Item
1.
Financial Statements
Our unaudited interim consolidated financial statements for the
three and nine months ended January 31, 2014 form part of this quarterly report.
All currency references in this report are to Canadian dollars unless otherwise
noted.
3
Fuhuiyuan International Holdings
Ltd.
INTERIM CONSOLIDATED BALANCE SHEETS
As at January 31, 2014
and April 30, 2013
Stated in Canadian Dollars
(Unaudited)
|
|
January 31,
|
|
|
April 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
88,952
|
|
$
|
360
|
|
Current assets -
discontinued
|
|
-
|
|
|
75,933
|
|
|
|
88,952
|
|
|
76,293
|
|
|
|
|
|
|
|
|
Long term assets - discontinued
|
|
-
|
|
|
33,445
|
|
|
|
|
|
|
|
|
Total Assets
|
$
|
88,952
|
|
$
|
109,738
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Accounts payable
and accrued liabilities
|
$
|
149,634
|
|
$
|
22,574
|
|
Due to related parties Note 7
|
|
1,112
|
|
|
33,704
|
|
Current
liability - discontinued
|
|
-
|
|
|
552,178
|
|
|
|
150,746
|
|
|
608,456
|
|
|
|
|
|
|
|
|
Long term liability - discontinued
|
|
-
|
|
|
274,074
|
|
Total Liabilities
|
|
150,746
|
|
|
882,530
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
Capital Stock
|
|
|
|
|
|
|
Authorized
100,000,000 common shares, voting, par value $.0001 each
90,000,000 preferred shares, par value $.0001
each
Issued
19,500,000 common shares (April 30, 2013 - 15,000,000)
|
|
1,950
|
|
|
1,500
|
|
Additional paid in capital
|
|
882,876
|
|
|
73,261
|
|
Accumulated deficit
|
|
(950,724
|
)
|
|
(879,053
|
)
|
Accumulated other comprehensive income
|
|
4,104
|
|
|
-
|
|
|
|
(61,794
|
)
|
|
(804,292
|
)
|
Equity attributable to noncontrolling interest
|
|
-
|
|
|
31,500
|
|
Total Stockholders' Deficit
|
|
(61,794
|
)
|
|
(772,792
|
)
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Deficit
|
$
|
88,952
|
|
$
|
109,738
|
|
4
Fuhuiyuan International Holdings
Ltd.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
For the three and nine months ended January 31, 2014 and
2013
Stated in Canadian Dollars
(Unaudited)
|
|
3
Months Ended January 31
|
|
|
9
months Ended January 31
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales revenue
|
$
|
-
|
|
$
|
-
|
|
$
|
160,365
|
|
$
|
-
|
|
Cost of goods sold
|
|
-
|
|
|
-
|
|
|
128,292
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Profit
|
|
-
|
|
|
-
|
|
|
32,073
|
|
|
-
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Administration fees
|
|
4,725
|
|
|
-
|
|
|
10,238
|
|
|
-
|
|
Consulting fees
|
|
10,500
|
|
|
-
|
|
|
10,500
|
|
|
-
|
|
Office and general
|
|
16,337
|
|
|
1,566
|
|
|
54,140
|
|
|
3,155
|
|
Professional fees
|
|
4,923
|
|
|
12,039
|
|
|
34,921
|
|
|
15,211
|
|
Rent
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
(36,485
|
)
|
|
(13,605
|
)
|
|
(109,799
|
)
|
|
(18,366
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income - gain on sale of property to related party
|
|
17,688
|
|
|
-
|
|
|
17,688
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from continuing operations
|
|
(18,797
|
)
|
|
(13,605
|
)
|
|
(60,038
|
)
|
|
(18,366
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations
|
|
-
|
|
|
(2,541
|
)
|
|
(10,549
|
)
|
|
(21,952
|
)
|
Net loss for the period
|
|
(18,797
|
)
|
|
(16,146
|
)
|
|
(70,587
|
)
|
|
(40,318
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
5,428
|
|
|
-
|
|
|
4,104
|
|
|
-
|
|
Comprehensive loss for the period
|
|
(13,369
|
)
|
|
(16,146
|
)
|
|
(66,483
|
)
|
|
(40,318
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend attributable to noncontrolling
interest
|
|
-
|
|
|
(766
|
)
|
|
(1,084
|
)
|
|
(2,157
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss attributed to equity
stockholders
|
$
|
(13,369
|
)
|
$
|
(16,912
|
)
|
$
|
(67,567
|
)
|
$
|
(42,475
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
$
|
(0.001
|
)
|
$
|
(0.001
|
)
|
$
|
(0.004
|
)
|
$
|
(0.001
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares
outstanding
|
|
21,521,739
|
|
|
15,000,000
|
|
|
19,059,847
|
|
|
15,000,000
|
|
5
Fuhuiyuan International Holdings Ltd.
