NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND DESCRIPTION
OF BUSINESS
Sunrise Real Estate Group, Inc. “SRRE”
was incorporated in Texas on October 10, 1996 under the name of Parallax Entertainment, Inc. SRRE together with its subsidiaries
and equity investment described below is collectively referred to as “the Company”, “our” or “us”.
The Company is primarily engaged in the provision of property brokerage services, which include property marketing, leasing and
management services; and real estate development in the People’s Republic of China (the “PRC”).
As of June 30, 2013, the Company has the
following major subsidiaries and equity investment.
Company Name
|
|
Date of
Incorporation
|
|
Place of
Incorporation
|
|
% of
Ownership
held
by the
Company
|
|
|
Relationship
with the
Company
|
|
Principal activity
|
Sunrise
Real Estate Development Group, Inc. (“CY-SRRE”)
|
|
April 30, 2004
|
|
Cayman Islands
|
|
|
100
|
%
|
|
Subsidiary
|
|
Investment holding
|
Lin
Ray Yang Enterprise Limited (“LRY”)
|
|
November 13, 2003
|
|
British Virgin Islands
|
|
|
100
|
%
|
|
Subsidiary
|
|
Investment holding
|
Shanghai
Xin Ji Yang Real Estate Consultation Company Limited (“SHXJY”)
|
|
August 20, 2001
|
|
PRC
|
|
|
100
|
%
|
|
Subsidiary
|
|
Property brokerage services
|
Shanghai
Shang Yang Real Estate consultation Company Limited (“SHSY”)
|
|
February 5, 2004
|
|
PRC
|
|
|
100
|
%
|
|
Subsidiary
|
|
Property brokerage services
|
Suzhou
Gao Feng Hui Property Management Company Limited (“SZGFH”)
|
|
January 10, 2005
|
|
PRC
|
|
|
100
|
%
|
|
Subsidiary
|
|
Property management and leasing services
|
Suzhou
Shang Yang Real Estate Consultation Company Limited (“SZSY”)
|
|
November 24, 2006
|
|
PRC
|
|
|
38.5
|
%
1
|
|
Subsidiary
|
|
Property brokerage and management services
|
Suzhou
Xi Ji Yang Real Estate Consultation Company Limited (“SZXJY”)
|
|
June 25, 2004
|
|
PRC
|
|
|
75
|
%
|
|
Subsidiary
|
|
Property brokerage services
|
Linyi
Shangyang Real Estate Development Company Limited (“LYSY”)
|
|
October 13, 2011
|
|
PRC
|
|
|
24
|
%2
|
|
Subsidiary
|
|
Real estate development
|
Shangqiu
Shang Yang Real Estate Consultation Company Limited (“SQSY”)
|
|
October 20, 2010
|
|
PRC
|
|
|
100
|
%
|
|
Subsidiary
|
|
Property brokerage services
|
Wuhan
Gao Feng Hui Consultation Company Limited (“WHGFH”)
|
|
November 10, 2010
|
|
PRC
|
|
|
60
|
%
|
|
Subsidiary
|
|
Property brokerage services
|
Sanya
Shang Yang Real Estate Consultation Company Limited (“SYSY”)
|
|
September 18, 2008
|
|
PRC
|
|
|
100
|
%
|
|
Subsidiary
|
|
Property brokerage services
|
Shanghai
Rui Jian Design Company Limited (“SHRJ”)
|
|
August 15, 2011
|
|
PRC
|
|
|
100
|
%
|
|
Subsidiary
|
|
Property brokerage services
|
Linyi
Rui Lin Construction and Design Company Limited (“LYRL”)
|
|
March 6, 2012
|
|
PRC
|
|
|
100
|
%
3
|
|
Subsidiary
|
|
Investment holding
|
Putian
Xin Ji Yang Real Estate Consultation Company Limited (“PTXJY”)
|
|
June 5, 2012
|
|
PRC
|
|
|
100
|
%
|
|
Subsidiary
|
|
Property brokerage services
|
Company Name
|
|
Date of
Incorporation
|
|
Place of
Incorporation
|
|
% of
Ownership
held
by the
Company
|
|
|
Relationship
with the
Company
|
|
Principal activity
|
Shanghai
Xin Ji Yang Real Estate Brokerage Company Limited (“SHXJYB”)***
|
|
January 28, 2013
|
|
PRC
|
|
|
75
|
%
4
|
|
Subsidiary
|
|
Property brokerage services
|
Wuhan
Yuan Yu Long Real Estate Development Company Limited (“WHYYL”)
|
|
December 28, 2009
|
|
PRC
|
|
|
49
|
%
|
|
Equity investment
|
|
Real Estate development
|
|
1.
|
The Company and a shareholder of SZSY,
which holds 12.5% equity interest in SZSY, entered into a voting agreement
that the Company is entitled to exercise the voting rights in respect
of the shareholder’s 12.5% equity interest in SZSY. The Company
effectively holds 51% voting rights in SZSY and therefore considers
SZSY as a subsidiary of the Company.
|
|
2.
|
The Company and a shareholder of LYSY,
which holds 51% equity interest in LYSY, entered into a voting agreement
that the Company is entitled to exercise the voting rights in respect
of her 51% equity interest in LYSY. The Company effectively holds 75%
voting rights in LYSY and therefore considers LYSY as a subsidiary
of the Company.
|
|
3.
|
The equity interest in LYRL is held
by three Chinese individuals in trust for SHXJY.
|
|
4.
|
On January 28, 2013, CY-SRRE, SZXJY
and an unrelated party established a subsidiary in the PRC, SHXJYB,
with CY-SRRE holding a 15% equity interest and SZXJY holding a 60%
equity interest in SHXYJB.
|
The accompanying condensed consolidated
balance sheet as of December 31, 2012, which has been derived from the audited consolidated financial statements and the accompanying
unaudited condensed consolidated financial statements, has been prepared pursuant to the rules and regulations of the Securities
and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in annual financial
statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
have been condensed or omitted pursuant to those rules and regulations and the Company believes that the disclosures made are
adequate to make the information not misleading.
In the opinion of management, these condensed
consolidated financial statements reflect all adjustments which are of a normal recurring nature and which are necessary to present
fairly the financial position of the Company as of June 30, 2013 and the results of operations for the three months and six months
ended June 30, 2013 and 2012, and the cash flows for the six months ended June 30, 2013 and 2012. These condensed consolidated
financial statements and related notes should be read in conjunction with the Company’s annual report on Form 10-K for the
fiscal year ended December 31, 2012. The results of operations for the three months and six months ended June 30, 2013 are not
necessarily indicative of the results which may be expected for the entire fiscal year.
The preparation of condensed consolidated
financial statements in conformity with U.S. GAAP requires the Company 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.
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Accounting and Principles
of Consolidation
The
condensed
consolidated financial statements include the financial statements
of Sunrise Real Estate Group, Inc. and its subsidiaries. All significant inter-company accounts and transactions have been eliminated
on consolidation.
Investments in business entities, in which
the Company does not have control but has the ability to exercise significant influence over operating and financial policies,
are accounted for using the equity method.
Going Concern
The Company’s
condensed consolidated financial statements have been prepared on a going concern, which contemplates the realization of assets
and satisfaction of liabilities and commitments in the normal course of business. As of
June 30
,
2013, the Company has a working capital deficiency, accumulated deficit from recurring net losses, and significant short-term
debt obligations currently in default or maturing in less than one year. These factors raise substantial doubts about the Company’s
ability to continue as a going concern.
Management believes that the Company will
generate sufficient cash flows to fund its operations and to meet its obligations on timely basis for the next twelve months by
successful implementation of its business plans, obtaining continued support from its lenders to rollover debts when they became
due, and securing additional financing as needed. If events or circumstances occur that the Company is unable to successfully
implement its business plans, fails to obtain continued supports from its lenders or to secure additional financing, the Company
may be required to suspend operations or cease business entirely.
