UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2021March 31, 2022
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 No. 000-56156
FOVEA JEWELRY HOLDINGS, LTD. |
(Exact name of registrant as specified in its charter) |
Wyoming |
| 95-4202424 |
(State or other jurisdiction of |
| (I.R.S. Employer |
incorporation or organization) |
| Identification No.) |
Room 403, 4/F, Phase 1 Austin Tower
22-26A Austin Avenue
Tsim Sha Tsui, Hong Kong
(Address of principal executive offices, zip code)
+852 6847 6812
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|
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Indicate by check mark whether the issuer (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 every Interactive Data File required to be submitted 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 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 | ☒ | Smaller reporting company | ☒ |
|
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Exchange Act): Yes ☐ No ☒
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
APPLICABLE ONLY TO CORPORATE ISSUERS
As of September 30, 2021,April 7, 2022, there were approximately 8,099,119 shares of common stock, $0.001 par value per share, outstanding.
FOVEA JEWELRY HOLDINGS, LTD.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30, 2021MARCH 31, 2022
INDEX
Index |
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| Notes to Condensed Consolidated Financial Statements (unaudited). |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
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Unregistered Sales of Equity Securities and Use of Proceeds. |
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| 2 |
| Table of |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q of Fovea Jewelry Holdings, Ltd., a Wyoming corporation (the “Company”), contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology. These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Actual results may differ materially from the predictions discussed in these forward-looking statements. The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include, among other things: the volatility of oil and gas prices, the possibility that equipment development efforts will not produces equipment that prospective customers want to purchase, the Company’s need for and ability to obtain additional financing, other factors over which we have little or no control; and other factors discussed in the Company’s filings with the Securities and Exchange Commission (“SEC”).
Our management has included projections and estimates in this Form 10-Q, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
| 3 |
| Table of |
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
FOVEA JEWELRY HOLDINGS, LTD
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| |||
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FOVEA JEWELRY HOLDINGS, LTD
CONDENSED CONSOLIDATED BALANCE SHEETS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
|
| September 30, 2021 |
|
| December 31, 2020 |
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||||
|
| (Unaudited) |
| (Audited) |
|
| (Unaudited) |
| (Audited) |
| ||||||
ASSETS |
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Current asset: |
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Cash and cash equivalents |
| $ | 956,572 |
|
| $ | 832,151 |
|
| $ | 1,735 |
| $ | 1,476 |
| |
Amount due from a shareholder |
| 99,641 |
| 100,188 |
| |||||||||||
Inventories |
|
| 727,939 |
|
|
| 731,038 |
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Total current assets |
|
| 956,572 |
|
|
| 832,151 |
|
| 829,315 |
| 832,584 |
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Non-current asset: |
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| ||||||
Plant and equipment |
|
| 22,474 |
|
|
| 28,378 |
|
|
| 18,518 |
|
|
| 20,521 |
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TOTAL ASSETS |
| $ | 979,046 |
|
| $ | 860,529 |
|
| $ | 847,833 |
|
| $ | 853,105 |
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LIABILTIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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| ||||||
Accrued liabilities |
| $ | 74,500 |
| $ | 74,500 |
| |||||||||
Income tax payable |
| $ | 10,887 |
| $ | 236 |
|
| 255 |
| 234 |
| ||||
Deferred tax liabilities |
|
| 3,708 |
|
|
| 4,682 |
|
|
| 3,055 |
|
|
| 3,386 |
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Total current liabilities |
|
| 14,595 |
|
|
| 4,918 |
|
| 77,810 |
| 78,120 |
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TOTAL LIABILITIES |
|
| 14,595 |
|
|
| 4,918 |
|
| 77,810 |
| 78,120 |
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Commitments and contingencies |
| 0 |
| 0 |
|
| 0 |
| 0 |
| ||||||
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STOCKHOLDERS’ EQUITY |
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Preferred stock, $0.001 par value; 5,000,000 shares authorized, no share issued and outstanding as of September 30, 2020 and December 31, 2020 |
| 0 |
| 0 |
| |||||||||||
Series A preferred stock, $0.001 par value,1,000,000 shares designated; 1,000,001 and 1,000,000 issued and outstanding, as of September 30, 2021 and December 31, 2020, respectively |
| 1,000 |
| 1,000 |
| |||||||||||
Common stock, $0.001 par value; 2,000,000,000 shares authorized; 8,099,119 and 10,199,119 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively |
| 8,099 |
| 10,199 |
| |||||||||||
Preferred stock, $0.001 par value; 5,000,000 shares authorized, no share issued and outstanding as of March 31, 2022 and December 31, 2021, respectively |
| 0 |
| 0 |
| |||||||||||
Series A preferred stock, $0.001 par value,1,000,000 shares designated; 1,000,000 issued and outstanding, as of March 31, 2022 and December 31, 2021, respectively |
| 1,000 |
| 1,000 |
| |||||||||||
Common stock, $0.001 par value; 2,000,000,000 shares authorized; 8,099,119 and 8,099,119 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively |
| 8,099 |
| 8,099 |
| |||||||||||
Common stock to be issued |
| 0 |
| 90 |
|
| - |
| - |
| ||||||
Additional paid-in capital |
| 131,700 |
| 129,510 |
|
| 131,700 |
| 131,700 |
| ||||||
Accumulated other comprehensive loss |
| (19,820 | ) |
| (10,591 | ) |
| (24,278 | ) |
| (20,678 | ) | ||||
Retained earnings |
|
| 843,472 |
|
|
| 725,403 |
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| 653,502 |
|
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| 654,864 |
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Stockholders’ equity |
|
| 964,451 |
|
|
| 855,611 |
|
| 770,023 |
| 774,985 |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ | 979,046 |
|
| $ | 860,529 |
|
| $ | 847,833 |
|
| $ | 853,105 |
|
See accompanying notes to condensed consolidated financial statements.
