SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2015
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF T
SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 333-147084
CHINA SHIANYUN GROUP CORP., LTD.
(Exact
name of Registrant as specified in its charter)
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Nevada
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83-0506099
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(State
or Other Jurisdiction of incorporation or
organization)
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(I.R.S.
Employer Identification No.)
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18/F., Development Centre Building,
South of Renmin Rd. LuoHu District, Shenzhen,
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Guandong Province, China
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n/a
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(Address
of principal executive offices)
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(Zip
Code)
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86-755-23998799
(Registrant’s
telephone number, including area code)
Indicate
by check mark whether the issuer (1) 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 x No o
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 x No o
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 definitions of “large accelerated
filer,”“accelerated
filer” and “smaller reporting
company” in Ruble 12b-2 of the Exchange
Act.
| |
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Large
accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer o (Do not
check if a smaller reporting company)
|
Smaller
reporting company x
|
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes o No x
State
the number of shares outstanding of each of the issuer’s classes of
common equity, as of November 13, 2015, are as
follows:
| |
|
|
Class
of Securities
|
Shares
Outstanding
|
|
Common Stock, $0.001 par value
|
776,837 shares
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CHINA SHIANYUN GROUP CORP., LTD.
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Part I – Financial Information
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Part II – Other Information
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INTRODUCTORY NOTE
Except
as otherwise indicated by the context, references in this Quarterly
Report on Form 10-Q (this “Form 10-Q”) to the “Company,” “China
Shianyun” “we,” “us” or “our” are references to the combined
business of China Shianyun Group Corp., Ltd. and its consolidated
subsidiaries. References to “Plenty Fame” are references
to our wholly-owned BVI subsidiary, Plenty Fame Holding, Limited”;
references to “Prospect” are references to our wholly-owned Hong
Kong subsidiary, Prospect Hong Kong Development Limited; references
to “Jiangxi Jien” are references to our wholly-owned PRC
subsidiary, Jiangxi Jien Industries Limited.; references to
“Shenzhen Jien” are to our wholly-owned PRC subsidiary, Shenzhen
Jien Electronic Commerce Company Limited. References to “China” or
“PRC” are references to the People’s Republic of
China. References to “BVI” are reference to British
Virgin Islands. References to “Hong Kong” or “HK” are references to
Hong Kong Special Administrative Region of China. References to
“RMB” are to Renminbi, the legal currency of China, and all
references to “$” and dollar are to the U.S. dollar, the legal
currency of the United States.
Special Note Regarding Forward-Looking Statements
This
report contains forward-looking statements and information that are
based on the beliefs of our management as well as assumptions made
by and information currently available to us. Such
statements should not be unduly relied upon. When used
in this report, forward-looking statements include, but are not
limited to, the words “anticipate,” “believe,” “estimate,”
“expect,” “intend,” “plan” and similar expressions, as well as
statements regarding new and existing products, technologies and
opportunities, statements regarding market and industry segment
growth and demand and acceptance of new and existing products, any
projections of sales, earnings, revenue, margins or other financial
items, any statements of the plans, strategies and objectives of
management for future operations, any statements regarding future
economic conditions or performance, uncertainties related to
conducting business in China, any statements of belief or
intention, and any statements or assumptions underlying any of the
foregoing. These statements reflect our current view
concerning future events and are subject to risks, uncertainties
and assumptions. There are important factors that could
cause actual results to vary materially from those described in
this report as anticipated, estimated or expected, including, but
not limited to: competition in the industry in which we
operate and the impact of such competition on pricing, revenues and
margins, volatility in the securities market due to the general
economic downturn; Securities and Exchange Commission (the “SEC”)
regulations which affect trading in the securities of “penny
stocks,” and other risks and uncertainties. Except as
required by law, we assume no obligation to update any
forward-looking statements publicly, or to update the reasons
actual results could differ materially from those anticipated in
any forward- looking statements, even if new information becomes
available in the future. Depending on the market for our
stock and other conditional tests, a specific safe harbor under the
Private Securities Litigation Reform Act of 1995 may be
available. Notwithstanding the above, Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”) and
Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) expressly state that the safe harbor for
forward-looking statements does not apply to companies that issue
penny stock. Because we may from time to time be
considered to be an issuer of penny stock, the safe harbor for
forward-looking statements may not apply to us at certain
times.
