WEB NEWS Comments & Business Outlook
China Senior Living Industry International Holding Corporation
Unaudited Con solidated Statements of Income and Comprehensive Income
For the three-month period ended March 31 , 201 6 and 201 5
(Stated in U.S. Dollars)
For the three months ended
3/31/2016
3 /3 1 /201 5
Revenues
$
115,728
$
130,389
Cost of revenues
84,065
80,778
Gross p rofit
31,663
49,611
Operating e xpenses
General and ad ministrative e xpense s
32,759
13,282
Operating (loss)/income
(1,096
)
36,329
Other income/(expense)
Interest income
11
-
Interest expense
-
(9,863
)
Total other income/(expense)
11
(9,863
)
(Loss)/Earnings before tax
(1,085
)
26,466
Income tax
-
-
Net (loss)/income
$
(1,085
)
$
26,466
Other c omprehensive income
Foreign c urrency t ranslation g ain
6,087
3,822
Comprehensive i ncome
$
5,002
$
30,288
(Loss)/earnings per share
Basic
$
(0.00
)
$
(0.00
)
Diluted
$
(0.00
)
$
(0.00
)
Weighted average number of Common shares outstanding
Basic
56,000,007
53,280,007
Diluted
56,000,007
56,000,007
Comments & Business Outlook
China Senior Living Industry International Holding Corporation (f/k/a China Forestry, Inc.)
Audited Con solidated Statements of Income and Comprehensive Income
For the years ended December 31 , 2015 and 2014
(Stated in U.S. Dollars)
For the years ended
12 /3 1 /2015
12 /3 1 /2014
Revenues
$
522,551
$
512,964
Cost of revenues
356,512
368,042
Gross p rofit
166,039
144,922
Operating e xpenses
General and ad ministrative e xpense s
120,855
75,677
Operating income
45,184
69,245
Other income/(expense)
Other income
494, 509
-
Interest income
302
-
Interest expense
(29,808 )
(77,973
)
Total other income/(expense)
465 ,003
(77,973
)
Earnings before tax
510 ,187
(8,728
)
Income tax
-
-
Net i ncome/(loss)
$
510,187
$
(8,728
)
Other c omprehensive i ncome/( l oss):
Foreign c urrency t ranslation g ain/( l oss)
(47,090 )
(2,694 )
Comprehensive i ncome
$
463,097
$
(11,422
)
Earnings per share
Basic
$
0.01
$
0.00
Diluted
$
0.01
$
0.00
Weighted average number of Common shares outstanding
Basic
56,000,007
53 , 280 , 007
Diluted
56,000,007
5 6 , 000 , 007
Management Discussion and Analysis
Net revenues. Our net revenue for the year ended December 31, 2015 amounted to $ 522,551, which represents an increase of approximately $ 9,587, or 1.87 %, from the year ended on December 31, 2014, in which our net revenue was $ 512,964.
Net income decreased $ 35,204, or 20.78%, to $ 134,199 in 2015 from $ 169,403 in 2014 as a result of the increase of general and administrative expenses.
Comments & Business Outlook
China Senior Living Industry International Holding Corporation (f/k/a China Forestry, Inc.)
Con solidated Statements of Income and Comprehensive Income
For the three-month and nine -month periods ended September 30, 2015 and 2014
(Stated in U.S. Dollars)
Three months ended
Nine months ended
9/30/2015
9/30/2014
9/30/2015
9/30/2014
Revenues
$
136,138
$
132,631
$
397,897
$
390,708
Cost of revenues
102,223
64,512
272,941
230,590
Gross profit
33,915
68,119
124,956
160,118
Operating expenses
General and administrative expenses
9,187
13,279
41,172
40,400
Operating income
24,728
54,840
83,784
119,718
Other income/(expense)
Other income
118,520
-
118,520
-
Interest expense
(9,972
)
(18,302
)
(29,808
)
(67,891
)
Total other income/(expense)
108,548
(18,302
)
88,712
(67,891
)
Earnings before tax
133,276
36,538
172,496
51,827
Income tax
-
-
-
-
Net income/(loss)
$
133,276
$
36,538
$
172,496
$
51,827
Other comprehensive income/(loss):
Foreign currency translation gain/(loss)
(34,473
)
(23,338
)
(28,021
)
(4,309
)
Comprehensive income
$
98,803
$
13,200
$
144,475
$
47,518
Earnings per share
Basic
$
0.00
$
0.00
$
0.00
$
0.00
Diluted
$
0.00
$
0.00
$
0.00
$
0.00
Weighted average number of Common shares outstanding
Basic
56,000,007
50,742,446
56,000,007
49,680,920
Diluted
56,000,007
53,462,446
56,000,007
52,400,920
Comments & Business Outlook
Item 1.01 Entry into a Material Definitive Agreement.
