SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended July 31, 2016
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 333-204600
Gushen, Inc.
(Exact name of registrant issuer as specified in its charter)
| Nevada | 47-3413138 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Room 1701-1703, 17/F, The Metropolis Tower,
10 Metropolis Drive, Hung Hom, Kowloon, Hong Kong
(Address of principal executive offices, including zip code)
Registrant’s phone number, including area code (852) 2665-2273
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 (section 232.405 of this chapter) during the preceding twelve months (or 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, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer ☐ Smaller reporting company ☒
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 common stock, as of the latest practicable date.
| Class | Outstanding at September 13, 2016 | |
| Common Stock, $.0001 par value | 29,018,750 |
TABLE OF CONTENTS
| Page | ||
| PART I | FINANCIAL INFORMATION | |
| ITEM 1. | UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: | |
| Condensed Consolidated Balance Sheets as of July 31, 2016 (unaudited) and April 30, 2016 (audited) | F-1 | |
| Condensed Consolidated Statements of Operations for the Three Months Ended July 31, 2016 and 2015 (unaudited) | F-2 | |
| Condensed Consolidated Statements of Cash Flows for the Three Months Ended July 31, 2016 and 2015 (unaudited) | F-3 | |
| Notes to the Condensed Consolidated Financial Statements (unaudited) | F-4 – F-8 | |
| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 2 |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 3 |
| ITEM 4. | CONTROLS AND PROCEDURES | 3 |
| PART II | OTHER INFORMATION | |
| ITEM 1. | LEGAL PROCEEDINGS | 4 |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 4 |
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 4 |
| ITEM 4. | MINE SAFETY DISCLOSURES | 4 |
| ITEM 5. | OTHER INFORMATION | 4 |
| ITEM 6. | EXHIBITS | 4 |
| SIGNATURES | 5 |
GUSHEN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JULY 31, 2016 AND APRIL 30, 2016
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| As of | ||||||||
| July 31, 2016 | April 30, 2016 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Amount due from a related company | 19,370 | - | ||||||
| Cash and cash equivalents | $ | 104,426 | $ | 1,500,410 | ||||
| TOTAL ASSETS | $ | 123,796 | $ | 1,500,410 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued liabilities | 3,000 | 9,800 | ||||||
| Amount due to a director | 43,361 | 1,408,265 | ||||||
| TOTAL LIABILITIES | 46,361 | 1,418,065 | ||||||
| Commitments and contingencies | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock , $0.0001 par value; 200,000,000 shares authorized; None issued and outstanding | ||||||||
| Common stock, $ 0.0001 par value; 600,000,000 shares authorized; 29,018,750 shares and 29,018,750 shares issued and outstanding as of July 31, 2016 and April 30, 2016, respectively | 2,902 | 2,902 | ||||||
| Additional paid-in capital | 113.948 | 113,948 | ||||||
| Accumulated deficit | (39,415 | ) | (34,505 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | $ | 77,435 | $ | 82,345 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 123,796 | $ | 1,500,410 | ||||
See accompanying notes to the condensed consolidated financial statements.
F-1
GUSHEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JULY 31, 2016 AND 2015
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
| Three Months Ended July 31, | ||||||||
| 2016 | 2015 | |||||||
| REVENUE | $ | - | $ | - | ||||
| COST OF REVENUE | - | - | ||||||
| GROSS PROFIT | - | - | ||||||
| OPERATING EXPENSES: | ||||||||
| General and administrative | (4,910 | ) | (3,698 | ) | ||||
| LOSS BEFORE INCOME TAX | (4,910 | ) | (3,698 | ) | ||||
| Income tax expense | - | - | ||||||
| NET LOSS | (4,910 | ) | (3,698 | ) | ||||
| Net loss per share - Basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average number of common shares outstanding - Basic and diluted | 29,018,750 | 28,930,000 | ||||||
See accompanying notes to the condensed consolidated financial statements.
F-2
GUSHEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JULY 31, 2016 AND 2015
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
| Three months ended July 31, | ||||||||
| 2016 | 2015 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (4,910 | ) | $ | (3,698 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amount due from a related company | (19,370 | ) | - | |||||
| Accounts payables and accrued liabilities | (6,800 | ) | 1,500 | |||||
| Net cash used in operating activities | (31,080 | ) | (2,198 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayment to a director | (1,364,904 | ) | (6,540 | ) | ||||
| Net cash used in financing activities | (1,364,904 | ) | (6,540 | ) | ||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (1,395,984 | ) | (8,738 | ) | ||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 1,500,410 | 59,649 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 104,426 | $ | 50,911 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for income tax | $ | - | $ | - | ||||
| Cash paid for interest | $ | - | $ | - | ||||
See accompanying notes to the condensed consolidated financial statements.
F-3
GUSHEN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JULY 31 2016 AND 2015
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
| 1. | BASIS OF PRESENTATION |
The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.
