UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

☒   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterquarterly period ended March 31, 2015

2016

OR

¨TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________

COMMISSION FILE NUMBER: 000-55181

____

Commission file number: 001-55180
JISHANYE, INC.

(Exact name of registrant as specified in its charter)

Delaware46-1992903
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
organization)

7F., No.247, Minsheng 1st Rd.

Xinxing Dist., Kaohsiung City 800

Taiwan Republic of China

(Address of principal executive offices)


+886 7222 373388672223733

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d)telephone number, including area code)


Copies to:
Asher S. Levitsky P.C.
Ellenoff Grossman & Schole LLP
1345 Avenue of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x  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 filer.  See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Americas; Suite 1100
New York, New York 10105-0302 

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐  No ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer.  See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
Large Accelerated Filer     ¨☐
Non-Accelerated Filer      ¨☐
Accelerated Filer    ¨☐    
Smaller Reporting Company    x☒

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.  Yes ¨ No x

As of March 15, 2015, there are a total of 12,500,001 shares of common stock issued and outstanding.

TABLE OF CONTENTS

PART I.  FINANCIAL INFORMATION5
ITEM 1.CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)5
ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS11
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK13
ITEM 4.CONTROLS AND PROCEDURES14
PART II. OTHER INFORMATION15
ITEM 1.LEGAL PROCEEDINGS15
ITEM 1A.RISK FACTORS15
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS15
ITEM 3.DEFAULTS UPON SENIOR SECURITIES15
ITEM 4.MINE SAFETY DISCLOSURES15
ITEM 5.OTHER INFORMATION15
ITEM 6.EXHIBITS15
 
  
Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.  Yes ¨  No ☒
As of May 16, 2016, there were 60,300,001 shares of common stock issued and outstanding. 
TABLE OF CONTENTS
SIGNATURESPART I. - FINANCIAL INFORMATION
Page No.
Item 1.
Financial Statements
 4
Condensed Consolidated Balance Sheets as of March 31, 2016 (unaudited) and December 31, 2015
 5
Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) for the three months ended March 31, 2016 and 2015
 6
Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015
 7
Notes to Unaudited Condensed Consolidated Financial Statements.
 8
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 13
Item 3
Quantitative and Qualitative Disclosures About Market Risk.
16
Item 4
Controls and Procedures.
 16
PART II - OTHER INFORMATION
Item 6
Exhibits
 17
Signatures
 18


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This report contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievement expressed or implied by the forward-looking statements. These risksforward-looking statements were based on various factors and uncertaintieswere derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements.

These factors include, but are not limited to, those specifically addressed under the factors described under Part 1 Item 2headings “Risks Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”Operations” in our annual report on Form 10-K for the year ended December 31, 2015 and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q and information contained in other reports that we file with the SEC. Most of these factors are difficult to predict accurately and are generally beyond our control.  In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward looking statements.  You should consider the areas of risk described in connection with any forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

that may be made herein. Forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference in this report, or that we filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect.


We file reports with the SEC. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. You can also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

OTHER PERTINENT INFORMATION

References in this report to “we,” “us,” “our” and the “Company” and words of like import refer to Jishanye, Inc., and its subsidiaries.

subsidiaries unless the context indicates otherwise.

References to Taiwan refer to Taiwan, Republic of China.

References to the PRC refer to the People’s Republic of China.
Our business is conducted in Taiwan using NTD,New Taiwanese Dollars (“NTD”), the currency of Taiwan, and our financial statements are presented in United States dollars (“USD”U.S. dollars,” “United States dollar” or “$”).  In this report, we refer toWe present assets, obligations, commitments and liabilities in our financial statements in USD.U.S. dollars.   These dollardollars references are based on the exchange rate of NTD to USD,U.S. dollars, determined as of a specific date. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of USDU.S. dollars which may result in an increase or decrease in the amount of our obligations (expressedassets and liabilities expressed in USD) and the valueU.S. dollars.
3
Table of our assets, including accounts receivable (expressed in USD).

Page
Consolidated Balance Sheets (unaudited)5
Consolidated Statements of Operations and Comprehensive Loss (unaudited) 6
Consolidated Statements of Cash Flows (unaudited) 7
Notes to Consolidated Financial Statements (unaudited) 8

Contents

PART I.  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ITEM
1.     FINANCIAL STATEMENTS
Jishanye, Inc.

 and Subsidiaries

Condensed Consolidated Balance Sheets

As of March 31, 2015 and December 31, 2014

(Unaudited)

  March 31,  December 31, 
  2015  2014 
Assets        
         
Current assets:        
Cash and cash equivalents $4,554  $12,387 
Inventory  885   870 
Prepaid expenses  1,744   1,664 
         
Total assets $7,183  $14,921 
         
Liabilities and Stockholders' Deficit        
         
Current liabilities:        
Accounts payable and accrued expense $144,500  $113,598 
Accrued expense - related party  1,121   1,101 
Short-term debt - related party  159,106   158,938 
         
Total liabilities  304,727   273,637 
         
Stockholders' deficit:        
Common stock, $0.0001 par value; 100,000,000 shares authorized,
12,500,001 shares issued and outstanding		  1,250   1,250 
Additional paid-in capital  98,750   98,750 
Accumulated other comprehensive loss  (116)  (25)
Accumulated deficit  (397,428)  (358,691)
Total stockholders' deficit  (297,544)  (258,716)
         
Total liabilities and stockholders' deficit $7,183  $14,921 

  
March 31,
2016
  
December 31,
2015
 
Assets (Unaudited)    
Current assets:      
Cash and cash equivalents $1,070,008  $1,041,119 
Accounts and notes receivable  6,654   1,466 
Inventories  908   4,985 
Prepaid expenses and other current assets  5,664   10,232 
Total current assets  1,083,234   1,057,802 
         