CHINA SHIANYUN GROUP CORP., LTD. AND SUBSIDIARIES
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September
30,
2015
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December
31,
2014
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(Unaudited)
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(Audited)
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Assets
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Current
assets
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Cash
and cash equivalents
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$ |
5,056,086 |
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$ |
35,324 |
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Accounts
receivable
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338,285 |
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378,298 |
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Inventories
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8,826 |
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31,865 |
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Amount due from a director
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55,965 |
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Prepaid expenses and other receivables
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124,077 |
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809,652 |
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Total
current assets
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5,583,239 |
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1,255,139 |
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Property,
plant and equipment, net
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2,092,604 |
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2,177,348 |
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Land
use rights, net
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92,342 |
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95,805 |
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Total assets
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$ |
7,768,185 |
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$ |
3,528,292 |
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Liabilities and stockholders’ equity
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Liabilities
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Current
liabilities
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Accounts
payable
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$ |
246,291 |
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$ |
111,853 |
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Accrued
expenses and other payables
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4,786,613 |
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2,266,692 |
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Receipt
in advance
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157,600 |
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465,837 |
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Taxes
payable
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2,148,783 |
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2,098,507 |
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Amount
due to a director
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66,833 |
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797,919 |
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Total liabilities
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$ |
7,406,120 |
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$ |
5,740,808 |
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Stockholders’ equity
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Common
stock: Par value $0.001 per share; 400,000,000 shares authorized,
776,837 shares issued and outstanding
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777 |
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777 |
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Additional
paid in capital
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3,435,412 |
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3,435,412 |
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Accumulated
deficits
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(3,136,749 |
) |
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(5,699,503 |
) |
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Accumulated
other comprehensive income
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62,625 |
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50,798 |
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Total stockholders’ equity
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$ |
362,065 |
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$ |
(2,212,516 |
) |
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Total liabilities and stockholders’ equity
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$ |
7,768,185 |
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$ |
3,528,292 |
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See accompanying notes to condensed consolidated financial
statements
CHINA SHIANYUN GROUP CORP., LTD. AND SUBSIDIARIES
AND COMPREHENSIVE INCOME
(UNAUDITED)
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For the three months
ended September 30,
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For the nine months
ended September 30,
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2015
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2014
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2015
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2014
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Revenues
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$ |
725,039 |
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48,652 |
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1,531,838 |
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207,249 |
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Cost
of sales and services
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179,138 |
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10,494 |
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707,795 |
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10,494 |
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Selling
and distribution
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5,600 |
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12,795 |
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16,957 |
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72,624 |
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General
and administrative expense (inclusive of depreciation and
allowances)
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98,162 |
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|
270,680 |
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506,640 |
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1,327,924 |
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Operating
income/(loss)
