REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders’ of
Crypto-Services,
Inc.
Shenzhen,
China
We
have audited the accompanying balance sheets of Crypto-Services, Inc. (the “Company”) as of August 31, 2016
and 2015, and the related statements of operations, changes in stockholders’ equity and cash flows for the years then ended.
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We
conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
our audits provide a reasonable basis for our opinion.
In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Crypto-Services,
Inc. as of August 31, 2016 and 2015, and the results of its operations and its cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States of America.
The
accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates
continuity of business, realization of assets, and liquidation of liabilities in the ordinary course of business. As discussed
in Note 2 to the financial statements, the Company has suffered recurring losses from operations which raises substantial doubt
about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/
Malone Bailey, LLP
www.malonebailey.com
Houston,
Texas
February
17, 2017
Notes
to Financial Statements
August
31, 2016
1.
Nature of Operations
Crypto-Services,
Inc. was incorporated in the State of Nevada as a for-profit company on March 21, 2014 and established a fiscal year end of August
31. CRYT is a development-stage Company which intended to offer an information based website at www.digitalcoindaily.com that
would provide users with up to date information on the world of digital currencies.
Gordon
Hum, the Company’s formert director, President, Treasurer, Secretary, Chief Executive Officer, Chief Financial Officer and
holder of 3,500,000 shares of the Company’s common stock representing approximately 45.16% of the Company’s issued
and outstanding securities, entered into a Stock Purchase Agreement, pursuant to which he agreed to sell to twelve unrelated third
parties all of his securities of the Company, for aggregate cash consideration of $35,000. On the same day, Edwin Jong, the Company’s
director, Vice President and holder of 1,500,000 shares of the Company’s common stock representing approximately 19.35%
of the Company’s issued and outstanding securities, entered into a Stock Purchase Agreement, pursuant to which he agreed
to sell to five unrelated third parties all of his securities of the Company, for aggregate cash consideration of $15,000. In
connection with the sales of the Company’s securities, Gordon Hum and Edwin Jong resigned from all of their positions with
the Company effective August 3, 2016. Concurrently, Xinlong Shen was appointed to serve as the sole director, President, Treasurer,
Secretary, Chief Executive Officer and Chief Financial Officer of the Company. Effective December 14, 2016, Company accepted the
resignation of Xinlong Shen from the position of President, Secretary and Treasurer. He will remain on the Board as a director.
Also effective December 14, 2016, the Company appointed Yumin Lin as the new President, Secretary and Treasurer. He will also
serve as a director.
Effective
August 28, 2016, shareholders of Crypto-Services, Inc. representing 54.19% of the Company’s issued stock approved changing
the Company’s name from Crypto-Services, Inc., to Fortune Valley Treasures, Inc. The Company filed a Certificate of Amendment
with the State of Nevada on September 21, 2016. However, the name change is subject to the approval of Financial Industry Regulatory
Authority (FINRA). Thus, the Company currently is still using Crypto-Services, Inc. as its company name.
2.
Going Concern
These
financial statements have been prepared on a going concern basis, which implies the Company will continue to realize it assets
and discharge its liabilities in the normal course of business. During the year ended August 31, 2016, the Company has recurring
losses and negative cash flows from operations. The continuation of the Company as a going concern is dependent upon the continued
financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations,
and the attainment of profitable operations. These factors raise substantial doubt regarding the Company’s ability to continue
as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded
asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
3.
Summary of Significant Accounting Policies
a)
Basis of Presentation
These
financial statements and notes are presented in accordance with accounting principles generally accepted in the United States.
The Company’s fiscal year end is August 31.
b)
Use of Estimates
The
preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The Company regularly evaluates estimates and assumptions related to deferred income
tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various
other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other
sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates.
To the extent there are material differences between the estimates and the actual results, future results of operations will be
affected.
c)
Cash and Cash Equivalents
The
Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
d)
Financial Instruments
The
fair values of financial instruments which include cash and cash equivalents, prepaid expense and accrued liabilities were estimated
to approximate their carrying values due to the immediate or relatively short maturity of these instruments.