In the opinion of management, the consolidated balance sheet as of April 30, 2016 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the three months ended July 31, 2016 are not necessarily indicative of the results to be expected for the entire fiscal year ending April 30, 2017 or any period thereafter.
These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended April 30, 2016.
| 2. | ORGANIZATION AND BUSINESS BACKGROUND |
Gushen, Inc. (the “Company”) was incorporated on March 9, 2015 in the state of Nevada. The Company is a development stage company with nominal operations. The principal activities of the Company are the provision of managerial assistance services including funding, administrative and IT support services for small and medium enterprises (“SMEs”) in their early stage of operations through its subsidiary, Gushen Holding Limited, which incorporated in the Republic of Seychelles. The Company attempts to assist the SMEs which are recently established and at an early stage of operations, but will not participate in board of the SMEs or making business decision. The primary purpose behind focusing on providing services to companies at this early stage of development will be for the Company to establish and nurture long-term relationships with clients during their growth and development.
| 3. | GOING CONCERN UNCERTAINTIES |
The accompanying unaudited condensed consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the discharge of liabilities in the normal course of business.
.
As of July 31, 2016, the Company suffered an accumulated deficit of $39,415 and incurred a continuous net operating loss of $4,910 for the three months ended July 31, 2016. While the Company has not generated revenues from its services, the Company’s cash position may not be significant enough to support the Company’s daily operations. The continuation of the Company as a going concern through April 30, 2017 is dependent upon improving the profitability and the continuing financial support from its stockholders. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations as they become due.
These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.
| 4. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated financial statements and notes.
Basis of presentation
The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
Basis of consolidation
The condensed consolidated financial statements include the accounts of the Company and its subsidiary. All inter-company balances and transactions within the Company have been eliminated upon consolidation.
Use of estimates
Management uses estimates and assumptions in preparing these condensed consolidated financial statements in accordance with US GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities in the balance sheet, and the reported revenues and expenses during the periods reported. Actual results may differ from these estimates.
F-4
GUSHEN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JULY 31 2016 AND 2015
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Cash and cash equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
Revenue recognition
In accordance with the Accounting Standard Codification Topic 605 “Revenue Recognition” (“ASC 605”), the Company recognizes revenue when the following four criteria are met: (1) delivery has occurred or services rendered; (2) persuasive evidence of an arrangement exists; (3) there are no continuing obligations to the customer; and (4) the collection of related accounts receivable is probable.
Revenue is measured at the fair value of the consideration received or receivable, net of discounts and taxes applicable to the revenue.
For the three months ended July 31, 2016 and 2015, the Company had no revenue generated.
Income taxes
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
The Company did not have any unrecognized tax positions or benefits and there was no effect on the financial condition or results of operations for the three months ended July 31, 2016. The Company and its subsidiary are subject to local and foreign tax jurisdictions. The Company’s tax returns remain open subject to examination by major tax jurisdictions.
Net loss per share
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share”. Basic loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
Foreign currencies translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations.
The reporting currency of the Company is United States Dollars (“US$”) and the accompanying condensed consolidated financial statements have been expressed in US$. In addition, the Company’s subsidiary in Seychelles maintains its books and record in Hong Kong Dollars (“HK$”), which is functional currency as being the primary currency of the economic environment in which the entity operates.
In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.
F-5
GUSHEN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JULY 31 2016 AND 2015
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Translation of amounts from HK$ into US$1 has been made at the following exchange rates for the respective periods:
| As of and for the three months ended July 31, | |||||||||
| 2016 | 2015 | ||||||||
| Period-end / average period HK$ : US$1 exchange rate | 7.75 | 7.75 | |||||||
Related parties
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
Fair value of financial instruments:
The carrying value of the Company's financial instruments: cash and cash equivalents, amount due from a related company, accounts payable and accrued liabilities, and amount due to a director approximate at their fair values because of the short-term nature of these financial instruments.
The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
Recent accounting pronouncements
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers" (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605)”, and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. In August 2015, the FASB issued an Accounting Standards Update to defer by one year the effective dates of its new revenue recognition standard until annual reporting periods beginning after December 15, 2017 (2018 for calendar-year public entities) and interim periods therein. Management is currently assessing the impact of the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting.
In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements - Going Concern, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern" (“ASU 2014-15”), which establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and, if so, to provide related footnote disclosures. ASU 2014-15 provides a definition of the term "substantial doubt" and requires an assessment for a period of one year after the date that the financial statements are issued or available to be issued. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The guidance is effective for the annual periods ending after December 15, 2016 and interim periods thereafter with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-15 on the Company’s financial statement presentation and disclosures.