Rental deposits  11,966   9,696 
Total assets $1,095,200  $1,067,498 
         
Liabilities and Stockholders’ Equity        
Current liabilities:        
Accounts payable $34,201  $9,141 
Accrued expenses and other payables  125,231   100,572 
Short-term debt - related parties  539,010   455,489 
Deferred income  4,537   4,247 
Total current liabilities  702,979   569,449 
         
Commitments and contingencies        
         
Stockholders’ equity:        
Common stock, $0.0001 par value; 100,000,000 shares authorized, 60,300,001 shares issued and outstanding as of March 31, 2016 and December 31, 2015  6,030   6,030 
Additional paid-in capital  1,092,990   1,092,990 
Accumulated other comprehensive income (loss)  1,472   6,391 
Accumulated deficit  (708,271)  (607,362)
 Total stockholders’ equity  392,221   498,049 
         
Total liabilities and stockholders’ equity $1,095,200  $1,067,498 
The accompanying notes are an integral part of these unauditedcondensed consolidated financial statements.

4
Jishanye, Inc.

and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

For the Three Months Ended March 31, 2015 and 2014

(Loss)

(Unaudited)

  Three Months
Ended
March 31,
2015		  Three Months
Ended
March 31,
2014		 
       
Operating expense:        
General and administrative $38,737  $14,102 
Total operating expense  38,737   14,102 
         
Loss from operations  38,737   14,102 
         
Other expense:        
Other expense  -   1,546 
         
Net loss  (38,737)  (15,648)
         
Other comprehensive loss:        
Foreign currency translation loss  (91)  (486)
         
Total comprehensive loss $(38,828) $(16,134)
         
Weighted average common shares outstanding:        
Basic and diluted  12,500,001   12,500,001 
         
Loss per common share:        
Basic and diluted $(0.00) $(0.00)

  
Three Months Ended
March 31,
 
  2016  2015 
       
Revenues $176,173  $- 
         
Cost of revenues  125,413   - 
         
Gross profit  50,760   - 
         
Operating Expenses:        
Selling  19,822   - 
General and administrative  141,506   38,737 
 Total operating expense  161,328   38,737 
Loss from operations  (110,568)  (38,737)
         
Other income (expense):        
  Interest income  250   - 
  Other income  9,409   - 
    Total other income (expense)  9,659   - 
         
Loss before tax
  (100,909)  (38,737)
Income taxes  -   - 
Net loss  (100,909)  (38,737)
         
Other comprehensive income (loss)        
 
 Foreign currency translation loss
  (4,919)  (91)
Total comprehensive loss $(105,828) $(38,828)
         
Weighted average number of shares outstanding:        
Basic and diluted  60,300,001   12,500,001 
         
Loss per share        
         
Basic and diluted  (0.00)  (0.00)

The accompanying notes are an integral part of these unauditedcondensed consolidated financial statements.

5
Jishanye, Inc.

and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2015 and 2014

(Unaudited)

  Three Months
Ended
March 31,
2015		  Three Months
Ended
March 31,
2014		 
Cash flows from operating activities:        
Net loss $(38,737) $(15,648)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation expense  -   491 
Loss from sale of property and equipment  -   1,546 
Changes in operating assets and liabilities:        
Other receivables  -   115 
Accounts payable and accrued expense  30,975   10,635 
Accrued expense - related party  20   - 
Net cash used in operating activities  (7,742)  (2,861)
         
Cash flows from investing activities        
Proceeds from sale of property and equipment  -   28,327 
Net cash provided by investing activities  -   28,327 
         
Effect of exchange rate changes on cash and cash equivalents  (91)  (212)
         
Net decrease in cash  (7,833)  25,254 
         
Cash and cash equivalents, beginning of the period  12,387   4,184 
　        
Cash and cash equivalents, end of the period $4,554  $29,438 
　        
Supplemental disclosure of cash flows information:        
Interest paid $-  $- 
Income taxes paid $-  $- 

  
Three Months Ended
March 31,
 
  2016  2015 
       
Cash flows from operating activities      
Net loss $(100,909) $(38,737)
Adjustments to reconcile net loss to net cash used in operating activities        
Changes in operating assets and liabilities        
Accounts and notes receivable  (5,052)  - 
Inventories  4,111   - 
Prepaid expenses and other current assets  2,712   - 
Accounts payable  24,355   - 
Accrued expense and other payables  22,580   30,975 
Deferred income  187   - 
Net cash used in operating activities  (52,016)  (7,762)
         
Cash flows from financing activities        
Proceeds from short-term debt - related parties  74,804   20 
Net cash provided by financing activities  74,804   20 
Effect of change on cash and cash equivalents
  6,101   (91)
         
Net increase (decrease) in cash  28,889   (7,833)
         
Cash and cash equivalents, beginning of period  1,041,119   12,387 
         
Cash and cash equivalents, end of period $1,070,008  $4,554 
         
Supplemental disclosure of cash flows information:        
Interest paid $-  $- 
Income taxes paid $-  $- 
The accompanying notes are an integral part of these unauditedcondensed consolidated financial statements.