INTERIM CONSOLIDATED STATEMENT OF
STOCKHOLDERS' EQUITY
For the period ended April 30, 2013 and January 31,
2014
Stated in Canadian Dollars
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
attributable
|
|
|
attributable
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
to
|
|
|
to
|
|
|
Total
|
|
|
|
Common Stock
|
|
|
Paid in
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
Fuhuiyuan
|
|
|
noncontrolli
|
|
|
Shareholders
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
Income
|
|
|
shareholders
|
|
|
ng
interest
|
|
|
'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 1, 2012
|
|
15,000,000
|
|
$
|
1,500
|
|
$
|
73,261
|
|
$
|
(57,445
|
)
|
$
|
-
|
|
$
|
17,316
|
|
$
|
36,500
|
|
$
|
53,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redemption of preferred shares
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5,000
|
)
|
|
(5,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended April 30, 2013
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(818,750
|
)
|
|
-
|
|
|
(818,750
|
)
|
|
-
|
|
|
(818,750
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends to noncontrolling interest
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,858
|
)
|
|
-
|
|
|
(2,858
|
)
|
|
-
|
|
|
(2,858
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 30, 2013
|
|
15,000,000
|
|
$
|
1,500
|
|
$
|
73,261
|
|
$
|
(879,053
|
)
|
$
|
-
|
|
$
|
(804,292
|
)
|
$
|
31,500
|
|
$
|
(772,792
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for 100% of common shares of
Fuhuiyuan International Goup (Holdings) Limited
|
|
7,500,000
|
|
|
750
|
|
|
49,307
|
|
|
-
|
|
|
-
|
|
|
50,057
|
|
|
-
|
|
|
50,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redemption of preferred shares
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(26,500
|
)
|
|
(26,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of subsidiary
|
|
(3,000,000
|
)
|
|
(300
|
)
|
|
760,308
|
|
|
-
|
|
|
-
|
|
|
760,008
|
|
|
(5,000
|
)
|
|
755,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss for the period ended
January 31, 2014
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(70,587
|
)
|
|
4,104
|
|
|
(66,483
|
)
|
|
-
|
|
|
(66,483
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends to noncontrolling interest
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,084
|
)
|
|
-
|
|
|
(1,084
|
)
|
|
-
|
|
|
(1,084
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 31, 2014
|
|
19,500,000
|
|
$
|
1,950
|
|
$
|
882,876
|
|
$
|
(950,724
|
)
|
$
|
4,104
|
|
$
|
(61,794
|
)
|
$
|
-
|
|
$
|
(61,794
|
)
|
6
Fuhuiyuan International Holdings
Ltd.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
For the
three and nine months ended January 31, 2014 and 2013
Stated in Canadian
Dollars
(Unaudited)
|
|
9
months Ended January 31
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for period
|
$
|
(70,587
|
)
|
$
|
(40,318
|
)
|
Loss from discontinued operations
|
|
10,549
|
|
|
21,952
|
|
Changes in non-cash working
capital balances
|
|
|
|
|
|
|
Accounts payable
|
|
127,060
|
|
|
18,230
|
|
Due to
(from) related parties
|
|
(32,592
|
)
|
|
-
|
|
|
|
|
|
|
|
|
Net cash from continuing
operations
|
|
34,430
|
|
|
(136
|
)
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
Cash received on sale of subsidiary
|
|
110
|
|
|
-
|
|
Cash received on shares issued
|
|
51,700
|
|
|
-
|
|
|
|
|
|
|
|
|
Net cash from continuing
investing activities
|
|
51,810
|
|
|
-
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
Redemption of preferred shares
|
|
(26,500
|
)
|
|
-
|
|
Dividend
|
|
(1,084
|
)
|
|
(2,157
|
)
|
|
|
|
|
|
|
|
Net cash from continuing
financing activities
|
|
(27,584
|
)
|
|
(2,157
|
)
|
|
|
|
|
|
|
|
Cash flows from discontinued operations
|
|
1,794
|
|
|
(2,177
|
)
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash
equivalents during the period
|
|
60,450
|
|
|
(4,470
|
)
|
|
|
|
|
|
|
|
Foreign exchange translation
|
|
4,104
|
|
|
-
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of the
period
|
|
24,398
|
|
|
4,874
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of the
period
|
$
|
88,952
|
|
$
|
404
|
|
|
|
|
|
|
|
|
Supplemental information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
Income taxes paid
|
$
|
-
|
|
$
|
-
|
|
7
FUHUIYUAN INTERNATIONAL HOLDINGS LIMITED
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
|
January 31, 2014
|
(UNAUDITED)
|
|
Stated in
Canadian dollars
|
NOTE 1
NATURE AND CONTINUANCE OF
OPERATIONS
Fuhuiyuan International Holdings Limited (Fuhuiyuan or the
Corporation), formerly KWest Investment International Ltd., was incorporated
in the state of Nevada, United States on December 8, 2009.