In January 2016, the FASB issued guidance that amends various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. The standard generally requires companies to measure investments in other entities, except those accounted for under the equity method, at fair value and recognize any changes in fair value in net income. The standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for various provisions of the standard. The Company does not expect a material impact to its consolidated financial statements due to the adoption of this guidance.
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
F-6
GUSHEN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JULY 31 2016 AND 2015
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
| 5. | AMOUNT DUE FROM A RELATED PARTY |
As of July 31, 2016, the balance represented temporary advances to a related company, Gushen Credit Limited, with a common director of the Company, Mr. Huang Pin Lung, for working capital purpose. The balance is unsecured, interest-free and repayable on demand.
| 6. | AMOUNT DUE TO A DIRECTOR |
As of July 31, 2016, the director of the Company advanced $43,361 to the Company, which is unsecured, interest-free and is payable upon demand, for working capital purpose. Imputed interest is considered insignificant.
| 7. | INCOME TAXES |
For the three months ended July 31, 2016 and 2015, the local (United States) and foreign components of loss before income taxes were comprised of the following:
| Three months ended July 31, 2016 | Three months ended July 31, 2015 | ||||||||
| $ | $ | ||||||||
| Tax jurisdictions from: | |||||||||
| - Local | (4,802 | ) | (3,635 | ) | |||||
| - Foreign, representing Seychelles | (108 | ) | (63 | ) | |||||
| Loss before income tax | (4,910 | ) | (3,698 | ) | |||||
The provision for income taxes consisted of the following:
| Three months ended | Three months ended | ||||||||
| July 31, 2016 | July 31, 2015 | ||||||||
| $ | $ | ||||||||
| Current: | |||||||||
| - Local | - | - | |||||||
| - Foreign | - | - | |||||||
| Deferred: | |||||||||
| - Local | - | - | |||||||
| - Foreign | - | - | |||||||
| Income tax expense | - | - | |||||||
The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company and its subsidiary operate in various countries: United States and Seychelles that are subject to taxes in the jurisdictions in which they operate, as follows:
United States of America
The Company is registered in the State of Nevada and is subject to the tax laws of the United States of America. As of July 31, 2016, the operations in the United States of America incurred $38,577 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards begin to expire in 2036, if unutilized. The Company has provided for a full valuation allowance of $13,502 against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.
F-7
GUSHEN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JULY 31 2016 AND 2015
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Seychelles
Under the current laws of the Republic of Seychelles (“Seychelles”), Gushen Holding Limited is registered as an international business company which governs by the International Business Companies Act of Seychelles. A company is subject to Seychelles income tax if it does business in Seychelles. A company that incorporated in Seychelles, but does not do business in Seychelles, is not subject to income tax there. Gushen Holding Limited did not do business in Seychelles for the three months ended July 31, 2016, and it does not intend to do business in Seychelles in the future. For the three months ended July 31, 2016 and 2015, Gushen Holding Limited had a net operating loss of $108 and $63 respectively
| 8. | COMMITMENTS AND CONTINGENCIES |
For the three months ended July 31, 2016, the Company utilized office space of a director and stockholder at no charge. Such costs are immaterial to the condensed financial statements and accordingly are not reflected herein.
| 9. | SUBSEQUENT EVENTS |
In
accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure
of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events
or transactions that occurred after July 31, 2016 up through the date the Company filed this condensed consolidated financial
statements with this Form 10-Q.
On August 5, 2016, the Company through its subsidiary acquired 100% equity interest of Gushen Credit Limited, a company incorporated in Hong Kong on June 29, 2015, for a consideration of $0.13 in cash. Mr. Huang Pin Lung, the director of the Company, is the sole stockholder and director of Gushen Credit Limited. Gushen Credit Limited has been granted a Money Lenders License by Hong Kong Licensing Court for a period of 12 months from December 3, 2015 to carry on money lending business in Hong Kong. The principal activity of Gushen Credit Limited is engaged in the provision of money lending services related to SME financing and mortgage loan.
F-8
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained in this Form 10-Q is intended to update the information contained in our Annual Report on Form 10-K for the year ended April 30, 2016 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.
The following discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our Form S-1 Amendment No.2, dated July 23, 2015 in the section entitled “Risk Factors” for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this quarterly report on Form 10-Q. The following should also be read in conjunction with the unaudited Financial Statements and notes thereto that appear elsewhere in this report.
Company Overview
Gushen, Inc. (the “Company”) was incorporated under the laws of the State of Nevada on March 9, 2015. Gushen is a development stage company that intends to provide managerial and IT support to start-ups companies as well as small and medium enterprises (“SMEs”) to assist them in their early stages of operations as they expand and grow their own company.
Gushen Inc. is a holding company which operates exclusively through its wholly owned subsidiary, Gushen Holding Limited. Gushen Holding Limited was incorporated in the Republic of Seychelles, however at this time any and all physical operations take place in Hong Kong. Gushen Inc. shares the same business plan as Gushen Holding Limited and any reference to one or the other is synonymous when referencing the business plan or plan of operations.