7

Jishanye, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

For the three months ended March 31, 2016 (unaudited)
Note 1 - Organization and Basis of Presentation

Jishanye, Inc. (“Jishanye” or the “Company”) is a Delaware Corporation organizedcorporation incorporated on April 12, 2012 as “Jishanyeunder the name of Yambear Bio-tech, Inc.” by Hsin-Lung Lin, a Taiwanese citizen, as a holding company for Jishanye Bio-Tech Co. Ltd. Taiwan (“Jishanye Taiwan”), a Taiwanese limited liability company.  The Company changed its corporate name to Jishanye, Inc. on October 25, 2013.  The Company established a wholly-owned subsidiary, Jishanye (Taiwan), Inc. (“Jishanye Taiwan”), a Taiwan being the operatinglimited liability company, of Jishanye in Taiwan, was established on August 17, 2012 and2012.  On September 30, 2015, the Company formed a wholly-owned subsidiary, Hongkong Jishanye Limited (“Jishanye HK”), in Hong Kong. Jishanye HK is a wholly owned subsidiarylimited liability company which the Company formed to hold the equity investment in its proposed business activities in the People’s Republic of Jishanye.

China. As of March 31, 2016, Jishanye HK has not commenced operations.

The Company, through its subsidiary, was engaged in selling enzymes products to public consumers in Taiwan. In June 2014, the Company changed its business plan to provideJishanye Taiwan, provides funeral management services to customersfamilies in Taiwan and offer death care management consultancy services to small and medium-sized enterprises in Taiwan, Hong Kong and mainland China inTaiwan. During the future. The Company’s goal is to establish an international brand on death care management consultancy services with high quality and name recognition.

Note 2 - Going Concern

The accompanying consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United Statessecond half of America (“US GAAP”), which contemplate continuation of the Company as a going concern. As of March 31, 2015, the Company has accumulated deficitexpanded the funeral management business by increasing its personnel, renting premises for funeral parlors and expanding our range of $397,428services. The Company began to generate revenue from funeral management services in the third quarter of 2015.  Funeral management services business in Taiwan include a range of services to grieving families, which include providing a place for mourners to visit, maintaining the body during the mourning period in a manner consistent with both religious and had working capital deficitcultural practices.  In Taiwan, funeral parlors generally use one of $297,544. These conditions raise substantial doubttwo different formats.  One type of funeral parlor, known as a binyiguan, is a funeral parlor in the traditional sense and these funeral parlors hold the body of the deceased and prepare the body for burial or cremation.  The other type is a litang, which similar to a small scale auditorium.  Although the body may be brought to the litang for a short period of time, usually for no more than one to two hours on any particular day, the litang provides a place for friends and relatives to visit the family of the deceased, without the presence of the body. The Company’s abilityfuneral parlors are of the litang variety, and the Company does not maintain the body during the mourning period or prepare the body for burial or cremation at its funeral parlors.  The Company’s funeral management services include providing the necessary setting and personnel to continuemeet the grieving family’s religious and cultural preferences.

Prior to June 2014, the Company’s principal business was the sale of enzyme products to the public in Taiwan.  In October 2015, the Company discontinued the enzyme product business, and the results of such business are reflected as a going concern. Thesediscontinued operation in our condensed consolidated financial statements do not include any adjustments that mightstatements. There was no operating result from the outcome of this uncertainty. These consolidated financial statements do not include any adjustments relatingrelated to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary shoulddiscontinued operation during the Company be unable to continue as a going concern. The major shareholders will continue to fund the Company until it is able to sustain positive cash flows from its operations. 

three months ended March 31, 2015.

Note 32 - Summary of Significant Accounting Policies

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements and related notesfootnotes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Form 10-K.10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The interim unaudited condensed consolidated financial statements furnished reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary to present fairly the financial position as of March 31, 2016 and the results of operations and cash flows for a fair statement of the periods ended March 31, 2016 and 2015. The interim financial data and other information related to these periods are unaudited. The results for the interim periods presented. Interim resultsthree months ended March 31, 2016 are not necessarily indicative of the results to be expected for any subsequent periods or for the full year.entire year ending December 31, 2016. These interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2014 and notes thereto contained elsewhere2015, which are included in the Registration Statementannual report on the Form 10-K, filed with the SEC on April 16, 2015.

The Company’s functional currency is the New Taiwanese Dollar (“NTD”); however, the accompanying consolidated financial statements were translated and presented in United States Dollars (“$” or “USD”).

14, 2016.

Principles of Consolidation

The accompanying consolidated financial statements include the accountsfinancial statements of Jishanye and its wholly-owned subsidiary,subsidiaries, Jishanye (Taiwan), Inc.Taiwan and Jishanye HK. All significant intercompany transactions and balances were eliminated in consolidation.

Foreign Currency

Assets

Jishanye, Inc. and liabilities recorded in foreign currencies are translated atSubsidiaries
Notes to Condensed Consolidated Financial Statements
For the exchange rate on the balance sheet date. Revenue and expenses are translated at average ratesthree months ended March 31, 2016 (unaudited)
Note 2 - Summary of exchange prevailing during the period. Translation adjustments resulting from this process are charged or credited to Other Comprehensive Loss.

Significant Accounting Policies (Continued)

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Specific estimates include the collectability of accounts receivable and the valuation of inventory and deferred income tax.  Actual results could differ from those estimates.

Foreign Currency Translation
The reporting currency of the Company is the United States Dollars (“$” or “United States dollar”).  The functional currency of the Company is the U.S. dollars and the functional currency of the Company’s operating subsidiary, Jishanye Taiwan, is the New Taiwanese Dollar (“NTD”).  The accompanying condensed consolidated financial statements are presented in United States dollars. For the operating subsidiary, results of operations and cash flows are translated from its functional currency to U.S. dollars at the average exchange rates during the period, assets and liabilities are translated at the exchange rate at the end of the period, and equity is translated at historical exchange rates. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive loss. All of the Company’s revenue transactions are transacted in NTD, the functional currency of the operating subsidiary.
Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and on deposit with banks.
Accounts and Notes Receivable
Accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts and sales returns. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentration, customer credit worthiness, current economic trends and changes in time deposits, certificatescustomer payment patterns to determine if the allowance for doubtful accounts is adequate. Notes receivable are pre-dated checks received from trade debtors for settlement. An estimate for doubtful accounts is made when collection of depositthe full amount is no longer probable. Delinquent account balances are written-off after management has determined that the likelihood of collection is not probable and all highly liquid debtknown bad debts are written off against the allowance for doubtful accounts when identified. As of March 31, 2016 and December 31, 2015, there was no allowance for uncollectible accounts and notes receivable.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and equivalents and accounts receivable. Credit risk concentration with original maturitiesrespect to accounts receivables is reduced because a diverse number of three monthscustomers make up the Company’s customer base.
The Company maintains cash with banks in Taiwan.  Should any bank holding cash become insolvent, or less.

