NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
|
1.
|
ORGANIZATION AND PRINCIPAL ACTIVITIES
|
Geo JS Tech Group Corp. (hereinafter referred to as the “Company”) was incorporated in the State of Texas on April 13, 2010. The Company is engaged in sand, stone and iron mineral mine exploration in Mexico. The Company's fiscal year-end is March 31.
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
The Company maintains its general ledger and journals with the accrual method accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements, which are compiled on the accrual basis of accounting.
Group Santander SA DE CV and GEO Iron Resource DE CV is under common control by certain directors of the Company, however, the shareholders component and structure, risk involved, operation regions, accounting policy, mission and objectives are totally different.
Geo Tech will account for the 50% equal interest ownership joint ventures under equity method. Since both joint ventures have no activity in the last six months due to waiting for the Mexico Mining Minister approval on the necessary license and permit, the equity share contributed by these two joint ventures are zero.
The preparation of the financial statements in conformity with generally accepted accounting principles 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ materially from those estimates.
|
(c)
|
Economic and political risks
|
The Company’s operations are mainly conducting mine exploration in the Mexico and selling to People’s Republic of China (“PRC”). Accordingly, the Company’s business, financial condition and results of operations in the Mexico and PRC may be influenced by the political, economic and legal environment in the Mexico and PRC, and by the general state of the Mexico and PRC economy.
The Company’s major mining operations in the Mexico and selling in PRC are subject to special considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the Mexico and PRC, and by changes in government administration, governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
|
(d)
|
Cash and cash equivalents
|
The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company maintains bank accounts in the United States of America and is under $250,000 deposit insurance coverage per account from Federal Deposit Insurance Corporation.
Accounts receivable is carried at the net invoiced value charged to customer. The Company records an allowance for doubtful accounts to cover estimated credit losses. Management reviews and adjusts this allowance periodically based on historical experience and its evaluation of the collectability of outstanding accounts receivable. The Company evaluates the credit risk of its customers utilizing historical data and estimates of future performance.
|
(f)
|
Machinery, equipment and other depreciable assets
|
Machinery and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives of the, machinery and equipment, are as follows:
|
Machinery
|
10 years
|
|
Equipment
|
10 years
|
The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income/operation. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.
|
(g)
|
Mining assets, Exploration and Stripping Costs
|
Mining assets include mineral properties and rights, their acquisition costs are initially capitalized as tangible assets when purchased. The Company assesses the carrying costs for impairment when indicators of impairment exist, such as the carrying cost is below the fair value. When determining on the fair value of the asset, the company will include value beyond proven and probable reserves and anticipated future price fluctuations, which include marketplace assumptions with consideration of the company’s operating plans with respect to developing and producing minerals. If proven and probable reserves are established for a mining assets and they have been determined that certain mineral properties can be economically developed and produced, costs will be amortized using the units-of-production method over the estimated life of the proven and probable reserve or duration of mining rights, whichever is practicable.
Exploration costs are expensed as incurred until the establishment of economically viable reserves.
Stripping costs are classified as production costs and are included in the cost of inventory produced.
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. In accordance with Accounting Standards Codification ASC 350 “Intangibles - Goodwill and Other”, goodwill is no longer subject to amortization. Rather, goodwill is subject to at least an annual assessment for impairment, applying a fair-value based test. Fair value is generally determined using a discounted cash flow analysis.
|
(i)
|
Accounting for the impairment of long-lived assets
|
Impairment of Long-Lived Assets is evaluated for impairment at a minimum on an annual basis whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC 360-10 “Impairments of Long-Lived Assets”. An asset is considered impaired if its carrying amount exceeds the future net cash flow the asset is expected to generate. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair market value. The recoverability of long-lived assets is assessed by determining whether the unamortized balances can be recovered through undiscounted future net cash flows of the related assets. The amount of impairment, if any, is measured based on projected discounted future net cash flows using a discount rate reflecting the Company's average cost of capital.
