Quarterly Report
Item 2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations.
Forward-Looking Statements
Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the sections “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You should carefully review the risks described in this Annual Report on Form 10-K and in other documents we file from time to time with the Securities and Exchange Commission (“SEC”). You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
All references in this Form 10-Q to the “Company,” “Resort Savers,” “we,” “us,” or “our” are to Resort Savers, Inc.
Corporate Overview
Resort Savers, Inc. (the “Company” or “Resort Savers” or “RSSV”) was incorporated in the State of Nevada on June 25, 2012. The Company was authorized to issue 1,000,000,000 shares of common stock, par value $0.0001 per share, and 15,000,000 shares of preferred stock, par value $0.0001 per share. Our fiscal year end is January 31. Resort Savers has limited cash on hand. We have sustained losses since inception and have relied solely upon the sale of our securities for funding. Resort Savers has never declared bankruptcy, been in receivership, or been involved in any kind of legal proceeding.
During the year ended January 31, 2016, the Company issued the following shares:
- 20,955 common shares to an unaffiliated investor for cash subscription paid before January 31, 2015
- 5,000,000 common shares to an unaffiliated investor in exchange of 1,000,000 common shares of BRI
- 3,033,926 common shares to a shareholder in Amuli, for the shareholder’s 60% interest in Amuli.
- 4,800,000 common shares to Mr. Yang Boajin, a shareholder in Tieshan Oil, for his 51% interest in Tieshan Oil.
Worx America, Inc.
From January 2015 through March 2015, the Company, by and through its wholly owned subsidiary, Xing Rui International Investment Holding Group Co., Ltd., a Seychelles corporation (“Xing Rui”), acquired 20,068,750 common shares of Worx America, Inc. (“Worx”), a private company based in Houston, Texas, in exchange for $1,650,000 cash and 1,000,000 shares of common stock of BRI with a value of $350,000 were paid by the Company to Worx in exchange of 20,068,750 common shares of Worx, representing 20% of Worx’s the then issued and outstanding voting common stock on a fully converted and diluted basis. More specifically,
(i) on January 28, 2015, $350,000 cash was paid by the Company to Worx in exchange of 5,403,728 common shares of Worx and (ii) on March 20, 2015, $1,300,000 cash and 1,000,000 shares of common stock of BRI with a value of $350,000 were paid by the Company to Worx in exchange of 14,665,022 common shares of Worx. This investment was accounted for under equity method with initial cost of $2,000,000.
Worx designs automated solutions for industrial, environmental and energy industries to improve efficiency and systems output. The Worx automated robotic tank cleaning system reduces tank cleaning time, reduces or eliminates the need for personnel to enter tanks, and may reduce the volume of solvents used to clean a tank. Actual results vary from tank to tank and may involve variables including the product in the tank, physical condition of the tank such as corrosion, or amount of sludge accumulated. Worx is currently refining its product line to improve speed and efficiency. Our investment in Worx has facilitated this development. We hope that our investment into what we believe is an important technology will give us early access to the technology, establish relationships in the industry, and allow us to assist Worx with the launch of its commercial products in China and other parts of Asia.
Shenzhen Amuli Industrial Development Co. Ltd.
On October 1, 2015, the Company’s wholly-owned subsidiary, Xing Rui, by and through a newly formed People’s Republic of China (the “PRC”) corporation subsidiary Huaxin Changrong (Shenzhen) Technology Service Company Limited (“Huaxin”), completed a purchase from Xu Xiao Yun of sixty percent (60%) of the shares of Shenzhen Amuli Industrial Development Co. Ltd., a PRC corporation (“Amuli”), for 3,033,926 shares of the Company’s common stock. The purchase price was valued $2,400,000.
Apart from the transactions described above, neither the Company nor any of its subsidiaries has a material relationship with either Mr. Xu Xiao Yun or Amuli.
Amuli is in development to become a large producer of the health beverage drink Kvass. Amuli has purchased equipment and is currently expanding its production facilities that are forecasted to generate sales and profits in 2016.
On October 9, 2015, we amended our certificate of incorporation to increase the maximum number of shares of common stock that the Company shall be authorized to have outstanding at any time to 1,000,000,000 shares.
Beijing Yandong Tieshan Oil Products Co., Ltd.
On January 29, 2016, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with Mr. Yang Baojin, a citizen of the PRC, and Huaxin, which is a wholly owned subsidiary of Xing Rui, whereas Xing Rui itself is a wholly owned subsidiary of the Company. Mr. Baojin is the president and majority owner of Beijing Yandong Tieshan Oil Products Co., Ltd., a corporation organized under the laws of the PRC (“BYTOC”).
