan Group as at June 30, 2013.
|
|
|
|
|
It is managements opinion that the pro forma
consolidated statement of financial position includes all adjustments
necessary for the fair presentation, in all material respects, of the
transactions described in Notes 3 and 4 in accordance with International
Financial Reporting Standard applied on a basis consistent with
Corporations accounting policies. The pro forma consolidated statement of
financial position is intended to reflect the financial position of the
Corporation had the proposed transactions been effected on the date
indicated, however is not necessarily indicative of the financial position
which would have resulted if the transactions had actually occurred on
June 30, 2013.
|
|
|
|
|
The unaudited pro forma consolidated statement of
financial position should be read in conjunction with the historical
financial statements and notes thereto of the Corporation.
|
|
|
|
2.
|
Significant accounting policies
|
|
|
|
|
The unaudited pro forma consolidated statement of
financial position has been compiled using the significant accounting
policies as set out in the financial statements of Corporation for the
year ended April 30, 2013. The significant accounting policies of
Fuhuiyuan Group conform in all material respects to those of the
Corporation.
|
|
|
|
3.
|
Business acquisition
|
|
|
|
|
The Corporation entered into a share exchange agreeement
(Agreement) dated August 15, 2013 with Fuhuiyuan Group with respect to
the proposed acquisition (the Acquisition) of all of the issued and
outstanding shares of Fuhuiyuan Group. Fuhuiyuan Group is incorporated
under the laws of British Virgin Island.
|
|
|
|
|
The combination between the Corporation and Fuhuiyuan
Group is subject to, amongst other things, regulatory approvals.
|
|
|
|
4.
|
Pro forma assumptions and adjustments
|
|
|
|
|
The pro forma consolidated statement of financial
position includes the following pro forma assumptions and
adjustments:
|
|
|
|
|
a)
|
In connection with the Acquistion, The Corporation issued
7,500,000 shares of common stock with total valuation of $50,000 for all
of the outstanding shares of Fuhuiyuan Group's common
stock.
|
14