The Company recognizes revenue in accordance with ASC 605 “Revenue Recognition”. The Company recognizes revenue when the significant risks and rewards of ownership have been transferred to the customer pursuant to PRC law, including factors such as when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, sales and value-added tax laws have been complied with, and collectability is probable. Furthermore, for sales with right of return, the company will anticipate the re-negotiation and price reduction process. The Company will provide a sales reduction provision to reflect the revenue reduction in accordance with ASC 605-15-25-1.
Revenue represents the invoiced value of goods sold recognized upon the delivery of goods to customers and may include shipping/freight charges and/or insurance. Since we do not provide insurance for clients, we do not charge insurance as part of our gross revenue. Revenue on freight charges may be recognized as income in case of the freight charges are borne by our Company. In sales which we do not bear freight charges, no freight charge will be incurred in the gross revenue.
Revenue is recognized when all of the following criteria are met:
|
- Persuasive evidence of an arrangement exists;
|
|
|
|
- Delivery has occurred or services have been rendered;
|
|
|
|
- The seller’s price to the buyer is fixed or determinable; and
|
|
|
|
- Collection is reasonably assured.
|
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
The Company may periodically issue shares of common stock for services rendered or for financing costs. Such shares are valued based on the market price of the shares on the transaction date.
The Company may periodically issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs.
ASC 718 "Compensation - Stock Compensation" prescribes accounting and reporting standards for all stock-based compensation plans, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights may be classified as either equity or liabilities. The Company should determine if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (
a
) the option to settle by issuing equity instruments lacks commercial substance or (
b
) the present obligation is implied because of an entity's past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability; otherwise, the transaction should be recognized as equity.
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50 "Equity -Based Payments to Non-Employees". Measurement of share-based payment transactions with non-employees shall be based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction should be determined at the earlier of performance commitment date or performance completion date.
In accordance with ASC 718, the cost of stock options and warrants issued to non-employees is measured at the grant date based on the fair value of the award. The fair value of the stock-based award is determined using the Black-Scholes option-pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive benefit, which is generally the vesting period.
Stock options issued to non-employee directors at fair market value will be accounted for under the intrinsic value method.
The Company did not have any stock options outstanding during the period ended June 30, 2014 and March 31, 2014. Accordingly, no pro forma financial disclosure is provided herein.
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
|
(l)
|
Issuance of shares for service
|
The Company accounts for the issuance of equity instruments to acquire goods and services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more reliably measurable.
The Company expensed all advertising costs as incurred. Advertising expenses included in selling expenses were $nil and $nil for the three months ended June 30, 2014 and 2013, respectively.
The Company uses the accrual method of accounting to determine and report its taxable income and tax credit in the year in which they are available. The Company has implemented ASC 740 “Income Taxes”.
Income tax liabilities computed according to the United States tax laws are provided for the tax effects of transactions reported in the financial statements and consists of taxes currently due plus deferred taxes related primarily to differences between the basis of fixed assets and intangible assets for financial and tax reporting. The deferred tax assets and 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. Deferred taxes also are recognized for operating losses that are available to offset future income taxes. A valuation allowance is created to evaluate deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize that tax benefit, or that future realization is uncertain.
Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other consolidated financial statements. The Company’s has no components of other comprehensive income.
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
The Company has only one category of inventory. The inventory consists of finished goods and states at lower of cost or market value. The inventory is derived from crunching down of large rock into 2 to 4 inched lump size ore with appropriate overhead incurred which included labor and processing cost. The management will regularly evaluate the inventory to determine if additional write-downs are required.
|
(q)
|
Recent accounting pronouncements
|
In January 2013, FASB has issued Accounting Standards Update (ASU) No. 2013-01,
Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities
. This ASU clarifies that ordinary trade receivables and receivables are not in the scope of ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. Specifically, ASU 2011-11 applies only to derivatives, repurchase agreements and reverse purchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with specific criteria contained in the FASB Accounting Standards Codification™ (Codification) or subject to a master netting arrangement or similar agreement. The FASB undertook this clarification project in response to concerns expressed by U.S. stakeholders about the standard’s broad definition of financial instruments. After the standard was finalized, companies realized that many contracts have standard commercial provisions that would equate to a master netting arrangement, significantly increasing the cost of compliance at minimal value to financial statement users. An entity is required to apply the amendments in ASU 2013-01 for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The effective date is the same as the effective date of ASU 2011-11.