| 4 |
| Table of contents |
FOVEA JEWELRY HOLDINGS, LTD
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
|
| Three Months ended March 31, |
| |||||
|
| 2022 |
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| 2021 |
| ||
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Revenue, net |
| $ | 1,217 |
|
| $ | 162,887 |
|
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Cost of revenue |
|
| (952 | ) |
|
| (81,682 | ) |
|
|
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Gross profit |
|
| 265 |
|
|
| 81,205 |
|
|
|
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Operating expenses: |
|
|
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General and administrative expenses |
|
| (1,922 | ) |
|
| (8,509 | ) |
Total operating expenses |
|
| (1,922 | ) |
|
| (8,509 | ) |
|
|
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|
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|
(LOSS) INCOME BEFORE INCOME TAXES |
|
| (1,657 | ) |
|
| 72,696 |
|
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Income tax expenses |
|
| 295 |
|
|
| 319 |
|
|
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NET (LOSS) INCOME |
|
| (1,362 | ) |
|
| 73,015 |
|
|
|
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|
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Other comprehensive loss: |
|
|
|
|
|
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|
|
– Foreign currency adjustment loss |
|
| (3,600 | ) |
|
| (7,757 | ) |
|
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|
COMPREHENSIVE (LOSS) INCOME |
| $ | (4,962 | ) |
| $ | 65,258 |
|
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Net (loss) income per share – Basic and Diluted |
| $ | (0.01 | ) |
| $ | 0.01 |
|
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Weighted average common shares outstanding |
|
|
|
|
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|
|
|
– Basic and Diluted |
|
| 8,099,119 |
|
|
| 10,889,119 |
|
See accompanying notes to condensed consolidated financial statements.
| 5 |
| Table of |
FOVEA JEWELRY HOLDINGS, LTD
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOMECASH FLOWS
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
|
| Three Months ended September 30, |
|
| Nine Months ended September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
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| ||||
REVENUE, NET |
| $ | 97,651 |
|
| $ | 542,900 |
|
| $ | 565,824 |
|
| $ | 942,965 |
|
|
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Cost of revenue |
|
| (81,348 | ) |
|
| (271,443 | ) |
|
| (407,903 | ) |
|
| (604,566 | ) |
|
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Gross profit |
|
| 16,303 |
|
|
| 271,457 |
|
|
| 157,921 |
|
|
| 338,399 |
|
|
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Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
| (10,803 | ) |
|
| (8,630 | ) |
|
| (30,129 | ) |
|
| (32,220 | ) |
|
|
| (10,803 | ) |
|
| (8,630 | ) |
|
| (30,129 | ) |
|
| (32,220 | ) |
|
|
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|
|
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|
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|
|
|
|
INCOME BEFORE INCOME TAXES |
|
| 5,500 |
|
|
| 262,827 |
|
|
| 127,792 |
|
|
| 306,179 |
|
|
|
|
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|
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|
|
|
|
|
|
|
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Income tax expenses |
|
| (295 | ) |
|
| (22,312 | ) |
|
| (9,723 | ) |
|
| (21,674 | ) |
|
|
|
|
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|
|
|
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|
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|
NET INCOME |
|
| 5,205 |
|
|
| 240,515 |
|
|
| 118,069 |
|
|
| 284,505 |
|
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|
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Other comprehensive income (loss): |
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
– Foreign currency adjustment income (loss) |
|
| (2,584 | ) |
|
| 326 |
|
|
| (9,229 | ) |
|
| (16,025 | ) |
|
|
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|
|
COMPREHENSIVE INCOME |
| $ | 2,621 |
|
| $ | 240,841 |
|
| $ | 108,840 |
|
| $ | 268,480 |
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
Net income per share – Basic and Diluted |
| $ | 0.00 |
|
| $ | 0.02 |
|
| $ | 0.01 |
|
| $ | 0.03 |
|
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Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– Basic and Diluted |
|
| 8,099,119 |
|
|
| 10,161,039 |
|
|
| 9,568,350 |
|
|
| 10,161,039 |
|
|
| Three Months ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
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| ||
Cash flow from operating activities: |
|
|
|
|
|
| ||
Net (loss) income |
| $ | (1,362 | ) |
| $ | 73,015 |
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation of plant and equipment |
|
| 1,922 |
|
|
| 1,934 |
|
|
|
|
|
|
|
|
|
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Inventories |
|
| 3,099 |
|
|
| 0 |
|
Deferred tax liabilities |
|
| (331 | ) |
|
| (319 | ) |
Amount due from a shareholder |
|
| 429 |
|
|
| 0 |
|
Net cash provided by operating activities |
|
| 3,757 |
|
|
| 74,630 |
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
| (3,498 | ) |
|
| (7,695 | ) |
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
| 259 |
|
|
| 66,935 |
|
|
|
|
|
|
|
|
|
|
BEGINNING OF PERIOD |
|
| 1,476 |
|
|
| 832,151 |
|
|
|
|
|
|
|
|
|
|
END OF PERIOD |
| $ | 1,735 |
|
| $ | 899,086 |
|
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|
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|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
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|
|
|
|
|
|
Cash paid for income taxes |
| $ | 0 |
|
| $ | 0 |
|
Cash paid for interest |
| $ | 0 |
|
| $ | 0 |
|
See accompanying notes to condensed consolidated financial statements.
