Notes to the Financial Statements
(Unaudited)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Lotus Bio-Technology Development Corp (“we”, “our”, the “Company”) was formed on March 24, 2011 with planned principal operations as an independent motion picture producer. In 2016, the Company has shifted its focus and began exploring opportunities in the organic growth and farming sector in China.
In May of 2016, the Company has changed its name, president and business direction and entered the organic bio development space.
On May 7
th
, 2016, The Company also signed a marketing and distribution agreement with Hunan Canshi in China. Lotus Bio-Technology will provide Marketing, Sales and distribution for organic related products produced exclusively by Hunan Canshi. The term of the agreement is 10 years. General terms of the agreement state that Lotus will provide; Marketing, sales and distribution for Hunan Canshi and Hunan Canshi will provide a variety of Organic related products, Both Hunan Canshi and Lotus Bio-Technology intend to collaborate on a variety of business related issues such as promotion of products through social media and corporate website, development of joint marketing materials and training and support for all staff. The agreement also states that subsidiary company is to be created of which Lotus will own 51% in the newly established Hong Kong Entity As of today that process has not completed.
The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all the information required to be included in a complete set of financial statements in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine months ended December 31, 2016are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2017.
2. GOING CONCERN
The Company’s interim unaudited financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates realization of assets and liquidation of liabilities in the normal course of business. As shown in the accompanying financial statements, the Company has incurred net loss of $22,652 for the nine months ended December 31, 2016. The Company has not generated any operating revenues to date, has a working capital deficit and existence is dependent upon management’s ability to develop profitable operations. These conditions raise substantial doubt that the Company will be able to continue as a going concern. These financial statements do not include any adjustments that might result from this uncertainty.
Our activities to date have been supported by equity financing and demand loans from our major shareholder. Management continues to seek funding from its shareholders and other qualified investors to pursue its business plan and new course of action.
Loss Per Share
Loss per share is computed using the weighted average number of shares outstanding during the period. We have adopted ASC 260, "Earnings Per Share". Diluted loss per share for year ended June 30, 2017 is equivalent to basic loss per share as there was no potential dilutive equity instrument.
6
Foreign Currency Transactions
The Company's functional currency is Canadian dollars and its reporting currency is the United States dollar.
The Company’s financial statements are translated from its functional currency, Canadian dollars, to the reporting currency, United States dollars, using the current rate method. Assets and liabilities are translated using the current rate in effect at the balance sheet date and revenues and expenses are translated at the average rate for the period. Adjustments resulting from the translation, if any, are included in cumulative other comprehensive income (loss) in stockholders’ equity. At June 30, 2017, the Company did not have any other comprehensive income (loss).
Capital Stock – share structure
The corporation’s articles pertaining to Stock has been amended as of July 16, 2015 to increase the authorized capital stock to 300,000,000 shares of common stock having par value of $0.00001 per share. The amendment was made and approved by the Company’s Board of Directors on July 15, 2015. The Board of Directors have 83.3% of common stock which have 83.3% voting in favor of this amendment. The corporation’s articles pertaining to Stock has been amended as of July 21, 2015 to keep the authorized capital stock to 100,000,000 shares of preferred stock having par value of $0.00001 per share. The Board of Directors have 83.3% of common stock which have 83.3% voting in favor in keeping the preferred stock to 100,000,000 shares.
Stock-Based Compensation
The Company adopted ASC 718,
Compensation – Stock-Based Compensation
, to account for its stock options and similar equity instruments issued. Accordingly, compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period. ASC 718 requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid. We did not grant any stock options during the period from March 24, 2011 (inception) to December 31, 2016
Comprehensive Income
We adopted ASC 220,
Comprehensive Income
, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. We are disclosing this information on our Statement of Stockholders' Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. We have no elements of "other comprehensive income” from March 24, 2011 (inception) to December 31, 2016
3. DUE TO RELATED PARTIES
As at June 30, 2017 the balance due to a majority shareholder was $51,754. The amount due to the major shareholder is unsecured, non-interest bearing and due on demand.
As at June 30, 2017 the balance due to other related third parties was $15,694.
7
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unaudited Interim Financial Statements
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and Article 8 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. This report on Form 10-Q should be read in conjunction with the Company's audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K, for the fiscal year ended March 31, 2017, as filed with the Securities and Exchange Commission ("SEC") on July 15, 2017.
In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year.
Basis of Presentation
The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, management, are subject to an insignificant risk of loss in value. The Company had $0.00 in cash and cash equivalents as of June 30, 2017
and March 31, 2017 respectively.
Principal of Consolidation
These consolidated financial statements include the accounts of Lotus Bio-technology Development. All intercompany balances and transactions have been eliminated in consolidation.
5.
SUBSEQUENT EVENTS
As at June 30, 2017, there is no subsequent events. The Company has evaluated all subsequent events through the filing date of the form 10Q for appropriate accounting and disclosure, and there is no subsequent event disclosure required.
8