Variable interest entity (VIE) is a term used by the United States Financial Accounting Standards Board in FIN 46 to refer to an entity (the investee) in which the investor holds a controlling interest that is not based on the majority of voting rights. A VIE is an entity meeting one of the following three criteria as elaborated in FASB ASC 810-10 [formerly FIN 46 (Revised)]:
2.As a group, the equity-at-risk holders cannot control the entity; or
3.The economics do not coincide with the voting interests (commonly known as the "anti-abuse rule").
On September 29, 2015, our Board of Directors also approved that Qi Ying transferred its equity ownership in Hanzhong Hengtai Bio-Tech Limited 汉中亨泰生物科技有限公司 (“Hengtai”) to Zhenheng Shao, Zhenguo Shao and Yongli Yang. Upon the completion of the equity transfer, Hengtai is no longer our indirectly wholly owned subsidiary in China. The transfer of Hengtai’s equity ownership is due to the reasons that Hengtai’s business operations were limited to the plantation and sale of garden plants and its business performance was not ideal in the recent years.
On September 29, 2015, we entered into agreement to convert the $484,000 outstanding convertible promissory notes and all of the accrued and unpaid interests into 2,720,000 shares of common stock to 8 note holders.
On September 29, 2015, our Board of Director approved the transfer of Qi Ying’s equity ownership in Hengtai to Zhenheng Shao, Zhenguo Shao and Yongli Yang. The transfer of Hengtai’s equity ownership is due to the reasons that Hengtai’s business operations were limited to the plantation and sale of garden plants and its business performance was not ideal in the recent years. Upon the completion of the equity transfer, Hengtai is no longer our indirectly wholly owned subsidiary in China.
As the result, PUBCO ceased the business of plantation and sale of garden plants and became engaged in senior living and senior care business through Yifuge.
Auditor trail
Item 4.01 Changes in Registrant's Certifying Accountant.
None of the reports of Yichien Yeh, CPA, on the Company's financial statements for either of the past two years contained an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles.
There were no disagreements between the Company and Yichien Yeh, CPA, for the two most recent fiscal years and through September 8, 2015 (date of dismissal) on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Yichien Yeh, CPA, would have caused them to make reference to the subject matter of the disagreement in connection with its report.
We provided Yichien Yeh, CPA with a copy of this Current Report and has requested that it furnish the Company with a letter addressing to the U.S. Securities and Exchange Commission stating whether it agrees with the above statements. A copy of such letter is attached as Exhibit 16.1 to this Current Report on Form 8-K.
(b) On September 8, 2015, the board of director of the Company approved the engagement of WWC, P.C. (“WWC, PC”) as its principal accountant to audit the Company's financial statements. During the Company's two most recent fiscal years or subsequent interim period, the Company has not consulted with the entity of WWC, PC regarding the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, nor did the entity of WWC, PC provide advice to the Company, either written or oral, that was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue.
Further, during the Company's two most recent fiscal years or subsequent interim period, the Company has not consulted the entity of WWC, PC on any matter that was the subject of a disagreement or a reportable event.