On June 7, 2010, the Corproation acquired KWest Investments
& Development Inc. (KWest Alberta) of Edmonton, Alberta, Canada as its
wholly owned subsidiary. KWest Alberta. was incorporated on September 29, 2008
with its head office located in Edmonton, Alberta, Canada and is specialized in
real estate syndication.
On August 15, 2013, the Corporation entered into a share
exchange agreement with Fuhuiyuan International Group (Holdings) Limited
(Fuhuiyuan International). In exchange for all the outstanding shares of
common stock of Fuhuiyuan International, the Corporation issued an aggregate of
7,500,000 shares of common stock of the Corporation.
Fuhuiyuan International is a newly formed trading company and
it has recently entered into an agency agreement with Qingdao Fuhuiyuan
Investment Co. Ltd. (Qingdao Fuhuiyuan) in which Qingdao Fuhuiyuan has
appointed Fuhuiyuan International to act as its international agent to sell
Qingdao Fuhuiyuans products, including cosmetics, jewelry, fashion clothing and
accessories. Fuhuiyuan International collects payments made by overseas
customers on behalf of Qingdao Fuhuiyuan and oversees all related activities and
expenditures. In addition, Fuhuiyuan International handles all affairs relating
to overseas transportation, customs declaration, customs clearance and payment
of taxes.
On January 1, 2014, the Corporation sold one of its
subsidiaries, KWest Investments & Development Inc (See Note 5).
NOTE 2
INTERIM REPORTING
The interim condensed consolidated financial statements, which
include the Corporation and its subsidiaries, KWest Investments &
Development Inc. and Fuhuiyuan International Group (Holdings) Limited, are
prepared under the accrual basis of accounting in accordance with accounting
principles generally accepted in the United States of America. All significant
inter-company accounts and transactions have been eliminated. These financial
statements include 100% of the assets, liabilities, and net income or loss of
its wholly-owned subsidiaries.
While the information presented in the accompanying interim
condensed consolidated financial statements is unaudited, it includes all
adjustments, which are, in the opinion of management, necessary to present
fairly the financial position, results of operations and cash flows for the
interim periods presented in accordance with accounting principles generally
accepted in the United States of America. All adjustments are of a normal
recurring nature. It is suggested that these interim condensed consolidated
financial statements be read in conjunction with the Companys April 30, 2013
annual consolidated financial statements. Operating results for the nine month
period ended January 31, 2014 are not necessarily indicative of the results that
can be expected for the year ended April 30, 2014.
8
FUHUIYUAN INTERNATIONAL HOLDINGS LIMITED
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
|
January 31, 2014
|
(UNAUDITED)
|
|
Stated in
Canadian dollars
|
NOTE 3
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
There have been no changes in accounting policies from those
disclosed in the notes to the audited consolidated financial statements for the
year ended April 30, 2013.
Functional currency
The Corporations functional currency is the Canadian dollar.
All amounts shown on these statements are stated in Canadian dollars.
NOTE 4
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.
NOTE 5
DISPOSITION OF SUBSIDIARY
On January 17, 2014, the Corporation closed a Share Purchase
and Sale Agreement pursuant to which the Corporation sold to 4 shareholders 100%
of the issued and outstanding shares of common stock in its wholly owned
subsidiary, KWest Investments & Development Inc. (KWest Alberta). In
consideration, the 4 purchasers paid $110 ($100 USD) in cash and tendered to the
Corporation for cancellation 3,000,000shares of common stock in the Company.