if the Company is otherwise unable to withdraw funds, the Company would lose the cash with that bank; however, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts. In Taiwan, a depositor has up to NTD 3,000,000 insured in a bank.

As of March 31, 2016 and December 31 2015, approximately $132,000 and $91,000 of the Company’s cash and equivalents held by financial institutions, was insured, and the remaining balance of approximately $899,000 and $942,000, was not insured.
InventoryInventories

Inventory is

Inventories are stated at the lower of cost or market, with cost determined by using the average cost method. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower. As of March 31, 2016 and December 31, 2015, the Company had finished goods for the continuing operation of $885$908 and no allowance for obsolete inventory.

Income Taxes

An asset4,985, respectively.

Jishanye, Inc. and liability approach is used for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences between income tax and financial reporting and principally relateSubsidiaries
Notes to recognitionCondensed Consolidated Financial Statements
For the three months ended March 31, 2016 (unaudited)
Note 2 - Summary of revenue and expenses in different periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws. In addition, a deferred tax asset can be generated by net operating loss carry forwards. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. The Company has tax losses that may be applied against future taxable income. The potential tax benefit arising from these loss carryforwards are offset by a valuation allowance due to uncertainty of profitable operations in the future.

Significant Accounting Policies (Continued)

Revenue Recognition

Product revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured.

Service revenue is recognized when persuasive evidence of an arrangement exists, service has been provided, the fee is fixed or determinable, and collectability is probable. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advances from customers.

Sales represent Rental income relates to the invoiced valuerental of products, netmounting halls and memorial tablets at the Company’s funeral parlors which is recognized on a straight-line basis over the terms of value-addedthe respective leases.

In accordance with the Company’s standard lease terms, rental payments of memorial tablets are generally payable yearly. Deferred income represents the cumulative difference between rental revenue as recorded on a straight line basis and rents received from the tenants. As of March 31, 2016 and December 31, 2015, the Company had deferred income of $4,537 and $4,247, respectively.
Income Taxes
The Company accounts for income taxes in accordance with the accounting standard issued by the Financial Accounting Standard Board (“FASB”) for income taxes. Under the asset and liability method as required by this accounting standard, deferred income taxes are recognized for the tax (“VAT”). consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The charge for taxation is based on the results for the reporting period as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. The effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.
Under the accounting standard regarding accounting for uncertainty in income taxes, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. U.S. GAAP also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transition.
Note 3 – Prepaid Expenses and Other Current Assets
The Company’s prepaid expenses and other current assets consisted of the following:
  March 31,  December 31, 
  2016  2015 
  (unaudited)    
Rental deposits $14,446  $12,120 
Other prepayments  3,184   7,808 
   17,630   19,928 
Less: Rental deposits - non-current assets  (11,966)  (9,696)
Prepaid expenses and other current assets $5,664  $10,232 
9
Jishanye, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
For the three months ended March 31, 2016 (unaudited)

Note 4 – Short-term Debt – Related Parties
The Company’s short-term debt from related parties consisted of the following:
  March 31,  December 31, 
  2016  2015 
  (unaudited)    
Loans from former chief executive officer $149,500  $149,500 
Loans from chief executive officer  226,300   145,440 
Loans from Taiwan Life, Inc.  153,910   151,459 
Loans from Taiwan Life Funeral Enterprises Ltd.  9,300   9,090 
  $539,010  $455,489 

The Company’s chief executive officer is chairman of and owns a 20% equity interest in Taiwan Life, Inc.
The Company’s chief executive officer is chairman of and owns a 45% equity interest in Taiwan Life Funeral Enterprises Ltd.
All of these loans are interest free, unsecured and are payable on demand.
Note 5 – Accrued Expenses and Other Payables
The Company’s accrued expenses and other payables consisted of the Company’s products soldfollowing:
  March 31,  December 31, 
  2016  2015 
  (unaudited)    
Accrued professional fees $89,050  $66,050 
Accrued staff costs and staff benefits  30,865   26,225 
Accrued subcontracting costs  -   4,303 
Value added tax and miscellaneous taxes payables  2,013   695 
Others  3,303   3,299 
  $125,231  $100,572 
Note 6 – Income Taxes
Jishanye is a holding company with no business other than holding an equity interest of Jishanye Taiwan.  Jishanye is subject to income tax in United States with a statutory income tax rate of 34%. Jishanye Taiwan is subject to income tax in Taiwan arewith a statute income tax rate of 17%. Jishanye HK, which has not commenced operations, is subject to a value-addedprofits tax in Hong Kong with a statutory income tax rate of 5% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing the finished product. The Company records VAT payable and VAT receivable net of payments in the financial statements. The VAT tax return is filed offsetting the payables against the receivables. Sales and purchases are recorded net of VAT collected and paid as the Company acts as an agent16.5%. No provision for the government.