The accompanying condensed consolidated
financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts
and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Foreign Currency Translation and Transactions
The functional currency of SRRE, CY-SRRE
and LRY is U.S. dollars (“$”) and their financial records are maintained and the financial statements prepared in
U.S. dollars. The functional currency of the Company’s subsidiaries and affiliate in China is Renminbi (“RMB”)
and their financial records and statements are maintained and prepared in RMB.
Foreign currency transactions during the
period are translated into each company’s denominated currency at the exchange rates ruling at the transaction dates. Gain
and loss resulting from foreign currency transactions are included in the condensed consolidated statement of operations. Assets
and liabilities denominated in foreign currencies at the balance sheet date are translated into each company’s denominated
currency at period-end exchange rates. All exchange differences are dealt with in the condensed consolidated statements of operations.
The financial statements of the Company’s
operations based outside of the United States have been translated into U.S. dollars in accordance with ASC 830. Management has
determined that the functional currency for each of the Company’s foreign operations is its applicable local currency. When
translating functional currency financial statements into U.S. dollars, period-end exchange rates are applied to the condensed
consolidated balance sheets, while average exchange rates as to revenues and expenses are applied to condensed consolidated statements
of operations. The effect of foreign currency translation adjustments are included as a component of accumulated other comprehensive
income in shareholders’ equity.
The exchange rates as of June 30, 2013
and December 31, 2012 are $1: RMB6.1787 and $1: RMB6.2855, respectively.
The RMB is not freely convertible into
foreign currency and all foreign exchange transaction must take place through authorized institutions. No representation is made
that the RMB amounts could have been, or could be, converted into U.S. dollars at the rate used in translation.
Major Customers
There was one customer that accounted
for 29% or our net revenues during the six months ended June 30, 2013, and there were three customers that accounted for 10%,
14% and 24% of our net revenues, respectively, during the six months ended June 30, 2012. There were no accounts receivable from
these customers as of June 30, 2013 and December 31, 2012.
Real Estate Property under Development
Real estate property under development,
which consists of residential unit sites and commercial and residential unit sites under development, is stated at the lower of
carrying amounts or fair value less selling costs.
Expenditures for land development, including
cost of land use rights, deed tax, pre-development costs and engineering costs, are capitalized and allocated to development projects
by the specific identification method. Costs are allocated to specific units within a project based on the ratio of the sales
value of units to the estimated total sales value times the total project costs.
Costs of amenities transferred to buyers
are allocated as common costs of the project that are allocated to specific units as a component of total construction costs.
For amenities retained by the Company, costs in excess of the related fair value of the amenity are also treated as common costs.
Results of operations of amenities retained by the Company are included in current operating results.
In accordance with ASC 360, “Property,
Plant and Equipment” (“ASC 360”), real estate property under development is subject to valuation adjustments
when the carrying amount exceeds fair value. An impairment loss is recognized only if the carrying amount of the assets is not
recoverable and exceeds fair value. The carrying amount is not recoverable if it exceeds the sum of the undiscounted cash flows
expected to be generated by the assets.
For the three months and six months ended
June 30, 2013 and 2012, the Company had not recognized any impairment for real estate property under development.
Long Term Investments
The Company accounts for long term investments
in equities as follows.
Investment in Unconsolidated Affiliates
Affiliates are entities over which the
Company has significant influence, but which it does not control. The Company generally considers an ownership interest of 20%
or higher to represent significant influence. Investments in unconsolidated affiliates are accounted for by the equity method
of accounting. Under this method, the Company’s share of the post-acquisition profits or losses of affiliates is recognized
in the income statement and its shares of post-acquisition movements in other comprehensive income are recognized in other comprehensive
income. Unrealized gains on transactions between the Company and its affiliates are eliminated to the extent of the Company’s
interest in the affiliates; unrealized losses are also eliminated unless the transaction provides evidence of an impairment of
the asset transferred.
When the Company’s share of losses
in an affiliate equals or exceeds its interest in the affiliate, the Company does not recognize further losses, unless the Company
has incurred obligations or made payments on behalf of the affiliate.
The Company is required to perform an
impairment assessment of its investments whenever events or changes in business circumstances indicate that the carrying value
of the investment may not be fully recoverable. An impairment loss is recorded when there has been a loss in value of the investment
that is other than temporary. The Company recorded any impairment losses in any of the periods reported.
Other Investments
Where the Company has no significant influence,
the investment is classified as other assets in the balance sheet and is carried under the cost method. Investment income is recognized
by the Company when the investee declares a dividend and the Company believes it is collectible. The Company periodically evaluates
the carrying value of its investment under the cost method and any decline in value is included in impairment of cost of the investment
in the condensed consolidated balance sheets.
Government Subsidies
Government subsidies include cash subsidies
received by the Company’s subsidiaries in the PRC from local governments.
In recognizing the benefit of government
subsidies in accordance with U.S. GAAP, the Company considers intended use of and restrictions of the subsidy, the requirements
for the receipt of funds, and whether or not the incentive is given for immediate financial support, or to encourage activities
such as land development in specified area. Each grant is evaluated to determine the propriety of classification on the consolidated
statements of operations and consolidated balance sheets. Those grants that are substantively reimbursements of specified costs
are matched with those costs and recorded as a reduction in costs. Those benefits that are more general in nature or driven by
business performance measures are classified as revenue.
The Company has received refundable government
subsidy of $5,369,320 as of June 30, 2013. The subsidy is given to reimburse the land acquisition costs and certain construction
costs incurred for the Company’s property development project in Linyi, and is repayable if the Company fails to complete
the subsidized property development project according to the agreed schedules. The Company recorded the subsidy received as a
deferred government subsidy.
Revenue Recognition
Agency commission revenue from property
brokerage is recognized when the property developer and the buyer complete a property sales transaction, and the property developer
grants confirmation to us to be able to invoice them accordingly. The time when we receive the commission is normally at the time
when the property developer receives from the buyer a portion of the sales proceeds in accordance with the terms of the relevant
property sales agreement, or the balance of the bank loan to the buyer has been funded, or recognized under the sales schedule
or other specific items of agency sales agreement with developer. At no point does the Company handle any monetary transactions
nor act as an escrow intermediary between the developer and the buyer.
Revenue from marketing consultancy services
is recognized when services are provided to clients, fees associated to services are fixed or determinable, and collection of
the fees is assured.
Rental revenue from property management
and rental business is recognized on a straight-line basis according to the time pattern of the leasing agreements.
The Company accounts for underwriting
sales in accordance with ASC 976-605 “Accounting for Sales of Real Estate” (Formerly Statement of Financial Accounting
Standards No. 66) (“ASC 976-605”). The commission revenue on underwriting sales is recognized when sales have been
consummated, generally when title is transferred and the Company no longer has substantial continuing involvement with the real
estate asset sold. If the Company provides certain rent guarantees or other forms of support where the maximum exposure to loss
exceeds the gain, it defers the related commission income and expenses by applying the deposit method. In future periods, the
commission income and related expenses are recognized when the remaining maximum exposure to loss is reduced below the amount
of income deferred.
All revenues represent gross revenues
less sales and business taxes.
Net Earnings (Loss) per Common Share
The Company computes net earnings (loss)
per share in accordance with ASC 260, “Earnings per Share” (“ASC 260”). Under the provisions of ASC 260,
basic net earnings (loss) per share is computed by dividing net earnings (loss) available to common shareholders for the period
by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net earnings
(loss) per share recognizes common stock equivalents, however; potential common stock in the diluted EPS computation is excluded
in net loss periods, as their effect is anti-dilutive.
Recently Adopted Accounting Standards
In December 2011, the FASB issued ASU
No. 2011-11, Topic 210 - Balance Sheet: Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”). ASU 2011-11
requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements
to understand the effect of those arrangements on its financial position. ASU 2011-11 became effective for fiscal years beginning
on or after January 1, 2013, with retrospective application for all comparable periods presented. The adoption of this guidance
did not have a material impact on the Company’s condensed consolidated financial statements.