Comments & Business Outlook
Comments & Business Outlook
CHINA FORESTRY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended
For the Six Months Ended
June 30,
June 30,
2015
2014
2015
2014
Revenue
Net sales
$
220,851
$
224,638
$
361,856
$
397,951
Cost of Goods Sold
(169,259)
(148,539)
(274,943)
(315,102)
Gross Profit
51,592
76,099
86,913
82,849
Operating Expenses
Selling expenses
11,620
14,400
46,406
42,556
General and administrative expenses (Note 13)
100,432
81,766
172,070
156,069
Total operating expenses
112,052
96,166
218,476
198,625
Income (Loss) from operations
(60,460)
(20,067)
(131,563)
(115,776)
Other Income (Expenses)
Interest expense
(75,393)
(85,362)
(161,274)
(162,882)
Other income
28,757
85,351
63,124
129,121
Other loss
(3)
12
(1,204)
(1,093)
Total other income (expenses)
(46,639)
1
(99,354)
(34,854)
Income (Loss) before income taxes
(107,099)
(20,066)
(230,917)
(150,630)
Income taxes
-
-
-
-
Net Income (Loss)
$
(107,099)
$
(20,066)
$
(230,917)
$
(150,630)
Net Loss per share - basic
$
(0.01)
$
(0.00)
$
(0.01)
$
(0.01)
Weighted average shares outstanding- basic
19,680,000
15,600,000
19,680,000
15,600,000
Net Loss per share - diluted
$
(0.01)
$
(0.00)
$
(0.01)
$
(0.01)
Weighted average shares outstanding- diluted
19,680,000
15,600,000
19,680,000
15,600,000
Comprehensive Income (loss)
Net income (loss)
$
(107,099)
$
(20,066)
$
(230,917)
$
(150,630)
Other comprehensive income (loss) - Foreign currency translation adjustment
(12)
(731)
(583)
(6,423)
Comprehensive income (loss)
$
(107,111)
$
(20,797)
$
(231,500)
$
(157,053)
Management Discussion and Analysis
Net Sales
We had net sales of $220,851 for the three months ended June 30, 2015 and $224,638 for the three months ended June 30, 2014. Our sales decreased by $3,787 or approximately 2%, the lower sales in 2015 is due to poor market condition in PRC.
Net loss was $107,099 for the three months ended June 30, 2015, as compared to a net loss of $20,066 for the same period in 2014. The increase of net loss was due to lower sales, and the increase of cost of sales, operating expenses and other expenses.
Comments & Business Outlook
CHINA FORESTRY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
For the Three Months Ended
March 31,
2015
2014
Revenue
Net sales
$
141,005
$
173,313
Cost of Goods Sold
(105,684)
(166,563)
Gross Profit
35,321
6,750
Operating Expenses
Selling expenses
34,786
28,156
General and administrative expenses (Note 13)
71,638
74,303
Total operating expenses
106,424
102,459
Loss from operations
(71,103)
(95,709)
Other Income (Expenses)
Interest expense
(85,881)
(77,520)
Other income
34,367
43,770
Other loss
(1,201)
(1,105)
Total other income (expenses)
(52,715)
(34,855)
Loss before income taxes
(123,818)
(130,564)
Income taxes
-
-
Net Loss
$
(123,818)
$
(130,564)
Net Loss per share - basic
$
(0.01)
$
(0.01)
Weighted average shares outstanding- basic
19,680,000
15,600,000
Net Loss per share - diluted
$
(0.00)
$
(0.01)
Weighted average shares outstanding- diluted
19,680,000
15,600,000
Comprehensive loss
Net loss
$
(123,818)
$
(130,564)
Other comprehensive income (loss) - Foreign currency translation adjustment
(571)
(5,692)
Comprehensive loss
$
(124,389)
$
(136,256)
Management Discussion and Analysis
Net Sales
We had net sales of $141,005 for the three months ended March 31, 2015 and $173,313 for the three months ended March 31, 2014. Our sales decreased by $32,308 or approximately 19%, the lower sales in 2015 is due to poor market condition in PRC.
Net loss was $123,818 for the three months ended March 31, 2015, as compared to a net loss of $130,564 for the same period in 2014. The decrease of net loss was due to higher gross margin.