Basic and Diluted Earnings (Loss) Per Common Share (“EPS”)

Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted earnings per share gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. There were no options, warrants or other instruments convertible into common stock outstandingtaxes has been recognized for the three months ended March 31, 2016 and 2015 as the Company, Jishanye Taiwan and 2014; therefore, basic and dilutedJishanye HK did not incur any assessable income for the period.

The Company has tax losses that may be applied against future taxable income. The potential tax benefits arising from these loss per common sharecarry forwards, which expire beginning the year 2025 through 2036, are offset by a valuation allowance due to the same.

Subsequent Events

The Company’s management reviewed all material events fromuncertainty of profitable operations in the future. As of March 31, 2016 and December 31, 2015, through the issuance dateCompany had net operating losses carry-forward of these financial statements for disclosure consideration.

$459,470 and $357,311, respectively.
Tax effects of temporary differences that give rise to significant portions of the deferred tax assets at March 31, 2016 and December 31, 2015 are presented below:
 March 31, 2016 December31, 2015 
 (unaudited)   
Deferred tax asset    
Net operating loss carry forwards $118,325  $94,564 
Less: valuation allowance  (118,325)  (94,564)
Net deferred tax asset $-  $- 
10
Jishanye, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
For the three months ended March 31, 2016 (unaudited)

Note 4 -7 – Related Party Transactions

Employment Agreement

Pursuant to an employment agreement between the Company and Hsin-Lung Linits former chief executive and financial officer, dated September 1, 2012, Hsin-Lung earnsthe former chief executive and financial officer earned a salary of NTD32,000NTD 32,000 (approximately $1,121)$1,100) per month, which was subsequently increased to serve as Chief Financial Officer of the Company. EitherNTD 35,000 (approximately $1,133).  The agreement provides that either party may terminate the agreement with at least 30 days prior notice. On September 15, 2014, the Board appointed Mei-Chun Lin to serve as new Chief Financial OfficerThis agreement was terminated in July 2015. The Company incurred salary of the Company. Hsin-Lung Lin will continue to serve as a member of the Company’s Board of Directors. Fornil and $1,121 for the three months ending,ended March 31, 2016 and 2015, respectively.
See Note 4 in connection with short-term debt - related parties and Note 8 in connection with lease transactions with related parties.
Note 8 – Commitments and Contingencies
Operating leases
On May 27, 2015, the Company recorded Hsin-Lung’s salary expenseleased the premises for a funeral parlor under a five-year lease agreement, for the period from June 1, 2015 to May 1, 2020 with an initial monthly rental of $3,363. AsNTD 155,000 (approximately $4,805), which increases to NTD 157,550 (approximately $4,885) on June 1, 2017 and to NTD 160,177 (approximately $4,965) on June 1, 2019.  Pursuant to the lease agreement, a company of March 31, 2015,which the Company had accrued expense of $1,121 for Hsin-Lung’s salary.

Short-term debt

In 2013, the CompanyCompany’s chief executive officer is chairman and in which he holds a 20% equity interest issued a promissory note to guarantee the payment of NTD 500,000 (approximately $15,000) as security in the event the Company terminates the lease prior to expiration.

On August 1, 2015, the Company leased premises for another funeral parlor under a lease agreement with a one year term, for the period from August 1, 2015 to July 1, 2016 with a monthly rental of NTD 40,000 (approximately $1,240).
During the third quarter of 2015, the Company leased three office premises from related parties for five-year terms.  The Company leased offices from its chief executive officer at a monthly rental of NTD 15,000 (approximately $465), from a company in which the chief executive officer is chairman and holds a 20% equity interest, at a monthly rental of NTD 10,000 (approximately $310), and from a director of its subsidiary for $149,500. a monthly rental NTD 15,000 (approximately $465).
On February 1, 2016, the Company leased another office under a lease agreement with approximately five year term, for the period from February 1, 2016 to September 30, 2020 with a monthly rental of NTD 33,000 (approximately $1,023).
Total rental expenses for the three months ended March 31, 2016 and 2015 was $23,438 and nil, respectively, of which $3,648 and nil was paid to related parties.
The promissory noteminimum future lease payments for the next five years and thereafter are as follows:
Period ending March 31: Related parties  Unrelated parties  Total 
          
2017 $14,880  $62,620  $77,500 
2018  14,880   58,451   73,331 
2019  14,880   58,609   73,489 
2020  14,880   59,423   74,303 
2021  4,650   4,965   9,615 
  $64,170  $244,068  $308,238 
Contingencies
The Company has obtained the relevant government approval to operate funeral management business in Taiwan, although it does not have permits for its funeral parlors.  Funeral parlors in Taiwan, including the ones operated by the Company, are generally unable to comply with the strict statutory requirements, for example, about the locations of funeral parlors relative to other public facilities like schools and hospitals. The non-compliance may result in fines and suspension of business. Although the potential penalties for violation of these regulations may be significant, the Company believes that non-compliance would not have significant impact on the Company’s operations or its operating results.
Jishanye, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
For the three months ended March 31, 2016 (unaudited)
Note 9 - Segment Reporting
The Company measures segment loss as loss from operations less depreciation and amortization.  The reportable segments are components of the Company which offer different products or services and are separately managed, with separate financial information available that is interest free and has no maturity date. separately evaluated regularly by the Company’s CEO in determining the performance of the business.  
As of March 31, 2016 and 2015, funeral management services is the entire balance was outstanding.

In 2014,Company’s only operating segment.