Gushen attempts to assist companies that are just getting off the ground and that are at an early stage of operations, but will not rule out business that are a little further along. The primary purpose behind focusing on companies at this early stage of development will be for Gushen, Inc. to establish and nurture long-term lasting relationships with our clients as they grow and develop. Gushen will initially target companies located in Hong Kong.
As
mentioned in our Form S-1, the Company intends to assist any future clients through various methods beyond just capital support,
although that may be included. On August 5, 2016, Gushen Holding Limited, a wholly-owned subsidiary of Gushen Inc., completed
an acquisition of Gushen Credit Limited, a company incorporated in Hong Kong. Gushen Holding Limited acquired One (1) Ordinary
share from Mr. Huang Pin Lung, director of Gushen Credit Limited, for a total consideration of $0.13 in cash. The purchase price
is determined based on the mutual agreement between Gushen Holding Limited and Gushen Credit Limited, which is believed to be
beneficial to both parties. Gushen Holding Limited funded the cash consideration through its own working capital.
Gushen Credit Limited, which was incorporated on June 29, 2015 and granted a Money Lenders License by Hong Kong Licensing Court
for a period of 12 months from the 3rd day of December 2015, is allowed to carry on money lending business in Hong Kong. Gushen
Credit Limited provides money lending services related to SME financing and mortgage loan and the money lending services are governed
by the Money Lenders Ordinance, Chapter 163 of the Laws of Hong Kong.
Results of Operation
For the three months period ended July 31, 2016 and 2015
Revenues
We have not generated revenues for the three months ended July 31, 2016 and 2015.
General and administrative expenses
We incurred a total of $4,910 and $3,698 general and administrative expenses for the three months ended July 31, 2016 and 2015, respectively. The general and administrative expenses are mainly comprised of accounting fee, bank charge, and printing and stationery. The Company expects operating expenses to increase when it starts to commence business operations.
Net loss
For the three months ended July 31, 2016 and 2015, we incurred a net loss of $4,910 and $3,698, respectively. The net loss mainly derived from the general and administrative expenses incurred.
- 2 -
Liquidity and Capital Resources
Cash Used In Operating Activities
For the three months ended July 31, 2016, the net cash used in operating activities was $31,080 comprising of net loss of $4,910, increase in amount due from a related company of $19,370, and decrease in accounts payable and accrued liabilities of $6,800.
For the three months ended July 31, 2015, the net cash used in operating activities was $2,198 comprising of net loss of $3,698, and increase in accounts payable and accrued liabilities of $1,500.
Cash Used In Financing Activities
For the three months ended July 31, 2016 and 2015, the net cash used in financing activities was $1,364,904 and $6,540, respectively which represented the repayment to a director of the Company.
As of July 31, 2016, we had total current assets and total current liabilities of $123,796 and $46,361, respectively with a positive working capital of $77,435.
Going Concern
As of July 31, 2016, the Company suffered an accumulated deficit of $39,415 and incurred a continuous net operating loss of $4,910 for the three months ended July 31, 2016. These matters raise substantial doubt about our ability to continue as a going concern. Our unaudited condensed consolidated financial statements included elsewhere in this report have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate our continuation as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty
Off-balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders as of July 31, 2016.
Item 3 Quantitative and Qualitative Disclosures About Market Risk.
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
Item 4 Controls and Procedures.
Evaluation of Disclosure Controls and Procedures:
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act")) as of July 31, 2016. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of July 31, 2016, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of July 31, 2016, our disclosure controls and procedures were not effective: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
Changes in Internal Control over Financial Reporting:
There were no changes in our internal control over financial reporting during the quarter ending July 31, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
- 3 -
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
We know of no materials, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any beneficial shareholder are an adverse party or has a material interest adverse to us.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits
| Exhibit No. | Name of Exhibit | |
| 3.1 | Articles of Incorporation (1) | |
| 3.2 | Bylaws (1) | |
| 31.1 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer* | |
| 32.1 | Section 1350 Certification of principal executive officer* | |
| 99.1 | Money Lenders License, dated as of December 3, 2015 and issued by Hong Kong Licensing Court (2) |
* Filed herewith.
(1) Incorporated by reference from Form S-1 Amendment
No.2 (File No. 333-204600) filed with the Securities and Exchange Commission on July 23, 2015.
(2) Incorporated by reference from our Form 8-K filed
with the Securities and Exchange on August 10, 2016.