As a result of the disposition, the Corporation eliminated the
following accounts and amounts from its consolidated balance sheet
Cash
|
$
|
29,576
|
|
Current assets
|
|
52,400
|
|
Property and equipment
|
|
31,723
|
|
Current liabilities
|
|
(594,632
|
)
|
Long-term liabilities
|
|
(274,074
|
)
|
Additional paid in capital
|
|
(20,389
|
)
|
Preferred shares noncontrolling interest
|
|
5,000
|
|
The asset and liabilities of KWest Alberta as at April 30, 2013
have been reclassified as being from discontinued operations. Similarly, the
operations and cash flows from KWest Alberta have been reclassified as being
discontinued for both the current periods and the similar period for the
previous periods.
9
FUHUIYUAN INTERNATIONAL HOLDINGS LIMITED
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
|
January 31, 2014
|
(UNAUDITED)
|
|
Stated in
Canadian dollars
|
NOTE 6
EQUIPMENT
|
|
|
|
|
|
|
|
January 31, 2014
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
Cost
|
|
|
Depreciation
|
|
|
Net
|
|
Furniture and computers
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Leasehold improvements
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
April
30, 2013
|
|
Furniture and computers
|
|
|
|
|
Accumulated
|
|
|
|
|
Leasehold improvement
|
|
Cost
|
|
|
Depreciation
|
|
|
Net
|
|
|
$
|
17,227
|
|
$
|
13,782
|
|
$
|
3,445
|
|
Furniture and computers
|
|
15,506
|
|
|
15,506
|
|
|
-
|
|
Leasehold improvement
|
$
|
32,733
|
|
$
|
29,288
|
|
$
|
3,445
|
|
NOTE 7
RELATED PARTY TRANSACTIONS AND
BALANCES
The following are related transaction balances with related
parties for the period ended January 31, 2014:
|
|
|
|
|
January 31, 2014
|
|
|
|
|
|
April
30, 2013
|
|
|
|
Current
|
|
|
Non-Current
|
|
|
Current
|
|
|
Non-Current
|
|
Due to related party
|
$
|
1,112
|
|
$
|
-
|
|
$
|
148,955
|
|
$
|
274,074
|
|
Current advances from related parties represent advances from a
shareholder, advances from a Corporation with common management and advances
from a party related to a shareholder. The advances are without interest and
have no specified repayment terms.
10
FUHUIYUAN INTERNATIONAL HOLDINGS LIMITED
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
|
January 31, 2014
|
(UNAUDITED)
|
|
Stated in
Canadian dollars
|
NOTE 8 -
CAPITAL STOCK
On April 28, 2010, the Corporation issued 5,445,000 common
shares of the Corporation for gross proceed of $92,817 by way of private
placement.
On June 7, 2010, the Corporation issued 9,555,000 common shares
of the Corporation in exchange for 100% of the outstanding common shares of
KWest Investments & Development Inc. The transaction was accounted for as a
reverse merger and a retroactive recapitalization.
On August 15, 2013, the Corporation issued 7,500,000 common
shares of in exchange for all the outstanding shares of common stock of
Fuhuiyuan International.
On January 31, 2013, the Corporation cancelled 3,000,000 common
shares of the Corporation as a result of the disposal of its subsidiary (See
Note 5).
As at January 31, 2013, there were no warrants or options
outstanding.
11
Item
2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Forward-Looking Statements
This report on Form 10-Q contains certain forward-looking
statements. All statements other than statements of historical fact are
forward-looking statements for purposes of these provisions, including any
projections of earnings, revenues, or other financial items; any statements of
the plans, strategies, and objectives of management for future operation; any
statements concerning proposed new products, services, or developments; any
statements regarding future economic conditions or performance; statements of
belief; and any statement of assumptions underlying any of the foregoing. Such
forward-looking statements are subject to inherent risks and uncertainties, and
actual results could differ materially from those anticipated by the
forward-looking statements.
