UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Amendment
No. 3)
(Mark
One)
☒
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2015
or
☐
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from ___________ to ___________
Commission
File Number: 000-55576
YANGTZE
RIVER DEVELOPMENT LIMITED
(Exact
name of registrant as specified in its charter)
Nevada
|
|
27-1636887
|
(
State
or other jurisdiction of
incorporation or organization)
|
|
(I.R.S.
Employer
Identification No.)
|
|
|
|
183
Broadway, Suite 5
New
York, NY
United
States
|
|
10007
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
Registrant’s
telephone number, including area code:
646-861-3315
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class:
|
|
Name
of each exchange on which registered:
|
None
|
|
None
|
Securities
registered pursuant to Section 12(g) of the Act:
Common
Stock, par value $0.0001 per share
(Title
of class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No
☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☒ No
☐
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
☒ No ☐
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Accelerated
filer
|
☐
|
Large
accelerated filer
|
☐
|
Non-accelerated
filer
|
☐
(Do not check if a smaller reporting company)
|
Smaller
reporting company
|
☒
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
☒
State
the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price
at which the common equity was last sold, as of the last business day of the registrant’s most recently completed second
fiscal quarter: $5,343,998.
Number of the issuer’s common
stock outstanding as of May 16, 2016: 172,269,446.
Documents
incorporate by reference: None.
TABLE
OF CONTENTS
EXPLANATORY
NOTE
Yangtze River Development
Limited (the “Company”) is filing this Amendment No. 3 to its Annual Report on Form 10-K/A for the fiscal year ended
December 31, 2015 (“Amendment No. 3”) to amend the Annual Report which was originally filed with the Securities
and Exchange Commission (the “SEC”) on February 2, 2016 (the “Original Annual Report”). Company subsequently
filed Amendment No. 1 to its Annual Report on Form 10-K/A for the fiscal year ended December 31, 2015 (“Amendment No. 1”)
on February 17, 2016 and Amendment No. 2 to its Annual Report on Form 10-K/A for the fiscal year ended December 31, 2015 (“Amendment
No. 2”) on March 30, 2016. The purpose of this Amendment No. 3 is to insert certain footnotes to the financial statements
in response to comments from SEC Staff on May 3, 2016, as well as the corresponding disclosure in the “Management’s
Discussion and Analysis of Liquidity and Capital Resources” section.
Pursuant to
Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Amendment No. 3 also
contains new certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. Accordingly, Amendment No. 3
includes the currently dated certifications as exhibits.
Except as described
above, no attempt has been made in this Amendment No. 3 to modify or update the other disclosures in the Original Annual Report.
Amendment No. 3 continues to speak as of the date of the Original Annual Report, and the Company has not updated the disclosures
contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Annual Report. Accordingly,
Amendment No. 3 should be read in conjunction with the Original Annual Report, Amendment No. 1 and Amendment No. 2.
MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
The
following discussion and analysis of the results of operations and financial condition for the year ended December 31, 2015 and
2014 should be read in conjunction with our financial statements and the notes to those financial statements that are included
elsewhere in this Report. Our discussion includes forward-looking statements based upon current expectations that involve risks
and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ
materially from those anticipated in these forward-looking statements as a result of a number of factors. See “Cautionary
Note Regarding Forward-looking Statements” on page 25.
Overview
Yangtze
River Development Limited is a Nevada corporation that operates through its wholly-owned subsidiary Energetic Mind Limited, a
British Virgin Islands company, which holds 100% capital stock of Ricofeliz Capital (HK) Ltd., a Hong Kong company that holds
100% capital stock of Wuhan Yangtze River Newport Logistics Co., Ltd., a wholly foreign-owned enterprise formed under the laws
of the People’s Republic of China that primarily engages in the business of real estate and infrastructural development
with a port logistics center located in Wuhan, Hubei Province of China. Situated in the middle reaches of the Yangtze River, Wuhan
Newport is a large infrastructure development project implemented under China's latest "One Belt One Road" initiative
and is believed to be strategically positioned in the anticipated "Pilot Free Trade Zone" of the Wuhan Port, a crucial
trading window among China, the Middle East and Europe. To be fully developed upon completion, within the logistics center, there
will be six operating zones: including port operation area, warehouse and distribution area, cold chain logistics area, rail cargo
loading area, exhibition area and business related area. The logistics center is also expected to provide a number of shipping
berths for cargo ships of various sizes. Wuhan Newport is expected to provide domestic and foreign businesses a direct access
to the anticipated Free Trade Zone in Wuhan. The project will include commercial buildings, professional logistic supply chain
centers, direct access to the Yangtze River, Wuhan-Xinjiang-Europe Railway and ground transportation, storage and processing centers,
IT supporting services, among others.
Our
Logistics Center is an extensive complex located in Wuhan, the capital of Hubei Province of China, a major transportation hub
city with access to numerous railways, roads and expressways passing through the city and connecting to major cities in China,
as well as other international centers of commerce and business.
The
Logistics Center is expected to occupy approximately 1,918,000 square meters, for which the construction and development are expected
to be completed in five years while the total anticipated investment have been divided into three phases – 40% of the total
in the first year and 30% respectively in the second and third year. The following table illustrates the timeframe of our investment
and construction progress.
Time
|
|
Phase
of Investment
|
|
Percentage
of Total Anticipated Investment
|
|
Percentage
of Construction of
the Logistics Center
|
1
st
Year
|
|
1
st
Phase Investment
|
|
40%
|
|
30%
|
2
nd
Year
|
|
2
nd
Phase Investment
|
|
70%
|
|
40%
|
3
rd
Year
|
|
3
rd
Phase Investment
|
|
100%
|
|
60%
|
4
th
Year
|
|
Investment
Completed
|
|
100%
|
|
75%
|
5
th
Year
|
|
Investment
Completed
|
|
100%
|
|
100%
|
The
Logistics Center located within the Wuhan Newport Yangluo Port, on the upper stream of the Yangtze River, and close to the northern
base of Wu Iron and Steel, China's first mega-sized iron and steel production complex. The Logistics Center is expected to include
a port terminal that will be located approximately 26.5km from the Wuhan Guan and 5.5km from the Yangluo Yangtze River Bridge.
The operation area of the port is expected to consist of a riverbank of 1,039 meters with eight 5,000-to-10,000-ton berths, two
of which are multi-purpose berths and the other six are general cargo berths. It is designed to be able to handle up to 5,000,000
tons of cargo annually, including up to 100,000 TEU for annual container throughput (including 20,000 TEU in freezers areas),
1,000,000 tons of iron and steel and 3,000,000 tons of general cargo.
Within
the Logistics Center, functional areas will be divided into six operating zones: a port operation area, a warehouse and distribution
area, a cold chain supply logistics area, a rail cargo loading area, an exhibition area and a business related area. The Logistics
Center will also be complemented with container storage areas, multi-functional areas, general storage areas, multi-functional
warehouse and infrastructural development, including new roads, gas stations, parking areas, gas and water pipes, electricity
lines and all other facilities and equipment to operate the Logistics Center.
Aside
from being situated in the Wuhan Yangluo Comprehensive Bonded Zone, Yangluo development area is amongst the third group of China’s
Pilot Free Trade Zone (FTZ) applicants to submit FTZ applications to the State Council. As of the date of this prospectus, approvals
have been granted to Shanghai, Tianjin, Guangdong and Fujian. Enterprises within the approved free-trade zones are typically entitled
to a series of favorable regulations and policies that could help the businesses grow and succeed. However, we can provide no
assurance at this point that the FTZ application will in fact be approved.
Wuhan
Newport has signed a twenty-year lease agreement, maximum number of years permitted by the applicable PRC laws, and with rights
to renew at its sole discretion effective April 27, 2015 to lease approximately 1,200,000 million square meters of land for building
logistics warehouses in support of the Logistics Center. The warehouses are expected to comprise of port terminal zones, warehouse
logistics zones, cold chain supply zones and railroad loading and unloading zones. The warehouses will connect the port terminal
along the Yangtze River and the railway leading to Europe, satisfying the requirement of China’s latest “One Belt,
One Road” initiative. It will also be able to support large logistics companies in Wuhan and other nearby provinces which
will rent the warehouses, terminals and offices within the Logistics Center.
Factors
Affecting our Operating Results
Growth
of China’s Economy
.
We operate and derive all of our revenue from operations in China. Economic conditions in China,
therefore, affect our operations, including the demand for our properties and services and the availability and prices of land
maintenance among other expenses. According to the National Bureau of Statistics of China, China has experienced significant economic
growth in the past decade. China is expected to experience continued growth in all areas of investment and consumption, though
may be at a slower rate. However, if the Chinese economy were to become significantly affected by a negative stimulus,
China’s growth rate may fall significantly and it could have a material adverse effect on our results of operations.
Government
Regulations.
Our business and results of operations are subject to PRC government policies and regulations regarding
the following:
|
●
|
Land
Use Right
— According to the Land Administration Law of the PRC and Interim Regulations of the People’s Republic
of China Concerning the Assignment and Transfer of the Right to the Use of the State-owned Land in the Urban Areas, individuals
and companies are permitted to acquire rights to use urban land or land use rights for specific purposes, including residential,
industrial and commercial purposes. We acquire land use rights from local governments and/or other entities for development
of commercial real estate projects.
|
|
●
|
Land
Development
— According to the Urban Real Estate Development and Operation Administration Regulation, the Urban
Real Estate Development and Operation Administration Rules of Hebei Province promulgated by the government of the Hebei Province,
and the Real Estate Development Enterprise Qualification Administration Regulation, a real estate development enterprise shall
obtain a Real Estate Development Enterprise Qualification Certificate. We obtained the related certificates and seek to ensure
that each phase of our projects complies with our certificates.
|
|
|
|
|
●
|
Project
Financing
— According to the Land Administration Law and the Property Law of the PRC, the land use rights, and buildings
still in process of construction may be pledged and mortgaged. From time to time, we may pledge and mortgage our land use
rights and real properties to lenders in order to obtain project financing.
|
Interest
Rate and Inflation Challenges.
We are subject to market risks due to fluctuations in interest rates and refinancing
of mid-term debt. Higher interest rates may also affect our revenues, gross profits and our ability to raise and service debt
and to finance our developments. Inflation could result in increases in the price of raw materials and labor costs. We
do not believe that inflation or deflation has affected our business materially.
Acquisitions
of Land Use Rights and Associated Costs
.
We acquire land use rights for development through the governmental auction process
and by obtaining land use rights permits from third parties through negotiation, acquisition of entities, co-development or other
joint venture arrangements. Our ability to secure sufficient financing for land use rights acquisitions and property development
depends on internal cash flows in addition to lenders’ perceptions of our credit reliability, market conditions in the capital
markets, investors’ perception of our securities, the PRC economy and the PRC government regulations that affect the availability
and cost of financing real estate companies or property purchasers.
Significant
Accounting Policies
Use
of Estimates
The
preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the
consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates. On an ongoing basis, management reviews these estimates using the currently available information.