- 4 -
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.
| GUSHEN, INC. | ||
| (Name of Registrant) | ||
| Date: September 13, 2016 | By: | /s/ Huang Pin Lung |
| Title: | Chief Executive Officer, President, Secretary, Treasurer, Director (Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer) | |
| Date: September 13, 2016 | By: | /s/ Cheung Yat Kit |
| Title: | Director |
- 5 -
EXHIBIT 31.1
CERTIFICATION
I, HUANG PIN LUNG, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Gushen, Inc. (the “Company”) for the quarter ended July 31, 2016;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: September 13, 2016 | By: | /s/ Huang Pin Lung |
| HUANG PIN LUNG | ||
| Chief Executive Officer, President, Secretary, | ||
| |
|
Treasurer, Director (Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Gushen, Inc. (the “Company”) on Form 10-Q for the period ending July 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), The undersigned hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
| Date: September 13, 2016 | By: | /s/ Huang Pin Lung |
| HUANG PIN LUNG | ||
| Chief Executive Officer, President, Secretary, | ||
| |
|
Treasurer, Director (Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer) |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Document and Entity Information - shares |
3 Months Ended | |
|---|---|---|
Jul. 31, 2016 |
Sep. 13, 2016 |
|
| Document and Entity Information [Abstract] | ||
| Entity Registrant Name | Gushen, Inc | |
| Entity Central Index Key | 0001639327 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --04-30 | |
| Document Type | 10-Q | |
| Document Period End Date | Jul. 31, 2016 | |
| Document Fiscal Year Focus | 2017 | |
| Document Fiscal Period Focus | Q1 | |
| Entity Filer Category | Smaller Reporting Company | |
| Entity Common Stock, Shares Outstanding | 29,018,750 |
Condensed Consolidated Balance Sheets - USD ($) |
Jul. 31, 2016 |
Apr. 30, 2016 |
|---|---|---|
| CURRENT ASSETS | ||
| Amount due from a related company | $ 19,370 | |
| Cash and cash equivalents | 104,426 | 1,500,410 |
| TOTAL ASSETS | 123,796 | 1,500,410 |
| CURRENT LIABILITIES | ||
| Accounts payable and accrued liabilities | 3,000 | 9,800 |
| Amount due to a director | 43,361 | 1,408,265 |
| TOTAL LIABILITIES | 46,361 | 1,418,065 |
| Commitments and contingencies | ||
| STOCKHOLDERS' EQUITY | ||
| Preferred stock , $0.0001 par value; 200,000,000 shares authorized; None issued and outstanding | ||
| Common stock, $ 0.0001 par value; 600,000,000 shares authorized; 29,018,750 shares and 29,018,750 shares issued and outstanding as of July 31, 2016 and April 30, 2016, respectively | 2,902 | 2,902 |
| Additional paid-in capital | 113,948 | 113,948 |
| Accumulated deficit | (39,415) | (34,505) |
| TOTAL STOCKHOLDERS' EQUITY | 77,435 | 82,345 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 123,796 | $ 1,500,410 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jul. 31, 2016 |
Apr. 30, 2016 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value | $ 0.0001 | $ 0.0001 |
| Preferred stock, shares authorized | 200,000,000 | 200,000,000 |
| Preferred stock, shares issued | ||
| Preferred stock, shares outstanding | ||
| Common stock, par value | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized | 600,000,000 | 600,000,000 |
| Common stock, shares issued | 29,018,750 | 29,018,750 |
| Common stock, shares outstanding | 29,018,750 | 29,018,750 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | |
|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
|
| Income Statement [Abstract] | ||
| REVENUE | ||
| COST OF REVENUE | ||
| GROSS PROFIT | ||
| OPERATING EXPENSES: | ||
| General and administrative | (4,910) | (3,698) |
| LOSS BEFORE INCOME TAX | (4,910) | (3,698) |
| Income tax expense | ||
| NET LOSS | $ (4,910) | $ (3,698) |
| Net loss per share - Basic and diluted | $ 0.00 | $ 0.00 |
| Weighted average number of common shares outstanding - Basic and diluted | 29,018,750 | 28,930,000 |
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) |
3 Months Ended | |
|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
|
| Cash flows from operating activities: | ||
| Net loss | $ (4,910) | $ (3,698) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||
| Amount due from a related company | (19,370) | |
| Accounts payables and accrued liabilities | (6,800) | 1,500 |
| Net cash used in operating activities | (31,080) | (2,198) |
| Cash flows from financing activities: | ||
| Repayment to a director | (1,364,904) | (6,540) |
| Net cash used in financing activities | (1,364,904) | (6,540) |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (1,395,984) | (8,738) |
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 1,500,410 | 59,649 |
| CASH AND CASH EQUIVALENTS, END OF PERIOD | 104,426 | 50,911 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
| Cash paid for income tax | ||
| Cash paid for interest | ||
Basis of Presentation |
3 Months Ended | |||
|---|---|---|---|---|
Jul. 31, 2016 | ||||
| Basis of Presentation [Abstract] | ||||
| BASIS OF PRESENTATION |
The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.
In the opinion of management, the consolidated balance sheet as of April 30, 2016 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the three months ended July 31, 2016 are not necessarily indicative of the results to be expected for the entire fiscal year ending April 30, 2017 or any period thereafter.