| 6 |
| Table of |
FOVEA JEWELRY HOLDINGS, LTD
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN STOCKHOLDERS’ EQUITY
(Currency expressed in United States Dollars (“US$”)), except for number of shares)
(Unaudited)
|
| Nine Months ended September 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
Cash flow from operating activities: |
|
|
|
|
|
| ||
Net income |
| $ | 118,069 |
|
| $ | 284,505 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation of plant and equipment |
|
| 5,794 |
|
|
| 5,798 |
|
|
|
|
|
|
|
|
|
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| 0 |
|
|
| (543,639 | ) |
Deferred tax liabilities |
|
| (974 | ) |
|
| (3,431 | ) |
Accounts payable |
|
| 0 |
|
|
| 271,812 |
|
Accrued liabilities and other payables |
|
| 10,651 |
|
|
| 14,456 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
| 133,540 |
|
|
| 29,501 |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Amount due to a director |
|
| 0 |
|
|
| 2,062 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
| 0 |
|
|
| 2,062 |
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
| (9,119 | ) |
|
| (16,188 | ) |
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
| 115,302 |
|
|
| 15,375 |
|
|
|
|
|
|
|
|
|
|
BEGINNING OF PERIOD |
|
| 832,151 |
|
|
| 31,380 |
|
|
|
|
|
|
|
|
|
|
END OF PERIOD |
| $ | 956,572 |
|
| $ | 46,755 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
Cash paid for income taxes |
| $ | 0 |
|
| $ | 0 |
|
Cash paid for interest |
| $ | 0 |
|
| $ | 0 |
|
|
| For the Three Months ended March 31, 2021 and 2022 |
| |||||||||||||||||||||||||||||||||
|
| Series A preferred stock |
|
| Common stock |
|
| Common stock |
|
| Additional paid-in |
|
| Accumulated other comprehensive income |
|
| Retained |
|
| Total stockholders’ |
| |||||||||||||||
|
| No. of shares |
|
| Amount |
|
| No. of shares |
|
| Amount |
|
| to be issued |
|
| capital | (loss) | earnings | equity |
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Balance as of January 1, 2021 |
|
| 1,000,000 |
|
| $ | 1,000 |
|
|
| 10,199,119 |
|
| $ | 10,199 |
|
| $ | 90 |
|
| $ | 129,510 |
|
| $ | (10,591 | ) |
| $ | 725,403 |
|
| $ | 855,611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to service providers |
|
| - |
|
|
| 0 |
|
|
| 900,000 |
|
|
| 900 |
|
|
| (90 | ) |
|
| (810 | ) |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Foreign currency translation adjustment |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (7,757 | ) |
|
| 0 |
|
|
| (7,757 | ) |
Net income for the period |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 73,015 |
|
|
| 73,015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2021 |
|
| 1,000,000 |
|
| $ | 1,000 |
|
|
| 10,161,039 |
|
| $ | 10,161 |
|
| $ | 0 |
|
| $ | 128,700 |
|
| $ | (18,348 | ) |
| $ | 798,418 |
|
| $ | 920,869 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2022 |
|
| 1,000,001 |
|
| $ | 1,000 |
|
|
| 8,099,119 |
|
| $ | 8,099 |
|
| $ | 0 |
|
| $ | 131,700 |
|
| $ | (20,678 | ) |
| $ | 654,864 |
|
| $ | 774,985 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (24,278 | ) |
|
| 0 |
|
|
| (24,278 | ) |
Net income for the period |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,362 |
|
|
| 1,362 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2022 |
|
| 1,000,001 |
|
| $ | 1,000 |
|
|
| 8,099,119 |
|
| $ | 8,099 |
|
| $ | 0 |
|
| $ | 131,700 |
|
| $ | (44,956 | ) |
| $ | 656,226 |
|
| $ | 752,069 |
|
See accompanying notes to condensed consolidated financial statements.
| 7 |
| Table of |
FOVEA JEWELRY HOLDINGS, LTD
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
|
| For the Three and Nine Months ended September 30, 2021 and 2020 |
| |||||||||||||||||||||||||||||||||||||||||
|
| Series A preferred stock |
|
| Series B preferred stock |
|
| Common stock |
|
| Common stock |
|
| Additional |
|
| Accumulated other |
|
|
|
|
| Total |
| ||||||||||||||||||||
|
| No. of shares |
|
| Amount |
|
| No. of shares |
|
| Amount |
|
| No. of shares |
|
| Amount |
|
| to be issued |
|
| paid-in capital |
|
| comprehensive income (loss) |
|
| Retained earnings |
|
| stockholders’ equity |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Balance as of January 1, 2020 |
|
| 1,000,000 |
|
| $ | 1,000 |
|
|
| - |
|
| $ |
|
|
| 10,090,974 |
|
| $ | 10,091 |
|
| $ | 0 |
|
| $ |
|
| $ | 369 |
|
| $ | 18,996 |
|
| $ | 30,526 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Issuance of fractional shares |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 108,145 |
|
|
| 108 |
|
|
| 0 |
|
|
|
|
|
| - |
|
|
| (108 | ) |
|
| - |
| |
Foreign currency translation adjustment |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
|
|
|
| (17,977 | ) |
|
| 0 |
|
|
| (17,977 | ) | |
Net income for the period |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
|
|
|
| 0 |
|
|
| 13,510 |
|
|
| 13,510 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Balance as of March 31, 2020 |
|
| 1,000,000 |
|
| $ | 1,000 |
|
|
| - |
|
|
| 0 |
|
|
| 10,161,039 |
|
| $ | 10,161 |
|
| $ | 0 |
|
| $ |
|
| $ | (17,608 | ) |
| $ | 32,468 |
|
| $ | 26,059 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Foreign currency translation adjustment |
|
| - |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,626 |
|
|
| 0 |
|
|
| 1,626 |
|
Net income for the period |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 30,480 |
|
|
| 30,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2020 |
|
| 1,000,000 |
|
| $ | 1,000 |
|
|
| - |
|
| $ | 0 |
|
|
| 10,161,039 |
|
| $ | 10,161 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | (15,982 | ) |
| $ | 62,498 |
|
| $ | 58,165 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 326 |
|
|
| 0 |
|
|
| 326 |
|
Net income for the period |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 240,515 |
|
|
| 240,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2020 |
|
| 1,000,000 |
|
| $ | 1,000 |
|
|
| - |
|
| $ | 0 |
|
|
| 10,161,039 |
|
| $ | 10,161 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | (15,656 | ) |
| $ | 303,463 |
|
| $ | 299,006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2021 (Audited) |
|
| 1,000,000 |
|
| $ | 1,000 |
|
|
| - |
|
|
| 0 |
|
|
| 10,199,119 |
|
| $ | 10,199 |
|
| $ | 90 |
|
| $ | 129,510 |
|
| $ | (10,591 | ) |
| $ | 725,403 |
|