In February 2013, the FASB issued ASU
2013-12, Topic 220 - Accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-02 changes the presentation
requirements of significant reclassifications out of accumulated other comprehensive income in their entirety and their corresponding
effect on net income. For other significant amounts that are not required to be reclassified in their entirety, the standard requires
the company to cross-reference to related footnote disclosures. ASU 2013-02 became effective for the company on January 1, 2013.
The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.
New Accounting Pronouncements Not Yet
Adopted
In March 2013, the FASB issued ASU 2013-05
Topic 830 – Foreign Currency Matters (“ASU 2013-05”). ASU 2013-05 resolves the diversity in practice about whether
Subtopic 810-10, Consolidation—Overall, or Subtopic 830-30, ASU 2013-05 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. ASU 2013-02 became effective for the company prospectively for fiscal
years (and interim reporting periods within those years) beginning after December 15, 2013. The Company does not expect the adoption
of this guidance to have a material effect on the Company’s condensed consolidated financial statements.
The FASB has issued ASU 2013-04 Topic
405 - Liabilities: Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation
Is Fixed at the Reporting Date (“ASU 2013-04”). ASU 2013-04 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 amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning
after December 15, 2013. The Company does not expect the adoption of this guidance to have a material impact on the Company’s
condensed consolidated financial statements.
NOTE 3 – RESTRICTED CASH
The Company is required to maintain
certain deposits with the bank that provides secured loans to the Company. As of
June 30
,
2013 and December 31, 2012, the Company held cash deposits of $1,382,168 and $1,352,319, respectively, as security for its bank
loans (see Note 12). These balances are subject to withdrawal restrictions and are not covered by insurance.
NOTE 4 - PROMISSORY DEPOSITS
Promissory deposits are paid to property developers in respect
of the real estate projects where the Company has been appointed as sales agent. The balances are unsecured, interest free and
recoverable on completion of the respective projects.
NOTE 5 – REAL ESTATE PROPERTY
UNDER DEVELOPMENT
Real estate property under development
represents the Company’s real estate development project in Linyi, the PRC (“Linyi Project”), which is located
on the junction of Xiemen Road and Hongkong Road in Linyi City Economic Development Zone, Shandong Province, PRC. This project
covers a site area of approximately 103,385 square meters for the development of villa-style residential housing buildings. The
Company acquired the site and commenced construction of this project during the fiscal year of 2012.
As of
June
30
, 2013, land use rights included in real estate property under development totaled $11,730,607.
Real estate property under development
as of June 30, 2013 has been pledged as collateral for the Company’s bank loans (See Note 14).
NOTE 6 - OTHER RECEIVABLES AND DEPOSITS,
NET
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
Advances to staff
|
|
$
|
41,133
|
|
|
|
40,477
|
|
Rental deposits
|
|
|
20,930
|
|
|
|
44,154
|
|
Other receivables
|
|
|
259,795
|
|
|
|
269,144
|
|
|
|
$
|
321,858
|
|
|
$
|
353,775
|
|
Other receivables
and deposits as of
June 30
, 2013 and December 31, 2012 are stated net of allowance for doubtful
accounts of $75,141 and $73,864, respectively.
NOTE 7 – PROPERTY AND EQUIPMENT
,
NET
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
Furniture and fixtures
|
|
$
|
361,367
|
|
|
$
|
354,446
|
|
Computer and office equipment
|
|
|
290,539
|
|
|
|
281,975
|
|
Motor vehicles
|
|
|
774,868
|
|
|
|
761,702
|
|
Properties
|
|
|
9,529,571
|
|
|
|
9,367,650
|
|
|
|
|
10,956,345
|
|
|
|
10,765,773
|
|
Less: Accumulated depreciation
|
|
|
(1,780,969
|
)
|
|
|
(1,462,512
|
)
|
|
|
$
|
9,175,376
|
|
|
$
|
9,303,261
|
|
Depreciation and amortization expense
for property and equipment amounted to $286,372 and $ 152,787 for the six months ended June 30, 2013 and 2012, respectively.
All properties as of June 30, 2013 and December
31, 2012 were pledged as collateral for the Company’s bank loans (See Note 12).
NOTE 8 – INVESTMENT PROPERTIES,
NET
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
Investment properties
|
|
$
|
10,021,659
|
|
|
$
|
9,851,376
|
|
Less: Accumulated depreciation
|
|
|
(3,780,069
|
)
|
|
|
(3,449,907
|
)
|
|
|
$
|
6,241,590
|
|
|
$
|
6,401,469
|
|
Depreciation and amortization expense
for investment properties amounted to $272,716 and $163,844 for the six months ended June 30, 2013 and 2012, respectively.
All investment properties as of June 30,
2013 and December 31, 2012 were pledged as collateral for the Company’s bank loans (See Note 10).
NOTE 9 – INVESTMENT IN AND AMOUNT
DUE FROM AN UNCONSOLIDATED AFFILIATE
In 2011, the Company invested $4,147,027
for acquiring 49% equity interest in WHYYL to expand its operations to real estate development business. WHYYL is developing a
real estate project in Wuhan, the PRC on a parcel of land covering approximately 27,950 square meters with a 3-year planned construction
period. The Company has accounted for this investment using the equity method as the Company has the ability to exercise significant
influence over their activities.
As of June 30
,
2013, the net investment in WHYYL was $3,857,022, which included its equity in net loss of WHYYL, net of income taxes, totaling
$3,468,342 as of June 30, 2013. The Company’s equity in net loss of the unconsolidated affiliate, net of income taxes, during
the three months ended June 30, 2013 and 2012 amounted to $79,765 and $36,801, respectively; and during the six months ended June
30, 2013 and 2012 amounted to $272,787 and $201,843, respectively.
The following table sets forth the movements
of the investment in an unconsolidated affiliate.
Balance as of January 1, 2013
|
|
$
|
3,925,770
|
|
Equity in net loss of the unconsolidated affiliate for
the six months ended June 30, 2013
|
|
|
(272,787
|
)
|
Translation adjustments
|
|
|
(65,588
|
)
|
|
|
|
|
|
Balance as of June 30, 2013
|
|
$
|
3,718,571
|
|
The following table sets forth the financial
information of WHYYL.
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended 30 June,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
162,786
|
|
|
|
75,104
|
|
|
|
556,708
|
|
|
|
411,924
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
32,458,812
|
|
|
$
|
19,387,419
|
|
Non-current assets
|
|
|
652,955
|
|
|
|
298,872
|
|
Total assets
|
|
|
33,111,767
|
|
|
|
19,686,291
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
26,058,400
|
|
|
|
11,674,515
|
|
Total equity
|
|
$
|
7,053,367
|
|
|
$
|
8,011,776
|
|
As of
June
30
, 2013 and December 31, 2012, the Company has a balance of $7,255,984 and $4,316,031 due from WHYYL,
which bears interest at a rate of 15% per annum, is unsecured and has no fixed term of repayment. The Company recorded interest
income from WHYYL of $240,174 and $373,549, respectively, for the three months and six months ended June 30, 2013. There was no
interest income from WHYYL during 2012.
During the three months and six months
ended June 30, 2013 and 2012, the Company had no impairment loss for investment in an unconsolidated affiliate.
NOTE 10 – AMOUNTS DUE TO DIRECTORS
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
Lin Chi-Jung
|
|
$
|
10,288,150
|
|
|
$
|
7,683,507
|
|
Lin Hsin-Hung
|
|
|
31,064
|
|
|
|
22,225
|
|
Lin Chao-Chin
|
|
|
1,465
|
|
|
|
1,440
|
|
|
|
$
|
10,320,679
|
|
|
$
|
7,707,172
|
|
|
(a)
|
The balance due to Lin Chi-Jung consists of unpaid salaries and
reimbursements and advances together with unpaid interest.
|
The balances of unpaid salaries and reimbursements
as of June 30, 2013 and December 31, 2012 were $82,374 and $35,797, respectively. The balances are unsecured, interest-free and
have no fixed term of repayment.
The advances together
with unpaid interest as of June 30, 2013 and December 31, 2012 were $10,205,776 and $7,647,710, respectively. The balances are
unsecured and interest bearing at rates ranging from 9.6% to 36.5% per annum. Included in the balance as of June 30, 2013, advances
of $611,277 were due on June 30, 2013, and the remaining balance has no fixed term of repayment.