In February 2013, FASB has issued Accounting Standards Update (ASU) No. 2013-02,
Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income
. This ASU improves the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in this ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP.
The new amendments will require an organization to:
-Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period.
-Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|
|
(q)
|
Recent accounting pronouncements (continued)
|
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). A private company is required to meet the reporting requirements of the amended paragraphs about the roll forward of accumulated other comprehensive income for both interim and annual reporting periods. However, private companies are only required to provide the information about the effect of reclassifications on line items of net income for annual reporting periods, not for interim reporting periods. The amendments are effective for reporting periods beginning after December 15, 2012, for public companies and are effective for reporting periods beginning after December 15, 2013, for private companies. Early adoption is permitted.
In February 2013, FASB issued Accounting Standards Update (ASU) No. 2013-03,
Financial Instruments (Topic 825)
. This ASU clarifies the scope and applicability of a disclosure exemption that resulted from the issuance of Accounting Standards Update No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendment clarifies that the requirement to disclose "the level of the fair value hierarchy within which the fair value measurements are categorized in their entirety (Level 1, 2, or 3)" does not apply to nonpublic entities for items that are not measured at fair value in the statement of financial position, but for which fair value is disclosed. This ASU is the final version of Proposed Accounting Standards Update 2013-200—Financial Instruments (Topic 825) which has been deleted. The amendments are effective upon issuance.
In February 2013, FASB has issued Accounting Standards Update (ASU) No. 2013-04,
Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date
. This ASU provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this ASU is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance in this ASU also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2014, and interim periods and annual periods thereafter. The amendments in this ASU should be applied retrospectively to all prior periods presented for those obligations resulting from joint and several liability arrangements within the ASU’s scope that exist at the beginning of an entity’s fiscal year of adoption. An entity may elect to use hindsight for the comparative periods (if it changed its accounting as a result of adopting the amendments in this ASU) and should disclose that fact. Early adoption is permitted.
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|
|
(q)
|
Recent accounting pronouncements (continued)
|
In March 2013, FASB has issued Accounting Standards Update (ASU) No. 2013-05,
Foreign Currency Matters (Topic 830)
. This ASU resolve the diversity in practice about whether Subtopic 810-10, Consolidation—Overall, or Subtopic 830-30, Foreign Currency Matters—Translation of Financial Statements, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights)within a foreign entity. In addition, the amendments in this Update resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. This ASU is the final version of Proposed Accounting Standards Update EITF11Ar—Foreign Currency Matters (Topic 830), which has been deleted. The amendments in this Update are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. For nonpublic entities the amendments in this Update are effective prospectively for the first annual period beginning after December 15, 2014, and interim and annual periods thereafter. The amendments should be applied prospectively to derecognition events occurring after the effective date. Prior periods should not be adjusted. Early adoption is permitted. If an entity elects to early adopt the amendments, it should apply them as of the beginning of the entity’s fiscal year of adoption.
In April 2013, FASB Accounting Standards Update 2013-07, Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting. This ASU clarifies when an entity should apply the liquidation basis of accounting. In addition, the guidance provides principles for the recognition and measurement of assets and liabilities and requirements for financial statements prepared using the liquidation basis of accounting. Liquidation is the process by which a company converts its assets to cash or other assets and settles its obligations with creditors in anticipation of ceasing all of its activities. An organization in liquidation must prepare its financial statements using a basis of accounting that communicates information to users of those financial statements to enable those users to develop expectations about how much the organization will have available for distribution to investors after disposing of its assets and settling its obligations. The ASU requires organization to prepare its financial statements using the liquidation basis of accounting when liquidation is “imminent.” Liquidation is considered imminent when the likelihood is remote that the organization will return from liquidation and either: (a) a plan for liquidation is approved by the person or persons with the authority to make such a plan effective and the likelihood is remote that the execution of the plan will be blocked by other parties; or (b) a plan for liquidation is being imposed by other forces (e.g., involuntary bankruptcy). In cases where a plan for liquidation was specified in the organization’s governing documents at inception (e.g., limited-life entities), the organization should apply the liquidation basis of accounting only if the approved plan for liquidation differs from the plan for liquidation that was specified in the organization’s governing documents. The ASU requires financial statements prepared using the liquidation basis to present relevant information about a company’s resources and obligations in liquidation, including the following:
|
|
l
|
The organization’s assets measured at the amount of the expected cash proceeds from liquidation, including any items it had not previously recognized under U.S. GAAP that it expects to either sell in liquidation or use in settling liabilities (e.g., trademarks).