 The Company does not have material long-lived assets located in countries other than Taiwan, and the Company’s revenue is generated solely from services rendered in Taiwan during the three months ended March 31, 2016 and 2015.
Note 10 – Subsequent events
On April 11, 2016, the Company borrowed NTD300,000 (approximately $9,438) from Taiwan Life Inc.,entered into employment agreements with Mr. Chun-Hao Chang, its chief executive officer, and Ms. Mei-Chun Lin, its chief financial officer, pursuant to which the Company will pay Mr. Chang an annual salary of NTD 1,200,000, or approximately $37,200, and pay Ms. Lin an annual salary of NTD 600,000, or approximately $18,600.  The agreements have a Taiwanese company ownedterm commencing April 11, 2016 through April 30, 2019 and continuing on a year-to-year basis thereafter unless terminated by Chief Executive Officer. The debt is interest free and has no maturity date. Aseither party on written notice given not later than 90 days prior to the expiration of March 31, 2015, the entire balance was outstanding.

initial term or any one-year extension.
12

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

You should read this Management’s Discussion

Overview
We offer funeral management services to families in Taiwan. Prior to the third quarter of 2015, we did not generate any revenue from our funeral management services.  During the second half of 2015, we increased our personnel, rented premises for two funeral parlors, and Analysis in conjunction with the Consolidated Financial Statements and Related Notes. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materiallywe began to generate revenue from those anticipated in these forward-looking statements.

Overview

We were incorporatedfuneral management services in the Statethird quarter of Delaware on April 12, 2012 under the name “Jishanye Bio-Tech, Inc.” On October 24, 2013, we changed our corporate name to “Jishanye, Inc.” Through our subsidiary we were engaged2015.

Funeral management services business in selling enzymes products to public consumers in Taiwan. The Company began providing death care management consultancyTaiwan include a range of services to consumers acrossgrieving families, which include providing a place for mourners to visit, maintaining the body during the mourning period in a manner consistent with both religious and cultural practices.  In Taiwan, funeral parlors generally offer two types of services. One type of funeral parlor, known as a binyiguan, is a funeral parlor in June 2014.

the traditional sense and these funeral parlors hold the body of the deceased and prepare the body for burial or cremation.  The Company currentlyother type, known as a litang, is similar to a small scale auditorium.  Our funeral parlors are of the litang variety. A funeral parlor may have several litangs.  In our funeral parlor in Kaohsiung, we have two private litangs, and in our funeral parlor in Taipei, we have four private litangs and one larger public use litang which can be used by up to 22 families.  Although the body may be brought to the litang for a short period of time, usually for no more than one to two hours on any day, the litang provides death care consultancya place for friends and relatives to visit the family of the deceased, without the presence of the body.  Since our funeral parlor in Taipei is on the second floor of a building, the body is rarely brought to the litang.  We do not maintain the body during the mourning period or prepare the body for burial or cremation at our funeral parlors.  Our funeral management services including providing the necessary setting and personnel to consumers across Taiwan. Our goal ismeet the grieving family’s religious and cultural preferences.

We expanded our business in Taiwan by opening a new office in Tainan in April 2016.  We are also taking the initial steps toward offering funeral management services in the PRC; however, we do not have a timetable for commencing operations in the PRC, and we cannot assure you that we will be able operate in the PRC or that any operations we commence in the PRC will be successful.
Although we are optimistic about our ability to generate revenues from this business, we can give no assurance that we can or will generate any significant revenue from this business or operate profitably or that we will be able to offer death care management consultancy services to small and medium-sized enterprises of Taiwan, Hong Kong and mainland China and establish an international brand with high quality and name recognition.

The Company will providein the PRC or generate a variety of death care management consultancyprofit from any services which coverwe may offer in the purchase of cemetery property,PRC.  Our chief executive officer has experience in the funeral services business in Taiwan and cemetery merchandises and funeral services. In addition, the Company is capable of offering consultancy services for pre-arranged funeral and pre-arranged death care contracts.

On September 15, 2014, the Board appointed Chung-Hao Chang as new Chief Executive Officer and Mei-Chun Lin to serve as new Chief Financial Officer of the Company. Hsin-Lung Lin will continue to serve asowns a member of the Company’s Board of Directors. Chung-Hao Chang is also the owner of Taiwan Life Inc. Taiwan Life Inc.company which is engaged in death carethe funeral management services business.

Prior to June 2014, our principal business was the sale of enzyme products to the public in Taiwan.  On October 2, 2015, we determined to completely cease our enzyme products operations and funeral service businesses in Taiwan.

Going Concern

The consolidated financial statements included in this Form 10-Q have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuationtreat it as a going concern.discontinued operation.   We had an accumulated deficit of $397,428 and a working capital deficit of $297,544 as of March 31, 2015. These conditions raise substantial doubt asdid not have any business activity with respect to our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The major shareholders of the Company will continue to fund the Company until it is able to sustain positive cash flows from operations.

Results of Operations

Comparison ofenzyme products during the three months ended March 31, 20152016 or 2015.

Results of Operations
Three Months ended March 31, 2016 and 2014

2015

General and administrative expensesRevenues. For the three months ended March 31, 2016, we had revenues of $176,173.  We did not generate any revenues from our funeral services business until the third quarter of 2015, and, 2014,thus, we did not have any revenue in the three months ended March 31, 2015.  During the three months ended March 31, 2016, we generated service revenue from the provision of funeral services, and rental income from mounting halls and memorial tablets at our funeral parlors. 
Cost of revenues. For the three months ended March 31, 2016, our cost of revenues was $125,413.  Cost of revenues primarily reflects direct staff costs, rental expenses for our funeral parlors and materials directly incurred for our services. 
Selling expenses. We had selling expenses of $19,822 for three months ended March 31, 2016.  Our selling expenses during 2016 primarily related to the commissions paid to third party sales agents.  Since we did not have any active business activity during the three months ended March 31, 2015, we did not incur selling expenses during the three months ended March 31, 2015.
13
General and administrative expenses. For the three months ended March 31, 2016 and 2015, we had general and administrative expenses of $38,737$141,506 and $14,102,$38,737, respectively. The increase was because of $102,769, or 265.3%, reflected the increaseexpansion of our funeral management service since the second half of 2015, including additional expenses for hiring new administrative staff and renting the executive offices and funeral parlors in professional fees related to SEC filings.