Comments & Business Outlook
CHINA FORESTRY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Years Ended
December 31,
2014
2013
Revenue
Net sales
$
518,114
$
1,778,363
Cost of Goods Sold
(408,405)
(1,293,060)
Gross Profit
109,709
485,303
Operating Expenses
Selling expenses
86,366
72,932
General and administrative expenses (Note 13)
343,741
426,918
Total operating expenses
430,107
499,850
Loss from operations
(320,398)
(14,547)
Other Income (Expenses)
Interest expense
(301,097)
(296,260)
Other loss
(1,094)
(542,549)
Other income
203,240
261,506
Total other income (expenses)
(98,951)
(577,303)
Loss before income taxes
(419,349)
(591,850)
Income taxes
-
-
Net Loss
$
(419,349)
$
(591,850)
Net Loss per share - basic
$
(0.02)
$
(0.04)
Weighted average shares outstanding- basic
17,097,863
15,600,000
Net Loss per share - diluted
$
(0.02)
$
(0.04)
Weighted average shares outstanding- diluted
17,097,863
15,600,000
Comprehensive loss
Net loss
$
(419,349)
$
(591,850)
Other comprehensive income (loss) - Foreign currency translation adjustment
(5,031)
13,517
Comprehensive loss
$
(424,380)
$
(578,333)
Management Discussion and Analysis
Net Sales
We had net sales of $518,114 for the year ended December 31, 2014 and $1,778,363 for the year ended December 31, 2013. Our sales decreased by $1,260,249 or approximately 71% the lower sales in 2014 is due to poor market condition in PRC
Net loss was $(419,349) for the year ended December 31, 2014, as compared to a net loss of $(591,850) for the same period in 2013. The decrease of net loss was due to significant decrease of other loss
Comments & Business Outlook
CHINA FORESTRY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended
For the Nine Months Ended
September 30,
September 30,
2014
2013
2014
2013
Revenue
Net sales
$
6,820
$
257,735
$
404,771
$
967,133
Cost of Goods Sold
(8,058)
(189,404)
(323,160)
(704,911)
Gross Profit
(1,238)
68,331
81,611
262,222
Operating Expenses
Selling expenses
7,815
4,352
50,371
36,447
General and administrative expenses (Note 13)
69,384
113,870
225,453
272,686
Total operating expenses
77,199
118,222
275,824
309,133
Loss from operations
(78,437)
(49,891)
(194,213)
(46,911)
Other Income (Expenses)
Interest expense
(83,944)
(67,626)
(246,826)
(198,954)
Other income
10,145
33,589
139,266
150,113
Other loss
-
-
(1,093)
-
Total other income (expenses)
(73,799)
(34,037)
(108,653)
(48,841)
Loss before income taxes
(152,236)
(83,928)
(302,866)
(95,752)
Income taxes
-
-
-
-
Net Loss
$
(152,236)
$
(83,928)
$
(302,866)
$
(95,752)
Net Loss per share - basic
$
-0.01
$
-0.01
$
-0.02
$
-0.01
Weighted average shares outstanding- basic
17,462,609
15,600,000
16,227,692
15,600,000
Net Loss per share – diluted
$
-0.01
$
-0.01
$
-0.02
$
-0.01
Weighted average shares outstanding- diluted
17,462,609
15,600,000
16,227,692
15,600,000
Comprehensive loss
Net loss
$
(152,236)
$
(83,928)
$
(302,866)
$
(95,752)
Other comprehensive income (loss) - Foreign currency translation adjustment
1,626
1,390
(4,797)
12,352
Comprehensive loss
$
(150,610)
$
(82,538)
$
(307,663)
$
(83,400)
Management Discussion and Analysis
Net Sales
We had net sales of $6,820 for the three months ended September 30, 2014 and $257,735 for the three months ended September 30, 2013. Our sales decreased by $250,915 or approximately 97%.