These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended April 30, 2016. |
Organization and Business Background |
3 Months Ended | ||
|---|---|---|---|
Jul. 31, 2016 | |||
| Organization and Business Background [Abstract] | |||
| ORGANIZATION AND BUSINESS BACKGROUND |
Gushen, Inc. (the “Company”) was incorporated on March 9, 2015 in the state of Nevada. The Company is a development stage company with nominal operations. The principal activities of the Company are the provision of managerial assistance services including funding, administrative and IT support services for small and medium enterprises (“SMEs”) in their early stage of operations through its subsidiary, Gushen Holding Limited, which incorporated in the Republic of Seychelles. The Company attempts to assist the SMEs which are recently established and at an early stage of operations, but will not participate in board of the SMEs or making business decision. The primary purpose behind focusing on providing services to companies at this early stage of development will be for the Company to establish and nurture long-term relationships with clients during their growth and development. |
Going Concern Uncertainties |
3 Months Ended | ||
|---|---|---|---|
Jul. 31, 2016 | |||
| Going Concern Uncertainties [Abstract] | |||
| GOING CONCERN UNCERTAINTIES |
The accompanying unaudited condensed consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the discharge of liabilities in the normal course of business. . As of July 31, 2016, the Company suffered an accumulated deficit of $39,415 and incurred a continuous net operating loss of $4,910 for the three months ended July 31, 2016. While the Company has not generated revenues from its services, the Company’s cash position may not be significant enough to support the Company’s daily operations. The continuation of the Company as a going concern through April 30, 2017 is dependent upon improving the profitability and the continuing financial support from its stockholders. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations as they become due.
These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern. |
Summary of Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated financial statements and notes.
Basis of presentation
The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
Basis of consolidation
The condensed consolidated financial statements include the accounts of the Company and its subsidiary. All inter-company balances and transactions within the Company have been eliminated upon consolidation.
Use of estimates
Management uses estimates and assumptions in preparing these condensed consolidated financial statements in accordance with US GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities in the balance sheet, and the reported revenues and expenses during the periods reported. Actual results may differ from these estimates.
Cash and cash equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
Revenue recognition
In accordance with the Accounting Standard Codification Topic 605 “Revenue Recognition” (“ASC 605”), the Company recognizes revenue when the following four criteria are met: (1) delivery has occurred or services rendered; (2) persuasive evidence of an arrangement exists; (3) there are no continuing obligations to the customer; and (4) the collection of related accounts receivable is probable.
Revenue is measured at the fair value of the consideration received or receivable, net of discounts and taxes applicable to the revenue.
For the three months ended July 31, 2016 and 2015, the Company had no revenue generated.
Income taxes
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
The Company did not have any unrecognized tax positions or benefits and there was no effect on the financial condition or results of operations for the three months ended July 31, 2016. The Company and its subsidiary are subject to local and foreign tax jurisdictions. The Company’s tax returns remain open subject to examination by major tax jurisdictions.
Net loss per share
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share”. Basic loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
Foreign currencies translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations.
The reporting currency of the Company is United States Dollars (“US$”) and the accompanying condensed consolidated financial statements have been expressed in US$. In addition, the Company’s subsidiary in Seychelles maintains its books and record in Hong Kong Dollars (“HK$”), which is functional currency as being the primary currency of the economic environment in which the entity operates.
In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.
Translation of amounts from HK$ into US$1 has been made at the following exchange rates for the respective periods:
Related parties
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
Fair value of financial instruments:
The carrying value of the Company's financial instruments: cash and cash equivalents, amount due from a related company, accounts payable and accrued liabilities, and amount due to a director approximate at their fair values because of the short-term nature of these financial instruments.
The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
Recent accounting pronouncements
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers" (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605)”, and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. In August 2015, the FASB issued an Accounting Standards Update to defer by one year the effective dates of its new revenue recognition standard until annual reporting periods beginning after December 15, 2017 (2018 for calendar-year public entities) and interim periods therein. Management is currently assessing the impact of the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting.
In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements - Going Concern, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern" (“ASU 2014-15”), which establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and, if so, to provide related footnote disclosures. ASU 2014-15 provides a definition of the term "substantial doubt" and requires an assessment for a period of one year after the date that the financial statements are issued or available to be issued. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The guidance is effective for the annual periods ending after December 15, 2016 and interim periods thereafter with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-15 on the Company’s financial statement presentation and disclosures.
In January 2016, the FASB issued guidance that amends various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. The standard generally requires companies to measure investments in other entities, except those accounted for under the equity method, at fair value and recognize any changes in fair value in net income. The standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for various provisions of the standard. The Company does not expect a material impact to its consolidated financial statements due to the adoption of this guidance.