Changes in facts and circumstances may cause the Company to revise its estimates. Significant accounting estimates reflected in
the consolidated financial statements include: (i) the allowance for doubtful debts; (ii) accrual of estimated liabilities; (iii)
contingencies; (iv) deferred tax assets; (v) impairment of long-lived assets; (vi) useful lives of property plant and equipment;
and (vii) real estate property refunds and compensation payables.
Fair
Value of Financial Instruments
ASC
Topic 825, Financial Instruments (“Topic 825”) requires disclosure of fair value information of financial instruments,
whether or not recognized in the balance sheets, for which it is practicable to estimate that value. In cases where quoted market
prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques
are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard,
the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be
realized in immediate settlement of the instruments. Topic 825 excludes certain financial instruments and all nonfinancial assets
and liabilities from its disclosure requirements. Accordingly, the aggregate fair value amounts do not represent the underlying
value of the Company.
Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that
are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
Level
3 inputs to the valuation methodology are unobservable and significant to the fair value.
As
of December 31, 2015 and 2014, financial instruments of the Company primarily comprise of cash, accrued interest receivables,
other receivables, short-term bank loans, deposits payables and accrued expenses, which were carried at cost on the balance sheets,
and carrying amounts approximated their fair values because of their generally short maturities.
Reporting
Currency and Foreign Currency Translation
The
Company’s consolidated financial statements are presented in the U.S. dollar (US$), which is the Company’s reporting
currency. Yangtze River, Energetic Mind, and Ricofeliz Capital uses US$ as its functional currency. Wuhan Newport uses Renminbi
(“RMB”) as its functional currency. Transactions in foreign currencies are initially recorded at the functional currency
rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded
as a gain or loss on foreign currency transaction in the statements of operations.
In
accordance with ASC 830, Foreign Currency Matters, the Company translated the assets and liabilities into US$ using the rate
of exchange prevailing at the applicable balance sheet date and the statements of operations and cash flows are translated at
an average rate during the reporting period. Adjustments resulting from the translation are recorded in owners’
equity as part of accumulated other comprehensive income.
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Balance sheet items, except for equity accounts
|
|
|
6.4917
|
|
|
|
6.1460
|
|
|
|
For the Years Ended
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Items in the statements of operations and comprehensive income, and statements of cash flows
|
|
|
6.2288
|
|
|
|
6.1457
|
|
Revenue
Recognition
The
Company recognizes revenue from steel trading when persuasive evidence of an arrangement exists, delivery has occurred, the price
is fixed or determinable and collection is reasonably assured.
Real
estate sales are reported in accordance with the provisions of ASC 360-20, Property, Plant and Equipment, Real Estate Sales.
Revenue
from the sales of completed properties and properties where the construction period is twelve months or less is recognized by
the full accrual method when (a) sale is consummated; (b) the buyer’s initial and continuing involvements are adequate to
demonstrate a commitment to pay for the property; (c) the receivable is not subject to future subordination; (d) the Company has
transferred to the buyer the usual risks and rewards of ownership in a transaction that is in substance a sale and does not have
a substantial continuing involvement with the property. A sale is not considered consummated until (a) the parties are bound by
the terms of a contract or agreement, (b) all consideration has been exchanged, (c) any permanent financing for which the seller
is responsible has been arranged, (d) all conditions precedent to closing have been performed. Fair value of buyer’s payments
to be received in future periods pursuant to sales contract is classified under accounts receivable. Sales transactions not meeting
all the conditions of the full accrual method are accounted for using the deposit method of accounting. Under the deposit method,
all costs are capitalized as incurred, and payments received from the buyer are recorded as a deposit liability.
Revenue
and profit from the sale of development properties where the construction period is more than twelve months is recognized by the
percentage-of-completion method on the sale of individual units when the following conditions are met: (a)construction is beyond
a preliminary stage; (b) the buyer is committed to the extent of being unable to require a refund except for non-delivery of the
unit; (c) sufficient units have already been sold to assure that the entire property will not revert to rental property; (d) sales
prices are collectible and (e) aggregate sales proceeds and costs can be reasonably estimated. If any of these criteria are not
met, proceeds are accounted for as deposits until the criteria are met and/or the sale consummated.
The
Company has not generated any revenue from the sales of real estate property for the years ended December 31, 2015 and 2014.
Real
Estate Capitalization and Cost Allocation
Real
estate property completed and real estate properties and land lots under development consist of commercial units under
construction and units completed. Properties under development or completed are stated at cost or estimated net realizable
value, whichever is lower. Costs include costs of land use rights, direct development costs, interest on indebtedness,
construction overhead and indirect project costs. The Company acquires land use rights with lease terms of 40 years through
government sale transaction. Land use rights are divided and transferred to customers after the Company delivers properties.
The Company capitalizes payments for obtaining the land use rights, and allocates to specific units within a project based on
units’ gross floor area. Costs of land use rights for the purpose of property development are not amortized. Other
costs are allocated to units within a project based on the ratio of the sales value of units to the estimated total sales
value.
Capitalization
of Interest
In
accordance with ASC 360, Property, Plant and Equipment, interest incurred during construction is capitalized to properties under
development. For the years ended December 31, 2015 and 2014, nil and nil were capitalized as properties under development, respectively.
Cash
and Cash Equivalents
Cash
and cash equivalents consist of cash and bank deposits with original maturities of three months or less, which are unrestricted
as to withdrawal and use the Company maintains accounts at banks and has not experienced any losses from such concentrations.
Property
and Equipment, Net
The
property and equipment are stated at cost less accumulated depreciation. The depreciation is computed on a straight-line method
over the estimated useful lives of the assets with 5% salvage value.
The
Company eliminates the cost and related accumulated depreciation of assets sold or otherwise retired from the accounts and includes
any gain or loss in the statement of income. The Company charges maintenance, repairs and minor renewals directly to expenses
as incurred; major additions and betterment to equipment are capitalized.
Income
Taxes
Current
income taxes are provided for in accordance with the laws of the relevant taxing authorities. As part of the process of preparing
consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which
it operates. The Company accounts for income taxes using the liability method. Under this method, deferred income taxes are recognized
for tax consequences in future years of differences between the tax bases of assets and liabilities and their reported amounts
in the consolidated financial statements at each year-end and tax loss carry forwards. Deferred tax assets and liabilities are
measured using enacted tax rates applicable for the differences that are expected to affect taxable income.
The
Company adopts a more likely than not threshold and a two-step approach for the tax position measurement and financial statement
recognition. Under the two-step approach, the first step is to evaluate the tax position for recognition by determining if the
weight of available evidence indicates that it is more likely than not that the position will be sustained, including resolution
of related appeals or litigation process, if any. The second step is to measure the tax benefit as the largest amount that is
more than 50% likely of being realized upon settlement. As of December 31, 2015 and 2014, the Company did not have any uncertain
tax position.
Land
Appreciation Tax (“LAT”)
In
accordance with the relevant taxation laws in the PRC, the Company is subject to LAT based on progressive rates ranging from 30%
to 60% on the appreciation of land value, which is calculated as the proceeds of sales of properties less deductible expenditures,
including borrowing costs and all property development expenditures. LAT is prepaid at 1% to 2% of the pre-sales proceeds each
year as required by the local tax authorities, and is settled generally after the construction of the real estate project is completed
and majority of the units are sold. The Company provides LAT as expensed when the related revenue is recognized based on estimate
of the full amount of applicable LAT for the real estate projects in accordance with the requirements set forth in the relevant
PRC laws and regulations. LAT would be included in income tax expense in the statements of operations and comprehensive income
(loss).
Earnings
per Share
Basic
earnings (loss) per share is computed using the weighted average number of common stock outstanding during the year. Diluted earnings
per share is computed using the weighted average number of common stock and potential common stock outstanding during the period
for convertible notes under if-convertible method, if dilutive. Potential common stocks are not included in the denominator of
the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive, such as in a period in which
a net loss is recorded.
Advertising
Expenses
Advertising
costs are expensed as incurred, or the first time the advertising takes place, in accordance with ASC 720-35, Advertising Costs.
For the years ended December 31, 2015 and 2014, the Company recorded advertising expenses of $7,724 and $47,187, respectively.
Impairment
of long-lived assets
The
Company applies the provisions of ASC No. 360 Sub topic 10, "Impairment or Disposal of Long-Lived Assets"(ASC 360- 10)
issued by the Financial Accounting Standards Board ("FASB"). ASC 360-10 requires that long-lived assets be reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable
through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever
any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair
value.
The
Company tests long-lived assets, including property and equipment and finite lived intangible assets, for impairment at least
annually or more frequently upon the occurrence of an event or when circumstances indicate that the net carrying amount is greater
than its fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent
of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its
evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected
to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows,
the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation
of fair value is generally measured by discounting expected future cash flows as the rate the Company utilizes to evaluate potential
investments. The Company estimates fair value based on the information available in making whatever estimates, judgments and projections
are considered necessary. There were no impairment losses in the years ended December 31, 2015 and 2014.
Stock-Based
Compensation
The
Company adopted ASC 718 Stock Compensation. Stock-based compensation cost is measured at the grant date based on the
fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period. The
fair value estimate is based on the share price and other pertinent factors. The Company estimates forfeitures at the
time of grant and to revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company
used a mix of historical data and future assumptions to estimate pre-vesting forfeitures and to record stock-based compensation
expense only for those awards that are expected to vest.
Recently
Issued Accounting Pronouncements
The
Company does not believe recently issued but not yet effective accounting standards from ASU 2014-01 to ASU 2015-01, if currently
adopted, would have a material effect of the consolidated financial position, results of operation and cash flows.
Results
of Operations
The
following table sets forth the results of our operations for the periods indicated in U.S. dollars.
Comparison
of Fiscal Years Ended December 31, 2015 and 2014
|
|
For the Years Ended
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
3,458,295
|
|
Cost of revenue
|
|
|
-
|
|
|
|
3,693,783
|
|
Gross loss
|
|
|
-
|
|
|
|
(235,488
|
)
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Selling expenses
|
|
|
11,577
|
|
|
|
87,866
|
|
General and administrative expenses
|
|
|
4,547,646
|
|
|
|
2,090,499
|
|
Total operating expenses
|
|
|
4,559,223
|
|
|
|
2,178,365
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(4,559,223
|
)
|
|
|
(2,413,853
|
)
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
|
|
|
|
|
|
Other income
|
|
|
868
|
|
|
|
-
|
|
Other expenses
|
|
|
(3,231
|
)
|
|
|
-
|
|
Interest income
|
|
|
55
|
|
|
|
10,996
|
|
Interest expenses
|
|
|
(3,199,031
|
)
|
|
|
(3,256,660
|
)
|
Total other income (expenses)
|
|
|
(3,201,339
|
)
|
|
|
(3,245,664
|
)
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(7,760,562
|
)
|
|
|
(5,659,517
|
)
|
Income taxes benefit
|
|
|
1,378,700
|
|
|
|
1,402,421
|
|
Net loss
|
|
$
|
(6,381,862
|
)
|
|
$
|
(4,257,096
|
)
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
(6,649,917
|
)
|
|
|
(147,341
|
)
|
Comprehensive loss
|
|
$
|
(13,031,779
|
)
|
|
$
|
(4,404,437
|
)
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share - basic and diluted
|
|
$
|
(0.04
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic and diluted
|
|
|
151,682,554
|
|
|
|
151,000,000
|
|
Revenue.