Net loss was $152,236 for the three months ended September 30, 2014, as compared to a net loss of $83,928 for the same period in 2013. The increase of net loss was due to significant decrease of our sales revenues.
Comments & Business Outlook
For the Three Months Ended
For the Six Months Ended
June 30,
June 30,
2014
2013
2014
2013
Revenue
Net sales
$
224,638
$
314,298
$
397,951
$
709,398
Cost of Goods Sold
(148,539)
(230,350)
(315,102)
(515,507)
Gross Profit
76,099
83,948
82,849
193,891
Operating Expenses
Selling expenses
14,400
21,793
42,556
32,095
General and administrative expenses (Note 13)
81,766
77,187
156,069
158,816
Total operating expenses
96,166
98,980
198,625
190,911
Income (Loss) from operations
(20,067)
(15,032)
(115,776)
2,980
Other Income (Expenses)
Interest expense
(85,362)
(64,194)
(162,882)
(131,328)
Other income
85,351
40,995
129,121
116,524
Other loss
12
-
(1,093)
-
Total other income (expenses)
1
(23,199)
(34,854)
(14,804)
Loss before income taxes
(20,066)
(38,231)
(150,630)
(11,824)
Income taxes
-
-
-
-
Net Loss
$
(20,066)
$
(38,231)
$
(150,630)
$
(11,824)
Net Loss per share - basic
$
(0.00)
$
(0.00)
$
(0.01)
$
(0.00)
Weighted average shares outstanding- basic
15,600,000
15,600,000
15,600,000
15,600,000
Net Loss per share – diluted
$
(0.00)
$
(0.00)
$
(0.01)
$
(0.00)
Weighted average shares outstanding- diluted
15,600,000
15,600,000
15,600,000
15,600,000
Comprehensive Loss
Net loss
$
(20,066)
$
(38,231)
$
(150,630)
$
(150,630)
Other comprehensive income (loss) - Foreign currency translation adjustment
(731)
9,469
(6,423)
10,962
Comprehensive loss
$
(20,797)
$
(28,762)
$
(157,053)
$
(139,668)
Management Discussion and Analysis
Net Sales
We had net sales of $224,638 for the three months ended June 30, 2014 and $314,298 for the three months ended June 30, 2013. Our sales decreased by $89,660 or approximately 29%. The Company revenues decreased due to decreased in demand of the Company’s product.
Net Loss
Net loss was $20,066 for the three months ended June 30, 2014, as compared to a net loss of $38,231 for the same period in 2013. The decrease of net income was due to higher other income from government’s subsidy.
Comments & Business Outlook
For the Three Months Ended
March 31,
2014
2013
Revenue
Net sales
$
173,313
$
395,100
Cost of Goods Sold
(166,563)
(285,157)
Gross Profit
6,750
109,943
Operating Expenses
Selling expenses
28,156
10,302
General and administrative expenses (Note 13)
74,303
81,629
Total operating expenses
102,459
91,931
Income from operations
(95,709)
18,012
Other Income (Expenses)
Interest expense
(77,520)
(67,134)
Other income
43,770
75,529
Other loss
(1,105)
-
Total other income (expenses)
(34,855)
8,395
Income (Loss) before income taxes
(130,564)
26,407
Income taxes
-
-
Net income (loss)
$
(130,564)
$
26,407
Net income (loss) per share - basic and diluted
$
0.00
$
0.00
Weighted average shares outstanding- basic and diluted
156,000,000
156,000,000
Comprehensive Income
Net income
$
(130,564)
$
26,407
Other comprehensive income –
Foreign currency translation adjustment
$
(5,692)
$
1,493
Comprehensive income
$
(136,256)
$
27,900
Management Discussion and Analysis
Net Sales
We had net sales of $173,313 for the three months ended March 31, 2014 and $395,100 for the three months ended March 31, 2013. Our sales decreased by $221,787 or approximately 56%. The Company revenues decreased due to decreased in demand of the Company’s product.
Net loss was $(130,564) for the three months ended March 31, 2014, as compared to a net income of $24,407 for the same period in 2013. The decrease of net income was due to significant decrease of our sales revenues with a lower gross margin, increase in selling expense as well as decrease in other income.