|
|
|
l
|
The organization’s liabilities as recognized and measured in accordance with existing guidance that applies to those liabilities.
|
|
|
l
|
Accrual of the costs it expects to incur and the income it expects to earn during liquidation, including any anticipated disposal costs.
|
This ASU is effective for interim and annual reporting periods beginning after December 15, 2013, with early adoption permitted.
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
In July 2013, The FASB has published Accounting Standards Update 2013-09, Fair Value Measurement (Topic 820): Deferral of the Effective Date of Certain Disclosures for Nonpublic Employee Benefit Plans in Update No. 2011-04. This ASU defers indefinitely certain disclosures about investments held by nonpublic employee benefit plans in their plan sponsors’ own nonpublic equity securities. The ASU was approved by the FASB on June 12, 2013. ASU No. 2013-09, Fair Value Measurement (Topic 820): Deferral of the Effective Date of Certain Disclosures for Nonpublic Employee Benefit Plans in Update No. 2011-04, applies to disclosures of certain quantitative information about the significant unobservable inputs used in Level 3 fair value measurement for investments held by certain employee benefit plans.
In July 2013, the FASB has issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force).U.S. GAAP does not include explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amendments in this ASU state that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This ASU applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted.
The FASB has issued Accounting Standards Update (ASU) No. 2014-06, Technical Corrections and Improvements Related to Glossary Terms. The amendments in this ASU relate to glossary terms and cover a wide range of Topics in the FASB’s Accounting Standards Codification™ (Codification). These amendments are presented in four sections:
1. Deletion of Master Glossary Terms (Section A) arising because of terms that were carried forward from source literature (e.g., FASB Statements, EITF Issues, and so forth) to the Codification but were not utilized in the Codification.
2. Addition of Master Glossary Term Links (Section B) arising from Master Glossary terms whose links did not carry forward to the Codification.
3. Duplicate Master Glossary Terms (Section C) arising from Master Glossary terms that appear multiple times in the Master Glossary with similar, but not identical, definitions.
4. Other Technical Corrections Related to Glossary Terms (Section D) arising from miscellaneous changes to update Master Glossary terms.
The amendments do not have transition guidance and are effective upon issuance for both public entities and nonpublic entities.
The FASB has issued Accounting Standards Update (ASU) No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance in U.S. GAAP.
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment.
In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations.
The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. This disclosure will provide users with information about the ongoing trends in a reporting organization’s results from continuing operations.
The amendments in this ASU enhance convergence between U.S. GAAP and International Financial Reporting Standards (IFRS). Part of the new definition of discontinued operation is based on elements of the definition of discontinued operations in IFRS 5, Non-Current Assets Held for Sale and Discontinued Operations.
The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. For most nonpublic organizations, it is effective for annual financial statements with fiscal years beginning on or after December 15, 2014. Early adoption is permitted.
The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact on results of operations, financial condition, or cash flows, based on current information.