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442,139 |
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(245,317 |
) |
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300,446 |
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(1,203,793 |
) |
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Other
income/(expenses)
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Other
income
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|
8,279 |
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|
11 |
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- |
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9,354 |
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Recovery
of bad debt
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1,001,648 |
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|
- |
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2,262,308 |
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|
- |
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Other
expense
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- |
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- |
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- |
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- |
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Total
other income/(expenses)
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1,009,927 |
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11 |
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2,262,308 |
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9,354 |
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Income/(loss)
from operations before provision for income taxes
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1,452,066 |
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(245,306 |
) |
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2,562,754 |
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(1,194,439 |
) |
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Provision
for income taxes
|
|
|
- |
|
|
|
- |
|
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|
- |
|
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|
- |
|
| |
|
|
|
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|
|
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|
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Net income/(loss) for the period
|
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$ |
1,452,066 |
|
|
|
(245,306 |
) |
|
|
2,562,754 |
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|
(1,194,439 |
) |
| |
|
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Other
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain/(loss)
on foreign currency translation
|
|
|
10,226 |
|
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|
(18,646 |
) |
|
|
11,827 |
|
|
|
10,421 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income/(loss) for the period
|
|
$ |
1,462,292 |
|
|
|
(263,952 |
) |
|
|
2,574,581 |
|
|
|
(1,184,018 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Earnings
per share, basic and diluted
|
|
$ |
1.87 |
|
|
|
(0.32 |
) |
|
|
3.30 |
|
|
|
(1.54 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares outstanding, basic and
diluted
|
|
|
776,837 |
|
|
|
776,837 |
|
|
|
776,837 |
|
|
|
776,837 |
|
See accompanying notes to condensed consolidated financial
statements
CHINA SHIANYUN GROUP CORP., LTD. AND SUBSIDIARIES
(UNAUDITED)
| |
|
Nine
months ended September 30,
|
|
| |
|
2015
|
|
|
2014
|
|
| |
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
Net
income/(loss)
|
|
$ |
2,562,754 |
|
|
|
(1,194,439 |
) |
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
expense
|
|
|
89,492 |
|
|
|
132,790 |
|
|
Loss
on disposal of property, plant and equipment
|
|
|
- |
|
|
|
41,913 |
|
|
Amortization
expense of land use rights
|
|
|
1,518 |
|
|
|
1,538 |
|
|
Amortization
expense of other intangible assets
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|
|
- |
|
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|
6,532 |
|
|
Interest
income
|
|
|
- |
|
|
|
(9,354 |
) |
|
Recovery
of bad debt
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|
|
(2,262,308 |
) |
|
|
- |
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
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|
|
Decrease
in accounts receivable
|
|
|
2,302,321 |
|
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|
166,702 |
|
|
Decrease/(increase)
in inventories
|
|
|
23,039 |
|
|
|
(197,838 |
) |
|
Decrease
in prepaid expenses and other receivables
|
|
|
685,575 |
|
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|
299,427 |
|
|
(Increase)/decrease
in amount due from a director
|
|
|
(55,965 |
) |
|
|
90,351 |
|
|
Increase/(decrease) in
accounts payable
|
|
|
134,438 |
|
|
|
(1,004 |
) |
|
Increase
in accrued expenses and other payables
|
|
|
2,519,921 |
|
|
|
45,048 |
|
|
(Decrease)/increase
in receipt in advance
|
|
|
(308,237 |
) |
|
|
208,213 |
|
|
Increase/(decrease) in
taxes payable
|
|
|
50,276 |
|
|
|
(91,633 |
) |
| |
|
|
|
|
|
|
|
|
|
Net cash provided by /(used in) operating
activities
|
|
$ |
5,742,824 |
|
|
|
(501,754 |
) |
| |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
Additions
to property, plant and equipment
|
|
$ |
(48,869 |
) |
|
|
(304 |
) |
|
Proceeds
from disposal of property, plant and equipment
|
|
$ |
- |
|
|
|
149,351 |
|
| |
|
|
|
|
|
|
|
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|
Net cash (used in)/provided by investing activities
|
|
$ |
(48,869 |
) |
|
|
149,047 |
|
| |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
(Decrease)/increase
in amount due to a director
|
|
|
(731,086 |
) |
|
|
205,252 |
|
| |
|
|
|
|
|
|
|
|
|
Net cash (used in)/provided by financing activities
|
|
$ |
(731,086 |
) |
|
|
205,252 |
|
| |
|
|
|
|
|
|
|
|
|
Net increase/(decrease) cash and cash equivalents
|
|
$ |
4,962,869 |
|
|
|
(147,455 |
) |
| |
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate changes
|
|
$ |
57,893 |
|
|
|
75,587 |
|
| |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at January 1
|
|
$ |
35,324 |
|
|
|
97,920 |
|
| |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at September 30
|
|
$ |
5,056,086 |
|
|
|
26,052 |
|
| |
|
|
|
|
|
|
|
|
|
Supplement
disclosure of cash flows information:
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$ |
- |
|
|
$ |
- |
|
|
Cash
paid for income taxes
|
|
$ |
- |
|
|
$ |
- |
|
See accompanying notes to condensed consolidated financial
statements
CHINA SHIANYUN GROUP CORP., LTD. AND SUBSIDIARIES
September 30, 2015
NOTE 1 –
ORGANIZATION AND PRINCIPAL ACTIVITIES
China
Shianyun Group Corp., Ltd and its subsidiaries (collectively known
as the “Company”) are principally engaged in the distribution of
consumer goods in the People’s Republic of China (“China” or the
“PRC”).
As
of September 30, 2015, the details of the Company’s major
subsidiaries are summarized as follows:
|
Name
|
|
Domicile
and date of incorporation
|
|
Effective
ownership
|
|
Principal
activities
|
| |
|
|
|
|
|
|
|
Jiangxi
Jien Industries Limited
(“Jiangxi
Jien”)
|
|
The
PRC
April
8, 1997
|
|
100%
|
|
Distribution
of consumer goods in the PRC.