| $ | 855,611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to service providers |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 900,000 |
|
|
| 900 |
|
|
| (90 | ) |
|
| (810 | ) |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Foreign currency translation adjustment |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (7,743 | ) |
|
| 0 |
|
|
| (7,743 | ) |
Net income for the period |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 66,858 |
|
|
| 66,858 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2021 |
|
| 1,000,000 |
|
| $ | 1,000 |
|
|
| - |
|
|
| 0 |
|
|
| 11,099,119 |
|
| $ | 11,099 |
|
| $ | 0 |
|
| $ | 128,700 |
|
| $ | (18,334 | ) |
| $ | 792,261 |
|
| $ | 914,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of preferred stock and cancellation of common stock |
|
| - |
|
|
| 0 |
|
|
| 1 |
|
|
| 0 |
|
|
| (3,000,000 | ) |
|
| (3,000 | ) |
|
|
|
|
|
| 3,000 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Foreign currency translation adjustment |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,098 |
|
|
| 0 |
|
|
| 1,098 |
|
Net income for the period |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 46,006 |
|
|
| 46,006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2021 |
|
| 1,000,000 |
|
|
| 1,000 |
|
|
| 1 |
|
|
| 0 |
|
|
| 8,099,119 |
|
|
| 8,099 |
|
|
| 0 |
|
|
| 131,700 |
|
|
| (17,236 | ) |
|
| 838,267 |
|
|
| 961,830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (2,584 | ) |
|
| 0 |
|
|
| (2,584 | ) |
Net income for the period |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 5,205 |
|
|
| 5,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2021 |
|
| 1,000,000 |
|
| $ | 1,000 |
|
|
| 1 |
|
| $ | 0 |
|
|
| 8,099,119 |
|
| $ | 8,099 |
|
| $ | 0 |
|
| $ | 131,700 |
|
| $ | (19,820 | ) |
| $ | 843,472 |
|
| $ | 964,451 |
|
See accompanying notes to consolidated financial statements.
FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
NOTE – 1 DESCRIPTION OF BUSINESS AND ORGANIZATION
Fovea Jewelry Holdings, Ltd (the “Company” or “FJHL”) was originally founded on February 1, 2006 as Dycam, Inc. On March 4, 2019, the Company redomiciled from Nevada to Wyoming. Currently, the Company through its subsidiaries,subsidiary, mainly commenced to operate an online store to sell the quality jewelry at affordable prices on www.fovea-jewellery.com. The goal is to “Deliver"Deliver A Better Living”Living". All products selling on the online store are with great quality, natural, socially responsible and niche.
Description of subsidiaries
Name |
| Place of incorporationand kind
legal entity |
| Principal activities and place of operation |
| Particulars of registered/ paid up
capital |
| Effective interest held | ||
|
|
|
|
|
|
|
|
| ||
Fovea International Holdings Limited |
| British Virgin Islands |
| Investment holding |
| 100 ordinary shares at par value of US$1 |
| 100% | ||
|
|
|
|
|
|
|
|
| ||
Fovea Jewellery Holdings Limited |
| Hong Kong |
| Sales and marketing in Hong Kong |
| 1 ordinary share at par value of HK$1 |
| 100% | ||
|
|
|
|
|
|
|
|
| ||
Gold Shiny International Limited |
| British Virgin Islands |
| Investment holding |
| 115 ordinary shares at par value of US$1 |
| 100% | ||
|
|
|
|
|
|
|
|
| ||
Gold Shiny (Asia) Limited |
| Hong Kong |
| Sales and marketing in Hong Kong |
| 1 ordinary share at par value of HK$1 |
| 100% |
The Company and its subsidiaries are hereinafter referred to as (the “Company”).
NOTE – 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated financial statements and notes.
• Basis of presentation |
These accompanying condensed consolidated financial statements have been prepared in U.S. Dollars in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the interim period ended September 30, 2021March 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021.2022. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis, and the financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended December 31, 2020,2021, filed with the SEC on March 26, 2021.April 29, 2022.
| Table of |
FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
• Use of estimates and assumptions |
In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the periods reported. Actual results may differ from these estimates.
• Basis of consolidation |
The condensed consolidated financial statements include the accounts of FJHL and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
• 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.
|
Accounts receivable are recorded at the invoiced amount• Plant and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from completion of service. Credit is extended based on evaluation of a customer’s financial condition, the customer credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectibility. At the end of fiscal year, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of September 30, 2021 and December 31, 2020, there was no allowance for doubtful accounts.equipment
|
Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
|
| Expected useful lives | |
Computer equipment |
| 5 years |
Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
Depreciation expense for the three months ended September 30,March 31, 2022 and 2021 were $1,922 and 2020 were $1,929 and $1,932,$1,930, respectively.
Depreciation expense for the nine months ended September 30, 2021 and 2020 were $5,794 and $5,798, respectively.• Revenue recognition
|
The Company adopted Accounting Standards UpdateCodification (“ASU”ASC”) No. 2014-09, “606 – Revenue from Contracts with Customers(Topic 606)” (“ASU 2014-09”ASC 606”) using.
Under ASC 606, a performance obligation is a promise within a contract to transfer a distinct good or service, or a series of distinct goods and services, to a customer. Revenue is recognized when performance obligations are satisfied and the full retrospective transition method.customer obtains control of promised goods or services. The Company’s adoption of ASU 2014-09 did not have a material impact on the amount and timing of revenue recognized in its condensed consolidated financial statements.
FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Under ASU 2014-09, the Company recognizes revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration to which the Company expects to be entitled to receive in exchange for those goods or services.