These forward-looking statements involve significant risks and
uncertainties, including, but not limited to, the following: competition,
promotional costs and the risk of declining revenues. Our actual results could
differ materially from those anticipated in such forward-looking statements as a
result of a number of factors. These forward-looking statements are made as of
the date of this filing, and we assume no obligation to update such
forward-looking statements. The following discusses our financial condition and
results of operations based upon our unaudited financial statements which have
been prepared in conformity with accounting principles generally accepted in the
United States. It should be read in conjunction with our financial statements
and the notes thereto included elsewhere herein.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.
Our consolidated financial statements are stated in Canadian
Dollars (CDN$) and are prepared in accordance with United States Generally
Accepted Accounting Principles.
In this quarterly report, unless otherwise specified, all
dollar amounts are expressed in Canadian Dollars (CDN$) and all references to
common shares refer to the common shares in our capital stock.
As used in this quarterly report, the terms we, us, our
and our company mean Fuhiyuan International Holdings Limited and our
wholly-owned subsidiary, Fuhuiyuan International Group (Holdings) Limited, a
British Virgin Island corporation, unless otherwise indicated.
General Overview
We were incorporated on December 8, 2009 under the laws of the
State of Nevada. We have one wholly-owned subsidiary, Fuhuiyuan International
Group (Holdings) Limited, a British Virgin Island corporation. Our principal
executive offices are located at Suite 204, 15615 102 Avenue, Edmonton, Alberta,
T5P 4X7. Our telephone number is (780)756-1668. Our fiscal year end is April
30.
On July 16, 2013, our board of directors and a majority of our
stockholders approved a change of name of our company from Kwest Investment
International Ltd. to Fuhuiyuan International Holdings Limited. A Certificate of
Amendment was filed with the Nevada Secretary of State on July 29, 2013, with an
effective date of August 7, 2013. The amendment was approved by Financial
Industry Regulatory Authority (FINRA) with an effective date of August 7, 2013.
Our trading symbol KWIT. Our CUSIP number is 359535 101.
12
On June 7, 2010 we entered into a share exchange agreement with
KWest Investments & Development Inc. (KWest Alberta) and all of its
shareholders whereby we acquired KWest Alberta and its 10% ownership in the
Sturgeon County Property in Alberta for 9,555,000 shares of our common stock.
KWest Alberta is a business specializing in land banking, real estate
syndication and management. On June 10, 2009, KWest Alberta acquired a 75 acre
parcel of land located in Sturgeon County, Alberta. The parcel is situated about
2 miles east of Redwater, Alberta and 3¾ miles north of the Alberta Industrial
Heartland which is targeted to be the future site for oil sand upgraders (heavy
oil processing facilities) in Alberta.
Concurrently with the purchase of the Sturgeon Country
property, KWest Alberta sold a 90% ownership interest in the property, to Kimura
Lake Estate Inc., KWest Alberta maintains a 10% ownership interest in the 75
acre parcel of land for Kimura Lake Estate and maintains a 10% ownership
interest. Our former officers and directors, Stolfin Wong and Eric Lo are also
directors and officers of Kimura Lake Estate Inc. and of the corporation from
which we originally acquired the property.
As a management company, through KWest Alberta, we were to
assist Kimura Lake Estate in syndicating the land through our sales team by
splitting the full parcel into separate half acre (1 unit) and one acre (2
units) units of undivided interest with individual land titles issued by the
Alberta Government Land Title Office and sold off to land investors. Our 10%
interest provided us with 15 units of undivided interest not for syndication and
Kimura Lake Estate had 135 units (90%) of undivided interest to syndicate. Once
the land was syndicated, our plan was to work with engineers, planners and
architects to get all the approvals and plans required, thereby increasing the
value of the land. We endeavoured to generate revenue in the form of management
fees derived from managing syndicated land as well as the sale of subdivided
land parcels. However, we did not generate any revenues from our management of
the Sturgeon Property.
Our Current Business
On August 22, 2013, we entered into a share exchange agreement
dated August 15, 2013, with Fuhuiyuan International Group (Holdings) Limited, a
British Virgin Island corporation (Fuhuiyuan BVI) and the sole shareholder of
Fuhuiyuan BVI, pursuant to which we agreed to purchase 100% of the issued and
outstanding securities of Fuhuiyuan BVI in consideration of the issuance of
7,500,000 shares of our common stock (being 33.33% of our issued and outstanding
voting securities). On October 31, 2013, we completed the acquisition and
Fuhuiyuan BVI began operating as our wholly owned subsidiary. Upon closing, Ms.