Prepayments are made for half of 50% of mining assets include mining concession rights in Maria, Manzanillo, Mexico to a joint venture partner and third party for professional fees which are summarized as follow:
|
|
|
June 30,
2014
|
|
|
March 31,
2014
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Prepayment for mining assets
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepayment for professional fees
|
|
|
0
|
|
|
|
1,700,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Transferred to mining assets
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Transferred to expenses
|
|
|
0
|
|
|
|
(1,700,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
0
|
|
|
$
|
0
|
|
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
|
4.
|
MACHINERY AND EQUIPMENT, NET
|
Machinery and equipment comprise the followings:
|
|
|
June 30
2014
|
|
|
March 31,
2014
|
|
|
At cost
|
|
|
|
|
|
|
|
Machinery
|
|
$
|
613,184
|
|
|
$
|
613,184
|
|
|
Equipment
|
|
|
2,482,000
|
|
|
|
2,482,000
|
|
|
Total assets at cost
|
|
$
|
3,095,184
|
|
|
$
|
3,095,184
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Accumulated depreciation
|
|
|
(708,651
|
)
|
|
|
(665,349
|
)
|
|
Net assets
|
|
$
|
2,376,533
|
|
|
$
|
2,429,835
|
|
Depreciation expenses were $53,305 for June 30, 2014 and $213,210 for the years ended March 31, 2014 respectively.
|
5.
|
LOANS FROM SHAREHOLDERS
|
Loans from shareholders are unsecured, interest free and repayable on demand.
In May 2013, the company recorded loans from stockholders and other unrelated party of was $515,000. Details of the Company’s loan transactions as of the three months ended June 30, 2014 are as follows;
|
Name
|
Date
|
|
Total
Aggregate
Amount
|
|
|
Payment
During the Year
|
|
|
Total
Outstanding as
of June 30,
2014
|
|
|
Total Interest
Paid During
the year
|
|
|
Interest Rate
|
|
Related or
Unrelated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jimmy Yee(1)
|
5/18/2013
|
|
$
|
115,000.00
|
|
|
$
|
0
|
|
|
$
|
135,000
|
|
|
$
|
0
|
|
|
|
0.00
|
%
|
Related
|
|
Po Wing Hong(2)
|
5/1/2013
|
|
$
|
200,000.00
|
|
|
$
|
0
|
|
|
$
|
200,000
|
|
|
$
|
0
|
|
|
|
0.00
|
%
|
Unrelated
|
|
Madalero Realty(3)
|
5/1/2013
|
|
$
|
200,000.00
|
|
|
$
|
50,000
|
|
|
$
|
150,000
|
|
|
$
|
0
|
|
|
|
0.00
|
%
|
Unrelated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2013
|
|
|
$
|
515,000.00
|
|
|
$
|
50,000
|
|
|
$
|
485,000
|
|
|
$
|
0
|
|
|
|
|
|
|
|
(1)
|
Jimmy Yee, a related party, made a loan of $135,000, which amount remains outstanding as of June 30, 2014. The loan is unsecured with no interest and repayable on demand.
|
|
|
|
|
(2)
|
Po Wing Hong, a related party, made a loan of $200,000, which amount remains outstanding as of June 30, 2014. The loan is unsecured with no interest and repayable on demand
|
|
|
|
|
(3)
|
Madalero Realty, a related party, made a loan of $200,000, which $150,000 amount remains outstanding as of June 30, 2014. The loan is unsecured with no interest and repayable on demand.
|
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
|
6.
|
RELATED PARTY TRANSACTIONS
|
During the period and fiscal year ended June 30, 2014 and March 31, 2014, the Company has the following related party transactions:
During the period and fiscal year ended June 30, 2014 and March 31, 2014, the Company paid $0 and $0 production cost; and $0 management fees and $0 royalty fees to Pan American Mineral Ventures, S.A. DE C.V., Baja California, Mexico, which was a 50% equal share joint venture partner for Mexico mineral exploration projects since September 26, 2010.
During the period and fiscal year ended June 30, 2014 and March 31, 2014, the Company paid $0 and $0 management fees to Geo Tech S.A. DE Mexico which was majority owned by one of the shareholder of the Company.
During the period and fiscal year ended June 30, 2014 and March 31, 2014, the Company paid $0 and $0 production cost to Geotech S.A. DE C.V., which was 70% owned by Edward Mui, one of the shareholder of the Company and 30% owned by unrelated person Wai Tsang.