The Under the standard, a contract’s transaction price is allocated to each distinct performance obligation. To determine revenue recognition for arrangements that the Company appliesdetermines are within the scope of ASC 606, the Company performs the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:steps:
• | identify the contract with a customer; |
• | identify the performance obligations in the contract; |
• | determine the transaction price; |
• | allocate the transaction price to performance obligations in the contract; and |
• | recognize revenue as the performance obligation is satisfied. |
Majority of the Company's income is derived from contracts with customers in the sale of diamond and jewelry products, and as such, the revenue recognized depicts the transfer of promised goods or services to its customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company considers the terms of the contract and all relevant facts and circumstances when applying this guidance. The Company’s revenue recognition policies are in compliance with ASC 606, as follows:
| 9 |
|
FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Product sales consist of a single performance obligation that the Company satisfies at a point in time. The Company recognizes product revenue when the following events have occurred: (a) the Company has transferred physical possession of the products, depending upon the method of distribution and shipping terms set forth in the customer contract, (b) the Company has a present right to payment, (c) the customer has legal title to the products, and (d) the customer bears significant risks and rewards of ownership of the products.
For these sales, the Company determined that the customer is able to direct the use of and obtain substantially all of the benefits from, the products at the time the products are delivered.
• Cost of revenue
Cost of revenue consists primarily of the purchase cost of goods sold,diamond and jewelry products, which are directly attributable to the sales of products.
• Income taxes |
The Company adopted the ASC 740 Income tax provisions of paragraph 740-10-25-13, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the condensed consolidated financial statements. Under paragraph 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the condensed consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
• Uncertain tax positions |
The Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the ASC 740 provisions of Section 740-10-25 for the ninethree months ended September 30, 2021March 31, 2022 and 2020.2021.
• 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 condensed consolidated statement of operations.
| Table of |
FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
The reporting currency of the Company is United States Dollar (“("US$”") and the accompanying condensed consolidated financial statements have been expressed in US$. In addition, the Company is operating in Hong Kong and maintainsmaintain its books and record in its local currency, Hong Kong Dollars (“HKD”), which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “ Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statements of changes in stockholder’s equity.
|
| September 30, 2021 |
|
| September 30, 2020 |
| ||
Period-end HKD:US$ exchange rate |
|
| 0.12843 |
|
|
| 0.12903 |
|
Period average HKD:US$ exchange rate |
|
| 0.12876 |
|
|
| 0.12885 |
|
Translation of amounts from HKD into US$ has been made at the following exchange rates for the period ended March 31, 2022 and 2021:
March 31, 2022 March 31, 2021 Period-end HKD:US$ exchange rate Period average HKD:US$ exchange rate • Comprehensive income | ||||||||||||||||||||||||||||
ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying condensed consolidated statements of changes in stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
• Related parties |
The Company follows ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all share-based payment awards, including restricted stock units, based on estimated grant date fair values. Restricted stock units are valued using the market price of the Company’s common shares on the date of grant. The Company records compensation expense, net of estimated forfeitures, over the requisite service period.
|
ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in condensed consolidated financial statements. For the period ended September 30, 2021 and 2020, the Company operates in one reportable operating segment in Hong Kong.
|
The Company follows the ASC 850-10, Related Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
The condensed consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
| 11 |
|
FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
• Commitments and contingencies
The Company follows the ASC 450-20, Commitments to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s condensed consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
• Fair value of financial instruments |
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:
Level 1 |
| Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
|
|
|
Level 2 |
| Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
|
|
|
Level 3 |
| Pricing inputs that are generally observable inputs and not corroborated by market data. |
FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, approximate their fair values because of the short maturity of these instruments.
| 12 |
|
In December 2019, the Financial FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
• Recent accounting pronouncements
Accounting Standards BoardAdopted
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40), (“FASB”ASU 2021-04”) issued Accounting Standard Update (“ASU”) 2019-12, “Simplifying the Accounting for Income Taxes.” The standard is expected to reduce cost and complexity related to This ASU reduces diversity in an issuer’s accounting for income taxes. The newmodifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU provides guidance eliminates certain exceptionsfor a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: (1) how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and clarifies and amends existing guidance(3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. This ASU will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to promote consistent application among reporting entities. Dependingmodifications or exchanges occurring on or after the amended guidance within this standard,effective date of the amendments. Early adoption is to be appliedpermitted, including adoption in an interim period. The adoption of ASU 2021-04 on a retrospective, modified retrospective or prospective basis. The Company adopted this standard effective January 1, 2021, and the adoption2022 did not have a material effectimpact on the Company’s consolidated financial statements.
In January 2020, the FASB issued ASU 2020-01, “Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The new guidance clarifies the interactions between accounting standards that apply to equity investments without readily determinable fair values. Specifically, it addresses the accounting for the transition into and out of the equity method. The Company adopted this standard effective January 1, 2021 on a prospective basis, and the adoption did not have a material effect on the Company’s consolidated financial statements.statements or disclosures.
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and doesdo 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.
NOTE – 3 STOCKHOLDERS’ EQUITY
Authorized shares
As of September 30, 2021 and December 31, 2020, theThe Company’s authorized shares were 5,000,000 shares of preferred stock, with a par value of $0.001.
As of September 30, 2021 and December 31, 2020, theThe Company’s authorized shares were 2,000,000,000 shares of common stock, with a par value of $0.001.
Issued and outstanding shares
As of March 31, 2022 and December 31, 2021, the Company had 1,000,000 shares of Series A preferred stock issued and outstanding.
As of March 31, 2022 and December 31, 2021, the Company had 8,099,119 and 8,099,119 shares of common stock issued and outstanding, respectively.
| Table of |
FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Series B Preferred Stock
On April 12, 2021, the Company designated a class of preferred stock titled, Series B Preferred Stock, with a par value of $0.001 per share, and consisting of one share. The Series B preferred carries voting rights equal to 110% of the total voting rights of the outstanding common stock and voting power of the Company, and has the right to appoint one director of the Company.
Issued and outstanding shares
In January 2021, the Company completed the issuance of 900,000 shares of its common stock to six individuals of consultants and service providers for their services rendered to the Company.
As of September 30, 2021 and December 31, 2020, the Company had 1,000,000 shares of Series A preferred stock issued and outstanding.
As of September 30, 2021 and December 31, 2020, the Company had 1 and 0 share of Series B preferred stock issued and outstanding respectively.
As of September 30, 2021 and December 31, 2020, the Company had 8,099,119 and 10,199,119 shares of common stock issued and outstanding, respectively.