|
| |
|
|
|
|
|
|
|
Shenzhen
Jien Electronic Commerce Company Limited (“Shenzhen
Jien”)
|
|
The
PRC
April
13, 2009
|
|
100%
|
|
Distribution
of consumer goods in the PRC, and provision of online customer
services
|
| |
|
|
|
|
|
|
NOTE 2 –
PRINCIPLES OF CONSOLIDATION
The
unaudited interim financial statements of the Company and the
Company’s subsidiaries (see Note 1) for the three months and nine
months ended September 30, 2015 and 2014 have been prepared
pursuant to the rules & regulations of the SEC. Certain
information and disclosures normally included in financial
statements prepared in accordance with accounting principles
generally accepted in the United States of America have been
condensed or omitted pursuant to such rules and regulations,
although the Company believes that the following disclosures are
adequate to make the information presented not
misleading. All significant intercompany balances and
transactions have been eliminated. The functional currency for the
majority of the Company’s operations is the Renminbi (“RMB”), while
the reporting currency is the US Dollar.
In
the opinion of management, the accompanying condensed consolidated
financial statements contain all adjustments, consisting only of
normal recurring accruals, necessary for a fair presentation of the
Company’s financial position as of September 30, 2015, the results
of its operations and cash flows for the nine months ended
September 30, 2015 and 2014.
The
results of operations for the three months and nine months ended
September 30, 2015 are not necessarily indicative of the results
for a full year period.
NOTE 3 –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
(a)
|
Cash
and Cash Equivalents
|
The
Company considers all highly liquid investments purchased with
original maturities of three months or less to be cash
equivalents. The Company maintains bank accounts in
China and Hong Kong.
Inventories
consisting of trading goods, packing and other materials are stated
at the lower of cost or net realizable value. Inventory costs are
calculated using a weighted average method of
accounting.
(c) Fair
Value of Financial Instruments
The
Company’s financial instruments primarily consist of cash and cash
equivalents, accounts receivable, prepaid expenses and other
receivables, amount due from/(to) directors, receipt in advance,
debts, accounts payable, accrued expenses and other payables, and
taxes payable.
The
estimated fair value amounts have been determined by the Company,
using available market information or other appropriate valuation
methodologies. However, considerable judgment is required in
interpreting market data to develop estimates of fair value.
Consequently, the estimates are not necessarily indicative of the
amounts that could be realized or would be paid in a current market
exchange.
As
of the balance sheet dates, the estimated fair values of the
financial instruments were not materially different from their
carrying values as presented, due to the short maturities of these
instruments and the fact that the interest rates on the borrowings
approximate those that would have been available for loans of
similar remaining maturity and risk profiles at respective period
ends.
The
Company generates revenues mainly from sale of consumer products
and also revenue from regional distribution rights.
The
Company recognizes revenue when products are delivered and
customers take ownership and assume risk of loss, collection of the
relevant receivable is probable, persuasive evidence of an
arrangement exists and selling price is fixed or
determinable.
Revenues
from regional distribution rights include brand usage fee and
continuing management fee income. All amounts received will be
initially recognized as receipt in advance, and will be recognized
as revenues when the following criteria are met:
|
(i)
|
Initial
admission fee income is generally recorded upon completion of
admission procedures, when the rights to use the “GEN+Me”
trademarks are granted to the users, and when collectability is
reasonably assured.
|
|
(ii)
|
Continuing
management fee income represent regular contractual payments
received for our supporting services, which are recognized as
revenue when earned, generally on a straight line
basis.
|
Basic
earnings per share is computed by dividing income available to
common shareholders by the weighted-average number of common shares
outstanding during the period. Diluted earnings per share is
computed similar to basic earnings per share except that the
denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common
shares had been issued and if the additional common shares were
dilutive. As of September 30, 2015 and 2014, there were no dilutive
securities outstanding.
(f) Foreign
Currency Translation
The
accompanying consolidated financial statements are presented in
United States Dollars (US$). The functional currency of the Company
is the Renminbi (RMB). Capital accounts of the consolidated
financial statements are translated into United States dollars from
RMB at their historical exchange rates when the capital
transactions occurred. Assets and liabilities are translated at the
exchange rates as of balance sheet date. Income and expenditures
are translated at the average exchange rate of the
period. The translation rates are as
follows:
| |
|
September
30,
2015
|
|
|
December
31,
2014
|
|
|
September
30,
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period/year
end RMB : US$ exchange rate
|
|
|
0.1576 |
|
|
|
0.1609 |
|
|
|
0.1625 |
|
|
Average
yearly RMB : US$ exchange rate
|
|
|
0.1597 |
|
|
|
0.1620 |
|
|
|
0.1618 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
On
July 21, 2005, the PRC changed its foreign currency exchange policy
from a fixed RMB/US$ exchange rate into a flexible rate under the
control of the PRC’s government.