The Exchange Agreement provides that the Company will issue 6,000,000 shares of its common stock to Mr. Baojin, and Mr. Baojin will deliver to Huaxin an ownership interest in BYTOC such that Huaxin will own 51% of all ownership interests in BYTOC, provided that 1,200,000 shares of the Company’s common stock (20% of the common stock to be delivered to Mr. Baojin) will be withheld by the Company for a period of 12 months in order to secure against breach by Mr. Baojin of his representations and warranties contained in the Agreement, as well as to secure the fulfillment of his covenants and further obligations under the Exchange Agreement (the “Exchange”). Therefore, pursuant to the terms of the Exchange Agreement, on January 29, 2016, the Company issued 4,800,000 shares of its common stock to Mr. Baojin.
BYTOC is principally engaged in the trading of oil, gas and lubricant products within the PRC. Apart from the transactions pursuant to the Exchange Agreement, neither the Company nor any of its subsidiaries has a material relationship with either Mr. Baojin or BYTOC.
Under the Exchange Agreement, Mr. Baojin guarantees, for five years, that BYTOC will have an annual net income of Renminbi (the currency of the PRC – “RMB”) 10 million. To the extent that in any year the actual net income of BYTOC is less than RMB 10 million, then Mr. Baojin will pay Huaxin a cash payment equal to 51% of the shortfall.
The Exchange Agreement was approved by a written consent of the Board of Directors of the Company on January 29, 2016 and the closing of the transactions under the Exchange Agreement occurred concurrently with the execution and delivery of the Exchange Agreement.
As a result of the closing of the transactions under the Exchange Agreement, Huaxin now owns a majority of the ownership interest of BYTOC. Pursuant to the Exchange Agreement, as soon as reasonably practicable following the closing, the parties will amend the articles of association and bylaws of BYTOC so as to require a vote of the majority of the ownership interests in BYTOC to (i) approve the acquisition of BYTOC by means of a merger, (ii) approve the sale of substantially all assets of BYTOC, (iii) liquidate, dissolve or wind-up the business and affairs of BYTOC, (iv) amend, alter or repeal any provision of the articles of association or bylaws of BYTOC, (v) create any class or series of capital stock of BYTOC, (vi) pay or declare any dividend or make any distribution on any shares of capital stock of BYTOC, (vii) issue any debt security, and/or (viii) elect each member of the board of directors of BYTOC.
The total value of the exchange, based on the value of the Company’s common stock as of the close of trading on January 28, 2016, was $3,435,000.
Kashi Jinju Colour Printing Packaging Co. LTD.
On May 12, 2015, the Company, by and through its wholly-owned subsidiary, Xing Rui signed a definitive Letter of Intent with the stockholders of Kashi Jinju Colour Printing Packaging Co. LTD., a PRC corporation (“Kashi Jinju”) which manufactures cardboard boxes. The stockholders of Kashi Jinju and the Company intend to enter into a share exchange, wherein the stockholders of Kashi Jinju will exchange 80% of the issued and outstanding shares of stock of Kashi Jinju for 32,000,000 shares of the Company’s common stock. As of April 30, 2016, the Company and Kashi Jinju are still working towards satisfying conditions of the Letter of Intent, including regulatory approvals and licensing in the PRC, which are required to close the transaction.
Our Board of Directors will be primarily responsible for investigating combination opportunities. However, we believe that business opportunities may also come to our attention from various sources, including professional advisors such as attorneys, accountants, securities broker-dealers, venture capitalists, members of the financial community and others who may present unsolicited proposals. We have no plan, understanding, agreements or commitments with any individual for such person to act as a finder of opportunities for us. We do not propose to restrict our search for business opportunity to any particular geographical area or industry, and, therefore, we are unable to predict the nature of our future business operations. Our management’s discretion in the selection of business opportunities is unrestricted, subject to the availability of such opportunities, economic conditions, and other factors.
The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements for the period ended April 30, 2016, together with notes thereto, which are included in this report. Results of Operations
During the period ended April 30, 2016, the Company generated revenues of $21,999,360 with $21,809,079 cost of goods sold, incurred operating expenses of $209,671 and other expenses of $52,164, and had a net loss of $72,840.
The following table provides selected financial data about our company for the period ended April 30, 2016 and the year ended January 31, 2016.
| Balance Sheet Data | April 30, 2016 | January 31, 2016 |
| Cash | $ 29,244 | $ 226,638 |
| Total Assets | $ 36,358,933 | $ 31,063,457 |
| Total Liabilities | $ 27,814,628 | $ 22,519,828 |
| Stockholders’ Equity | $ 8,544,305 | $ 8,543,629 |
The following summary of our results of operations, for the quarters ended April 30, 2016 and 2015.
Three Months Ended
April 30,
2016 2015
REVENUE $ 21,999,360 $ -
COST OF GOODS SOLD 21,809,079 -
GROSS PROFIT 190,281 -
OPERATING EXPENSES
General and administrative 174,019 1,500
Professional fees 35,652 28,673
Total Operating Expenses 209,671 30,173
LOSS FROM OPERATIONS (19,390 ) (30,173 )
OTHER EXPENSE
Interest expenses (52,164 ) -
Equity loss on unconsolidated affiliate investment - (30,692 )
Total Other Expenses (52,164 ) (30,692 )
LOSS BEFORE INCOME TAXES (71,554 ) (60,865 )
Provision for income taxes (1,286 ) -
NET LOSS (72,840 ) (60,865 )
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The following summary of comprehensive loss, for the quarters ended April 30, 2016 and 2015.