During
the fiscal year ended December 31, 2015, we did not generate any revenue, compared to revenue of $3,458,295 for the fiscal year
ended December 31, 2014, a decrease of $3,458,295 or approximately 100.0%. The significant decrease was mainly because we did
not engage in any steel trading during the fiscal year ended 2015.
We
also did not generate any revenue from the sales of real estate property for the years ended December 31, 2015 and 2014.
Cost
of Revenue.
Our
cost of revenue sold consists of the cost of purchased goods. During the year ended December 31, 2015, our cost of goods sold
was $nil, compared to $3,693,783 for the cost of goods sold for the year ended December 31, 2014, a decrease of $3,693,783 or
approximately 100.0%. The decrease in the cost of revenue was mainly due to the lack of steel trading during the fiscal year
ended 2015.
Gross
Loss.
Our
gross margin increased from a loss of $235,488 for the fiscal year ended December 31, 2014 to $nil for the fiscal year ended December
31, 2015. The increase of the gross margin is mainly due to the lack of steel trading during the fiscal year ended December 31,
2015 and we sold steel for less than the cost of goods during the fiscal year ended December 31, 2014.
Operating
Expenses.
Operating
expenses totaled $4,559,223 for the year ended December 31, 2015, compared to $2,178,365 for the year ended December 31, 2014,
an increase of $2,380,858, or approximately 109%. The significant increase is mainly because of significant increase of general
and administrative expenses offset by decrease in selling expenses.
Selling,
General and Administrative expenses
.
Selling
expenses decrease from $87,866 for the fiscal year ended December 31, 2014 to $11,577 for the fiscal year ended December 31, 2015,
a decrease of $76,289, or approximately 86.83%. The decrease is mainly attributable to decrease in steel trading during the fiscal
year ended December 31, 2015.
Our
general and administrative expenses consist of salaries, office expenses, utilities, business travel, amortization expenses
(including legal expenses, accounting expenses and other professional service expenses) and stock compensation. General and
administrative expenses were $4,547,646 for the fiscal year ended December 31, 2015, compared to $2,090,499 for the
fiscal year ended December 31, 2014, an increase of $2,457,147 or 118 %. The significant increase is
mainly because of the increase of expenses related to professional fees in connection with our merger with Kirin and in
preparation of a public offering and application for listing to the NYSE.
Loss
from Operations.
As
a result of the factors described above, operating loss was $4,559,223 for the fiscal year ended December 31, 2015, compared to
operating loss of $2,413,853 for the fiscal year ended December 31, 2014, an increase of operating loss of $2,145,370, or approximately
88.88%.
Other
Expenses.
We
had a total other expense of $3,201,339 for the fiscal year ended December 31, 2015, compared to a total expense of $3,245,664
for the fiscal year ended December 31, 2014. Our interest income and expense were $55 and $3,199,031, respectively, for the fiscal
year ended December 31, 2015, compared to interest income and expenses of $10,996 and $3,256,660, respectively, for the fiscal
year ended December 31, 2014. Other income and expenses were $868 and $3,231 for the fiscal year ended December 31, 2015, compared
to $nil for the fiscal year ended December 31, 2014.
Income
Tax.
We
received an income tax benefit of $1,378,700 for the fiscal year ended December 31, 2015, compared to $1,402,421 for the fiscal
year ended December 31, 2014.
Net
Loss.
As
a result of the factors described above, our net loss from operations for the year ended December 31, 2015 was $6,381,862, compared
to net loss of $4,257,096 for the fiscal year ended December 31, 2014, an increase in loss of $2,124,766.
Foreign
Currency Translation.
Our
consolidated financial statements are expressed in U.S. dollars but the functional currency of our operating subsidiary is RMB.
Results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated
at the unified exchange rate at the end of the period and equity is translated at historical exchange rates. Translation adjustments
resulting from the process of translating the financial statements denominated in RMB into U.S. dollars are included in determining
comprehensive income. Our foreign currency translation loss for the year ended December 31, 2015 was $6,649,917, compared to $147,341
for the year ended December 31, 2014, an increase of $6,502,576.
Net
Loss Available to Common Stockholders.
Net
loss available to our common stockholders was $0.04 per share (basic and diluted), for the fiscal year ended December 31, 2015,
compared to net loss of $0.03 per share (basic and diluted), for the year ended December 31, 2014.
Liquidity
and Capital Resources
The
following table sets forth a summary of our cash flows for the fiscal years indicated:
|
|
Years
Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Net cash provided by from operating activities
|
|
$
|
(4,735,142
|
)
|
|
$
|
(5,277,025
|
)
|
Net cash provided by (used in) investing activities
|
|
$
|
494,179
|
|
|
$
|
(70,908
|
)
|
Cash flows provided by financing activities
|
|
$
|
4,698,162
|
|
|
$
|
4,346,367
|
|
Effect of exchange rate changes on cash and cash equivalent
|
|
$
|
(996
|
)
|
|
$
|
(5,801
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
$
|
456,203
|
|
|
$
|
(1,007,367
|
)
|
Cash and cash equivalents - beginning of year
|
|
$
|
56,366
|
|
|
$
|
1,063,733
|
|
Cash and cash equivalents - end of year
|
|
$
|
512,569
|
|
|
$
|
56,366
|
|
We
had a balance of cash and cash equivalents of $512,569 as of December 31, 2015 compared to a balance of $56,366 as of December
31, 2014. We have historically funded our working capital needs through advance payments from customers, bank borrowings, and
capital from stockholders. Our working capital requirements are influenced by the state and level of our operations, and the timing
of capital needed for projects.
Operating
Activities
.
Net cash outflow from operating activities was $4,735,142 for the fiscal year ended December 31, 2015, compared
to net cash outflow from operating activities of $5,277,025 for the year ended December 31, 2014, a decrease of $541,883. The
decrease in net cash outflows from operating activities was primarily contributed by the following factors:
|
●
|
Changes
in prepayments (combination of others receivables) provided $nil cash outflow for the fiscal year ended December 31, 2015. In
the same period of 2014, changes in prepayments (combination of others receivables) provided $884,391 cash inflow, which led
to a decrease of $884,391 in net cash inflow.
|
|
|
|
|
●
|
Changes
in real estate properties and land lots under development provided $778,977 cash outflow for the year ended December 31, 2015,
compared to changes in real estate properties and land lots under development contributed $6,412,919 cash outflow in the same
period of 2014, which led to a decrease of $5,633,942 in net cash outflow.
|
|
|
|
|
●
|
Changes
in accounts payable provided $nil cash inflow for the fiscal year ended December 31, 2015, compared to $4,486,912 cash inflow
for the fiscal year ended December 31, 2014, which lead to a decrease of $4,486,912 in net cash inflow from operating
activities.
|
|
●
|
Changes
in other payables and accrued liabilities provided $2,257,051 cash inflow for the fiscal year ended December 31, 2015, compared
other payables and accrued liabilities contributed $72,260 cash inflow in the same period of 2014, which led to
an increase of $2,184,791 in net cash inflow.
|
|
|
|
|
●
|
We
have net loss of $6,381,862 for the fiscal year ended December 31, 2015, compared to net loss $4,257,096 in the same period
of 2014, which led to an increase of $2,124,766 increase in net cash outflow.
|
Investing
Activities.
Net cash provided by investing activities was $494,179 for the fiscal year ended December 31, 2015,
compared to net cash of $70,908 used in investing activities for the fiscal year ended December 31, 2014, represented an increase
of $565,087. The increase was primarily because of decrease of cash used for purpose of property and equipment, as
well as the effect of share exchange completed in December, 2015.
Financing
Activities
.
Net cash provided by financing activities was $4,698,162 for the fiscal year ended December 31, 2015, compared
to net cash of $4,346,367 provided by financing activities for the fiscal year ended December 31, 2014, represented an increase
of $351,795. The increase was primarily because we have a $176,599 of repayment of financial institution loans in the
fiscal year ended December 31, 2015, compared to $488,146 for the same period in 2014.
Contractual
Obligations
Upon
consummation of the Second Share Exchange and Subsidiaries Sale described above in “Corporate History”, Jasper Lake
Holdings Limited (“Jasper”), a related party, holds an 8% convertible promissory note in the principal amount of $75,000,000
with a maturity date of December 19, 2018. Upon maturity, Jasper may convert all or any portion of the then aggregate outstanding
principal amount, together with any accrued and unpaid interest, into shares of Company’s common stock at $10.00 per share.
Off-Balance
Sheet Arrangements
January 29, 2016, we received an undertaking
commitment letter provided by the our majority shareholder who is willing to provide sufficient funding on an as-needed basis.
We believe that the financial commitment provided by our majority shareholder could provide our company with sufficient capital
resources to meet our capital needs for a reasonable period of time.
Recently
Issued Accounting Pronouncements
The
Company does not believe other recently issued but not yet effective accounting standards from ASU 2016-01, if currently adopted,
would have a material effect of the consolidated financial position, results of operation and cash flows.
PART
IV
Item
15.
|
Exhibits,
Financial Statement Schedules.
|
(a)
The following documents are filed as part of this report:
(1)
|
Financial
Statements:
|
The
audited balance sheet of the Company as of December 31, 2015 and December 31, 2014, the related condensed statements of operations,
changes in stockholders’ deficiency and cash flows for the years then ended, the footnotes thereto, and the report of Dominic
KF Chan & Co., independent auditors, are filed herewith.
None.
Financial
statement schedules have been omitted because they are either not applicable or the required information is included in the financial
statements or notes hereto.
The
exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Report.
(b)
The following are exhibits to this Report and, if incorporated by reference, we have indicated the document previously filed with
the SEC in which the exhibit was included.
Certain
of the agreements filed as exhibits to this Report contain representations and warranties by the parties to the agreements that
have been made solely for the benefit of the parties to the agreement. These representations and warranties:
|
●
|
may
have been qualified by disclosures that were made to the other parties in connection with the negotiation of the agreements,
which disclosures are not necessarily reflected in the agreements;
|
|
|
|
|
●
|
may
apply standards of materiality that differ from those of a reasonable investor; and
|
|
|
|
|
●
|
were
made only as of specified dates contained in the agreements and are subject to subsequent developments and changed circumstances.
|
Accordingly,
these representations and warranties may not describe the actual state of affairs as of the date that these representations and
warranties were made or at any other time. Investors should not rely on them as statements of fact.