The
RMB is not freely convertible into foreign currency and all foreign
exchange transactions must take place through authorized
institutions. No representation is made that the RMB
amounts could have been, or could be, converted into US$ at the
rates used in translation.
|
(g)
|
Recent
Accounting Pronouncements
|
In
May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts
with Customers, which is included in ASC 606, Revenue from
Contracts with Customers. This ASU is a comprehensive new revenue
recognition model that creates a single source of revenue guidance
for all companies in all industries. The model is more
principles-based than current guidance, and is primarily based on
recognizing revenue at an amount that reflects consideration to
which the entity expects to be entitled to in exchange for
transferring goods or services to a customer. The guidance will be
effective for the Company's interim and annual reporting periods
beginning January 1, 2017. The standard allows the Company to
transition to the new model using either a full or modified
retrospective approach, and early adoption is not permitted. The
Company is currently evaluating the impact this standard will have
on its business practices, financial condition, results of
operations, and disclosures.
In
August 2014, the FASB issued ASU No. 2014-15, Presentation of
Financial Statements—Going Concern (Subtopic 205-40): Disclosure of
Uncertainties about an Entity’s Ability to Continue as a Going
Concern, which is intended to define management’s responsibility to
evaluate whether there is substantial doubt about an organization’s
ability to continue as a going concern and to provide related
footnote disclosures. This ASU provides guidance to an
organization’s management, with principles and definitions that are
intended to reduce diversity in the timing and content of
disclosures that are commonly provided by organizations today in
the financial statement footnotes. The amendments are effective for
annual periods ending after December 15, 2016, and interim periods
within annual periods beginning after December 15, 2016. Early
application is permitted for annual or interim reporting periods
for which the financial statements have not previously been issued.
The Company does not intend to early adopt this standard. The
Company does not expect the adoption of this standard to have an
impact on its financial statements.
On
January 9, 2015, FASB published ASU 2015-01, Simplifying Income
Statement Presentation by Eliminating the Concept of Extraordinary
Items. The ASU applies to all entities and is effective for fiscal
years, and interim periods within those fiscal years, beginning
after December 15, 2015. A reporting entity may apply the
amendments prospectively. A reporting entity also may apply the
amendments retrospectively to all prior periods presented in the
financial statements. Early adoption is permitted provided that the
guidance is applied from the beginning of the fiscal year of
adoption. The Company does not expect the adoption of ASU 2015-01
to have material impact on the Company's consolidated financial
statement.
In
April 2015, the FASB issued ASU 2015-03, Interest – Imputation of
Interest (Subtopic 835-30): Simplifying the Presentation of Debt
Issuance Costs. This ASU requires debt issuance costs related to a
recognized debt liability be presented in the balance sheet as a
direct deduction from the carrying value of that debt liability,
consistent with debt discounts. The recognition and measurement
guidance for debt issuance costs are not affected by this ASU. The
amendments in this ASU are effective retrospectively for fiscal
years, and interim periods within those years, beginning after
December 15, 2015. Early adoption is permitted. The Company does
not expect the impact of adopting this ASU to be material to the
Company’s financial statements and related
disclosures.
In
May 2015, the FASB issued ASU 2015-07, Fair Value Measurement
(Topic 820), Disclosures for Investments in Certain Entities That
Calculate Net Asset Value per Share (or Its Equivalent) (ASU
2015-07), which removes the requirement to categorize within the
fair value hierarchy investments for which fair value is measured
using the net asset value per share practical expedient. The
amendments also remove the requirement to make certain disclosures
for all investments that are eligible to be measured at fair value
using the net asset value per share practical expedient. Instead,
such disclosures are restricted only to investments that the entity
has decided to measure using the practical expedient. This standard
is effective for interim and annual periods beginning after
December 15, 2015. PGE will adopt the amendments contained in ASU
2015-07 on January 1, 2016, which is not expected to have an impact
on the Company’s consolidated financial position, consolidated
results of operations, or consolidated cash flows.