Taiwan.

Net loss.Other income (expense):  For the three months ended March 31, 20152016, we had other income of $9,659, which represented  commissions we received for referring clients to other facilities when our facilities were either not available or not in a convenient location for the family or to cemetery plots or urn cemeteries offered by third parties..  We did not have any other income during the three months ended March 31, 2015.
Loss and 2014, ourcomprehensive loss.  As a result of the foregoing, we had net loss of $100,909, or $0.00 per share (basic and diluted) for the three months ended March 31, 2016 and $38,737, or $0.00 per share (basic and diluted) for the three months ended March 31, 2015.  As a result of foreign currency translation losses, our comprehensive loss was $105,828 for the three months ended March 31, 2016 and $38,828 and $16,134, respectively. The increase was because offor the increase in professional fees related to additional costs incurred on our SEC filings.

three months ended March 31, 2015.

Liquidity and Capital Resources

In 2014, we received NTD300,000 (approximately $9,606) from a related party. As of

At March 31, 2015,2016, we had cash on handworking capital of $4,554.

$380,255, as compared with $488,353 at December 31, 2015. The decrease in working capital primarily resulted from the loss from operations during the three months ended March 31, 2016.

We used $7,742$52,016 and $2,861$7,762 of cash in our operations for the three months ended March 31, 2016 and 2015, respectively.  For the three months ended March 31, 2016, our cash flow used in operating activities primarily reflected our net loss of $100,909, the increase in accounts and 2014, respectively. Thenotes receivable of $5,052 and partially offset by the decrease in inventories of $4,111, the decrease in prepaid expenses and other current assets of $2,712, the increase is mainly attributable toin accounts payables of $24,355 and the payments made toincrease in accrued expenses and other payables of $22,580. For the three months ended March 31, 2015, our vendorscash flow used in operating activities principally reflected our net loss of $38,737 and partially offset by the increase in accrued expenses and other payables of $30,975.
We received cash of $74,804 from financing activities for the operating expenses.

three months ended March 31, 2016, which represented the short-term loans from our chief executive officer. We received $0 and used $28,327$20 of cash in investing activityfinancing activities for the three months ended March 31, 2015, resulted from loans from a company controlled by our chief executive officer.

We believe that our available cash provides us with sufficient funds for our short-term operations.  To the extent we seek to expand our business, particularly if we take active steps to commence operations in the PRC, and 2014, respectively. The change is becauseto the extent that we had no investing related transactions in 2015continue to sustain losses and in 2014, we sold our fixed assets related to enzyme business.

We plan to fundnegative cash flow from our operations, from loans and advances from our major shareholders and plan to raise equity capital by offering shares of our common stock to investors.

On January 15, 2013, our prior Chief Executive Officer, Chief Financial Officer and Chairman of the Board, Mr. Lin Hsin-Lung, extended a loanwe expect that may require additional funding in the amount of $149,500 to the Company. The loan is due on demand and has no interest obligations. On September 15, 2014, the Board appointed Mei-Chun Lin to serve as new Chief Financial Officer of the Company. Hsin-Lung Lin will continue to serve as a member of the Company’s Board of Directors. 

On December 31, 2014, Taiwan Life Inc., a company owned by our Chief Executive Officer Chun-Hao Chang, extended a loan in the amount of approximately US$10,000 to the Company. The loan has no maturity date and has no interest obligations. In addition, Taiwan Life Inc., is providing the Company with rent free office space until November 2015.

The estimated budget for 2015 is as follows:

Salaries and benefits $50,000 
Management overhead  10,000 
Professional fees  150,000 
General overhead  20,000 
Total $230,000 

We believe we will be able to raise the necessary capital to carry out our business plan, but there is no guarantee that we will be able to do so.

Stock Acquisition by Chief Executive Officer

On October 23, 2014, Chun-Hao Chang, the Company’s Chairman of the Board of Directors, Chief Executive Officer and President, completed the purchase of 1,200,000 shares of the Company’s common stock for a purchase price of $5,000 from Yambear Holding Limited in a private transaction. As a result of the stock purchase Chun-Hao Chang holds approximately 9.6% of the Company’s common stock.

near future.

Critical Accounting Policies

Our condensed consolidated financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("US GAAP"(“U.S. GAAP”). USU.S. GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to USU.S. GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.  Specific estimates include the collectability of accounts receivable, the valuation of inventory and deferred income tax.  Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our condensed consolidated financial statements.

We believe the following isare among the most critical accounting policies that impact our condensed consolidated financial statements. We suggeststatements:
14
Revenue Recognition
Service revenue is recognized when persuasive evidence of an arrangement exists, service has been provided, the fee is fixed or determinable, and collectability is probable. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advances from customers. Rental income relates to the rental of mounting halls and memorial tablets at the Company’s funeral parlors which is recognized on a straight-line basis over the terms of the respective leases. In accordance with our standard lease terms, rental payments of memorial tablets are generally payable yearly. Deferred income represents the cumulative difference between rental revenue as recorded on a straight line basis and rents received from the tenants. As of March 31, 2016 and December 31, 2015, we had deferred income of $4,537 and $4,247, respectively.
Accounts and Notes Receivable
Accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts and sales returns. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentration, customer credit worthiness, current economic trends and changes in customer payment patterns to determine if the allowance for doubtful accounts is adequate. Notes receivable are pre-dated checks received from trade debtors for settlement. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Delinquent account balances are written-off after management has determined that the likelihood of collection is not probable and known bad debts are written off against the allowance for doubtful accounts when identified. As of March 31, 2016 and December 31, 2015, there was no allowance for uncollectible accounts and notes receivable.
Foreign Currency Translation
Our reporting currency and functional currency is the U.S. dollar, and the functional currency of our significant accounting policies, as describedoperating subsidiary is the NTD. For our subsidiary, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in ourthe corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. The cumulative translation adjustment and effect of exchange rate changes on cash for the Summary of Significant Accounting Policies, be read in conjunction with this Management's Discussionthree months ended March 31, 2016 and Analysis of Financial Condition2015 was $(4,919) and Results of Operations.