Exhibit
Number
|
|
Description
|
|
|
|
31.1
|
|
Certification
of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
31.2
|
|
Certification
of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
32.1+
|
|
Certification
of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2+
|
|
Certification
of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
|
101.INS
|
|
XBRL
Instance Document
|
101.SCH
|
|
XBRL
Taxonomy Schema
|
101.CAL
|
|
XBRL
Taxonomy Calculation Linkbase
|
101.DEF
|
|
XBRL
Taxonomy Definition Linkbase
|
101.LAB
|
|
XBRL
Taxonomy Label Linkbase
|
101.PRE
|
|
XBRL
Taxonomy Presentation Linkbase
|
+
In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
|
YANGTZE
RIVER DEVELOPMENT LIMITED
|
|
|
|
|
By:
|
/s/
Xiangyao Liu
|
|
|
Xiangyao
Liu
|
|
|
President
and Chief Executive Officer
(Principal
Executive Officer)
|
|
|
|
|
Date:
|
May
16, 2016
|
|
|
|
|
By:
|
/s/
Xin Zheng
|
|
|
Xin
Zheng
|
|
|
Chief
Financial Officer
(Principal
Financial and Accounting Officer)
|
|
|
|
|
Date:
|
May
16, 2016
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Xiangyao Liu
|
|
President,
Chief Executive Officer and Director
|
|
May
16, 2016
|
Xiangyao
Liu
|
|
(Principal
Executive Officer)
|
|
|
|
|
Chief
Financial Officer
|
|
|
|
|
|
|
|
/s/
Xin Zheng
|
|
(Principal
Financial and Accounting Officer)
|
|
May
16, 2016
|
Xin
Zheng
|
|
|
|
|
|
|
|
|
|
/s/
James Stuart Coleman
|
|
Director
|
|
May
16, 2016
|
James
Stuart Coleman
|
|
|
|
|
|
|
|
|
|
/s/
Zhanhuai Cheng
|
|
Director
|
|
May
16, 2016
|
Zhanhuai
Cheng
|
|
|
|
|
|
|
|
|
|
/s/
Yanliang Wu
|
|
Director
|
|
May
16, 2016
|
Yanliang
Wu
|
|
|
|
|
|
|
|
|
|
/s/
Yu Zong
|
|
Director
|
|
May
16, 2016
|
Yu
Zong
|
|
|
|
|
|
|
|
|
|
/s/
Harvey Leibowitz
|
|
Independent
Director
|
|
May
16, 2016
|
Harvey
Leibowitz
|
|
|
|
|
|
|
|
|
|
/s/
Zhixue Liu
|
|
Independent
Director
|
|
May
16, 2016
|
Zhixue
Liu
|
|
|
|
|
|
|
|
|
|
/s/
Tongming Wang
|
|
Independent
Director
|
|
May
16, 2016
|
Tongming
Wang
|
|
|
|
|
|
|
|
|
|
/s/
Romano Tio
|
|
Independent
Director
|
|
May
16, 2016
|
Romano
Tio
|
|
|
|
|
|
|
|
|
|
/s/
Daniel W. Heffernan
|
|
Independent
Director
|
|
May
16, 2016
|
Daniel
W. Heffernan
|
|
|
|
|
|
|
|
|
|
/s/
Zhihong Su
|
|
Independent
Director
|
|
May
16, 2016
|
Zhihong
Su
|
|
|
|
|
Yangtze River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
CONSOLIDATED
FINANCIAL STATEMENTS
December
31, 2015 AND 2014
TABLE
OF CONTENTS
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board
of Directors and Stockholders of
Yangtze
River Development Limited
We
have audited the accompanying consolidated balance sheets of Yangtze River Development Limited (the “Company”) (formerly
known as Kirin International Holding, Inc.) as of December 31, 2015 and 2014, and the related consolidated statements of operations
and comprehensive loss, changes in owners’ equity and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of their internal
control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit
also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements,
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of Yangtze River Development Limited as of December 31, 2015 and 2014, and the results of its operations and its cash flows for
the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/
Dominic K.F. Chan & Co.
|
|
Dominic
K.F. Chan & Co.
|
|
Certified
Public Accountants
|
|
Hong
Kong, March 30, 2016
|
|
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
Consolidated
Balance Sheets
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
ASSETS
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
512,569
|
|
|
$
|
56,366
|
|
Other assets and receivables
|
|
|
6,259,865
|
|
|
|
2,937,545
|
|
Real estate property completed
|
|
|
31,566,156
|
|
|
|
33,025,319
|
|
Real estate properties and land lots under development
|
|
|
364,876,105
|
|
|
|
384,610,172
|
|
Property and equipment, net
|
|
|
157,499
|
|
|
|
237,475
|
|
Deferred tax assets
|
|
|
3,614,419
|
|
|
|
2,420,449
|
|
Total Assets
|
|
$
|
406,986,613
|
|
|
$
|
423,287,326
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
5,526,610
|
|
|
$
|
5,837,471
|
|
Due to related parties
|
|
|
32,045,112
|
|
|
|
322,388,060
|
|
Other taxes payable
|
|
|
13,350
|
|
|
|
28,203
|
|
Other payables and accrued liabilities
|
|
|
560,830
|
|
|
|
264,558
|
|
Real estate property refund and compensation payable
|
|
|
25,274,753
|
|
|
|
25,158,858
|
|
Convertible note
|
|
|
75,000,000
|
|
|
|
-
|
|
Loans payable
|
|
|
44,502,981
|
|
|
|
47,185,161
|
|
Total liabilities
|
|
$
|
182,923,636
|
|
|
$
|
400,862,311
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Preferred stock at $0.0001 par value; 100,000,000 shares authorized; none issued or outstanding
|
|
$
|
-
|
|
|
$
|
-
|
|
Common stock at $0.0001 par value; 500,000,000 shares authorized; 172,254,446 and 151,000,000 shares issued and outstanding at December 31, 2015 and December 31, 2014, respectively
|
|
|
17,225
|
|
|
|
15,100
|
|
Additional paid-in capital
|
|
|
242,622,947
|
|
|
|
27,955,331
|
|
Accumulated losses
|
|
|
(16,263,010
|
)
|
|
|
(9,881,148
|
)
|
Accumulated other comprehensive (loss) income
|
|
|
(2,314,185
|
)
|
|
|
4,335,732
|
|
Total Equity
|
|
$
|
224,062,977
|
|
|
$
|
22,425,015
|
|
Total Liabilities and Equity
|
|
$
|
406,986,613
|
|
|
$
|
423,287,326
|
|
See
notes to the consolidated financial statements
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
consolidated
Statements of OPERATIONS and Comprehensive LOSS
|
|
For the Years Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
3,458,295
|
|
Cost of revenue
|
|
|
-
|
|
|
|
3,693,783
|
|
Gross loss
|
|
|
-
|
|
|
|
(235,488
|
)
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Selling expenses
|
|
|
11,577
|
|
|
|
87,866
|
|
General and administrative expenses
|
|
|
4,547,646
|
|
|
|
2,090,499
|
|
Total operating expenses
|
|
|
4,559,223
|
|
|
|
2,178,365
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(4,559,223
|
)
|
|
|
(2,413,853
|
)
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
|
|
|
|
|
|
Other income
|
|
|
868
|
|
|
|
-
|
|
Other expenses
|
|
|
(3,231
|
)
|
|
|
-
|
|
Interest income
|
|
|
55
|
|
|
|
10,996
|
|
Interest expenses
|
|
|
(3,199,031
|
)
|
|
|
(3,256,660
|
)
|
Total other expenses
|
|
|
(3,201,339
|
)
|
|
|
(3,245,664
|
)
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(7,760,562
|
)
|
|
|
(5,659,517
|
)
|
Income taxes benefit
|
|
|
1,378,700
|
|
|
|
1,402,421
|
|
Net loss
|
|
$
|
(6,381,862
|
)
|
|
$
|
(4,257,096
|
)
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
(6,649,917
|
)
|
|
|
(147,341
|
)
|
Comprehensive loss
|
|
$
|
(13,031,779
|
)
|
|
$
|
(4,404,437
|
)
|
Loss per share - basic and diluted
|
|
$
|
(0.04
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic and diluted
|
|
|
151,682,554
|
|
|
|
151,000,000
|
|
See
notes to the consolidated financial statements
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
consolidated
Statements of CHANGES IN Equity
|
|
Common
stock
|
|
|
Additional
|
|
|
|
|
|
Accumulated
other
|
|
|
|
|
|
|
Number
of shares
|
|
|
Amount
|
|
|
paid-in
capital
|
|
|
Accumulated
losses
|
|
|
comprehensive
(loss)
income
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of January 1, 2014
|
|
|
151,000,000
|
|
|
$
|
15,100
|
|
|
$
|
27,955,331
|
|
|
$
|
(5,624,052
|
)
|
|
$
|
4,483,073
|
|
|
$
|
26,829,452
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,257,096
|
)
|
|
|
-
|
|
|
|
(4,257,096
|
)
|
Foreign
currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(147,341
|
)
|
|
|
(147,341
|
)
|
Balance
as of December 31, 2014
|
|
|
151,000,000
|
|
|
$
|
15,100
|
|
|
$
|
27,955,331
|
|
|
$
|
(9,881,148
|
)
|
|
$
|
4,335,732
|
|
|
$
|
22,425,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forgiveness
of loan from Wuhan Renhe
|
|
|
-
|
|
|
|
-
|
|
|
|
285,413,074
|
|
|
|
-
|
|
|
|
-
|
|
|
|
285,413,074
|
|
Effect
of share exchange
|
|
|
20,596,546
|
|
|
|
2,060
|
|
|
|
(86,182,521
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(86,180,461
|
)
|
Restricted
shares issued for services
|
|
|
657,900
|
|
|
|
65
|
|
|
|
3,749,965
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,750,030
|
|
Extinguishment
of debt with a former officer
|
|
|
-
|
|
|
|
-
|
|
|
|
11,687,098
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,687,098
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,381,862
|
)
|
|
|
-
|
|
|
|
(6,381,862
|
)
|
Foreign
currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,649,917
|
)
|
|
|
(6,649,917
|
)
|
Balance
as of December 31, 2015
|
|
|
172,254,446
|
|
|
$
|
17,225
|
|
|
$
|
242,622,947
|
|
|
$
|
(16,263,010
|
)
|
|
$
|
(2,314,185
|
)
|
|
$
|
224,062,977
|
|
See
notes to the consolidated financial statements
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
Consolidated
Statements of Cash Flows
|
|
For the Years Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(6,381,862
|
)
|
|
$
|
(4,257,096
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation of property, and equipment
|
|
|
79,064
|
|
|
|
80,133
|
|
Loss on disposal of property, and equipment
|
|
|
3,082
|
|
|
|
-
|
|
Deferred tax benefit
|
|
|
(1,378,700
|
)
|
|
|
(1,402,421
|
)
|
Share-based compensation expense
|
|
|
1,808,867
|
|
|
|
-
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepayments
|
|
|
-
|
|
|
|
884,391
|
|
Other assets and receivables
|
|
|
(1,534,700
|
)
|
|
|
(57,758
|
)
|
Real estate property completed
|
|
|
(312,163
|
)
|
|
|
(276,595
|
)
|
Real estate properties and land lots under development
|
|
|
(778,977
|
)
|
|
|
(6,412,919
|
)
|
Accounts payable
|
|
|
-
|
|
|
|
4,486,912
|
|
Other taxes payable
|
|
|
(13,914
|
)
|
|
|
28,204
|
|
Other payables and accrued liabilities
|
|
|
2,257,051
|
|
|
|
72,260
|
|
Real estate property refund and compensation payables
|
|
|
1,517,110
|
|
|
|
1,577,864
|
|
Net Cash Used In Operating Activities
|
|
|
(4,735,142
|
)
|
|
|
(5,277,025
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(11,733
|
)
|
|
|
(70,908
|
)
|
Proceeds from disposal of property and equipment
|
|
|
130
|
|
|
|
-
|
|
Effect of share exchange
|
|
|
505,782
|
|
|
|
-
|
|
Net Cash Provided By (Used In) Investing Activities
|
|
|
494,179
|
|
|
|
(70,908
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from financial institution loans
|
|
|
-
|
|
|
|
47,187,464
|
|
Repayment of financial institution loans
|
|
|
(176,599
|
)
|
|
|
(488,146
|
)
|
Advances from related parties
|
|
|
4,874,761
|
|
|
|
4,834,513
|
|
Repayment to related parties
|
|
|
-
|
|
|
|
(47,187,464
|
)
|
Net Cash Provided By Financing Activities
|
|
|
4,698,162
|
|
|
|
4,346,367
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
|
|
(996
|
)
|
|
|
(5,801
|
)
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) In Cash and Cash Equivalents
|
|
|
456,203
|
|
|
|
(1,007,367
|
)
|
Cash and Cash Equivalents at Beginning of Year
|
|
|
56,366
|
|
|
|
1,063,733
|
|
Cash and Cash Equivalents at End of Year
|
|
$
|
512,569
|
|
|
$
|
56,366
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information:
|
|
|
|
|
|
|
|
|
Cash paid for interest expense
|
|
$
|
3,001,771
|
|
|
$
|
3,256,660
|
|
Cash paid for income tax
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Non-Cash Transactions:
|
|
|
|
|
|
|
|
|
Forgiveness of loans from an owner
|
|
$
|
285,413,074
|
|
|
$
|
-
|
|
Issuance of convertible note
|
|
$
|
150,000,000
|
|
|
$
|
-
|
|
Reduction of convertible note
|
|
$
|
75,000,000
|
|
|
$
|
-
|
|
See
notes to the consolidated financial statements
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
NOTES
TO THE FINANCIAL STATEMENTS
December
31, 2015 and 2014
1.