Comments & Business Outlook
CHINA FORESTRY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Years Ended
December 31,
2013
2012
Revenue
Net sales
$
1,778,363
$
1,546,063
Cost of Goods Sold
(1,293,060)
(1,154,917)
Gross Profit
485,303
391,146
Operating Expenses
Selling expenses
72,932
89,911
General and administrative expenses (Note 13)
426,918
326,977
Total operating expenses
499,850
416,888
Income (Loss) from operations
(14,547)
(25,742)
Other Income (Expenses)
Interest expense
(296,260)
(215,383)
Other loss
(542,549)
-
Other income
261,506
364,294
Total other income (expenses)
(577,303)
148,911
Income (Loss) before income taxes
(591,850)
123,169
Income taxes
-
-
Net Income (Loss)
$
(591,850)
$
123,169
Net Loss per share - basic
$
(0.038)
$
0.008
Weighted average shares outstanding- basic
15,600,007
15,600,007
Net Loss per share - diluted
$
(0.038)
$
0.008
Weighted average shares outstanding- diluted
15,600,007
15,600,007
Comprehensive Income (loss)
Net income (loss)
$
(591,850)
$
123,169
Other comprehensive income (loss) - Foreign currency translation adjustment
13,517
7,556
Comprehensive income (loss)
$
(578,333)
$
130,725
Management Discussion and Analysis
Results of Operations
Net Sales
We had net sales of $1,778,363 for the year ended December 31, 2013 and $1,546,063 for the year ended December 31, 2012. Our sales increased by $232,300 or approximately 15%. The Company has increased its sales of a specific product known as Taxus Yew which is considered one of the most endangered plants in China. The trees were previously reserved and maintained by the Company in order to extract certain chemical compound from the trees.
Net loss was $591,850 for the year ended December 31, 2013, as compared to a net income of $123,169 for the same period in 2012. The decrease of net income was due to increase in general and administrative expense and other loss from loan defaulted by the Company’s related party along with a decrease in government grant received.
Comments & Business Outlook
CHINA FORESTRY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended
For the Nine Months Ended
September 30,
September 30,
2012
2011
2012
2011
Revenue
Net sales
$
180,344
$
412,340
$
1,256,659
$
1,280,919
Cost of Goods Sold
(134,371)
(330,259)
(925,146)
(1,012,357)
Gross Profit
45,973
82,081
331,513
268,562
Operating Expenses
Selling expenses
25,810
7,582
76,169
31,977
General and administrative expenses (Note 13)
81,216
70,457
223,440
187,230
Total operating expenses
107,026
78,039
299,609
219,207
Income (Loss) from operations
(61,053)
4,042
31,904
49,355
Other Income (Expenses)
Interest expense
(56,773)
(61,762)
(161,467)
(197,081)
Other expenses
-
(8)
-
(39)
Other income
23,222
53,898
303,993
211,759
Total other income (expenses)
(33,551)
(7,872)
142,526
14,639
Income (Loss) before income taxes
(94,604)
(3,830)
174,430
63,994
Income taxes
-
-
-
-
Net Income (Loss)
$
(94,604)
$
(3,830)
$
174,430
$
63,994
Net Income (Loss) per share - basic
$
(0.006)
$
(0.000)
$
0.011
$
0.004
Weighted average shares outstanding- basic
15,600,000
15,600,000
15,600,000
15,600,000
Net Income (Loss) per share - diluted
$
(0.006)
$
(0.000)
$
0.011
$
0.004
Weighted average shares outstanding- diluted
15,600,000
15,600,000
22,400,000
15,600,000
Comprehensive Income
Net income (loss)
$
(94,604)
$
(3,830)
$
174,430
$
63,994
Foreign currency translation adjustment
4,757
2,907
2,416
5,434
Comprehensive income (loss)
$
(89,847)
$
(923)
$
176,846
$
69,428
Corporate Structure Info.