The Company is currently
negotiating with Lin Chi-Jung for an extension of the repayment date. The advances from Lin Chi-Jung currently in default amount
to $611,277.
|
(b)
|
The balances due to Lin Chao-Chin
and Lin Hsin-Hung are unsecured, interest-free and have no fixed term
of repayment.
|
The interest expense on amounts due to
directors amounted to $396,612 and $242,022 for the three months ended June 30, 2013 and 2012; and $741,179 and $487,048, respectively,
for the six months ended June 30, 2013 and 2012.
NOTE 11 - OTHER PAYABLES AND ACCRUED
EXPENSES
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
Accrued staff commission and bonus
|
|
$
|
499,308
|
|
|
$
|
890,419
|
|
Rental deposits received
|
|
|
879,459
|
|
|
|
945,309
|
|
Customer deposits
|
|
|
412,708
|
|
|
|
1,217,087
|
|
Advances from unrelated parties
|
|
|
-
|
|
|
|
1,288,680
|
|
Dividend payable to non-controlling interests
|
|
|
141,539
|
|
|
|
237,582
|
|
Accrued expenses
|
|
|
516,066
|
|
|
|
346,861
|
|
Other payables
|
|
|
555,298
|
|
|
|
420,304
|
|
|
|
$
|
3,004,378
|
|
|
$
|
5,346,242
|
|
Advances from unrelated parties are unsecured,
interest-free and have no fixed term of repayment.
NOTE 12 – BANK LOANS
In January
2013, the Company obtained a bank loan of $1,294,771 (RMB8,000,000) from the Bank of China, bearing interest at a rate of 7.56%
per annum. The loan is secured by the properties of two unrelated parties and matures on December 5, 2013. As of
June 30
,
2013, the outstanding balance of this loan was $1,294,771.
In August
2012, the Company entered into a 3-year revolving facility line of credit agreement with First Sino Bank. Under the terms of the
agreement, the Company could borrow a maximum amount of $5,794,099 (RMB35,800,000) as of
June 30
,
2013. The borrowings under this facility bear interest at a rate per annum equal to 125% of the prevailing base lending rate for
periods ranging from 1 year to 3 years as announced by the People’s Bank of China (“PBOC”). The average interest
rate for the six months ended
June 30
, 2013 was 7.6875% per annum. The credit facility is
secured by all of the Company’s properties included in property and equipment (See Note 7) and the restricted cash of $1,382,168
as of
June 30
, 2013 and $1,352,319 as of December 31, 2012 (See Note 3), guaranteed by a
director of the Company, and matures on March 31, 2015. Borrowings under this facility are renewable for an additional period
not longer than 12 months and are due not later than March 31, 2015. As of
June 30
, 2013
and December 31, 2012, the Company had outstanding loan balances of $5,794,099 and $5,695,649, respectively, under this facility
line of credit.
In April
2012, the Company entered into a 3-year non-revolving facility line of credit agreement with First Sino Bank. Under the terms
of the agreement, the Company could borrow a maximum amount of $12,138,476 (RMB75,000,000) as of
June 30
,
2013. The borrowings under this facility bear interest at a rate per annum equal to 125% of the prevailing base lending rate for
periods ranging from 1 year to 3 years as announced by PBOC. The average interest rate for the six months ended
June 30
,
2013 was 7.6875% per annum. The facility of credit is secured by all of the Company’s investment properties (See Note 8)
and guaranteed by a director of the Company, and matures on March 31, 2015. Borrowings under this facility are renewable for an
additional period not longer than 36 months and are due not later than March 31, 2015. As of
June 30
,
2013 and December 31, 2012, the Company had outstanding loan balances of $12,138,476 and $11,932,225, respectively, under this
facility line of credit. Under the term of the agreement, the Company is to adhere to the covenant that it agreed not to use any
of its pledged assets as security for another debt obligation or other liability. The Company was not in compliance with the covenant
as of June 30, 2013.
In November
2009, the Company entered into a 3-year revolving facility line of credit agreement with First Sino Bank. Under the terms of the
agreement, the Company could borrow a maximum amount of $8,901,549 (RMB55,000,000) as of
June 30
,
2013. The borrowings under this facility bear interest at a rate equal to 110% of the prevailing 1-year base lending rate announced
by PBOC. The average interest rate for the six months ended
June 30
, 2013 was 7.5440% per
annum. The facility of credit was secured by all of the Company’s properties included in property and equipment (See Note
7), and was guaranteed by a director of the Company and an unrelated company. This facility was cancelled and replaced by the
above-mentioned 3-year non-revolving facility line of credit agreement entered by the Company in April 2012.
In March
2010, the Company entered into a 3-year revolving facility line of credit agreement with First Sino Bank. Under the terms of the
agreement, the Company could borrow a maximum amount of $2,427,695 (RMB15,000,000) as of
June 30
,
2013. The borrowings under this facility bear interest at a rate equal to 110% of the prevailing 1-year base lending rate announced
by PBOC. The average interest rate for the six months ended
June 30
, 2013 was 7.5440% per
annum. The facility of credit was secured by all of the Company’s investment properties (See Note 8), and was guaranteed
by a director of the Company and an unrelated company. This facility was cancelled and replaced by the above-mentioned 3-year
non-revolving facility line of credit agreement entered by the Company in April 2012.
NOTE 13 – PROMISSORY NOTES PAYABLE
The
promissory notes payable consist of the following unsecured notes to unrelated parties. Included in the balances, the promissory
note and unpaid interest thereon of $3,022,898 and $3,853,052 are in default as of
June 30
,
2013 and December 31, 2012, respectively.
The promissory note with an outstanding
principal of $3,896,869 bears interest at a rate of 12% per annum, is unsecured and has matured on January 30, 2013. The Company
is currently negotiating with the note holder for an extension of the repayment date. As of June 30, 2013 and December 31, 2012,
the outstanding principal in default and unpaid interest related to this promissory note amounted to $3,022,898 and $3,853,052,
respectively.
The promissory note with a principal of
$300,000 bears interest at a rate of 15% per annum, is unsecured and has no fixed term of repayment. As of June 30, 2013 and December
31, 2012, the outstanding principal and unpaid interest related to this promissory note amounted to $330,000 and $307,500, respectively.
The promissory notes with a principal
of $935,472 (RMB5,780,000) bear interest at a rate of 15% per annum, is unsecured and has no fixed term of repayment. As of June
30, 2013 and December 31, 2012, the outstanding principal and unpaid interest related to this promissory note amounted to $1,171,363
and $1,088,219, respectively.
The promissory note with a principal of
$809,232 (RMB5,000,000) bears interest at a rate of 15% per annum, is unsecured and has no fixed term of repayment. As of March
31, 2013 and December 31, 2012, the outstanding principal and unpaid interest related to this promissory note amounted to $981,665
and $905,324, respectively.
The interest expense on promissory notes
amounted to $174,821 and $49,905 for the three months ended June 30, 2013 and 2012; and $405,986 and $ 123,123, respectively,
for the six months ended June 30, 2013 and 2012.
NOTE 14 – LONG TERM LOAN
Long term obligations of the Company are
summarized as follows:
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
Loan from China Citi Bank
|
|
$
|
11,329,244
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Less: Current portion
|
|
|
(11,329,244
|
)
|
|
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
In May 2013,
the Company obtained a bank loan of $11,329,244 (RMB70,000,000) from the China Citi Bank. The loan bears interest at a rate of
14.21% per annum and is collateralized by the real estate property under development of LYSY and is guaranteed by a director of
the Company and LYSY and his wife, and a director of
a corporate
shareholder of LYSY. The guarantors do not receive any compensation for these guarantees. The Company is obliged to repay $3,398,773
(RMB21,000,000), or higher, before May 14, 2014, $4,531,698 (RMB28,000,000), or higher, on November 14, 2014, and the remaining
loan balance on May 14, 2015. As of
June 30
, 2013, the outstanding balance of this loan was
$11,329,244. Under the term of the loan agreement, the Company is to adhere to certain covenants. The Company is to adhere to the
restrictions on use of proceeds from the loan to finance construction of the real estate development project of LYSY. The Company
was not in compliance with the covenant as of June 30, 2013 and therefore classified the loan as current.