Transactions
involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of
competitive, freemarket dealings may not exist. Representations about transactions with related parties, if made, shall not imply
that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions
unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to
related parties due to their related party nature.
The
Company’s operations and financing activities are conducted primarily in United States dollars, and as a result the Company
is not subject to significant exposure to market risks from changes in foreign currency rates. Management has determined that
the Company is not exposed to significant credit risk.
3.
Summary of Significant Accounting Policies (continued)
e)
Loss per Share
The
Company computes net loss per share in accordance with ASC 740 “
Earnings per Share
”. ASC 260 requires presentation
of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by
dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during
the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options,
using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the
average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock
options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.
f)
Income Taxes
The
Company accounts for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized
g)
Recent Accounting Pronouncements
The
Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant effect on its
financial statements.
h)
Related parties
The
Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party
transactions.
4.
Related Party Transactions
|
a)
|
During
the year ended August 31, 2016, our former CEO, Gordon Hum, forgave $1,479 owed by the Company, which was recorded as additional
paid-in capital.
|
|
|
|
|
b)
|
As
of August 31, 2016, the Company was indebted to the then-CEO, Xinlong Shen, in the amount of $3,000, which is non-interest
bearing, unsecured, and due on demand.
|
|
|
|
|
c)
|
A
friend of Xinlong Shen provided non-compensated book keeping and financial reporting services from August, 2016 to December,
2016.
|
5.
Common Stock
|
a)
|
On
August 29, 2014, the Company issued 5,000,000 common shares at $0.01 per share for proceeds of $50,000.
|
|
|
|
|
b)
|
On
July 29, 2015, the Company issued 1,450,000 common shares at $0.01 per share for proceeds of $14,500.
|
|
|
|
|
c)
|
On
August 18, 2015, the Company issued 1,300,000 common shares at $0.01 per share for proceeds of $13,000.
|
6.
Income Taxes
Potential
benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has incurred
a net operating loss of $93,296 which expires beginning in 2034. The Company has adopted ASC 740, “
Accounting
for
Income Taxes
”, as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits
for non-capital losses carried forward. The potential benefit of the net operating loss has not been recognized in these financial
statements because the Company cannot be assured it is more likely than not it will utilize the loss carried forward in future
years.
The
income tax benefit differs from the amount computed by applying the federal income tax rate of 34% to net loss before income taxes.
Significant
components of the Company’s deferred tax assets and liabilities as at August 31, 2016 and 2015, after applying enacted corporate
income tax rates, are as follows:
|
|
2016
|
|
|
2015
|
|
Deferred income tax asset
|
|
|
|
|
|
|
|
|
Net operating loss carried forward
|
|
$
|
31,721
|
|
|
$
|
15,583
|
|
Valuation allowance
|
|
$
|
(31,721
|
)
|
|
$
|
(15,583
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred income tax asset
|
|
|
-
|
|
|
|
-
|
|
7.
Subsequent Events
On
September 1, 2016, the Company entered into a one-year Administrative Consultant Services Agreement with Geoffrey J. Armstrong
from Kouzelne Mesto Ltd. to engage him as an administrative consultant to assist Chief Executive Officer of the Company in the
day-to-day public, legal, and regulatory administration of the business. The consultant will be compensated at a monthly fee of
$3,500 on the first day of each month starting September 1, 2016. Stock issuance will also be made to the consultant. The agreement
will terminate on August 31, 2017 and may be continued upon the agreement of both parties.
Effective
December 14, 2016, the Company executed a Sale and Purchase Agreement (the Agreement”) to acquire 100% of the shares and
assets of DaXingHuaShang Investment Group Limited (“DIGL”), a company incorporated under the laws of Republic of Seychelles.
Pursuant to the Agreement, the Company has agreed to issue 300 million shares of the Company to DIGL to acquire 100% of the shares
and assets for a cost of $12 million reflecting the value of the rights, titles and interests in the business assets and all attendant
or related assets of DIGL. Both partied agreed that this share issuance by the Company represents payment in full of the $12 million.