ORGANIZATION AND PRINCIPAL ACTIVITIES
The
consolidated financial statements include the financial statements of Yangtze River Development Limited (the “Company”
or “Yangtze River”) and its subsidiaries, Energetic Mind Limited (“Energetic Mind”), Ricofeliz Capital
(HK) Limited (“Ricofeliz Capital”), and Wuhan Yangtze River Newport Logistics Co., Ltd. (“Wuhan Newport”).
The
Company, formerly named as Kirin International Holding, Inc., and Ciglarette, Inc., was incorporated in the State of Nevada on
December 23, 2009. The Company was a development stage company and has not generated significant revenue since inception to March
1, 2011.
On
March 1, 2011, the Company entered into a share exchange agreement that Kirin China Holding Limited (“Kirin China”)
became the Company’s wholly-owned subsidiary. Kirin China engaged in the development and sales of residential and commercial
real estate properties, and development of land lots in People’s Republic of China (“China”, or the “PRC”).
On
December 19, 2015, the Company completed a share exchange (the “Share Exchange”) with Energetic Mind and all the shareholders
of Energetic Mind, whereby Yangtze River acquired 100% of the issued and outstanding capital stock of Energetic Mind, in exchange
for 151,000,000 shares of Yangtze River’s common stock, which constituted approximately 88% of its issued and outstanding
shares on a fully-diluted basis of Yangtze River immediately after the consummation of the Share Exchange, and an 8% convertible
note (the “Note”) in the principal amount of $150,000,000. As a result of the Share Exchange, Energetic Mind became
Yangtze River’s wholly-owned subsidiary and Jasper Lake Holdings Limited (“Jasper”), the former shareholder
of Energetic Mind, became Yangtze River’s controlling stockholder. The Share Exchange transaction with Energetic Mind was
treated as an acquisition, with Energetic Mind as the accounting acquirer and Yangtze River as the acquired party. The financial
statements before the date of the Share Exchange are those of Energetic Mind with the results of the Company being consolidated
from the date of the Share Exchange.
Energetic
Mind owns 100% of Ricofeliz Capital and operates its business through its subsidiary Wuhan Newport.
Wuhan
Newport was a wholly owned subsidiary of Wuhan Renhe Group Co., Ltd. (the “Wuhan Renhe”), a company incorporated in
the PRC as at September 23, 2002. On July 13, 2015, Wuhan Renhe transferred all of the equity interests of the Company to Ricofeliz
Capital, a company incorporated in Hong Kong on March 25, 2015. Ricofeliz Capital was incorporated by Energetic Mind, a company
incorporated in British Virgin Islands (“BVI”). Energetic Mind was incorporated by Mr. Liu Xiangyao on January 2,
2015, and was subsequently purchased by various companies incorporated in BVI or the United States of America (“USA”),
among whom Jasper became its 64% owner. Jasper was 100% owned by Mr. Liu Xiangyao, a Hong Kong citizen.
The
major assets of Wuhan Newport include land lots for developing commercial buildings that are in line with the principal activities
of Kirin China.
On
December 31, 2015, the Company entered into certain stock purchase and business sale agreements (the “Agreements”)
with Kirin Global Enterprises, Inc. (the “Purchaser”), a California corporation and an entity controlled by a former
officer and director of the Company whereby the Company sold its interest in certain subsidiaries (see note 11) for an aggregate
of $75,000,002. (the “Sale”).
Pursuant
to the terms of the Agreements, Jasper agreed to finance the Sale by reducing Company’s financial obligations of the Note
by an aggregate of $75,000,000. In addition, the Purchaser agreed to pay the remaining two dollar in cash.
Upon
completion of the Sale, the Company operates its business solely through its subsidiary Wuhan Newport, primarily engaging in the
business as a port logistic center located in the middle reaches of the Yangtze River in the PRC.
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
NOTES
TO THE FINANCIAL STATEMENTS
December
31, 2015 and 2014
2.
Summary of Significant Accounting Policies
2.1
Basis of presentation
The
accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles
in the United States of America (“GAAP”).
The
consolidated financial statements include the financial statements of all the subsidiaries. All transactions and balances between
the Company and its subsidiaries have been eliminated upon consolidation.
The
consolidated balance sheets are presented unclassified because the time required to complete real estate projects and the Company’s
working capital considerations usually stretch for more than one-year period.
2.2
Use of estimates
The
preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the
consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates. On an ongoing basis, management reviews these estimates using the currently available information.
Changes in facts and circumstances may cause the Company to revise its estimates. Significant accounting estimates reflected in
the consolidated financial statements include: (i) the allowance for doubtful debts; (ii) accrual of estimated liabilities; and
(iii) contingencies; (iv) deferred tax assets; (v) impairment of long-lived assets; (vi) useful lives of property plant and equipment;
and (vii) real estate property refunds and compensation payables.
2.3
Cash and cash equivalents
Cash
and cash equivalents consist of cash and bank deposits with original maturities of three months or less, which are unrestricted
as to withdrawal and use the Company maintains accounts at banks and has not experienced any losses from such concentrations.
2.4
Property and equipment
The
property and equipment are stated at cost less accumulated depreciation. The depreciation is computed on a straight-line method
over the estimated useful lives of the assets with 5% salvage value. Estimated useful lives of property and equipment are stated
in Note 7.
The
Company eliminates the cost and related accumulated depreciation of assets sold or otherwise retired from the accounts and includes
any gain or loss in the statement of income. The Company charges maintenance, repairs and minor renewals directly to expenses
as incurred; major additions and betterment to equipment are capitalized.
2.5
Impairment of long-lived assets
The
Company applies the provisions of ASC No. 360 Sub topic 10, "Impairment or Disposal of Long-Lived Assets"(ASC 360- 10)
issued by the Financial Accounting Standards Board ("FASB"). ASC 360-10 requires that long-lived assets be reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable
through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever
any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair
value.
The
Company tests long-lived assets, including property and equipment and finite lived intangible assets, for impairment at least
annually or more frequently upon the occurrence of an event or when circumstances indicate that the net carrying amount is greater
than its fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent
of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its
evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected
to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows,
the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation
of fair value is generally measured by discounting expected future cash flows as the rate the Company utilizes to evaluate potential
investments. The Company estimates fair value based on the information available in making whatever estimates, judgments and projections
are considered necessary. There were no impairment losses in the years ended December 31, 2015 and 2014.
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
NOTES
TO THE FINANCIAL STATEMENTS
December
31, 2015 and 2014
2.6
Fair values of financial instruments
ASC
Topic 825, Financial Instruments (“Topic 825”) requires disclosure of fair value information of financial instruments,
whether or not recognized in the balance sheets, for which it is practicable to estimate that value. In cases where quoted market
prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques
are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard,
the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be
realized in immediate settlement of the instruments. Topic 825 excludes certain financial instruments and all nonfinancial assets
and liabilities from its disclosure requirements. Accordingly, the aggregate fair value amounts do not represent the underlying
value of the Company.
Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs
that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial
instruments.
Level
3 inputs to the valuation methodology are unobservable and significant to the fair value.
As
of December 31, 2015 and 2014, financial instruments of the Company primarily comprise of cash, accrued interest receivables,
other receivables, short-term bank loans, deposits payables and accrued expenses, which were carried at cost on the balance sheets,
and carrying amounts approximated their fair values because of their generally short maturities.
2.7
Convertible notes
In
accordance with ASC subtopic 470-20, the convertible notes are initially carried at the principal amount of the convertible notes.
Debt premium or discounts, which are the differences between the carrying value and the principal amount of convertible notes
at the issuance date, together with related debts issuance cost, are subsequently amortized using effective interest method as
adjustments to interest expense from the debt issuance date to its first redemption date. Convertible notes are classified as
a current liability if they are or will be callable by the Company or puttable by the debt holders within one year from the balance
sheet date, even though liquidation may not be expected within that period.
2.8 Foreign
currency translation and transactions
The
Company’s consolidated financial statements are presented in the U.S. dollar (US$), which is the Company’s reporting
currency. Yangtze River, Energetic Mind, and Ricofeliz Capital uses US$ as its functional currency. Wuhan Newport uses Renminbi
Yuan(“RMB”) as its functional currency. Transactions in foreign currencies are initially recorded at the functional
currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount
are recorded as a gain or loss on foreign currency transaction in the statements of operations.