Three months ended
April 30,
2016 2015
Net loss $ (72,840 ) $ (60,865 )
Other comprehensive loss net of tax:
Unrealized loss on available-for-sale investments net of tax
benefit - (62,000 )
Foreign currency translation adjustments 10,662 -
Comprehensive loss $ (62,178 ) $ (122,865 )
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For the three months ended April 30, 2016 and April 30, 2015
Revenues
The Company generated revenues of $21,999,360 and $0 during the three months ended April 30, 2016 and April 30, 2015, respectively.
Operating expenses
For the three months ended April 30, 2016, total operating expenses were $209,671, which included professional fees in the amount of $35,652 and general and administrative expenses of $174,019. For the three months ended April 30, 2015, total operating expenses were $30,173, which included professional fees in the amount of $28,673 and general and administrative expenses of $1,500. The increase in professional fees, management fees and general and administrative expenses were primary related to the Company’s ongoing regulatory requirements.
Interest expense
During the three months ended April 30, 2016 and 2015, the Company recognized interest expense of $52,164 and $0, respectively.
Loss on investment
During the three months ended April 30, 2015, the Company recognized $30,692 loss from its investment in Worx based on its proportionate share of Worx’s net loss during March 20, 2015 to April 30, 2015. During the three months ended April 30, 2016, the Company did not recognize investment loss. The Company lost significant influence on Worx on May 1, 2015. As a result, the equity method was suspended and the cost method was applied since then.
Net loss
For the three months ended April 30, 2016, the Company had a net loss of $72,840, as compared to a net loss for the three months ended April 30, 2015 of $60,865.
Comprehensive income loss
For the three months ended April 30, 2016, the Company had comprehensive income of $10,622 as foreign currency translation adjustment. For the three months ended April 30, 2015, the Company had a proportionate unrealized loss from Worx’s investment held for sale of $62,000, as indicated in the statement of other comprehensive income.
Limited Operating History; Need for Additional Capital There is no historical financial information about us on which to base an evaluation of our performance. We are a development stage company and have not generated revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in developing our website, and possible cost overruns due to the price and cost increases in supplies and services.
If we are unable to meet our needs for cash from either our operations, or possible alternative sources, then we may be unable to continue, develop, or expand our operations.
Liquidity and Capital Resources
Working Capital
As of As of
April 30, January 31,
2016 2016
Current Assets $ 32,256,770 $ 26,957,038
Current Liabilities $ 27,814,628 $ 22,519,828
Working Capital $ 4,442,142 $ 4,437,210
Cash Flows
Three months ended
April 30,
2016 2015
Cash Flows used in Operating Activities $ (262,727 ) $ (25,605 )
Cash Flows used in Investing Activities $ - (1,300,000 )
Cash Flows from Financing Activities $ 57,333 $ 25,605
Net Decrease in Cash During Period $ (197,394 ) $ (1,300,000 )
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As at April 30, 2016, the Company’s cash balance was $29,244 compared to $226,638 as at January 31, 2016. The decrease in cash was primarily due to operating losses associated with the business operations of BYOTC during the months ended 2016.
As at April 30, 2016, the Company had current assets of $32,256,770 compared with current assets of $26,957,038 and the Company had current liabilities of $27,814,628 compared with current liabilities of $22,519,828 as at January 31, 2016.
As at April 30, 2016, our company had a working capital of $4,442,142 compared with working capital of $4,437,210 as at January 31, 2016. The increase in working capital was primarily attributed to the increase in accounts receivable of $7,152,231 and increase in accounts payable and accrued liabilities of $18,721,720 and the decrease in prepaid expense and deposits off $1,663,274 and decrease deposits received of $13,496,941.
Cash Flow from Operating Activities
During the three months ended April 30, 2016, our company used $262,727 in cash from operating activities compared to cash used by operating activities of $25,605, during the three months ended April 30, 2015. Cash Flow from Investing Activities
During the three months ended April 30, 2016, our company used $0 compared to cash used $1,300,000 in investment of Worx for investing activities during the three months ended April 30, 2015.
Cash Flow from Financing Activities
During the three months ended April 30, 2016, our company received $57,333 loans from related parties compared to $25,605 of loan from related party for the three months ended April 30, 2015.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. Item 3. Quantitative and Qualitative Disclosures About Market Risk. As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures.
Management’s Report on Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer, principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.
As of the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer, principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report. Changes in Internal Control over Financial Reporting There have been no changes in our internal controls over financial reporting that occurred during the quarter ended April 30, 2016, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