During the period and fiscal year ended June 30, 2014 and March 31, 2014, the Company paid $0 and $29,000 production cost to Geo Iron Resource S.A., which was 51% owned by Edward Mui, 13% by Jimmy Yee, 12% by Huang Y Kao, with aggregated 76% owned by the shareholders of the Company. The rest of the 24% was owned by 6 other unrelated persons, 6% by Mathieu Goldenberg, 6% by Roman Avzski, 3% by Angela Sung, 3% by John Lionti, 3% by Joe Greco Sr., 3% by Joe Greco Jr.
The nature of the $29,000 production cost was for patio rental and administration. The nature of the $4,062,000 production cost payment were made for $2,963,086 iron mineral purchase, $365,820 trucking and gasoline, $332,820 port fee, $229,989 heavy equipment lease, $53,200 salary for Mexico personnel, $48,000 patio rental, $35,585 general administration, $21,500 maintenance, $12,000 rent.
During the period and fiscal year ended June 30, 2014 and March 31, 2014, we did no business with Groupo Santander S.A. DE C.V. The detail shareholders of Santander SA DE CV were 62.62% owned by Jeff Zhou, one of the shareholder of the Company; the rest of the 37.37% were owned by 5 other unrelated persons, 18.75% by Wei Qiu, 7.5% by Shan M Chan, 6.25% by Guo D Lin, 4.25% owned by Anita Cheung, 0.63% owned by Dak T Yee.
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
The Company is subject to federal corporation income taxes at a maximum rate of 33% in the United States, the tax jurisdiction in which they are operating. Texas State is not required to file the corporation income tax returns and no corporation income tax is levied.
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, including tax loss and credit carry forwards, 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 of the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Realization of the deferred tax asset is dependent on generating sufficient taxable income in future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Company is subject to the United States Federal corporation income tax at a rate of 33%. The reconciliation of the United State Federal income tax rate to the effective income tax rate based on loss before income taxes stated in the financial statements concerning the net operation loss carried forwards and the deferred taxation are as following:
|
|
|
June 30,
2014
|
|
|
March 31,
2014
|
|
|
|
|
|
|
|
|
|
|
Deferred Tax Assets:
|
|
|
|
|
|
|
|
Net operating loss carried forwards
|
|
$
|
3,053,061
|
|
|
$
|
3,065,531
|
|
|
Federal tax rate
|
|
|
33%
|
|
|
|
33%
|
|
|
Less: Valuation allowance
|
|
$
|
(3,053,061)
|
|
|
$
|
(3,065,331)
|
|
|
Federal tax rate
|
|
|
(33%)
|
|
|
|
(33%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets, net
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company did not have any interest or penalty recognized in the income statements for the period ended June 30, 2014 and 2013 or balance sheet as of June 30, 2014 and March 31, 2014. The Company did not have uncertain tax positions or events leading to uncertain tax position within the next 12 months. The Company’s 2013, 2012 and 2011 U.S. Corporation Income Tax Return are subject to Internal Revenue Service examination.
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
Suppliers
The Company’s major suppliers for the period ended June 30, 2014 and 2013 are listed as following:
|
|
|
Purchases For
Three Months Ended
|
|
|
Accounts Payable
As Of
|
|
|
Major Customers
|
|
June,
30,
2014
|
|
|
June 30,
2013
|
|
|
June 30,
2014
|
|
|
June 30,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company A
|
|
|
100
|
%
|
|
|
0
|
%
|
|
|
100%
|
%
|
|
|
0
|
%
|
|
Company B
|
|
|
%
|
|
|
60
|
%
|
|
|
0%
|
%
|
|
|
0
|
%
|
|
Company C
|
|
|
%
|
|
|
4.8
|
%
|
|
|
0%
|
%
|
|
|
0
|
%
|
|
Company D
|
|
|
%
|
|
|
4.8
|
%
|
|
|
0%
|
%
|
|
|
0
|
%
|
|
Company E
|
|
|
%
|
|
|
4.4
|
%
|
|
|
0%
|
%
|
|
|
0
|
%
|
Customers
The Company’s major customers for the period ended June 30, 2014 and 2013 are listed as following:
|
|
|
Sales For Three Months Ended
|
|
|
Accounts Receivable As Of
|
|
|
Major Customers
|
|
June, 30,
2014
|
|
|
June 30,
2013
|
|
|
June 30,
2014
|
|
|
June 30,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company M
|
|
|
80
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
Company N
|
|
|
20
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
Company O
|
|
|
%
|
|
|
38
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
Company P
|
|
|
%
|
|
|
31
|
%
|
|
0
|
%
|
|
|
100
|
%
|
|
Company Q
|
|
|
%
|
|
|
11
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
As shown in the accompanying financial statements, the Company has an accumulated deficit of $3,907,654 as of June 30, 2014. The Company also experience insufficient cash flows from operations and will be required to raise capital to fund its operations until it is able to generate sufficient revenue to support the future development. Moreover, the Company may be continuously raising capital through the sale of debt and equity securities. These factors have raised substantial doubt about the Company’s ability to continue as a going concern. There can be no assurances that the Company will be able to obtain adequate financing or achieve profitability. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
|
10.