NOTE 15 – DEFERRED GOVERNMENT
SUBSIDY
Deferred government subsidy consists of
the cash subsidy provided by the local government.
Government subsidy received as of June
30, 2013 and December 31, 2012 was $5,369,320 and $5,273,314, respectively. The subsidy is given to reimburse the land acquisition
costs and certain construction costs incurred for the Company’s property development project, and is repayable if the Company
fails to complete the subsidized property development project before the agreed date. The entire government subsidy is deferred
and included as deferred government subsidy in the condensed consolidated balance sheets.
NOTE 16 – DEPOSITS RECEIVED FROM
UNDERWRTING SALES
The Company accounts for its underwriting
sales revenue with underwriting rent guarantees using the deposit method in accordance with ASC 976-605 (formerly SFAS No.66).
Revenue from the sales of floor space with underwriting rent guarantees until the revenues generated by sub-leasing properties
exceed the guaranteed rental amount due to the purchasers.
NOTE 17 – STATUTORY RESERVE
According to the relevant corporation
laws in the PRC, a PRC company is required to transfer at least 10% of its profit after taxes, as determined under accounting
principles generally accepted in the PRC, to the statutory reserve until the balance reaches 50% of its registered capital. The
statutory reserve can be used to make good on losses or to increase the capital of the relevant company.
According to the Law of the PRC on Enterprises
with Wholly-Owned Foreign Investment, the Company PRC’s subsidiaries are required to make appropriations from after-tax
profits as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) to non-distributable
reserves. These reserve funds include one or more of the following: (i) a general reserve, (ii) an enterprise expansion reserve
and (iii) a staff bonus and welfare fund. A wholly-owned PRC subsidiary is not required to make appropriations to the enterprise
expansion reserve but annual appropriations to the general reserve are required to be made at 10% of the profit after tax as determined
under PRC GAAP at each year-end, until such fund has reached 50% of its respective registered capital. The staff welfare and bonus
reserve is determined by the board of directors. The general reserve is used to offset future losses. The subsidiary may, upon
a resolution passed by the stockholders, convert the general reserve into capital. The staff welfare and bonus reserve are used
for the collective welfare of the employees of the subsidiary. The enterprise expansion reserve is for the expansion of the subsidiary
operations and can be converted to capital subject to approval by the relevant authorities. These reserves represent appropriations
of the retained earnings determined in accordance with Chinese law.
In addition
to the general reserve, the Company’s PRC subsidiaries are required to obtain approval from the local PRC government prior
to distributing any registered share capital. Accordingly, both the appropriations to general reserve and the registered share
capital of the Company’s PRC subsidiary are considered as restricted net assets and are not distributable as cash dividends.
As of
June 30
, 2013 and December 31, 2012, the Company’s statutory reserve fund was $782,987.
NOTE 18 - COMMITMENTS AND CONTINGENCIES
Operating Lease Commitments
The Company leases certain of its office
properties under non-cancellable operating lease arrangements. Payments under operating leases are expensed on a straight-line
basis over the periods of their respective terms, and the terms of the leases do not contain rent escalation, or contingent rent,
renewal, or purchase options. There are no restrictions placed upon the Company by entering into these leases. Rental expenses
under operating leases were $45,694 and $10,428 for the three months ended June 30, 2013 and 2012, respectively; and $95,522 and
$$23,360 for the six months ended June 30, 2013, respectively.
As of June 30, 2013, the Company had the
following operating lease obligations falling due.
|
|
Amount
|
|
|
|
|
|
Within one year
|
|
$
|
87,685
|
|
Two to five years
|
|
|
18,774
|
|
|
|
$
|
106,459
|
|
During 2005 and 2006, SZGFH entered into
leasing agreements with certain buyers of the Sovereign Building underwriting project to lease the properties for them. These
leasing agreements on these properties are for 62% of the floor space that was sold to third party buyers. In accordance with
the leasing agreements, the owners of the properties can have a rental return of 8.5% and 8.8% per annum for a period of 5 years
and 8 years, respectively. The leasing period started in the second quarter of 2006 and the Company had the right to sublease
these properties to cover these lease commitments in the leasing periods. In 2009, we agreed with certain buyers to amend the
agreed 5-year annual return rate from 8.5% to 5.8% and the agreed 8-year annual return rate from 8.8% to 6% for the remaining
lease, or to terminate their lease agreements early. As of June 30, 2013, the Company has the following leasing commitment related
to these properties.
|
|
Amount
|
|
|
|
|
|
Within one year
|
|
$
|
849,955
|
|
Two to five years
|
|
|
-
|
|
|
|
$
|
849,955
|
|
An accrual for onerous contracts was recognized
which is equal to the difference between the present value of the sublease income and the present value of the associated lease
expense at the appropriate discount rate. During the three months and six months ended June 30, 2013 and 2012, the Company had
no significant provision for onerous contracts.
According to the leasing agreements, the
Company has an option to terminate any agreement by paying a predetermined compensation. As of June 30, 2013, the compensation
to terminate all leasing agreements is $990,489. According to the sub-leasing agreements that have been signed through June 30,
2013, the rental income from these sub-leasing agreements will be $804,660 within one year and $0 within two to five years. However,
no assurance can be given that we can collect all of the rental income.
Other commitments
As of June 30, 2013, the Company had outstanding
commitments of $26,570,648 with respect to non-cancellable construction contracts for real estate development.
Contingencies
As of June 30, 2013, the Company was contingently
liable for $809,232 in a guarantee executed on May, 2013. The Company provided a loan guarantee to an unaffiliated third-party
lender for the borrowing of $809,232 (RMB5,000,000) by Lin Chi-Jung, a director of the Company. The Company provided the guarantee
in order to secure a loan to the Company for $809,232 from Lin Chi-Jung. Lin Chi-Jung obtained the loan from the third party lender
and, in turn, lent the funds to the Company on the same terms as his loan from the third-party lender. The loan to the Company
bears interest at a rate of 20% per annum and matures in December 2013. The guarantee is secured by the use right of the Company’s
investment properties located in Shanghai, and expires in December 2013. No loss has been experienced or is anticipated under this
guarantee.
NOTE 19 - SEGMENT INFORMATION
The Company's chief executive officer
and chief operating officer have been identified as the chief operating decision makers. The Company's chief operating decision
makers direct the allocation of resources to operating segments based on the profitability and cash flows of each respective segment.