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations. |
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Amount Due From a Related Party |
3 Months Ended | ||
|---|---|---|---|
Jul. 31, 2016 | |||
| Amount Due From a Related Party [Abstract] | |||
| AMOUNT DUE FROM A RELATED PARTY |
As of July 31, 2016, the balance represented temporary advances to a related company, Gushen Credit Limited, with a common director of the Company, Mr. Huang Pin Lung, for working capital purpose. The balance is unsecured, interest-free and repayable on demand. |
Amount Due to a Director |
3 Months Ended | ||
|---|---|---|---|
Jul. 31, 2016 | |||
| Amount Due to a Director [Abstract] | |||
| AMOUNT DUE TO A DIRECTOR |
As of July 31, 2016, the director of the Company advanced $43,361 to the Company, which is unsecured, interest-free and is payable upon demand, for working capital purpose. Imputed interest is considered insignificant. |
Income Taxes |
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Jul. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAXES |
For the three months ended July 31, 2016 and 2015, the local (United States) and foreign components of loss before income taxes were comprised of the following:
The provision for income taxes consisted of the following:
The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company and its subsidiary operate in various countries: United States and Seychelles that are subject to taxes in the jurisdictions in which they operate, as follows:
United States of America
The Company is registered in the State of Nevada and is subject to the tax laws of the United States of America. As of July 31, 2016, the operations in the United States of America incurred $38,577 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards begin to expire in 2036, if unutilized. The Company has provided for a full valuation allowance of $13,502 against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.
Seychelles
Under the current laws of the Republic of Seychelles (“Seychelles”), Gushen Holding Limited is registered as an international business company which governs by the International Business Companies Act of Seychelles. A company is subject to Seychelles income tax if it does business in Seychelles. A company that incorporated in Seychelles, but does not do business in Seychelles, is not subject to income tax there. Gushen Holding Limited did not do business in Seychelles for the three months ended July 31, 2016, and it does not intend to do business in Seychelles in the future. For the three months ended July 31, 2016 and 2015, Gushen Holding Limited had a net operating loss of $108 and $63 respectively |
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Commitments and Contingencies |
3 Months Ended | ||
|---|---|---|---|
Jul. 31, 2016 | |||
| Commitments and Contingencies [Abstract] | |||
| COMMITMENTS AND CONTINGENCIES |
For the three months ended July 31, 2016, the Company utilized office space of a director and stockholder at no charge. Such costs are immaterial to the condensed financial statements and accordingly are not reflected herein. |
Subsequent Events |
3 Months Ended | ||
|---|---|---|---|
Jul. 31, 2016 | |||
| Subsequent Events [Abstract] | |||
| SUBSEQUENT EVENTS |
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after July 31, 2016 up through the date the Company filed this condensed consolidated financial statements with this Form 10-Q. On August 5, 2016, the Company through its subsidiary acquired 100% equity interest of Gushen Credit Limited, a company incorporated in Hong Kong on June 29, 2015, for a consideration of $0.13 in cash. Mr. Huang Pin Lung, the director of the Company, is the sole stockholder and director of Gushen Credit Limited. Gushen Credit Limited has been granted a Money Lenders License by Hong Kong Licensing Court for a period of 12 months from December 3, 2015 to carry on money lending business in Hong Kong. The principal activity of Gushen Credit Limited is engaged in the provision of money lending services related to SME financing and mortgage loan. |
Summary of Significant Accounting Policies (Policies) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| Basis of presentation | Basis of presentation
The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). |
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| Basis of consolidation | Basis of consolidation
The condensed consolidated financial statements include the accounts of the Company and its subsidiary. All inter-company balances and transactions within the Company have been eliminated upon consolidation. |
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| Use of estimates | Use of estimates
Management uses estimates and assumptions in preparing these condensed consolidated financial statements in accordance with US GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities in the balance sheet, and the reported revenues and expenses during the periods reported. Actual results may differ from these estimates. |
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| Cash and cash equivalents | Cash and cash equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. |
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| Revenue recognition | Revenue recognition
In accordance with the Accounting Standard Codification Topic 605 “Revenue Recognition” (“ASC 605”), the Company recognizes revenue when the following four criteria are met: (1) delivery has occurred or services rendered; (2) persuasive evidence of an arrangement exists; (3) there are no continuing obligations to the customer; and (4) the collection of related accounts receivable is probable.
Revenue is measured at the fair value of the consideration received or receivable, net of discounts and taxes applicable to the revenue.
For the three months ended July 31, 2016 and 2015, the Company had no revenue generated. |
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| Income taxes | Income taxes
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
The Company did not have any unrecognized tax positions or benefits and there was no effect on the financial condition or results of operations for the three months ended July 31, 2016. The Company and its subsidiary are subject to local and foreign tax jurisdictions. The Company’s tax returns remain open subject to examination by major tax jurisdictions. |
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| Net loss per share | Net loss per share
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share”. Basic loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive. |
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| Foreign currencies translation | Foreign currencies translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations.