Jinglan Dong and Mr. Bowen Dong were appointed to our board of directors.
Fuhuiyuan BVI is a newly formed trading company which holds
certain sales agency rights, pursuant to an agency agreement dated June 30,
2013, to act as international sales agent for Qingdao Fuhuiyuan Investment Co.
Ltd., a China based purveyor of cosmetics, footwear, clothing and fashion
accessories. Pursuant to the agency agreement, Fuhuiyuan BVI will be responsible
for collecting payments made by overseas customers on behalf of Qingdao
Fuhuiyuan as well as overseeing all sales related activities and expenditures,
including overseas transportation, customs declaration, customs clearance and
payment of taxes. In consideration of the agency services provided by Fuhuiyuan
BVI, Qindao Fuhuiyuan will pay to Fuhuiyuan BVI 20% of the gross value of sales
under the agency agreement. The agency agreement is for a perpetual term and may
be terminated by either party with two months notice.
The products currently distributed by Fuhuiyuan BVI under the
agency agreement with Qindao Fuhuiyuan include the following:
-
Ying Cui Cao Ben
brand skin care products, which have received ISO
9001:2008 certifications and comply with the highest manufacturing standards
regulated by the Cosmetics Good Manufacturing Practices (GMP) of both the
United States and European Union;
-
Dancing
brand leather footwear, bags and accessories;
-
Fuyuan
brand jewelry , a line of crystal inlay silver jewelry
13
On January 17, 2014, we entered into and closed a share
purchase and sale agreement dated January 1, 2014 pursuant to which we sold to
four shareholders of our company, namely Stolfin Wong, our former president and
director, Eric Lo, our former director, Hon Ming Tony Wong, and Willie Chan,
100% of the issued and outstanding securities in our wholly owned subsidiary,
KWest Alberta. In consideration of the sale of KWest Alberta, the four
purchasers tendered to our company for cancellation 3,000,000 common shares in
our capital stock and a payment of $100.
Results of Operations
The following summary of our results of operations should be
read in conjunction with our consolidated financial statements for the quarter
ended January 31, 2014, which are included herein.
Our operating results for the three months ended January 31,
2014 and 2013 are summarized as follows:
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 31,
|
|
|
January 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Revenue
|
$
|
Nil
|
|
$
|
Nil
|
|
$
|
160,365
|
|
$
|
Nil
|
|
Cost of goods sold
|
$
|
Nil
|
|
$
|
Nil
|
|
$
|
128,292
|
|
$
|
Nil
|
|
Administration fees
|
$
|
4,725
|
|
$
|
Nil
|
|
$
|
10,238
|
|
$
|
Nil
|
|
Commission fees
|
$
|
Nil
|
|
$
|
Nil
|
|
$
|
Nil
|
|
$
|
Nil
|
|
Consulting fees
|
$
|
10,500
|
|
$
|
Nil
|
|
$
|
10,500
|
|
$
|
Nil
|
|
Depreciation
|
$
|
Nil
|
|
$
|
Nil
|
|
$
|
Nil
|
|
$
|
Nil
|
|
Office and general
|
$
|
16,337
|
|
$
|
1,566
|
|
$
|
54,140
|
|
$
|
3,155
|
|
Professional fees
|
$
|
4,923
|
|
$
|
12,039
|
|
$
|
34,921
|
|
$
|
15,211
|
|
Rent
|
$
|
Nil
|
|
$
|
Nil
|
|
$
|
Nil
|
|
$
|
Nil
|
|
Net Income (Loss)
|
$
|
(18,797
|
)
|
$
|
(16,146
|
)
|
$
|
(70,587
|
)
|
$
|
(40,318
|
)
|
For the three months ended January 31, 2014, our net loss
increased by $2,651 as compared to the three months ended January 31, 2013 to
$18,797. For the nine months ended January 31, 2014, our net loss increased by
$30,269 as compared to the nine months ended January 31, 2013 to $70,587. Our
expenses increased primarily due to additional expenses related to the
acquisition of Fuhuiyuan BVI.