The Company evaluates performance based
on several factors, including net revenue, cost of revenue, operating expenses, loss from operations and net loss. The following
tables show the operations of the Company's operating segments:
|
|
Three Months ended June 30, 2013
|
|
|
|
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage
|
|
|
Real Estate
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
Development
|
|
|
Corporate
|
|
|
Total
|
|
Net revenues
|
|
|
4,487,385
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,487,385
|
|
Cost of revenues
|
|
|
(1,216,265
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,216,265
|
)
|
Gross income
|
|
|
3,271,120
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,271,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
(321,058
|
)
|
|
|
(51,833
|
)
|
|
|
-
|
|
|
|
(372,891
|
)
|
General and administrative expenses
|
|
|
(667,226
|
)
|
|
|
(81,233
|
)
|
|
|
(22,640
|
)
|
|
|
(771,099
|
)
|
Operating profit (loss)
|
|
|
2,282,836
|
|
|
|
(133,066
|
)
|
|
|
(22,640
|
)
|
|
|
2,127,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
195,423
|
|
|
|
25,847
|
|
|
|
-
|
|
|
|
221,270
|
|
Interest expense
|
|
|
(955,030
|
)
|
|
|
-
|
|
|
|
(2,015
|
)
|
|
|
(957,045
|
)
|
Miscellaneous
|
|
|
932
|
|
|
|
-
|
|
|
|
-
|
|
|
|
932
|
|
Total other (expenses) income
|
|
|
(758,675
|
)
|
|
|
25,847
|
|
|
|
(2,015
|
)
|
|
|
(734,843
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax
|
|
|
1,524,161
|
|
|
|
(107,219
|
)
|
|
|
(24,655
|
)
|
|
|
1,392,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
(35,419
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(35,419
|
)
|
Equity in net loss
of an unconsolidated affiliate, net of income taxes
|
|
|
-
|
|
|
|
(79,765
|
)
|
|
|
-
|
|
|
|
(79,765
|
)
|
Net income (loss)
|
|
$
|
1,488,742
|
|
|
$
|
(186,984
|
)
|
|
$
|
(24,655
|
)
|
|
$
|
1,277,103
|
|
|
|
Three Months ended June 30, 2012
|
|
|
|
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage
|
|
|
Real Estate
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
Development
|
|
|
Corporate
|
|
|
Total
|
|
Net revenues
|
|
|
1,835,788
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,835,788
|
|
Cost of revenues
|
|
|
(863,281
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(863,281
|
)
|
Gross income
|
|
|
972,507
|
|
|
|
-
|
|
|
|
-
|
|
|
|
972,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
(326,490
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(326,490
|
)
|
General and administrative expenses
|
|
|
(649,336
|
)
|
|
|
(186,451
|
)
|
|
|
(120,771
|
)
|
|
|
(956,558
|
)
|
Operating loss
|
|
|
(3,319
|
)
|
|
|
(186,451
|
)
|
|
|
(120,771
|
)
|
|
|
(310,541
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
1,003
|
|
|
|
(611
|
)
|
|
|
-
|
|
|
|
392
|
|
Interest expense
|
|
|
(324,785
|
)
|
|
|
-
|
|
|
|
(168,370
|
)
|
|
|
(493,155
|
)
|
Miscellaneous
|
|
|
40,633
|
|
|
|
-
|
|
|
|
-
|
|
|
|
40,633
|
|
Total other expenses
|
|
|
(283,149
|
)
|
|
|
(611
|
)
|
|
|
(168,370
|
)
|
|
|
(452,130
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(286,468
|
)
|
|
|
(187,062
|
)
|
|
|
(289,141
|
)
|
|
|
(762,671
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
(25,805
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(25,805
|
)
|
Equity in net loss
of an unconsolidated affiliate, net of income taxes
|
|
|
-
|
|
|
|
(36,801
|
)
|
|
|
-
|
|
|
|
(36,801
|
)
|
Net loss
|
|
$
|
(312,273
|
)
|
|
$
|
(223,863
|
)
|
|
$
|
(289,141
|
)
|
|
$
|
(825,277
|
)
|
|
|
Six Months ended June 30, 2013
|
|
|
|
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage
|
|
|
Real Estate
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
Development
|
|
|
Corporate
|
|
|
Total
|
|
Net revenues
|
|
$
|
6,600,814
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,600,814
|
|
Cost of revenues
|
|
|
(2,380,204
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,380,204
|
)
|
Gross income
|
|
|
4,220,610
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,220,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
(622,491
|
)
|
|
|
(63,324
|
)
|
|
|
-
|
|
|
|
(685,815
|
)
|
General and administrative expenses
|
|
|
(1,478,540
|
)
|
|
|
(153,669
|
)
|
|
|
(190,649
|
)
|
|
|
(1,822,858
|
)
|
Operating income (loss)
|
|
|
2,119,579
|
|
|
|
(216,993
|
)
|
|
|
(190,649
|
)
|
|
|
1,711,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
329,382
|
|
|
|
49,836
|
|
|
|
-
|
|
|
|
379,218
|
|
Interest expense
|
|
|
(1,845,661
|
)
|
|
|
-
|
|
|
|
(26,531
|
)
|
|
|
(1,872,192
|
)
|
Miscellaneous
|
|
|
16,243
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,243
|
|
Total other (expenses) income
|
|
|
(1,500,036
|
)
|
|
|
49,836
|
|
|
|
(26,531
|
)
|
|
|
(1,476,731
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/ (loss) before income taxes
|
|
|
619,543
|
|
|
|
(167,157
|
)
|
|
|
(217,180
|
)
|
|
|
235,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (expense) benefit
|
|
|
(35,419
|
)
|
|
|
15,781
|
|
|
|
-
|
|
|
|
(19,638
|
)
|
Equity in net loss
of an unconsolidated affiliate, net of income taxes
|
|
|
(79,765
|
)
|
|
|
(193,022
|
)
|
|
|
-
|
|
|
|
(272,787
|
)
|
Net income/ (loss)
|
|
$
|
504,359
|
|
|
$
|
(344,398
|
)
|
|
$
|
(217,180
|
)
|
|
$
|
(57,219
|
)
|
|
|
Six Months ended June 30, 2012
|
|
|
|
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage
|
|
|
Real Estate
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
Development
|
|
|
Corporate
|
|
|
Total
|
|
Net revenues
|
|
$
|
3,555,323
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,555,323
|
|
Cost of revenues
|
|
|
(2,146,283
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,146,283
|
)
|
Gross income
|
|
|
1,409,040
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,409,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
(610,710
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(610,710
|
)
|
General and administrative expenses
|
|
|
(1,172,285
|
)
|
|
|
(527,944
|
)
|
|
|
(158,091
|
)
|
|
|
(1,858,320
|
)
|
Operating loss
|
|
|
(373,955
|
)
|
|
|
(527,944
|
)
|
|
|
(158,091
|
)
|
|
|
(1,059,990
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
3,668
|
|
|
|
68
|
|
|
|
54
|
|
|
|
3,790
|
|
Interest expense
|
|
|
(801,866
|
)
|
|
|
-
|
|
|
|
(182,740
|
)
|
|
|
(984,606
|
)
|
Miscellaneous
|
|
|
74,647
|
|
|
|
-
|
|
|
|
-
|
|
|
|
74,647
|
|
Total other (expenses) income
|
|
|
(723,551
|
)
|
|
|
68
|
|
|
|
(182,686
|
)
|
|
|
(906,169
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(1,097,506
|
)
|
|
|
(527,876
|
)
|
|
|
(340,777
|
)
|
|
|
(1,966,159
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
(41,480
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(41,480
|
)
|
Equity in net loss
of an unconsolidated affiliate, net of income taxes
|
|
|
-
|
|
|
|
(201,843
|
)
|
|
|
-
|
|
|
|
(201,843
|
)
|
Net loss
|
|
$
|
(1,138,986
|
)
|
|
$
|
(729,719
|
)
|
|
$
|
(340,777
|
)
|
|
$
|
(2.209,482
|
)
|
|
|
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage
|
|
|
Real Estate
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
Development
|
|
|
Corporate
|
|
|
Total
|
|
As of June 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate property under development
|
|
$
|
-
|
|
|
$
|
25,758,459
|
|
|
$
|
-
|
|
|
$
|
25,758,459
|
|
Total assets
|
|
|
23,677,149
|
|
|
|
38,193,513
|
|
|
|
59,718
|
|
|
|
61,930,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate property under development
|
|
$
|
-
|
|
|
$
|
20,493,851
|
|
|
$
|
-
|
|
|
$
|
20,493,851
|
|
Total assets
|
|
|
24,322,419
|
|
|
|
25,813,935
|
|
|
|
55,681
|
|
|
|
50,192,035
|
|
NOTE 19 – RESTATEMENTS
Subsequent to the issuance of the Company’s
condensed consolidated financial statements for the three months and six months ended June 30, 2012, the Company determined that
it incorrectly recognized the government subsidy and overstated the equity in net loss of an unconsolidated affiliate in the condensed
consolidated statement of operations.