NOTE – 4 INCOME TAX
The provision for income taxes consisted of the following:
|
| Nine months ended September 30, |
|
| Three months ended March 31, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||||
Current tax |
| $ | 10,679 |
| $ | 25,129 |
|
| $ | 22 |
| $ | 6,157 |
| ||
Deferred tax |
|
| (956 | ) |
|
| (3,455 | ) |
|
| (317 | ) |
|
| (319 | ) |
|
|
|
|
|
|
|
|
|
|
| ||||||
Income tax expense |
| $ | 9,723 |
|
| $ | 21,674 |
|
| $ | (295 | ) |
| $ | 5,838 |
|
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 rate. The Company mainly operates in Hong Kong that is subject to taxes in the jurisdictions in which they operate, as follows:
United States of America
FJHL is registered in the State of Wyoming and is subject to the tax laws of United States of America.
For the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, there was no operation in the United States of America.
BVI
Under the current BVI law, the Company is not subject to tax on income.
FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Hong Kong
The Company’s subsidiary operating in Hong Kong is subject to the Hong Kong Profits Tax at the two-tiered profits tax rates from 8.25% to 16.5% on the estimated assessable profits arising in Hong Kong during the current year, after deducting a tax concession for the tax year. The reconciliation of income tax rate to the effective income tax rate for the ninethree months ended September 30,March 31, 2022 And 2021 and 2020 is as follows:
|
| Nine months ended September 30, |
|
| Three months ended March 31, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||||
Income before income taxes |
| $ | 127,792 |
| $ | 306,179 |
|
| $ | 1,657 |
| $ | 72,696 |
| ||
Statutory income tax rate |
|
| 16.5 | % |
|
| 16.5 | % |
|
| 16.5 | % |
|
| 16.5 | % |
Income tax expense at statutory rate |
| 21,086 |
| 50,519 |
|
| 273 |
| 11,994 |
| ||||||
Tax effect of non-deductible items |
| 637 |
| 956 |
|
| 317 |
| 319 |
| ||||||
Tax effect of tax holiday |
|
| (11,044 | ) |
|
| (26,346 | ) |
|
| (568 | ) |
|
| (6,156 | ) |
Income tax expense |
| $ | 10,679 |
|
| $ | 25,129 |
|
| $ | 22 |
|
| $ | 6,157 |
|
The following table sets forth the significant components of the deferred tax liabilities of the Company as of September 30, 2021March 31, 2022 and December 31, 2020:2021:
|
| As of |
| |||||||||||||
|
| March 31, |
| December 31, |
| |||||||||||
|
| September 30, 2021 |
|
| December 31, 2020 |
|
| 2022 |
|
| 2021 |
| ||||
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
|
| ||||||
Accelerated depreciation |
| $ | (3,708 | ) |
| $ | (4,682 | ) |
| $ | (3,055 | ) |
| $ | (3,386 | ) |
NOTE – 5 RELATED PARTY TRANSACTIONS
Apart from the transactions and balances detailed elsewhere in these accompanying condensed consolidated financial statements, the Company has no other significant or material related party transactions during the periods presented.
| 14 |
| Table of contents |
FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
NOTE – 6 CONCENTRATIONS OF RISK
The Company is exposed to the following concentrations of risk:
(a) Major customers
For the three months ended September 30,March 31, 2022 and 2021, there is one singlethe individual customer who accounts for 100% of the Company’s revenues totaling $97,651.
For the three months ended September 30, 2020, there is one single customer who accounts for 100% of the Company’s revenues totaling $542,900 and its outstanding receivable balances of $543,639 as at period-end date.
For the nine months ended September 30, 2021, there is one single customer who accounts for 100% of the Company’s revenues totaling $565,824.
For the nine months ended September 30, 2020, there is one single customer who accounts for 87%10% or more of the Company’s revenues totaling $818,008 and its outstanding receivable balances of $543,639 as at period-end date.dates, are presented as follows:
|
| Three months ended March 31, 2022 |
|
| March 31, 2022 |
| ||||||
Customers |
| Revenues |
|
| Percentage of revenues |
|
| Accounts receivable |
| |||
|
|
|
|
|
|
|
|
|
| |||
Customer A |
| $ | 1,217 |
|
|
| 100 | % |
| $ | 0 |
|
|
| Three months ended March 31, 2021 |
|
| March 31, 2021 |
| ||||||
Customers |
| Revenues |
|
| Percentage of revenues |
|
| Accounts receivable |
| |||
|
|
|
|
|
|
|
|
|
| |||
Customers B |
| $ | 50,922 |
|
|
| 31 | % |
| $ | 0 |
|
Customers C |
|
| 45,766 |
|
|
| 28 | % |
|
| 0 |
|
Customers D |
|
| 40,738 |
|
|
| 25 | % |
|
| 0 |
|
Customers E |
|
| 25,461 |
|
|
| 16 | % |
|
| 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
| $ | 162,887 |
|
|
| 100 | % |
| $ | 0 |
|
All of the Company’s customers are located in Hong Kong.
(b) Major vendor
For the three months ended September 30,March 31, 2022 and 2021, there iswas one singlevender represented more than 10% of the Company’s operating cost. This vendor who accountsaccounted for 100% of the Company’s purchases totaling $81,348.
FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
For the three months ended September 30, 2020, there is one single customer whooperating cost with no accounts for 100% of the Company’s purchases totaling $271,443payable at March 31, 2022 and its outstanding receivable balances of $271,812 as at period-end date.2021.
For the nine months ended September 30, 2021, there is one single customer who accounts for 100% of the Company’s purchases totaling $407,903.
|
| Nine months ended September 30, 2020 |
|
|
| September 30, 2020 |
| |||||||
Vendors |
| Purchases |
|
| Percentage of purchases |
|
|
| Accounts payable |
| ||||
|
|
|
|
|
|
|
|
|
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|
| |||
Vendors B |
| $ | 515,657 |
|
|
| 85 | % |
|
|
| $ | 271,812 |
|
Vendors C |
|
| 88,909 |
|
|
| 15 | % |
|
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
| $ | 604,566 |
|
|
| 100 | % |
| Total: |
| $ | 271,812 |
|
The Company’s vendor is located in Hong Kong.