|
COMMITMENT AND CONTINGENCIES
|
Operating Leases - The Company has operating lease agreements for office premises, which expiring through March 2014. Future minimum rental payments under agreements classified as operating leases with non-cancelable terms for the next one year and thereafter are as follows:
|
June 30, 2015
|
|
$
|
2,700
|
|
|
2016 and thereafter
|
|
|
0
|
|
|
Total
|
|
$
|
2,700
|
|
Rental expense paid for the years ended June 30, 2014 and 2013 were $3,600 and $3,600 respectively.
The Company is a plaintiff in a motion filed in the Harris County, Texas. The defendant filed counter-claim. Based on the information from the legal counsel, the Company has meritorious claims against the defendant. The case is in the initial stages and no outcome can be determined.
On April 17, 2010, the Company has issued 100,000,000 shares of ordinary common stock at par value $0.001 per share for $2,650,000.
On December 8, 2011, the Company has forfeited 15,000,000 shares of ordinary common stock for two shareholders as they did not intend to pay cash on them. Accordingly, the common stock was reduced by $15,000 and the paid in capital was reduced by $382,500. Total capital was reduced by $397,500.
On January 31, 2013, the company has re-issued 12,980,000 shares of ordinary common stock at par value $0.001 per share to various accredit investors for $1,298,000.
On March 28, 2014, the company issued 107,000,000 shares for acquisition of mining assets and consultant contracts.
Segment information is not required as the Company has one product and generates income in one geographic region.
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
The Company calculates earnings per share in accordance with ASC 260, “Earnings Per Share”, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the fiscal year. Potentially dilutive common shares consist of convertible preferred stock (using the if-converted method) and exercisable warrants and stock options outstanding (using the treasury method). Holder of convertible preferred stock participate in dividends of the Company on the same basis as holders of the Company’s common stock and is therefore included in the calculation of basic earnings per share using the two class method.
The following table sets forth the computation of basic and diluted net income per common share:
|
|
|
June 30,
2014
|
|
|
June 30,
2013
|
|
|
|
|
|
|
|
|
|
|
Net income for computing basic net income(loss) per share
|
|
$
|
12,270
|
|
|
$
|
(952,310)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income(loss) for computing diluted net income(loss) per share
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income(loss) attributable to ordinary shareholders for computing basic net income
|
|
$
|
12,270
|
|
|
$
|
(952,310)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding in computing net income (loss) per common stock
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
204,980,000
|
|
|
|
149,716,264
|
|
|
Diluted
|
|
|
204,980,000
|
|
|
|
149,716,264
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share of common stock
|
|
$
|
.0001
|
|
|
$
|
(0.0064)
|
|
|
Diluted earnings (loss) per share
|
|
$
|
.0001
|
|
|
$
|
(0.0064)
|
|
The Company has evaluated all other subsequent events through August 5, 2014 the date these financial statements were issued, and determined that there were no other subsequent events or transactions that require recognition or disclosures in the financial statements.