In
July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330),
Simplifying the Measurement of Inventory (ASU 2015-11), which
changes the measurement principle for inventory from the lower of
cost or market tolower of cost and net realizable value. Net
realizable value is defined as the “estimated selling prices in the
ordinary course of business, less reasonably predictable costs of
completion, disposal and transportation.” ASU 2015-11 eliminates
the guidance that entities consider replacement cost or net
realizable value less an approximately normal profit margin in the
subsequent measurement of inventory when cost is determined on a
first-in, first-out or average cost basis. The provisions of ASU
2015-11 are effective for public entities with fiscal years
beginning after December 15, 2016, or January 1, 2017 for PGE, and
interim periods within those fiscal years. Early adoption is
permitted. The Company is in the process of evaluating the impact
to its consolidated financial position, consolidated results of
operations, and consolidated cash flows of the adoption of ASU
2015-11.
In
September 2015, the Financial Accounting Standards Board ("FASB")
issued Accounting Standards Update ("ASU") No. 2015-16, “Business
Combinations (Topic 805): Simplifying the Accounting for
Measurement-Period Adjustments” (“ASU 2015-16”), which requires
that an acquirer recognize adjustments to provisional amounts that
are identified during the measurement period in the reporting
period in which the adjustment amounts are determined. ASU 2015-16
is effective for fiscal years, and interim reporting periods within
those fiscal years, beginning after December 15, 2015.
The
Company does not expect the adoption of these guidance to have a
material impact on its consolidated financial
statements.
NOTE 4 –
ACCOUNTS RECEIVABLE
As
of the balance sheet dates, the Company’s accounts receivable are
summarized as follows:
| |
|
September
30,
2015
|
|
|
December
31,
2014
|
|
| |
|
|
|
|
|
|
|
Beijing
Shanghan International Trading Limited (“Beijing
Shanghan”)
|
|
$ |
3,425,171 |
|
|
$ |
5,987,925 |
|
|
Others
|
|
|
338,285 |
|
|
|
378,298 |
|
|
Less:
Allowance for doubtful accounts
|
|
|
(3,425,171 |
) |
|
|
(5,987,925 |
) |
|
Total
|
|
$ |
338,285 |
|
|
$ |
378,298 |
|
Beijing
Shanghan was a related party at initial recognition because one of
its director held more than 5% of shares of issued and outstanding
Common Stock during 2008 and 2009. However, during the year ended
31 December 2012, such shareholder’s holding was decreased to less
than 5%. As a result, we no longer consider Beijing Shanghan as a
related party for the period ended September 30,
2015. The Company collected certain outstanding
receivables amounting to $2,262,308 from Beijing Shanghan and
recognized as a recovery of bad debts in other income during the
period ended September 30, 2015.
NOTE 5 –
PREPAID EXPENSES AND OTHER RECEIVABLES
As
of the balance sheet dates, the Company’s prepaid expenses and
other receivables are summarized as follows:
| |
|
September
30,
2015
|
|
|
December
31,
2014
|
|
| |
|
|
|
|
|
|
|
Prepaid
expenses– (i)
|
|
$ |
40,021 |
|
|
$ |
522,181 |
|
|
Other
receivables– (i)
|
|
|
1,217 |
|
|
|
- |
|
|
Amount
due from Shu Jian– (ii)
|
|
|
82,839 |
|
|
|
287,471 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
124,077 |
|
|
$ |
809,652 |
|
| |
|
|
|
|
|
|
|
|
|
(i)
|
The
Company evaluates prepaid expenses and other receivables on a
periodic basis and records a charge to the current operations of
the Company when the related expense has been incurred or when the
amounts reported as other receivables is no longer deemed to be
collectible by the Company.
|
|
(ii)
|
The
amount represents temporary advances to Shu Jian, an independent
third party, which is unsecured and repayable within a
year.
|
NOTE 6 –
PROPERTY, PLANT AND EQUIPMENT, NET
Property,
plant and equipment of the Company consist primarily of
manufacturing facilities and equipment in the PRC. As of the
balance sheet dates, property, plant and equipment are summarized
as follows:
|
|
Depreciable
lives
|
|
September
30,
2015
|
|
|
December
31,
2014
|
|
| |
|
|
|
|
|
|
|
|
At
cost:
|
|
|
|
|
|
|
|
|
Plant
|
40
years
|
|
$ |
2,140,716 |
|
|
$ |
2,185,541 |
|
|
Machinery
|
15
years
|
|
|
214,272 |
|
|
|
218,758 |
|
|
Motor vehicle
|
10
years
|
|
|
82,755 |
|
|
|
84,488 |
|
|
Office equipment
|
5
years
|
|
|
293,317 |
|
|
|
250,222 |
|
|
Leasehold Improvement
|
2
years
|
|
|
846,470 |
|
|
|
864,194 |
|
| |
|
|
|
3,577,530 |
|
|
|
3,603,203 |
|
| |
|
|
|
|
|
|
|
|
|
|
Less:
Accumulated depreciation
|
|
|
|
(1,484,926 |
) |
|
|
(1,425,855 |
) |
| |
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment, net
|
|
|
$ |
2,092,604 |
|
|
$ |
2,177,348 |
|
| |
|
|
|
|
|
|
|
|
|
Depreciation
expense for the nine months ended September 30, 2015 and 2014 was $
89,492 and $132,790, respectively.