(c) Economic and political risk
The Company’s major operations are conducted in Hong Kong. Accordingly, the political, economic, and legal environments in Hong Kong, as well as the general state of Hong Kong’s economy may influence the Company’s business, financial condition, and results of operations.
(d) Exchange rate risk
The Company cannot guarantee that the current exchange rate will remain steady; therefore there is a possibility that the Company could post the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of HKD converted to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
| 15 |
| Table of contents |
FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
NOTE – 7 COMMITMENTS AND CONTINGENCIES
As of September 30, 2021,March 31, 2022, the Company has no material commitments or contingencies.
NOTE – 8 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 condensed consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after September 30, 2021,March 31, 2022, up through the date the Company issued the unaudited condensed consolidated financial statements.
| Table of |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following information should be read in conjunction with (i) the financial statements of Fovea Jewelry Holdings, Ltd., a Wyoming corporation (the “Company”), and the notes thereto appearing elsewhere in this Form 10-Q together with (ii) the more detailed business information and the December 31, 20202021 audited financial statements and related notes included in the Company’s Annual Report on Form 10-K, (File No. 000-56156; the “Form 10”), as filed with the Securities and Exchange Commission on March 26, 2021.April 29, 2022. Statements in this section and elsewhere in this Form 10-Q that are not statements of historical or current fact constitute “forward-looking” statements.
OVERVIEW
The Company is incorporated in the State of Wyoming as a result of a domestication from the State of Nevada on March 4, 2019 and has a fiscal year end of December 31.
CRITICAL ACCOUNTING POLICIES
PLAN OF OPERATION
Our plan of operations over the next 12 month period is to continue developing our website to have a fully functioning online store and sell our diamond products.
Results of Operations
Comparison of the three months ended September 30,March 31, 2022 and March 31, 2021 and September 30, 2020
The following table sets forth certain operational data for the three months ended September 30, 2021,March 31, 2022, compared to the three months ended September 30, 2020:March 31, 2021:
|
| Three months ended September 30, |
|
| Three months ended March 31, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||||
Revenue |
| $ | 97,651 |
| $ | 542,900 |
|
| $ | 1,217 |
| $ | 162,887 |
| ||
Cost of revenue |
|
| (81,348 | ) |
|
| (271,443 | ) |
|
| (952 | ) |
|
| (81,682 | ) |
Gross profit |
|
| 16,303 |
|
|
| 271,457 |
|
|
| 265 |
|
|
| 81,205 |
|
Operating Expenses |
|
| (10,803 | ) |
|
| (8,630 | ) |
|
| (1,922 | ) |
|
| (8,509 | ) |
Income from operations |
| 5,500 |
| 262,827 |
|
| (1,657 | ) |
| 72,696 |
| |||||
Income tax expense |
|
| (295 | ) |
|
| (22,312 | ) |
|
| 295 |
|
|
| (5,838 | ) |
NET INCOME |
| $ | 5,205 |
|
| $ | 240,515 |
| ||||||||
NET (LOSS) INCOME |
| $ | (1,362 | ) |
| $ | 66,858 |
| ||||||||
Revenue. We generated revenues of $97,651$1,217 and $542,900$162,887 for the three months ended September 30,March 31, 2022 and 2021, and 2020, respectively. The decrease in revenue is attributable to the decrease in market demand.demand from the Omicron outbreak in the first fiscal quarter of 2022.
Cost of Revenue. Cost of revenue for the three months ended September 30, 2021,March 31, 2022, was $81,348,$952, as compared to cost of revenue of $271,443$81,682 for the same period ended September 30, 2020.March 31, 2021. Cost of revenue decreased primarily as a result of the decrease in market demand.
Gross Profit. We achieved a gross profit of $16,303$265 and $271,457$81,205 for the three months ended September 30,March 31, 2022 and 2021, and 2020, respectively. The decrease in gross profit is primarily attributable to the decreasing market demand.
| Table of |
Operating Expenses. We incurred G&A expenses of $10,803$1,922 and $8,630$8,509 for the three months ended September 30,March 31, 2022, and 2021, and 2020, respectively. The increase in G&A is primarily attributable to increase professional, administrative and other fees.
Income Tax Expense. Our income tax expenses for the three months ended September 30,March 31, 2022 and 2021 and 2020 were $295 and $22,312,$5,838, respectively.
Net (Loss) Income. During the three months ended September 30, 2021,March 31, 2022, we incurred a net income of $5,205,$1,362, as compared to net income of $240,515$66,858 for the same period ended September 30, 2020.March 31, 2021.
Comparison of the nine months ended September 30, 2021 and September 30, 2020
|
| Nine months ended September 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
Revenue |
| $ | 565,824 |
|
| $ | 942,965 |
|
Cost of revenue |
|
| (407,903 | ) |
|
| (604,566 | ) |
Gross profit |
|
| 157,921 |
|
|
| 338,399 |
|
Operating Expenses |
|
| (30,129 | ) |
|
| (32,220 | ) |
Income from operations |
|
| 127,792 |
|
|
| 306,179 |
|
Income tax expense |
|
| (9,723 | ) |
|
| (21,674 | ) |
NET INCOME |
| $ | 118,069 |
|
| $ | 284,505 |
|
Revenue. We generated revenues of $565,824 and $942,965 for the nine months ended September 30, 2021 and 2020, respectively. The decrease in revenue is attributable to the decrease in market demand.
Cost of Revenue. Cost of revenue for the nine months ended September 30, 2021, was $407,903, as compared to cost of revenue of $604,566 for the same period ended September 30, 2020. Cost of revenue decreased primarily as a result of the decrease in market demand.
Gross Profit. We achieved a gross profit of $157,921 and $338,399 for the nine months ended September 30, 2021, and 2020, respectively. The decrease in gross profit is primarily attributable to the decreasing market demand.