In
accordance with ASC 830, Foreign Currency Matters, the Company translated the assets and liabilities into US$ using the rate
of exchange prevailing at the applicable balance sheet date and the statements of operations and cash flows are translated at
an average rate during the reporting period. Adjustments resulting from the translation are recorded in owners’
equity as part of accumulated other comprehensive income.
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Balance sheet items, except for equity accounts
|
|
|
6.4917
|
|
|
|
6.1460
|
|
|
|
For the Years Ended
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Items in the statements of operations and comprehensive income, and statements of cash flows
|
|
|
6.2288
|
|
|
|
6.1457
|
|
2.9
Revenue recognition
The
Company recognizes revenue from steel trading when persuasive evidence of an arrangement exists, delivery has occurred, the price
is fixed or determinable and collection is reasonably assured.
Real
estate sales are reported in accordance with the provisions of ASC 360-20, Property, Plant and Equipment, Real Estate Sales.
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
NOTES
TO THE FINANCIAL STATEMENTS
December
31, 2015 and 2014
Revenue
from the sales of completed properties and properties where the construction period is twelve months or less is recognized by
the full accrual method when (a) sale is consummated; (b) the buyer’s initial and continuing involvements are adequate to
demonstrate a commitment to pay for the property; (c) the receivable is not subject to future subordination; (d) the Company has
transferred to the buyer the usual risks and rewards of ownership in a transaction that is in substance a sale and does not have
a substantial continuing involvement with the property. A sale is not considered consummated until (a) the parties are bound by
the terms of a contract or agreement, (b) all consideration has been exchanged, (c) any permanent financing for which the seller
is responsible has been arranged, (d) all conditions precedent to closing have been performed. Fair value of buyer’s payments
to be received in future periods pursuant to sales contract is classified under accounts receivable. Sales transactions not meeting
all the conditions of the full accrual method are accounted for using the deposit method of accounting. Under the deposit method,
all costs are capitalized as incurred, and payments received from the buyer are recorded as a deposit liability.
Revenue
and profit from the sale of development properties where the construction period is more than twelve months is recognized by the
percentage-of-completion method on the sale of individual units when the following conditions are met: (a)construction is beyond
a preliminary stage; (b) the buyer is committed to the extent of being unable to require a refund except for non-delivery of the
unit; (c) sufficient units have already been sold to assure that the entire property will not revert to rental property; (d) sales
prices are collectible and (e) aggregate sales proceeds and costs can be reasonably estimated. If any of these criteria are not
met, proceeds are accounted for as deposits until the criteria are met and/or the sale consummated.
The
Company has not generated any revenue from the sales of real estate property for the years ended December 31, 2015 and 2014.
2.10
Real estate capitalization and cost allocation
Real
estate property completed and real estate properties and land lots under development consist of commercial units under construction
and units completed. Properties under development or completed are stated at cost or estimated net realizable value, whichever
is lower. Cost capitalization of development and redevelopment activities begins during the predevelopment period, which we define
as the activities that are necessary to begin the development of the property. We cease capitalization upon substantial completion
of the project, but no later than one year from cessation of major construction activity. We also cease capitalization when activities
necessary to prepare the property for its intended use have been suspended. Costs include costs of land use rights, direct development
costs, interest on indebtedness, construction overhead and indirect project costs. The Company acquires land use rights with lease
terms of 40 years through government sale transaction. Land use rights are divided and transferred to customers after the Company
delivers properties. The Company capitalizes payments for obtaining the land use rights, and allocates to specific units within
a project based on units’ gross floor area. Costs of land use rights for the purpose of property development are not amortized.
Other costs are allocated to units within a project based on the ratio of the sales value of units to the estimated total sales
value.
2.11
Capitalization of interest
In
accordance with ASC 360, Property, Plant and Equipment, interest incurred during construction is capitalized to properties under
development. For the years ended December 31, 2015 and 2014, nil and nil were capitalized as properties under development, respectively.
2.12
Advertising expenses
Advertising
costs are expensed as incurred, or the first time the advertising takes place, in accordance with ASC 720-35, Advertising Costs.
For the years ended December 31, 2015 and 2014, the Company recorded advertising expenses of $7,724 and $47,187, respectively.
2.13
Share-based compensation
The
Company grants restricted shares to its non-employee consultants. Awards granted to non-employees are measured at fair value at
the earlier of the commitment date or the date the services are completed, and are recognized using graded vesting method over
the period the service is provided.
2.14
Income taxes
Current
income taxes are provided for in accordance with the laws of the relevant taxing authorities. As part of the process of preparing
consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which
it operates. The Company accounts for income taxes using the liability method. Under this method, deferred income taxes are recognized
for tax consequences in future years of differences between the tax bases of assets and liabilities and their reported amounts
in the consolidated financial statements at each year-end and tax loss carry forwards. Deferred tax assets and liabilities are
measured using enacted tax rates applicable for the differences that are expected to affect taxable income.
The
Company adopts a more likely than not threshold and a two-step approach for the tax position measurement and financial statement
recognition. Under the two-step approach, the first step is to evaluate the tax position for recognition by determining if the
weight of available evidence indicates that it is more likely than not that the position will be sustained, including resolution
of related appeals or litigation process, if any. The second step is to measure the tax benefit as the largest amount that is
more than 50% likely of being realized upon settlement. As of December 31, 2015 and 2014, the Company did not have any uncertain
tax position.
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
NOTES
TO THE FINANCIAL STATEMENTS
December
31, 2015 and 2014
2.15
Land Appreciation Tax (“LAT”)
In
accordance with the relevant taxation laws in the PRC, the Company is subject to LAT based on progressive rates ranging from 30%
to 60% on the appreciation of land value, which is calculated as the proceeds of sales of properties less deductible expenditures,
including borrowing costs and all property development expenditures. LAT is prepaid at 1% to 2% of the pre-sales proceeds each
year as required by the local tax authorities, and is settled generally after the construction of the real estate project is completed
and majority of the units are sold. The Company provides LAT as expensed when the related revenue is recognized based on estimate
of the full amount of applicable LAT for the real estate projects in accordance with the requirements set forth in the relevant
PRC laws and regulations. LAT would be included in income tax expense in the statements of operations and comprehensive income
(loss).
2.16
Earnings (loss) per share
Basic
earnings (loss) per share is computed using the weighted average number of common shares outstanding during the year. Diluted
earnings per share is computed using the weighted average number of common shares and potential common shares outstanding during
the period for convertible notes under if-convertible method, if dilutive. Potential common shares are not included in the denominator
of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive, such as in a period in which
a net loss is recorded.
2.17
Comprehensive loss
Comprehensive
loss includes net income (loss) and foreign currency adjustments. Comprehensive loss is reported in the consolidated statements
of operations and comprehensive loss. Accumulated other comprehensive loss, as presented on the consolidated balance sheets are
the cumulative foreign currency translation adjustments.
2.18
Contingencies
In
the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out
of its business, that cover a wide range of matters, including, among others, government investigations and tax matters. In accordance
with ASC No. 450 Sub topic 20, “Loss Contingencies”, the Company records accruals for such loss contingencies when
it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.
2.19
Recently issued accounting pronouncements
The
Company does not believe other recently issued but not yet effective accounting standards from ASU 2016-01, if currently adopted,
would have a material effect of the consolidated financial position, results of operation and cash flows.
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
NOTES
TO THE FINANCIAL STATEMENTS
December
31, 2015 and 2014
3.
Risks
(a)
Liquidity risk
The
Company is exposed to liquidity risk which is risk that it is unable to provide sufficient capital resources and liquidity to
meet its commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring
procedures.
(b) Foreign
currency risk
A
majority of the Company’s operating activities and a significant portion of the Company’s assets and liabilities are
denominated in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either
through the Peoples’ Bank of China (“PBOC”) or other authorized financial institutions at exchange rates quoted
by PBOC. Approval of foreign currency payments by the PBOC or other regulatory institutions requires submitting a payment application
form together with suppliers' invoices and signed contracts. The value of RMB is subject to changes in central government policies
and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System
market.
(c)
Concentration risk
For
the year ended December 31, 2014, two customers accounted for all of sales. There were no sales for the year December 31, 2015.
|
|
Years Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Customer A
|
|
|
-
|
|
|
|
20
|
%
|
Customer B
|
|
|
-
|
|
|
|
80
|
%
|
|
|
|
-
|
|
|
|
100
|
%
|
For
the year ended December 31, 2014, products purchased from two suppliers accounted for all of product purchases. There were no
sales for the year December 31, 2015.
|
|
Years Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Supplier A
|
|
|
-
|
|
|
|
19
|
%
|
Supplier B
|
|
|
-
|
|
|
|
81
|
%
|
|
|
|
-
|
|
|
|
100
|
%
|
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
NOTES
TO THE FINANCIAL STATEMENTS
December
31, 2015 and 2014
4.
OTHER assets and receivables
Other
assets and receivables as of December 31, 2015 and 2014 consisted of:
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
847
|
|
|
$
|
3,611
|
|
Working capital borrowed by contractors
|
|
|
-
|
|
|
|
12,431
|
|
Individual income tax receivable
|
|
|
-
|
|
|
|
361
|
|
Staff allowance
|
|
|
-
|
|
|
|
72,346
|
|
Prepaid consulting and legal fees
|
|
|
1,941,163
|
|
|
|
-
|
|
Underwriting commission deposit
|
|
|
1,606,000
|
|
|
|
-
|
|
Excessive business tax and related urban construction and education surcharge
|
|
|
1,726,408
|
|
|
|
1,814,991
|
|
Excessive land appreciation tax
|
|
|
985,447
|
|
|
|
1,033,805
|
|
|
|
$
|
6,259,865
|
|
|
$
|
2,937,545
|
|
Business
tax and LAT are payable each year at 5% and 1% - 2% respectively of customer deposits received. The Company recognizes sales related
business tax and LAT in the income statement to the extent that they are proportionate to the revenue recognized each period.
Any excessive amounts of business and LAT liabilities recognized at period-end pursuant to tax laws and regulations over the amounts
recognized in the income statement are capitalized in prepayments and will be expensed in subsequent periods.
5.
REAL ESTATE PROPERTY COMPLETED
The
account balance and components of the real estate property completed were as follow:
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Properties completed
|
|
|
|
|
|
|
Wuhan Centre China Grand Steel Market
|
|
|
|
|
|
|
|
|
Costs of land use rights
|
|
$
|
7,716,994
|
|
|
$
|
8,151,059
|
|
Other development costs
|
|
|
23,849,162
|
|
|
|
24,874,260
|
|
|
|
$
|
31,566,156
|
|
|
$
|
33,025,319
|
|
As
of December 31, 2015, the sole and wholly owned developing project of the Company is called Wuhan Centre China Grand Steel Market
(Phase 1) Commercial Building in the south of Hans Road, Wuhan Yangluo Economic Development Zone with approximately 222,496.6
square meters of total construction area. Since June 2009, the Company commenced the construction of the project that funded through
a combination of bank loans and advances from shareholders. The Company has obtained certificates representing titles of the land
use rights used for the development of the project. As of December 31, 2015, the Company has completed the construction of four
buildings covering area of approximately 35,350.4 square meters of construction area. The Company values the real estate assets
based on estimates using present value by quoted prices for comparable real estate projects.