Loss
on disposal of property, plant and equipment for the nine months
ended September 30, 2015 and 2014 was nil and 41,913,
respectively.
NOTE 7 –
LAND USE RIGHTS, NET
The
Company’s land use rights represent the cost of purchasing the
rights to use the leasehold land in the PRC for the production
facilities of Jiangxi Jien. According to the law of the PRC, the
government owns all the land in the PRC. Companies or individuals
are only authorized to possess and use the land through land use
rights granted by the PRC government.
As
of the balance sheet dates, the Company’s land use rights are
summarized as follows:
|
|
Useful
lives
|
|
September
30,
2015
|
|
|
December
31,
2014
|
|
|
At
cost:
|
|
|
|
|
|
|
|
|
Land use rights
|
59
– 60 years
|
|
$ |
119,823 |
|
|
$ |
122,332 |
|
| |
|
|
|
|
|
|
|
|
|
|
Less:
Accumulated amortization
|
|
|
|
(27,481 |
) |
|
|
(26,527 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Land
use rights, net
|
|
|
$ |
92,342 |
|
|
$ |
95,805 |
|
| |
|
|
|
|
|
|
|
|
|
Amortization
expense of land use rights for the nine months ended September 30,
2015 and 2014 was $1,518 and $1,538, respectively.
NOTE 8 –
AMOUNT DUE FROM/(TO) DIRECTORS
As
of the balance sheet dates, the Company’s current accounts with the
directors are summarized as follows:
| |
|
September
30,
2015
|
|
|
December
31,
2014
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Ye
Xin Zhang
|
|
$ |
55,965 |
|
|
|
(161,446 |
) |
| |
|
|
|
|
|
|
|
|
|
Chen
Xing Hua
|
|
$ |
(66,833 |
) |
|
|
(636,473 |
) |
| |
|
|
|
|
|
|
|
|
The
amount due to the directors represents temporary advances from the
director for the Company’s working capital use. The balance is
unsecured, interest free, and has no fixed terms of
repayment.
NOTE 9 –
ACCRUED EXPENSES AND OTHER PAYABLES
As
of the balance sheet dates, the Company’s accrued expenses and
other payables are summarized as follows:
|
|
|
September
30,
2015
|
|
|
December
31,
2014
|
|
| |
|
|
|
|
|
|
|
Accrued
interest expense
|
|
|
268,479 |
|
|
|
274,100 |
|
|
Amount
due to Shenzhen Hanhong – (i)
|
|
|
858,920 |
|
|
|
876,905 |
|
|
Other
accrual and payables – (ii)
|
|
|
3,659,214 |
|
|
|
1,115,687 |
|
|
|
|
$ |
4,786,613 |
|
|
$ |
2,266,692 |
|
|
(i)
|
The
amount mainly represents consultancy fee payable to Shenzhen
Hanhong. Shenzhen Hanhong is a related party as Mr. Chen Xing Hua
is a common director of the Company and Shenzhen Hanhong. The
amount is interest free, unsecured and has no fixed terms of
repayment.
|
|
(ii)
|
The
balance consists of amounts owed by the Company to various entities
that are incurred by the Company in daily business operations other
than trading nature. These liabilities and accrued
operating expenses are non-interest bearing and are payable within
one year.
|
NOTE 10 –
RECEIPT IN ADVANCE
Receipt in advance mainly consists of money received from customers
for regional distribution rights which are yet to be performed.