Operating Expenses. We incurred G&A expenses of $30,129 and $32,220 for the nine months ended September 30, 2021, and 2020, respectively. The decrease in G&A is primarily attributable to decrease professional, administrative and other fees.
Income Tax Expense. Our income tax expenses for the nine months ended September 30, 2021 and 2020 were $9,723 and $21,674, respectively.
Net Income. During the nine months ended September 30, 2021, we incurred a net income of $118,069, as compared to net income of $284,505 for the same period ended September 30, 2020.
Liquidity and Capital Resources
As of September 30, 2020,March 31, 2022, we had cash and cash equivalents of $956,572.$1,735. As of December 31, 2020,2021, we had cash and cash equivalents of $832,151.$1,476.
|
| Nine Months Ended September 30, |
|
| Three Months Ended March 31, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||
Net cash provided by operating activities |
| $ | 133,540 |
| $ | 29,501 |
|
| $ | 3,757 |
| $ | 68,473 |
| ||
Net cash used in investing activities |
| $ | - |
| $ | - |
|
| $ | - |
| $ | - |
| ||
Net cash provided by financing activities |
| $ | - |
| $ | 2,062 |
|
| $ | - |
| $ | - |
| ||
| Table of |
Net Cash Provided By Operating Activities.
For the ninethree months ended September 30,March 31, 2022, net cash provided by operating activities was $3,757 which consisted primarily of a net loss of $1,362, depreciation of property, plant and equipment of $1,922, an increase in inventories of $3,099 and offset by an increase in deferred tax liabilities of $331.
For the three months ended March 31, 2021, net cash provided by operating activities was $133,540$68,473, which consisted primarily of a net income of $118,069,$66,858, depreciation of property, plant and equipment of $5,794, an increase in income tax payables of $10,651 and offset by a decrease in deferred tax liabilities of $974.
For the nine months ended September 30, 2020, net cash provided by operating activities was $29,501, which consisted primarily of a net income of $284,505, depreciation of property, plant and equipment of $5,798, an increase in accounts receivable of $543,639, an increase in accounts payable of $271,812, an increase in income tax payable of $25,164, offset by a decrease in accrued expenses and other payables of $10,708$1,934 and a decrease in deferred tax liabilities of $3,431.$319.
Net Cash Used In Investing Activities.
For the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, net cash used in investing activities was $0.
Net Cash Provided By Financing Activities.
For the ninethree months ended September 30, 2021,March 31, 2022, net cash provided by financing activities was $0.
For the nine months ended September 30, 2020, net cash provided by financing activities was $2,062, which primarily consisted of advances from a director.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Subsequent Events
None through the date of this filing.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 3.
ITEM 4. CONTROLS AND PROCEDURES.
DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, our Chief Executive Officer, who acts as both our principal executive officer and our principal financial officer, is responsible for conducting an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the fiscal year covered by this report. Disclosure controls and procedures means that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, including any consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when this report was being prepared. Based on this evaluation, our Chief Executive Officer, who acts as both principal executive officer and principal financial officer, concluded as of the evaluation date that our disclosure controls and procedures were not effective as of September 30, 2021.March 31, 2022.
There were no changes in the Company’s internal controls over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.
| Table of |
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is not currently subject to any legal proceedings. From time to time, the Company may become subject to litigation or proceedings in connection with its business, as either a plaintiff or defendant. There are no such pending legal proceedings to which the Company is a party that, in the opinion of management, is likely to have a material adverse effect on the Company’s business, financial condition or results of operations.
ITEM 1A. RISK FACTORS
As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 1A.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
None.
ITEM 5. OTHER INFORMATION.
Series B Preferred Stock
On April 12, 2021, the Company designated a class of preferred stock titled, Series B Preferred Stock, with a par value of $0.001 per share, and consisting of one share. The Series B preferred carries voting rights equal to 110% of the total voting rights of the outstanding common stock and voting power of the Company, and has the right to appoint one director of the Company.None.
| Table of |
Additionally, the one share of Series B Preferred Stock contains protective provisions, which precludes the Company from taking the certain actions without the approval of the holder of the share of Series B Preferred Stock. More specifically, so long as any shares of Series B Preferred Stock are outstanding, the Company shall not, without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then outstanding shares of Series B Preferred Stock, voting as a separate class:
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Additionally, as long as any shares of Series B Preferred Stock remain outstanding, the holders of a majority of the shares of Series B Preferred Stock represented at a duly called special or annual meeting of such stockholders or by an action by written consent for that purpose shall be entitled to elect a special director to the board of directors.
Stock Purchase Agreement
On April 13, 2021, the Company entered into a Stock Purchase Agreement with Liao Zhicheng, the Company’s majority stockholder, pursuant to which the Company sold to Liao Zhicheng one share of Series B Preferred Stock in exchange for 3,000,000 shares of common stock of the Company. The Company anticipates cancelling and returning to its authorized capital stock the 3,000,000 shares of common stock purchased from Liao Zhicheng by May 31, 2021.
Risk Factor
Liao Zhicheng beneficially owns approximately or has the right to vote 100% of our Series B Preferred Stock, which counts for 110% of the total voting rights of the common stock. As a result, he has a controlling voting power in all matters submitted to our stockholders for approval including:
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As a result of his ownership and position, Liao Zhicheng is able to substantially influence all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition, the future prospect of sales of significant amounts of shares held by him could affect the market price of our common stock if the marketplace does not orderly adjust to the increase in shares in the market and the value of your investment in our company may decrease. Liao Zhicheng’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
ITEM 6. EXHIBITS.
(a) Exhibits required by Item 601 of Regulation SK.:
Number |
| Description |
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|
|
| ||
| ||
| ||
101.INS |
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|
101.SCH |
| |
101.CAL |
| |
101.DEF |
| |
101.LAB |
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101.PRE |
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______________________________
+ XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
| Table of |
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.
| FOVEA JEWELRY HOLDINGS, LTD. | ||
|
| ||
Date: | By: | /s/ Thomson Lee |
|
| Name: | Thomson Lee | |
| Title: | Chief Executive Officer (principal executive officer, principal accounting officer and principal financial officer) | |