The Company recognized the
government subsidy received in the condensed consolidated statement of operations for the three months and six months ended June
30, 2012. In consideration of the intended use and restrictions of the subsidy that the subsidy is given to reimburse the land
acquisition costs and certain construction cost of the Company’s real estate development project in Linyi, and is repayable
if the Company fails to complete the project by the agreed date, the Company determined that the government subsidy should be
deferred. As a result, the net profit attributable to non-controlling interests was decreased.
|
(b)
|
Equity in net loss of an unconsolidated affiliate
|
The Company’s unconsolidated
affiliate charged the interest expense to its statement of operations for the three months and six months ended June 30, 2012.
The Company reconsidered the affiliate’s interest expense that was incurred in relation to the construction of a real estate
development project of the affiliate, and determined that the interest expense should be capitalized as part of the project development
cost. Accordingly, the Company should decrease its equity in net loss of the unconsolidated affiliate for the three months and
six months ended June 30, 2012.
|
(c)
|
Other adjustment and reclassifications
|
Additionally, the Company has
made an immaterial adjustment to correct a consolidation error in additional paid-in capital and accumulated other comprehensive
income and an error in classifying the Company’s equity in net loss of an unconsolidated affiliate as loss on disposal of
property and equipment, and reclassified certain items in the condensed consolidated financial statements for the three months
and six months ended June 30, 2012 to be comparable with the classification for the three months and six months ended March 31,
2013.
The Company has restated its condensed
consolidated financial statements for the three months and six months ended June 30, 2012 to reflect the correction of the above
errors and reclassifications. The impacts of these restatements decrease the net income by $777,215, and result in a net loss of
$825,277, for the three months ended June 30, 2012; and decrease the net income by $2,202,570, and result in a net loss of $2,209,482
for the six months ended June 30, 2012. Additionally, due to these restatements, the Company’s total assets and total liabilities
as of June 30, 2012 increase by $420,253 and $1,832,756, respectively, while the total stockholders’ equity as of June 30,
2012 is decreased by $2,622,823.
The impacts of these restatements on the
Company’s unaudited condensed consolidated balance sheet as of June 30, 2012, its unaudited condensed consolidated statement
of operations and cash flows for the six months ended June 30, 2012 are set forth below.
Unaudited Condensed Consolidated Balance
Sheet as of June 30, 2012
|
|
As
|
|
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
|
As
|
|
|
|
Reported
|
|
|
Adjustments
|
|
|
Restated
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,648,514
|
|
|
$
|
-
|
|
|
$
|
2,648,514
|
|
Restricted cash
|
|
|
1,343,895
|
|
|
|
-
|
|
|
|
1,343,895
|
|
Accounts receivable
|
|
|
1,210,969
|
|
|
|
-
|
|
|
|
1,210,969
|
|
Promissory deposits
|
|
|
1,222,154
|
|
|
|
-
|
|
|
|
1,222,154
|
|
Real estate property under development
|
|
|
14,377,926
|
|
|
|
-
|
|
|
|
14,377,926
|
|
Amount due from a related party
|
|
|
22,711
|
|
|
|
(22,711
|
)(c)
|
|
|
-
|
|
Other receivables and deposit
|
|
|
643,117
|
|
|
|
22,711
|
(c)
|
|
|
665,828
|
|
Total current assets
|
|
|
21,469,286
|
|
|
|
-
|
|
|
|
21,469,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
2,171,832
|
|
|
|
-
|
|
|
|
2,171,832
|
|
Investment properties, net
|
|
|
6,730,855
|
|
|
|
-
|
|
|
|
6,730,855
|
|
Investment in an unconsolidated affiliate
|
|
|
-
|
|
|
|
420,253
|
(b)
|
|
|
3,949,900
|
|
|
|
|
|
|
|
|
3,529,647
|
(c)
|
|
|
|
|
Other investments
|
|
|
3,660,883
|
|
|
|
(3,529,647
|
)(c)
|
|
|
131,236
|
|
Total assets
|
|
$
|
34,032,856
|
|
|
$
|
420,253
|
|
|
$
|
34,453,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
27,097
|
|
|
$
|
-
|
|
|
$
|
27,097
|
|
Amounts due to directors
|
|
|
5,204,991
|
|
|
|
-
|
|
|
|
5,204,991
|
|
Amount due to a related party
|
|
|
110,531
|
|
|
|
(110,531
|
)(c)
|
|
|
-
|
|
Other payables and accrued expenses
|
|
|
2,847,055
|
|
|
|
110,531
|
(c)
|
|
|
2,957,586
|
|
Other taxes payable
|
|
|
65,926
|
|
|
|
-
|
|
|
|
65,926
|
|
Income taxes payable
|
|
|
15,599
|
|
|
|
-
|
|
|
|
15,599
|
|
Bank loans
|
|
|
11,857,894
|
|
|
|
-
|
|
|
|
11,857,894
|
|
Promissory notes payable
|
|
|
2,330,264
|
|
|
|
-
|
|
|
|
2,330,264
|
|
Total current liabilities
|
|
|
22,459,357
|
|
|
|
-
|
|
|
|
22,459,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred government subsidy
|
|
|
-
|
|
|
|
2,622,823
|
(a)
|
|
|
2
,622,823
|
|
Deposits received from underwriting sales
|
|
|
2,896,808
|
|
|
|
-
|
|
|
|
2,896,808
|
|
Total liabilities
|
|
|
25,356,165
|
|
|
|
2
,622,823
|
|
|
|
27,978,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, par value $0.01 per share; 20,000,000 shares authorized: 28,691,925 shares issued and outstanding
|
|
|
286,919
|
|
|
|
-
|
|
|
|
286,919
|
|
Additional paid-in capital
|
|
|
4,579,553
|
|
|
|
(9,545
|
)(c)
|
|
|
4,570,008
|
|
Statutory reserve
|
|
|
782,987
|
|
|
|
-
|
|
|
|
782,987
|
|
Accumulated losses
|
|
|
(11,903,942
|
)
|
|
|
(655,706
|
)(a)
|
|
|
(12,139,395
|
)
|
|
|
|
|
|
|
|
420,253
|
(b)
|
|
|
|
|
Accumulated other comprehensive income
|
|
|
452,294
|
|
|
|
9,545
|
(c)
|
|
|
461,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deficit of Sunrise Real Estate Group, Inc.
|
|
|
(5,802,189
|
)
|
|
|
(235,453
|
)
|
|
|
(6,037,642
|
)
|
Non-controlling interests
|
|
|
14,478,880
|
|
|
|
(1,967,117
|
)(a)
|
|
|
12,511,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders’ equity
|
|
|
8,676,691
|
|
|
|
(2,202,570
|
)
|
|
$
|
6,474,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity
|
|
$
|
34,032,856
|
|
|
$
|
420,253
|
|
|
$
|
34,453,109
|
|
Unaudited Condensed Consolidated Statement
of Operations For The Three Months Ended June 30, 2012
|
|
As
|
|
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
|
As
|
|
|
|
Reported
|
|
|
Adjustments
|
|
|
Restated
|
|
Net revenues
|
|
$
|
1,835,788
|
|
|
$
|
-
|
|
|
$
|
1,835,788
|
|
Cost of revenues
|
|
|
(729,166
|
)
|
|
|
143,115
|
(c)
|
|
|
(863,281
|
)
|
Gross income
|
|
|
1,106,622
|
|
|
|
143,115
|
|
|
|
972,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
(326,490
|
)
|
|
|
-
|
|
|
|
(326,490
|
)
|
General and administrative expenses
|
|
|
(1,090,673
|
)
|
|
|
(143,115
|
)(c)
|
|
|
(956,558
|
)
|
Operating loss
|
|
|
(310,541
|
)
|
|
|
-
|
|
|
|
(310,541
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
391
|
|
|
|
-
|
|
|
|
391
|
|
Interest expense
|
|
|
(493,155
|
)
|
|
|
-
|
|
|
|
(491,155
|
)
|
Miscellaneous
|
|
|
830,701
|
|
|
|
(790,067
|
)(a)
|
|
|
40,634
|
|
Total other income (expenses)
|
|
|
337,937
|
|
|
|
(790,067
|
)
|
|
|
(45
0,130
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and equity in net loss of an unconsolidated affiliate
|
|
|
27,396
|
|
|
|
(790,067
|
)
|
|
|
(762,671
|
)
|
Income tax expense
|
|
|
(25,805
|
)
|
|
|
-
|
|
|
|
(25,805
|
)
|
Equity in net loss of an unconsolidated affiliate, net of income taxes
|
|
|
(49,653
|
)
|
|
|
12,852
|
(b)
|
|
|
(36,801
|
)
|
Net loss
|
|
|
(48,062
|
)
|
|
|
(777,215
|
)
|
|
|
(825,277
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net (income) loss attributable to
non-controlling interests
|
|
|
(391,850
|
)
|
|
|
592,550
|
(a)
|
|
|
200,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to shareholders of Sunrise Real Estate Group, Inc.