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
The Company has evaluated the prepayment item concerning with the acquisition of mineral mining assets $100,000 and the company was unable to determine the future mining asset benefits and relevant income generating amount. Therefore, the company determined to provide adjustment to write it off and restate the related March 31, 2013 financial statements to eliminate this uncertain prepayment.
|
ITEMS
|
|
ORIGINAL
2013
|
|
|
Adjustment
|
|
|
RESTATED
2013
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepayment
|
|
$
|
100,000
|
|
|
$
|
(100,000)
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
$
|
950,047
|
|
|
$
|
(100,000)
|
|
|
$
|
850,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
2,840,008
|
|
|
$
|
(100,000)
|
|
|
$
|
2,740,008
|
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
|
$
|
(754,593)
|
|
|
$
|
(100,000)
|
|
|
$
|
(854,593)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders’ Equity
|
|
$
|
2,795,907
|
|
|
$
|
(100,000)
|
|
|
$
|
2,695,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
2,840,008
|
|
|
$
|
(100,000)
|
|
|
$
|
2,740,008
|
|
As a result of restatement of the balance sheet as of March 31, 2013, the prepayment was reduced by $100,000 and changed from $100,000 to $0. Total current assets was reduced by $100,000 and changed from $950,047 to $850,047. Total assets was reduced by $100,000 and changed from $2,840,008 to $2,740,009. The accumulated deficit was reduced by $100,000 and changed from $(754,593) to $(854,593). The total stockholders’ equity was reduced by $100,000 and changed from $2,795,907 to $2,695,907. Total liabilities and stockholders’ equity was reduced by $100,000 and changed from $2,840,008 to $2,740,008.
|
ITEMS
|
|
ORIGINAL
2013
|
|
|
Adjustment
|
|
|
RESTATED
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
5,568,172
|
|
|
$
|
-
|
|
|
$
|
5,568,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
(5,019,636)
|
|
|
|
(100,000)
|
|
|
|
(5,119,636)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profits
|
|
$
|
548,536
|
|
|
$
|
(100,000)
|
|
|
$
|
448,436
|
|
|
Operating expenses
|
|
$
|
539,924
|
|
|
$
|
-
|
|
|
$
|
539,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profits/(loss) from operations
|
|
$
|
8,612
|
|
|
$
|
(100,000)
|
|
|
$
|
(91,388)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) before income taxes
|
|
$
|
8,612
|
|
|
$
|
(100,000)
|
|
|
$
|
(91,388)
|
|
|
Net profits/(loss)
|
|
$
|
8,612
|
|
|
$
|
(100,000)
|
|
|
$
|
(91,388)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings/(loss) per share – Basic and diluted
|
|
$
|
0.0001
|
|
|
$
|
(0.0011)
|
|
|
$
|
(0.0010)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average no. of common stock- Basic and diluted
|
|
|
87,133,699
|
|
|
|
|
|
|
|
87,133,699
|
|
GEO JS TECH GROUP CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013
(Stated in US Dollars)
As a result of restatement of the statements of income and comprehensive income for the year ended March 31, 2013, the net revenue did not have changes, the cost of revenue was reduced by $100,000 and changed from $(5,019,636) to $(5,119,636).Gross profits was reduced by $100,000 and changed from $548,536 to $448,436. The profits/(loss) from operations, income/(loss) before income taxes and net profits/(loss) were reduced by $100,000 and changed from $8,612 to $(91,388). The net earnings/(loss) per share-basic and diluted was reduced by $(0.0011) and changed from $0.0001 to $(0.0010).
|
ITEMS
|
|
ORIGINAL
2013
|
|
|
Adjustment
|
|
|
RESTATED
2013
|
|
|
STATEMENTS OF CASH FLOW
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
|
|
$
|
8,612
|
|
|
$
|
(100,000)
|
|
|
$
|
(91,388)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepayment
|
|
|
0
|
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used)/provided by operating activities
|
|
$
|
(296,890)
|
|
|
$
|
0
|
|
|
$
|
(296,890)
|
|
As a result of restatement of the statements of cash flow for the year ended March 31, 2013, the net income/(loss) reduced by $100,000 and changed from $8,612 to $(91,388) which is offset by the $100,000 reduction of prepayment and changed from $0 to $(100,000). The net cash (used)/provided by operating activities did not have changes.