On May 20, 2011, the Board of Directors of the Registrant authorized the termination of the several variable interest entity contracts (the “VIE Contracts”) that had been entered into between the Registrant’s direct wholly owned subsidiary Financial International (Hong Kong) Holdings Company Limited (“FIHK”), Hanzhong Hengtai Biotech Limited (“Hengtai”), and SHAO, Zhenheng, YANG, Yongli and SHAO, Zhenzhong.
The new strucute is now a foreign invested enterprise (FIE)
diagram depicting the organizational structure of the Registrant after the termination of the VIE Contracts and the exercise of the Exclusive Option Agreement follows:
Reverse Merger Activity
CHFY sold its original operating subsidiary on December 14, 2010 and closed antoher reverse merger:
On July 15, 2010, the Company closed a reverse merger with Financial International (Hong Kong) Holdings Co. Limited (“FIHK”). FIHK has no other material operations except a series of contractual arrangements with Hanzhong Hengtai Bio-Tech Limited (“Hengtai”), a company organized and existing under the laws of the People’s Republic of China on October 22, 2003. Through the reverse merger, the Company acquired control of Hengtai, a company incorporated under the laws of the People’s Republic of China that is engaged in the plantation and sale of garden plants used in landscaping, such as Chinese Yews of the types Taxus chinensis var. mairei and Taxus media.
Investor Alert
On December 14, 2010, the Registrant (as Vendor) and Land Synergy Limited (as Purchaser), a company incorporated in the British Virgin Islands (“Land Synergy”), simultaneously entered into and closed the transactions contemplated by a Sale and Purchase Agreement relating to the share capital of the Jin Yuan Global Limited (“Jin Yuan”) subsidiary of the Registrant. Jin Yuan owned and operated a company known as Harbin Senrun Forestry Development Co. Ltd., which has in the past operated a timber business for the Registrant in the Heilongjiang Province of the People’s Republic of China. However, for the year ended December 31, 2007 and subsequent years, Harbin Senrun lost its wood cutting quota for log sales from the Bureau of Forestry and has had no revenues. Land Synergy paid US$2,000 for 100% of the share capital of Jin Yuan.
The Board of Directors of the Registrant determined , in the exercise of its reasonable business judgment, that the timber business of Jin Yuan no longer fit with the business plan of the Registrant as it has developed since the merger on July 15, 2010 with Hanzhong Hengtai Bio-Tech Limited, a Chinese company engaged in the business of the plantation and sale of garden plants used in landscaping. Accordingly, the Board of Directors of the Registrant determined that it was in the best interests of the company to sell its 100% equity interest in Jin Yuan to Land Synergy.
Reverse Merger Activity
As of June 10, 2010, the Registrant entered into a Share Exchange Agreement with Financial International Holdings Co. Ltd., a company organized and existing under the laws of the Hong Kong SAR of the People’s Republic of China (“FIHK”); LIU, Shengli, the owner of 60% of the outstanding share capital of FIHK (“Liu”), and LI, Bin, the owner of 40% of the outstanding share capital of FIHK (“Li”) (Liu and Li collectively being the “Shareholders”), and Hanzhong Hengtai Bio-Tech Limited, a company organized and existing under the laws of the People’s Republic of China (“Hengtai”).
Hengtai is engaged in the business of Chinese Yew, Aesculus, Dove Tree and Dendrobium plantation. The breed of Chinese Yew and Dendrobium in the Company are endorsed by Ministry of Science & Technology of China under the China Spark Program. The paclitaxel extracted from yew is an anticancer medicine acknowledged in the world and it has obvious curative effect.
Under the terms of the share exchange agreement, CHFY will acquire 100% of all of the issued and outstanding share capital of FIHK from its shareholders in an exchange for 100,000,000 shares of newly issued common stock of the CHFY and a Convertible Note in the principal amount of $1.0 million, which note is convertible into 68,000,000 shares of common stock of CHFY. Pursuant to the Agreement, CHFY would acquire and operate FIHK and Hengtai as wholly-owned subsidiaries.