|
|
$
|
(439,912
|
)
|
|
$
|
(184,665
|
)
|
|
$
|
(624,577
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share – basic and fully diluted
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and fully diluted
|
|
|
28,691,925
|
|
|
|
|
|
|
|
28,691,925
|
|
Unaudited Condensed Consolidated Statement
of Operations For The Six Months Ended June 31, 2012
|
|
As
|
|
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
|
As
|
|
|
|
Reported
|
|
|
Adjustments
|
|
|
Restated
|
|
Net revenues
|
|
$
|
3,555,323
|
|
|
$
|
-
|
|
|
$
|
3,555,323
|
|
Cost of revenues
|
|
|
(1,878,053
|
)
|
|
|
(286,230
|
)(c)
|
|
|
(2,146,283
|
)
|
Gross income
|
|
|
1,677,270
|
|
|
|
(286,230
|
)
|
|
|
1,409,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
(610,710
|
)
|
|
|
-
|
|
|
|
(610,710
|
)
|
General and administrative
expenses
|
|
|
(2,126,550
|
)
|
|
|
286,230
|
(c)
|
|
|
(1,858,320
|
)
|
Operating
loss
|
|
|
(1,059,990
|
)
|
|
|
-
|
|
|
|
(1,059,990
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
3,790
|
|
|
|
-
|
|
|
|
3,
790
|
|
Interest expense
|
|
|
(984,606
|
)
|
|
|
-
|
|
|
|
(984,606
|
)
|
Miscellaneous
|
|
|
2,697,470
|
|
|
|
(2,622,823
|
)(a)
|
|
|
74,647
|
|
Total
other income (expenses)
|
|
|
1,716,654
|
|
|
|
(2,622,823
|
)
|
|
|
(906,169
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) before income taxes and equity in net loss of an unconsolidated affiliate
|
|
|
656,664
|
|
|
|
(2,622,823
|
)
|
|
|
(1,966,159
|
)
|
Income tax expense
|
|
|
(41,480
|
)
|
|
|
-
|
|
|
|
(41,480
|
)
|
Equity
in net loss of an unconsolidated affiliate, net of income taxes
|
|
|
(622,096
|
)
|
|
|
420,253
|
(b)
|
|
|
(201,843
|
)
|
Net loss
|
|
|
(6,912
|
)
|
|
|
(2,202,570
|
)
|
|
|
(2,209,482
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
Net (income) loss attributable to non-controlling interests
|
|
|
(1,490,232
|
)
|
|
|
1,967,117
|
(a)
|
|
|
476,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to shareholders of Sunrise Real Estate Group, Inc.
|
|
$
|
(1,497,144
|
)
|
|
$
|
(235,453
|
)
|
|
$
|
(1,732,597
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share –
basic and fully diluted
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
$
|
(0.06
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic
and fully diluted
|
|
|
28,691,925
|
|
|
|
|
|
|
|
28,691,925
|
|
Unaudited Condensed Consolidated Statement
of Cash Flows For The Six Months Ended June 30, 2012
|
|
As
|
|
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
|
As
|
|
|
|
Reported
|
|
|
Adjustments
|
|
|
Restated
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(6,912
|
)
|
|
$
|
(2,622,823
|
)(a)
|
|
$
|
(2,209,482
|
)
|
|
|
|
|
|
|
|
420,253
|
(b)
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
316,631
|
|
|
|
-
|
|
|
|
316,631
|
|
Loss on disposal of property and equipment
|
|
|
624,298
|
|
|
|
(622,096
|
)(c)
|
|
|
2,202
|
|
Equity in net loss of an unconsolidated affiliate
|
|
|
-
|
|
|
|
622,096
|
(c)
|
|
|
201,843
|
|
|
|
|
|
|
|
|
(420,253
|
)(b)
|
|
|
|
|
Changes in assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(75,649
|
)
|
|
|
-
|
|
|
|
(75,649
|
)
|
Promissory notes
|
|
|
2,314,374
|
|
|
|
|
|
|
|
2,314,374
|
|
Real estate property under development
|
|
|
(14,415,532
|
)
|
|
|
-
|
|
|
|
(14,415,532
|
)
|
Other receivables and deposits
|
|
|
217,987
|
|
|
|
294,268
|
(c)
|
|
|
512,255
|
|
Amount due from a related party
|
|
|
294,268
|
|
|
|
(294,268
|
)(c)
|
|
|
-
|
|
Accounts payable
|
|
|
(454,001
|
)
|
|
|
-
|
|
|
|
(454,001
|
)
|
Other payables and accrued expenses
|
|
|
(628,984
|
)
|
|
|
-
|
|
|
|
(628,984
|
)
|
Interest payable on promissory notes
|
|
|
214,677
|
|
|
|
-
|
|
|
|
214,677
|
|
Interest payable on amounts due to directors
|
|
|
224,840
|
|
|
|
-
|
|
|
|
224,840
|
|
Other taxes payable
|
|
|
(3,222
|
)
|
|
|
-
|
|
|
|
(3,222
|
)
|
Income taxes payable
|
|
|
(208,412
|
)
|
|
|
-
|
|
|
|
(208,412
|
)
|
Deposits received from underwriting sales
|
|
|
(183,556
|
)
|
|
|
-
|
|
|
|
(183,556
|
)
|
Deferred government subsidy
|
|
|
-
|
|
|
|
2,622,823
|
(a)
|
|
|
2,622,823
|
|
Net cash used in operating activities
|
|
|
(11,769,193
|
)
|
|
|
-
|
|
|
|
(11,769,193
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of equity investment
|
|
|
(60,000
|
)
|
|
|
-
|
|
|
|
(60,000
|
)
|
Purchases of property and equipment
|
|
|
(41,684
|
)
|
|
|
-
|
|
|
|
(41,684
|
)
|
Net cash used in investing activities
|
|
|
(101,684
|
)
|
|
|
-
|
|
|
|
(101,684
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital contribution from non-controlling interests of new consolidated subsidiaries
|
|
|
12,083,096
|
|
|
|
-
|
|
|
|
12,083,096
|
|
New bank loans
|
|
|
792,594
|
|
|
|
-
|
|
|
|
792,594
|
|
Advances from directors
|
|
|
53,835
|
|
|
|
-
|
|
|
|
53,835
|
|
Repayments to directors
|
|
|
(189,186
|
)
|
|
|
-
|
|
|
|
(189,186
|
)
|
Proceeds from new promissory notes
|
|
|
418,477
|
|
|
|
-
|
|
|
|
418,477
|
|
Net cash provided by financing activities
|
|
|
13,104,981
|
|
|
|
-
|
|
|
|
13,104,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash Equivalents
|
|
|
37,317
|
|
|
|
-
|
|
|
|
37,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
1,271,421
|
|
|
|
|
|
|
|
1,271,421
|
|
Cash and cash equivalent at the beginning of period
|
|
|
1,377,093
|
|
|
|
|
|
|
|
1,377,093
|
|
Cash and cash equivalents at the end of period
|
|
$
|
2,648,514
|
|
|
$
|
-
|
|
|
$
|
2,648,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary disclosure of cash flow information
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
$
|
214,856
|
|
|
$
|
-
|
|
|
$
|
214,856
|
|
Interest paid
|
|
|
158,205
|
|
|
|
-
|
|
|
|
158,105
|
|