SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Note B - SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting

The financial statements reflect the assets, revenues and expenditures of the Company on the accrual basis of accounting.

The Company’s fiscal year end is June 30.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect certain amounts reported in the financial statements and disclosures. Accordingly, actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly-liquid investments with an original maturity of three months or less when purchased to be cash equivalents. As of December 31, 2016, there were $ 9,973 cash and cash equivalents respectively.

Property, Plant, and Equipment Depreciation

Property, plant, and equipment are stated at cost. Depreciation is being provided principally by straight line methods over the estimated useful lives of the assets. As of December 31, 2016, there was no fixed asset in the Company’s balance sheets.

Comprehensive Income

The company’s comprehensive income is comprised of net income, unrealized gains and losses on marketable securities classified foreign currency translation adjustments, and unrealized gains and losses on derivative financial instruments related to foreign currency hedging.

Inventory

As of December 31, 2016, the Company had Zero inventory. 

Stock-Based Compensation

The Company accounts for stock issued for services using the fair value method. In accordance with FASB ASC Topic 718, “Compensation - Stock Compensation”, the measurement date of shares issued for services is the date at which the counterparty’s performance is complete.

On March 31, 2011, 100,000 shares were issued to Michael Williams for legal services of $10,000 at $0.10 per share.

On June 13, 2012, 50,000 shares were issued to Pivo Associates for services of $5,000 at $0.10 per share.

On July 1, 2013, 120,000 shares were issued to Williams Security Law Firm for legal service of $ 12,000 at $ 0.10 per share.

On February 3, 2015, 140,000 shares were issued to Globex Transfer LLC for professional service of $ 7,000 at $ 0.05 per share.

Basic and Diluted Net Loss per Common Share

The Company computes per share amounts in accordance with FASB ASC Topic 260, “Earnings per Share”. ASC 260 requires presentation of basic and diluted EPS.

Basic EPS is computed by dividing the income (loss) available to Common Shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock and common stock equivalents outstanding during the periods.

As of December 31, 2016, the Company only issued one type of shares, i.e., common shares only. There are no other type of securities were issued. Accordingly, the diluted and basic net loss per common share is the same.

Revenue Recognition

In accordance with the FASB Accounting Standards Codification (ASC) 605-15-25 “Revenue Recognition for Sales of Product”, the Company recognizes revenue when it is realized or realizable and earned. The revenue from the product sales transaction shall be recognized at time of sale if the following conditions are met:

· The seller's price to the buyer is substantially fixed or determinable at the date of sale.

· The buyer has paid the seller, or the buyer is obligated to pay the seller and the obligation is not contingent on resale of the product.

· The buyer's obligation to the seller would not be changed in the event of theft or physical destruction or damage of the product.

· The buyer acquiring the product for resale has economic substance apart from that provided by the seller.

· The seller does not have significant obligations for future performance to directly bring about resale of the product by the buyer.

· The amount of future returns can be reasonably estimated.

In accordance with paragraph 4-14 of FASB ASC 605-45, "Reporting Revenues Gross as a Principal versus Net as an Agent", the Company will recognize revenues on a gross basis. ASC 605-45, paragraph 4-14 discusses whether revenues and cost of goods sold to arrive at gross profit and their corresponding assets and liabilities should be recorded at gross or net. The following indicators of gross revenue recognition will be applicable in the Company:

· Acts as principal in the transaction, Entity Is the Primary Obligor in the Arrangement. The Company will purchase the products from supplier(s) and will responsible for the acceptability of the products, store the products in our warehouse as inventory. The current leased property is a warehouse with office suite. For whole purchase and selling cycle, the Company acts as principal and primary obligator throughout the whole purchase to selling transaction.

· Has risk and rewards of ownership, such as general inventory risk, risk of loss for collection, delivery and returns. Based on the signed distribution agreement, the supplier ship the products FOB at shipping point, after shipping, the Company will take care of the products loss, and after receiving the products the Company will store all products in leased warehouse and incur risk of loss inventory. After selling to customers, the Company is also responsible for risk of loss for delivery, return, and collection of receivable.

· Takes title to the products. The Company will take title to the products before customers order them. The Company will retail its purchased products to general public through e-commerce or online selling. All customer orders and its shipments to customers will be responsible of the Company, not supplier(s).

· Flexibility in pricing. The retail price to customers will be the responsibility of the Company according to the market competitions.

· Assumes credit risk. The Company will assume collection and receivable risks.

· The Company can change the products or perform part of the service, and the Company is involved in the determination of products or service specifications based on customer’s needs. At the beginning of the Company’s development stage, the Company will not change the products. After the products purchased by the Company and stored in warehouse, the Company will display our products on our website or through e-bay, the interested customers will click the specific product items to complete purchase orders. After the development stage, the Company will develop its own design and will customize the products according to customers’ request.

All the indicators of net revenue reporting (ASC 605-45, paragraph 16-23) will not be applicable in the Company.

Revenues are recognized from product sales upon shipment, which is the point in time when risk of loss is transferred to the customer, net of estimated returns and allowances.

The Company had zero revenue for the fiscal quarter ended at December 31, 2016 and 2015 respectively.

Cost of Goods Sold

Cost of Goods Sold included the purchase cost of the product sold, freight and shipping expense, custom fees, and merchant account fees.

For the quarter ended December 31, 2016 and 2015, no Cost of Goods Sold was recorded.

Operating Expense

Operating expense consist of selling, general and administrative expenses.

For the quarter ended December 31, 2016 and 2015, the Company incurred $ 23,658 and $ 27,197 operating expenses respectively, and $ 320,050 of operation expenses incurred for the period from May 10, 2010 date of inception to December 31, 2016.

Professional Fees

Professional fees consist of accounting and auditing fees, legal fees, SEC filing fees, and other professional fees.

For the quarter ended December 31, 2016 and 2015, the Company incurred $ 22,600 and $ 27,013 respectively, and $ 285,844 of professional fees expense incurred for the period from May 10, 2010 date of inception to December 31,2016.

Operating Leases

After February 6, 2013, the Company moved to the new address located at 1000 E. Armstrong St., Morris, IL 60450. There was no lease signed between the Company and the property owner, Jian Li, who is also the majority shareholder of the Company. Prior to the closing date of February 6, 2013, the monthly rent payment of $ 600 for the former office location in Hoffman Estates was paid up to January 31, 2013.

Recent Accounting Pronouncements

Management believes that none of the recently issued accounting pronouncements will have a material impact on the financial statements.

Income Tax

Income taxes are provided for tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes. Deferred taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences in asset and liability basis relate primarily to organization and start-up costs (use of different methods and periods to calculate deduction). Deferred taxes are also recognized for operating losses and tax credits that are available to offset future income taxes. The deferred tax assets and/or liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. The components of the deferred tax asset and liability are classified as current and concurrent based on their characteristics. Valuation allowances are provided for deferred tax assets based on management’s projection of the sufficiency of future taxable income to realize the assets.