6. REAL ESTATE
PROPERTIES AND LAND LOTS UNDER DEVELOPMENT
The components of real estate properties
and land lots under development were as follows:
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Properties under development
|
|
|
|
|
|
|
Wuhan Centre China Grand Steel Market
|
|
|
|
|
|
|
Costs of land use rights
|
|
$
|
9,306,948
|
|
|
$
|
9,830,445
|
|
Other development costs
|
|
|
38,982,735
|
|
|
|
40,385,963
|
|
Land lots undeveloped
|
|
|
316,586,422
|
|
|
|
334,393,764
|
|
|
|
$
|
364,876,105
|
|
|
$
|
384,610,172
|
|
As
of December 31, 2015, the Company has three buildings under development of the project described in Note 5 covering area of approximately
57,450.4 square meters of construction area.
Land
use right with net book value of $181,287,079, including in real estate held for development and land lots undeveloped were pledged
as collateral for the
financial institution
loan as at December 31, 2015.
(See Note 10).
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
NOTES
TO THE FINANCIAL STATEMENTS
December
31, 2015 and 2014
7.
Property and Equipment
The
Company’s property and equipment used to conduct day-to-day business are recorded at cost less accumulated depreciation.
Depreciation expenses are calculated using straight-line method over the estimated useful life with 5% of estimated salvage value
below:
|
|
Useful life
|
|
|
December 31,
|
|
|
|
Years
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
Fixture, furniture and office equipment
|
|
|
5
|
|
|
$
|
63,474
|
|
|
$
|
56,710
|
|
Vehicles
|
|
|
5
|
|
|
|
528,424
|
|
|
|
605,642
|
|
Less: accumulated depreciation
|
|
|
|
|
|
|
(434,399
|
)
|
|
|
(424,877
|
)
|
Property and equipment, net
|
|
|
|
|
|
$
|
157,499
|
|
|
$
|
237,475
|
|
Depreciation
expense totaled $76,419 and $80,133 for the years ended December 31, 2015 and 2014, respectively.
8.
OTHER PAYABLES AND ACCRUED LIABILITIES
Other
payables and accrued liabilities as of December 31, 2015 and 2014 consisted of:
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Salaries payable
|
|
$
|
182,716
|
|
|
$
|
75,301
|
|
Business tax and related urban construction and education surcharge
|
|
|
12,947
|
|
|
|
121
|
|
Deposits from contractors
|
|
|
167,907
|
|
|
|
177,351
|
|
Interests payable in connection with convertible note
|
|
|
197,260
|
|
|
|
-
|
|
Others
|
|
|
-
|
|
|
|
11,785
|
|
|
|
$
|
560,830
|
|
|
$
|
264,558
|
|
9.
REAL ESTATE PROPERTY REFUND AND COMPENSATION PAYABLe
During
the years 2012 and 2011, the Company signed 443 binding agreements of sales of commercial offices of the project with floor area
of 22,790 square meters to unrelated purchasers (the transactions or the real estate sales transactions). The Company received
deposits and considerations from the purchasers as required by the agreements. The construction commenced in the 2010, which was
originally expected to be delivered to customers in late of 2012. No revenue was recognized from the sales of the commercial offices
due to the reason stated below.
Owing
to commercial reasons, the Company decided to terminate the agreements made for the sale of the real estate properties in relation
to the project of Wuhan Centre China Grand Market. According to the agreements of sales, the Company is obliged to compensate
the purchaser at a rate equal to 6% per annum or 0.05% per day on the deposits paid. In the years ended December 31, 2015 and
2014, the Company incurred $1,528,126 and $1,547,428 compensation expenses which were included in general and administrative expenses.
As
at December 31, 2015, 375 out of 443 agreements were cancelled, and no completed office (or real estate certificate) has been
delivered to the purchaser. The Company is still in the progress of negotiating with the purchasers for the cancellation of the
remaining agreements. The directors of the Company are of the opinion that almost all of the purchasers shall accept the cancellation.
If, finally the purchaser insisted on the execution of the agreement, the Company will accept.
Real
estate property refund and compensation payable represent the amount of customer deposits received and the compensation calculated
in accordance with the provisions in the sales agreements. The payable consists of the followings:
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Property sales deposits
|
|
$
|
20,152,652
|
|
|
$
|
21,297,363
|
|
Compensation
|
|
|
5,122,101
|
|
|
|
3,861,495
|
|
|
|
$
|
25,274,753
|
|
|
$
|
25,158,858
|
|
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
NOTES
TO THE FINANCIAL STATEMENTS
December
31, 2015 and 2014
10.
Loans payable
|
|
Weighted-
average
|
|
|
|
|
December
31
|
|
Bank
name
|
|
interest
rate
|
|
|
Term
|
|
2015
|
|
|
2014
|
|
China Construction
Bank
|
|
|
6.33
|
%
|
|
From
May 30, 2014 to May 29, 2020
|
|
|
44,502,981
|
|
|
|
47,185,161
|
|
Interest
expenses incurred on loans payable for the years ended December 31, 2015 and 2014 was $3,001,771 and $3,256,660, respectively.
Land
use right with net book value of $181,287,079, including in real estate held for development and land lots under development were
pledged as collateral for the loan as at December 31, 2015.
The
aggregate maturities of loans payable of each of years subsequent to December 31, 2015 are as follows:
2016
|
|
$
|
154,043
|
|
2017
|
|
|
10,783,000
|
|
2018
|
|
|
10,783,000
|
|
2019
|
|
|
12,323,428
|
|
2020
|
|
|
10,459,510
|
|
|
|
$
|
44,502,981
|
|
11.
DISPOSAL OF SUBSIDIARIES
On
December 31, 2015, the Company sold all of its interests in i) Brookhollow Lake, LLC, ii) Newport Property Holding, LLC, iii)
wholly-owned subsidiary Kirin China, iv) wholly-owned subsidiary Kirin Hopkins Real Estate Group, v) wholly-owned subsidiary Archway
Development Group LLC, vi) wholly-owned subsidiary Specturm International Enterprise, LLC and vii) wholly-owned subsidiary HHC-6055
Centre Drive LLC (collectively referred to as the “Kirin Subsidiaries”). The sale of Kirin China also effectively
terminated Company’s contractual relationship with Hebei Zhongding Real Estate Development Co. Ltd and Xingtai Zhongding
Jiye Real Estate Development Co., Ltd, both of which are companies formed under the laws of the People’s Republic of China
and were deemed Company’s variable interest entities prior to the Sale.
The
Company sold its interests in Kirin Subsidiaries for an aggregate of $75,000,002 for the Sale. The carrying amount of the net
assets of Kirin Subsidiaries was $63,312,904 as of disposal date and the Company recognized the differences of $11,687,098 to
shareholders' equity as a capital transaction.
12.
CONVERTIBLE NOTE
On
December 19, 2015, the Company issued an 8% convertible note in the principal amount of $150,000,000 to Jasper, a related party,
in the Share Exchange (see note 1). The holder of the Note may convert all or any portion of the then aggregate outstanding principal
amount, together with any accrued and unpaid interest, into shares of Company’s common stock at $10.00 per share.
On
December 31, 2015, pursuant to the terms and conditions of the Agreements, Jasper, financed the Purchaser for the Sale by reducing
Company’s financial obligations under the Note by an aggregate of $75,000,000 (see note 1). As a result of the Sale, the
outstanding balance due to Jasper under the Note was $75,000,000 plus any accrued interest.
There
was no beneficial conversion feature attributable to the Note as the set conversion price of the Note was greater than the fair
value of the common share price at the date of issuance. The Company has accounted for the Note in accordance with ASC 470-20,
as a single instrument as a non-current liability. The Note is initially carried at the gross cash received at the issuance date.
The
interest expense for the convertible note included in the consolidated statements of operations is $197,260 and nil for the years
ended December 31, 2015 and 2014. Note issuance costs are immaterial.
13.
Employee Retirement Benefit
The
Company has made employee benefit contribution in accordance with Chinese relevant regulations, including retirement insurance,
unemployment insurance, medical insurance, work injury insurance and birth insurance. The Company recorded the contribution in
the salary and employee charges when incurred. The contributions made by the Company were $64,005 and $17,507 for the years ended
December 31, 2015 and 2014, respectively.
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
NOTES
TO THE FINANCIAL STATEMENTS
December
31, 2015 and 2014
14.
INCOME TAXES
The
Company was incorporated in the state of Nevada. Under the current law of Nevada, the Company is not subject to state corporate
income tax. No provision for federal corporate income tax has been made in the financial statements as there are no assessable
profits.
Energetic
Mind was incorporated in the British Virgin Islands (“BVI”). Under the current law of the BVI, Energetic Mind is not
subject to tax on income.
Ricofeliz
Capital was incorporated in Hong Kong. No provision for Hong Kong profits tax has been made in the financial statements as there
are no assessable profits.
Wuhan
Newport was incorporated in the PRC, was governed by the income tax law of the PRC and is subject to PRC enterprise income tax
(“EIT”). The EIT rate of PRC is 25%.
Income
tax expenses for the years ended December 31, 2015 and 2014 are summarized as follows:
|
|
Years Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
-
|
|
|
$
|
-
|
|
Deferred tax benefit
|
|
|
1,378,700
|
|
|
|
1,402,421
|
|
|
|
$
|
1,378,700
|
|
|
$
|
1,402,421
|
|
A
reconciliation of the income tax benefit (expenses) determined at the PRC EIT income tax rate to the Company’s effective
income tax benefit is as follows:
|
|
Years Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
EIT at the PRC statutory rate of 25%
|
|
$
|
1,940,140
|
|
|
$
|
1,414,879
|
|
Permanent items
|
|
|
-
|
|
|
|
(12,458
|
)
|
Valuation allowance
|
|
|
(561,440
|
)
|
|
|
-
|
|
|
|
$
|
1,378,700
|
|
|
$
|
1,402,421
|
|
The
Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and
penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. For the years
ended December 31, 2015 and 2014, the Company had no unrecognized tax benefits.
The
Company does not anticipate any significant increase to its liability for unrecognized tax benefit within the next 12 months.
The Company will classify interest and penalties related to income tax matters, if any, in income tax expense.
Deferred
income taxes are recognized for tax consequences in future years of differences between the tax bases of assets and liabilities
and their reported amounts in the consolidated financial statements at each year-end and tax loss carry forwards. The tax effects
of temporary differences that give rise to the following approximate deferred tax assets and liabilities as of December 31, 2015
and 2014 are presented below.