The reporting currency of the Company is United States Dollars (“US$”) and the accompanying condensed consolidated financial statements have been expressed in US$. In addition, the Company’s subsidiary in Seychelles maintains its books and record in Hong Kong Dollars (“HK$”), which is functional currency as being the primary currency of the economic environment in which the entity operates.
In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.
Translation of amounts from HK$ into US$1 has been made at the following exchange rates for the respective periods:
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| Related parties | Related parties
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence. |
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| Fair value of financial instruments: | Fair value of financial instruments:
The carrying value of the Company's financial instruments: cash and cash equivalents, amount due from a related company, accounts payable and accrued liabilities, and amount due to a director approximate at their fair values because of the short-term nature of these financial instruments.
The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
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| Recent accounting pronouncements | Recent accounting pronouncements
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers" (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605)”, and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. In August 2015, the FASB issued an Accounting Standards Update to defer by one year the effective dates of its new revenue recognition standard until annual reporting periods beginning after December 15, 2017 (2018 for calendar-year public entities) and interim periods therein. Management is currently assessing the impact of the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting.
In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements - Going Concern, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern" (“ASU 2014-15”), which establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and, if so, to provide related footnote disclosures. ASU 2014-15 provides a definition of the term "substantial doubt" and requires an assessment for a period of one year after the date that the financial statements are issued or available to be issued. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The guidance is effective for the annual periods ending after December 15, 2016 and interim periods thereafter with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-15 on the Company’s financial statement presentation and disclosures.
In January 2016, the FASB issued guidance that amends various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. The standard generally requires companies to measure investments in other entities, except those accounted for under the equity method, at fair value and recognize any changes in fair value in net income. The standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for various provisions of the standard. The Company does not expect a material impact to its consolidated financial statements due to the adoption of this guidance.
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations. |
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Summary of Significant Accounting Policies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| Schedule of exchange rates for the respective periods |
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Income Taxes (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of local (United States) and foreign components of loss before income taxes |
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| Schedule of provision for income taxes |
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Going Concern Uncertainties (Details) - USD ($) |
3 Months Ended | ||
|---|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
Apr. 30, 2016 |
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| Going Concern Uncertainties (Textual) | |||
| Accumulated deficit | $ (39,415) | $ (34,505) | |
| Net loss for the period | $ (4,910) | $ (3,698) | |
Summary of Significant Accounting Policies (Details) |
Jul. 31, 2016 |
Jul. 31, 2015 |
|---|---|---|
| Schedule of exchange rates for the respective periods | ||
| Period-end / average period HK$ : US$1 exchange rate | 7.75 | 7.75 |
Summary of Significant Accounting Policies (Details Textual) |
3 Months Ended |
|---|---|
Jul. 31, 2016 | |
| Summary of Significant Accounting Policies (Textual) | |
| Tax benefit, Description | Greater than 50%. |
| Translation of amounts, Description | HK$ into US$1. |
Amount Due to a Director (Details) - USD ($) |
Jul. 31, 2016 |
Apr. 30, 2016 |
|---|---|---|
| Amount Due to a Director (Textual) | ||
| Advance due to a director | $ 43,361 | $ 1,408,265 |
Income Taxes (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
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| Tax jurisdictions from: | ||
| Local | $ (4,802) | $ (3,635) |
| Foreign, representing Seychelles | (108) | (63) |
| Loss before income tax | $ (4,910) | $ (3,698) |
Income Taxes (Details 1) - USD ($) |
3 Months Ended | |
|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
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| Current: | ||
| Local | ||
| Foreign | ||
| Deferred: | ||
| Local | ||
| Foreign | ||
| Income tax expense | ||
Income Taxes (Details Textual) - USD ($) |
3 Months Ended | |
|---|---|---|
Jul. 31, 2016 |
Jul. 31, 2015 |
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| Income Taxes (Textual) | ||
| Cumulative net operating losses | $ 38,577 | |
| Net operating loss carryforwards expiration date | Expire in 2036. | |
| Deferred tax assets valuation allowance | $ 13,502 | |
| Net operating loss Seychelles | $ (108) | $ (63) |
Subsequent Events (Details) |
3 Months Ended | |
|---|---|---|
Jul. 31, 2016 |
Aug. 05, 2016 |
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| Subsequent Event [Line Items] | ||
| Description of acquired entity | On August 5, 2016, the Company through its subsidiary acquired 100% equity interest of Gushen Credit Limited, a company incorporated in Hong Kong on June 29, 2015, for a consideration of $0.13 in cash. | |
| Subsequent Event [Member] | ||
| Subsequent Event [Line Items] | ||
| Subsidiary acquired equity interest | 100.00% |