Foreign Currency

Assets and liabilities recorded$(91), respectively. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

All of our revenue transactions are transacted in the functional currency of the operating subsidiary. We do not enter into any material transaction in foreign currencies. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of our operations.
Asset and liability accounts at March 31, 2016 and December 31, 2015 were translated at NTD 32.26 to $1.00 and NTD 30.03 to $1.00, respectively, which were the exchange rates on the balance sheet date. Revenuedates. Equity accounts were stated at their historical rate. The average translation rates applied to the statements of income for the three months ended March 31, 2016 and expenses2015 were NTD 32.89 to $1.00 and NTD 31.50 to $1.00, respectively. Cash flows from our operations are translated atcalculated based upon the local currencies using the average rates of exchange prevailing during the period.translation rate. Translation adjustments resulting from this process are charged or credited to Other Comprehensive Income.

Income (Loss).

Inventory

Inventory is stated at the lower of cost or market, using the average cost method. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower. As of March 31, 2015, the Company had finished goods of $885 and no allowance for obsolete inventory.

Recent Accounting Pronouncements

The Company does

We do not expect adoption of the new accounting pronouncements will have a material effect on the Company’sour condensed consolidated financial statements.

Off-Balance Sheet Arrangements

None.

15

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

Not Applicable.

ITEM 4. INTERNAL CONTROLS OVER FINANCIAL REPORTING.

AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our

As required by Rule 13a-15 under the Exchange Act, our management, with the participation of our principalchief executive officer and principalchief financial officer, evaluated the effectiveness of our disclosure controls and procedures.procedures at March 31, 2016.  The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a companyus in the reports, such as this report, that it fileswe file or submitssubmit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controlsforms, and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a companyus in the reports that itwe files or submits under the Exchange Act is accumulated and communicated to the company’sour management, including itsour principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, Mr. Chun-Hao Chang, our Chief Executive Officerchief executive officer, and Ms. Mei-Chun Lin, the Company’s Chief Financial Officer,our chief financial officer, concluded that as of March 31, 2015,2016, our disclosure controls and procedures were not effective due toeffective.
As we disclosed in our Annual Report on Form 10-K, during our assessment of the followingeffectiveness of internal control over financial reporting as of December 31, 2015, management identified that there are material weaknesses in our control environment and financial reporting process as of March 31, 2015:

1)lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal control and procedures;
2)inadequate segregation of duties consistent with control objectives; 
3)ineffective controls over period end financial disclosure and reporting processes; and 
4)lack of accounting personnel with adequate experience and training. 

Changes in internal control over financial reporting. Specifically, we did not have appropriate policies and procedures in place to evaluate the proper accounting and disclosures of key documents and agreements. We also currently lack sufficient accounting personnel with the appropriate level of knowledge, experience and training in U.S. GAAP and SEC reporting

During requirements, and we do not have independent directors or an audit committee.

We have taken, and are taking, certain actions to remediate the material weakness related to our lack of U.S. GAAP experience. We plan to hire additional credentialed professional staff and consulting professionals with greater knowledge and experience in U.S. GAAP and related regulatory requirements to oversee our financial reporting process in order to enable us to comply with U.S. GAAP and relevant securities laws. We are in the process of searching for an acceptable candidate to fill the position. In addition, we plan to provide additional training to our accounting personnel on U.S. GAAP, and other regulatory requirements regarding the preparation of financial statements. Until such time as we hire qualified accounting personnel with the requisite U.S. GAAP knowledge and experience and train our current accounting personnel, we have engaged an outside consultant with U.S. GAAP knowledge and experience to supplement our current internal accounting personnel and assist us in the preparation of our financial statements so that our financial statements are prepared in accordance with U.S. GAAP. In addition to above stated remediation plan we also plan to hire an outside Sarbanes-Oxley Act consultant to assist us in improving the design and operations of our internal controls over financial reporting.
Changes in Internal Controls over Financial Reporting
There were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred during the three months ended March 31, 2015, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the fiscal quarter covered by this report2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

16
PART II.  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1A. RISK FACTORS.

Not applicable.

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

(a)           Exhibits:

Exhibit Number Description of Exhibit
Number
31.1
 Description of Exhibit
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
31.2 
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
32.1*32.1 
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*Certification of theand Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


101.INS XBRL Instance Document.
  
101.SCH XBRL Taxonomy Extension Schema Document.
  
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.
  
101.DEF XBRL Taxonomy Extension Definition Linkbase Document.
  
101.LAB XBRL Taxonomy Extension Label Linkbase Document.
  
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.

*The certification attached as Exhibits 32.1 accompany this quarterly report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906

17
SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Quarterly Report on Form 10-Q report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 20, 201518, 2016
By:/s/ Chun-Hao Chang
 Name:
 Chun-Hao Chang
 Its:    Chief Executive Officer
  (Principal Executive Officer)

Date: May 20, 201518, 2016
By:/s/ Mei-Chun Lin
 Name:
Mei-Chun Lin
 Its:Chief Financial Officer
  (Principal Financial and Accounting Officer)

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