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Deferred tax assets
|
|
|
|
|
|
|
Operating loss carry forward
|
|
$
|
303,237
|
|
|
$
|
229,288
|
|
Excess of interest expenses
|
|
|
1,398,582
|
|
|
|
648,140
|
|
Accrued expenses
|
|
|
1,912,600
|
|
|
|
1,543,021
|
|
|
|
$
|
3,614,419
|
|
|
$
|
2,420,449
|
|
The
Company had net operating losses carry forward of $1,212,948 as of December 31, 2015 which will expire on various dates between
December 31, 2018 and 2019.
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
NOTES
TO THE FINANCIAL STATEMENTS
December
31, 2015 and 2014
15.
loss per share
|
|
Years Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Numerator:
|
|
|
|
|
|
|
Net loss for basic and diluted loss per share
|
|
$
|
(6,381,862
|
)
|
|
$
|
(4,257,096
|
)
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding-basic and diluted
|
|
|
151,682,554
|
|
|
|
151,000,000
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
$
|
(0.04
|
)
|
|
$
|
(0.03
|
)
|
246,900
common shares resulting from the assumed conversions of 8% Convertible Note (note 12) were excluded from the calculation of diluted
loss per share for the year ended December 31, 2015 as their effect is anti-dilutive.
16.
Related Party Transactions
16.1
Nature of relationships with related parties
Name
|
|
Relationships with the Company
|
Wuhan Renhe Group Co., Ltd (“Wuhan Renhe”)
|
|
Former shareholder (Mr Wang Geng) of Wuhan Newport
|
Wuhan Renhe Real Estate Co., Ltd. (“Renhe RE”)
|
|
Mr Wang Geng, the director of the Company, holds 100% of Renhe RE
|
Mr Zhao Weibin
|
|
Officer
|
Mr Liu Xiangyao
|
|
Director
|
16.2
Related party balances and transactions
Amount
due to Wuhan Renhe were $28,822,089 and $322,388,060 as at December 31, 2015 and 2014, respectively. The amount is unsecured,
interest free and does not have a fixed repayment date.
On
June 30, 2015, Wuhan Renhe forgave a total amount of $285,413,074 with the Company. The Company has credited the amount of $285,413,074
to additional paid-in capital in equity.
A
summary of changes in the amount due to Wuhan Renhe is as follows:
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
At beginning of year
|
|
$
|
322,388,060
|
|
|
$
|
366,755,923
|
|
Advances from the related party
|
|
|
28,463,394
|
|
|
|
4,834,513
|
|
Repayment to the related party
|
|
|
-
|
|
|
|
(47,187,464
|
)
|
Forgiveness of loan
|
|
|
(285,413,074
|
)
|
|
|
-
|
|
Exchange difference adjustment
|
|
|
(36,616,291
|
)
|
|
|
(2,014,912
|
)
|
At end of year
|
|
$
|
28,822,089
|
|
|
$
|
322,388,060
|
|
Amount
due to Renhe RE were $667,776 and nil as at December 31, 2015 and 2014, respectively. The amount is unsecured, interest free and
does not have a fixed repayment date.
A
summary of changes in the amount due to Renhe RE is as follows:
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
At beginning of year
|
|
$
|
-
|
|
|
$
|
-
|
|
Advances from the related party
|
|
|
667,776
|
|
|
|
-
|
|
At end of year
|
|
$
|
667,776
|
|
|
$
|
-
|
|
Amount
due to Mr Zhao Weibin were $ 126,516 and nil as at December 31, 2015 and 2014, respectively. The amount is unsecured, interest
free and does not have a fixed repayment date.
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
NOTES
TO THE FINANCIAL STATEMENTS
December
31, 2015 and 2014
A
summary of changes in the amount due to Mr Zhao Weibin is as follows:
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
At beginning of year
|
|
$
|
-
|
|
|
$
|
-
|
|
Advances from the officer
|
|
|
126,516
|
|
|
|
-
|
|
At end of year
|
|
$
|
126,516
|
|
|
$
|
-
|
|
Amount
due to Mr Liu Xiangyao were $2,428,731 and nil as at December 31, 2015 and 2014, respectively. The amount is unsecured, interest
free and does not have a fixed repayment date.
A
summary of changes in the amount due to Mr Liu Xiangyao is as follows:
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
At beginning of year
|
|
$
|
-
|
|
|
$
|
-
|
|
Advances from the director
|
|
|
2,428,731
|
|
|
|
-
|
|
At end of year
|
|
$
|
2,428,731
|
|
|
$
|
-
|
|
17.
SHARE-BASED COMPENSATION EXPENSES
On
December 27, 2015, the Company granted 317,345 and 340,555 shares of the Company’s restricted common stock to a number of
consultants, in exchange for its legal and professional services to the Company for the years ended December 31, 2015 and 2016,
respectively. These shares were valued at $5.7 per share, the closing bid price of the Company’s common stock on the date
of grant. Total compensation expense recognized in the general and administrative expenses of the consolidated statement of operations
for the year ended December 31, 2015 was $1,808,867. Total compensation expense of approximately $1,941,163 will be recognized
in 2016. The shares attributable to fiscal 2015 and 2016 were issued on December 30, 2015.
18.
Concentration of Credit Risks
As
of December 31, 2015 and 2014, substantially all of the Company’s cash and cash equivalents were held by major financial
institutions located in China and the US, which management believes are of high credit quality.
The
Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results
of operations may be influenced by the political, economic and legal environments in the PRC as well as by the general state of
the PRC’s economy. The business may be influenced by changes in governmental policies with respect to laws and regulations,
anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.
No
customer accounted for more than 10% of total accounts receivable as of December 31, 2015 and 2014.
19.
Commitments and Contingencies
Operating
lease commitments
For
the years ended December 31, 2015 and 2014, rental expenses under operating leases were $6,000 and nil, respectively.
The
future obligations for operating leases as of December 31, 2015 are as follows:
2016
|
|
$
|
72,000
|
|
2017
|
|
|
18,000
|
|
Total minimum payment required
|
|
$
|
90,000
|
|
Legal
proceeding
The
Company is not currently a party to any legal proceeding, investigation or claim which, in the opinion of the management, is
likely to have a material adverse effect on the business, financial condition or results of operations. The Company did not
identify any contingency as of December 31, 2015.
Yangtze
River Development Limited
(FORMERLY
Kirin International Holding, Inc.)
NOTES
TO THE FINANCIAL STATEMENTS
December
31, 2015 and 2014
20.
Subsequent Event
The
management evaluated all events subsequent to the balance sheet date through the date the consolidated financial statements were
available to be issued. Except for the followings, there are no significant matters to make material adjustments or disclosure
in the consolidated financial statements.
On
January 13, 2016, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of the State
of Nevada, changing its name from “Kirin International Holding, Inc.” to “Yangtze River Development Limited”.
Effective
January 22, 2016, upon approval by FINRA, Yangtze River Development Limited, or formerly Kirin International Holding, Inc., changed
its stock symbol from “KIRI” to “YERR”.
On
January 25, the board of directors (the “Board”) of the Company formed and adopted charters for six standing committees:
Audit Committee, Compensation Committee, Nomination Committee, Governance and Human Resources Committee, Board Oversight Committee,
Social Media Committee (collectively the “Committees”). Each Committee consists of only independent directors of the
Company. The Board also adopted charter for the Regulatory, Compliance and Government Affairs Committee, for which the charter
will be implemented once the committee is formed. The Company believes that the adoption of these charters and formation of these
Committees are necessary for the implementation of effective internal control and oversight and a significant step towards remediating
any material weakness the Company currently has. Members of the Committees are as set forth below
|
●
|
Audit
Committee: Harvey Leibowitz (Chair), Zhihong Su, Daniel W. Heffernan, Romano Tio, Tongmin Wang
|
|
|
|
|
●
|
Compensation
Committee: Harvey Leibowitz (Chair), Zhihong Su, Zhixue Liu, Romano Tio, Daniel W. Heffernan
|
|
|
|
|
●
|
Nomination
Committee: Daniel W. Heffernan (Chair), Harvey Leibowitz, Zhixue Liu, Romano Tio, Zhihong Su
|
|
|
|
|
●
|
Governance
and Human Resources Committee: Zhihong Su (Chair), Harvey Leibowitz, Romano Tio, Daniel W. Heffernan, Tongmin Wang
|
|
|
|
|
●
|
Board
Oversight Committee: Daniel W. Heffernan (Chair), Zhixue Liu, Harvey Leibowitz, Romano Tio, Zhihong Su
|
|
|
|
|
●
|
Social
Media Committee: Romano Tio (Chair), Harvey Leibowitz, Zhihong Su, Daniel W. Heffernan, Tongmin Wang
|
The
Company believes that all members of each of the audit and compensation committees are independent and that Mr. Harvey Leibowitz
qualifies as an “audit committee financial expert,” as that term is defined in applicable regulations of the SEC.
The
Audit Committee is responsible for making such examinations as are necessary to monitor the corporate financial reporting and
external audits of the Company and its subsidiaries; to provide to the Board the results of its examinations and recommendations
derived there from; to outline to the Board improvements made, or to be made, in internal accounting controls; to nominate independent
auditor; and to provide to the Board such additional information and materials as it may deem necessary to make the Board aware
of significant financial matters requiring Board attention.
The
Company believes that the adoption of these charters and formation of these Committees, specifically that of the Audit Committee,
are necessary for the implementation of effective internal control.
21.
RESTRICTED NET ASSETS
PRC
laws and regulations permit payments of dividends by the Company’s subsidiary incorporated in the PRC only out of their
retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. In addition, the Company’s
subsidiary incorporated in the PRC are required to annually appropriate 10% of their net income to the statutory reserve prior
to payment of any dividends, unless such reserve have reached 50% of their respective registered capital. In addition, registered
share capital and capital reserve accounts are also restricted from withdrawal in the PRC, up to the amount of net assets held
in each subsidiary. As a result of the restrictions described above and elsewhere under PRC laws and regulations, the Company’s
subsidiary incorporated in the PRC are restricted in their ability to transfer a portion of their net assets to the Company in
the form of dividends or advances from PRC subsidiary. Such restriction amounted to $297,052,074 as of December 31, 2015. Except
for the above, there is no other restriction on the use of proceeds generated by the Company’s subsidiary to satisfy any
obligations of the Company.
22.
GOING CONCERN
As shown in the accompanying financial statements,
the Company has sustained recurring losses and negative cash flows from operations. Over the past years, the Company has been
funded through a combination of bank loans and advances from shareholders. On January 29, 2016, the Company received an undertaking
commitment letter provided by the Company’s majority shareholder who is willing to provide sufficient funding on an as-needed
basis. In addition, the Company plans to dispose of the existing developed real estate properties with market value of approximately
$42 million when the Company needs cash flows. The Company believes that, as a result of these, it currently has sufficient cash
and financing commitments to meet its funding requirements for a reasonable period of time.
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