Liquidity and Financial Condition
Working Capital
|
|
At
|
|
|
At
|
|
|
|
January 31,
|
|
|
April 30,
|
|
|
|
2014
|
|
|
2013
|
|
Current Assets
|
$
|
88,952
|
|
$
|
76,293
|
|
Current Liabilities
|
$
|
150,746
|
|
$
|
608,456
|
|
Working Capital (Deficit)
|
$
|
(61,794
|
)
|
$
|
(498,718
|
)
|
Our total current assets as of January 31, 2014 were $88,952 as
compared to total current assets of $76,293 as of April 30, 2013. The increase
was primarily due to the acquisition of Fuhuiyuan BVI. Our total current
liabilities as of January 31, 2014 were $150,746 as compared to total current
liabilities of $608,456 as of April 30, 2013. The decrease in current
liabilities was primarily attributed to the divestiture of KWest Alberta.
14
Cash Flows
|
|
Nine Months Ended
|
|
|
|
January 31,
|
|
|
|
2014
|
|
|
2013
|
|
Net Cash Provided by (Used in) Operating
Activities
|
$
|
34,430
|
|
$
|
(136
|
)
|
Net Cash Provided by (Used in) Investing Activities
|
$
|
51,810
|
|
$
|
Nil
|
|
Net Cash Provided by (Used in) Financing
Activities
|
$
|
(27,584
|
)
|
$
|
(2,157
|
)
|
Increase (Decrease) in Cash and Cash Equivalents During the
Period
|
$
|
60,450
|
|
$
|
(4,470
|
)
|
Operating Activities
Cash provided by operating activities during the nine months
ended January 31, 2014 increased from $136 compared to cash used in operating
activities for the nine months ended January 31, 2013 to $34,430 which was
primarily due to increase in accounts payable.
Investing Activities
Cash provided by investing activities during the nine months
ended January 31, 2014 increased from $Nil for the nine months ended January 31,
2013 to $51,810 which was primarily due to cash acquired from the acquisition of
Fuhuiyuan BVI.
Financing Activities
The increase in cash used in financing activities during the
nine month period ended January 31, 2014 is primarily as a result of the
redemption of preferred shares by and the divestiture of the companys
subsidiary, KWest Alberta.
We will require additional funds to fund our budgeted expenses
over the next 12 months. These funds may be raised through equity financing,
debt financing, or other sources, which may result in further dilution in the
equity ownership of our shares. There is still no assurance that we will be able
to maintain operations at a level sufficient for an investor to obtain a return
on his investment in our common stock. Further, we may continue to be
unprofitable. We need to raise additional funds in the immediate future in order
to proceed with our budgeted expenses.
Specifically, we estimate our operating expenses and working
capital requirements for the next 12 months to be as follows:
Description
|
Estimated
Completion
Date
|
Estimated
Expenses
($)
|
Legal and accounting fees
|
12 months
|
$50,000
|
Management and operating costs
|
12 months
|
$100,000
|
Salaries and consulting fees
|
12 months
|
$75,000
|
General and administrative expenses
|
12 months
|
$25,000
|
Total
|
|
$250,000
|
We plan to use a portion of the above funds for expenses
related to our subsidiary, Fuhuiyuan BVI.
15
We intend to meet our cash requirements for the next 12 months
through a combination of cash flow from operations and either debt financing or
equity financing by way of private placements. We currently do not have any
arrangements in place to complete any private placement financings and there is
no assurance that we will be successful in completing any such financings on
terms that will be acceptable to us.
If we are not able to generate or raise the full $250,000 to
implement our business plan as anticipated, we will scale our business
development in line with available capital. Our primary priority will be to
retain our reporting status with the Securities and Exchange Commission which
means that we will first ensure that we have sufficient capital to cover our
legal and accounting expenses. Once these costs are accounted for, in accordance
with how much financing we are able to secure, we will focus on expanding our
operations, particularly with our subsidiary, Fuhuiyuan BVI.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
stockholders.
Critical Accounting Policies
The summary of significant accounting policies is presented to
assist in understanding the financial statements. The financial statements and
notes are the representations of our companys management, who is responsible
for their integrity and objectivity. The consolidated financial statements have
been prepared in accordance with the instructions to form 10-Q, and therefore,
do not included all the information necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. Our company's significant accounting
policies are more fully described in Note 2 to the audited consolidated
financial statements contained in our company's Annual Report on Form 10-K for
the year ended April 30, 2013. There were no material changes to our company's
significant accounting policies or the estimates made pursuant to those policies
during the most recent quarter.
Recent Accounting Pronouncements
Our company adopts new pronouncements relating to generally
accepted accounting principles applicable to our company 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.