Revenues from regional distribution rights include initial fees and
continuing management fee income. All amounts received will be
initially recognized as receipt in advance, and will be recognized
as revenues when the following criteria are
met:
|
(i)
|
Initial
admission fee income is generally recorded upon completion of
admission procedures, when the rights to use the trademarks are
granted to the users, and when collectability is reasonably
assured.
|
|
(ii)
|
Continuing
management fee income represent regular contractual payments
received for the use of the “GEN+Me” trademarks plus our supporting
services, which is recognized as revenue when earned, generally on
a straight line basis.
|
NOTE 11 –
TAXES PAYABLE
As
of the balance sheet dates, the Company’s taxes payable are
summarized as follows:
| |
|
September
30,
2015
|
|
|
December
31,
2014
|
|
| |
|
|
|
|
|
|
|
Income
tax payables
|
|
$ |
336,334 |
|
|
$ |
343,376 |
|
|
Value
added tax payables
|
|
|
1,762,245 |
|
|
|
1,697,172 |
|
|
Other
tax payables
|
|
|
50,204 |
|
|
|
57,959 |
|
|
Total
|
|
$ |
2,148,783 |
|
|
$ |
2,098,507 |
|
| |
|
|
|
|
|
|
|
|
NOTE 12–
COMMON STOCK
As
of the balance sheet dates, the Company has authorized 400,000,000
shares of common stock, par value $0.001 per
share. In addition, the Company has authorized
10,000,000 shares of preferred stock, none of which has been issued
as of September 30, 2015.
NOTE 13 –
SEGMENT REPORTING
The
Company’s reportable segments of business include sale of consumer
products and regional distribution rights. Each of these
segments is conducted in a separate corporation and each functions
independently of the others. The Company has no sales between
segments.
Financial
information of the Company’s business segments is as
follows:
| |
|
Nine
months ended September 30,
|
|
| |
|
2015
|
|
|
2014
|
|
| |
|
|
|
|
|
|
|
Revenues
from:
|
|
|
|
|
$ |
|
|
|
Sale
of consumer products
|
|
|
1,531,838 |
|
|
|
207,249 |
|
|
Regional
distribution rights
|
|
|
- |
|
|
|
- |
|
|
|
|
|
1,531,838 |
|
|
|
207,249 |
|
| |
|
|
|
|
|
|
|
|
|
Segment
profit/(loss) from:
|
|
|
|
|
|
|
|
|
|
Sale
of consumer products
|
|
|
2,965,319 |
|
|
|
(507,464 |
) |
|
Regional
distribution rights
|
|
|
(16,957 |
) |
|
|
(72,624 |
) |
|
Corporate
|
|
|
(385,608 |
) |
|
|
(614,351 |
) |
|
|
|
|
2,562,754 |
|
|
|
(1,194,439 |
) |
| |
|
|
|
|
|
|
|
|
NOTE 14 –
PROVISION FOR INCOME TAXES
A
reconciliation of the expected tax with the actual tax expense is
as follows:
| |
|
Nine
months ended September 30,
|
|
| |
|
2015
|
|
|
2014
|
|
| |
|
Amount
|
|
|
Amount
|
|
| |
|
|
|
|
|
|
|
Profit/(loss)
before provision for income taxes
|
|
$ |
2,562,754 |
|
|
|
(1,194,439 |
) |
| |
|
|
|
|
|
|
|
|
|
Expected
PRC income tax expense at statutory tax rate of 25%
|
|
|
640,689 |
|
|
|
(298,610 |
) |
|
Utilization
of tax loss brought forward
|
|
|
(640,689 |
) |
|
|
- |
|
|
Tax
losses not recognized as deferred tax assets
|
|
|
- |
|
|
|
298,610 |
|
|
Provision
for Income Taxes
|
|
$ |
- |
|
|
|
- |
|
|
(i)
|
Both
Jiangxi Jien and Shenzhen Jien are subject to PRC tax. The
provision for PRC income tax is based on a statutory rate of 25% of
the assessable income of the PRC subsidiaries as determined in
accordance with the relevant income tax rules and regulations of
the PRC.
|
|
(ii)
|
The
Company and other immediate holding companies did not generate any
taxable income in their jurisdiction during the nine months ended
September 30, 2015 and 2014, respectively.
|
NOTE 15 –
CAPITAL COMMITMENT
Capital
Commitment:
As
of the balance sheet dates, the Company’s capital commitment are
summarized as follows:
| |
|
September
30,
2015
|
|
|
December
31,
2014
|
|
| |
|
|
|
|
|
|
|
Construction-in-progress:
|
|
|
|
|
|
|
|
Contracted
but not provided for
|
|
$ |
1,613,474 |
|
|
$ |
1,647,259 |
|
NOTE 16 –
GOING CONCERN
As
of September 30, 2015, the Company has accumulated deficits of
$3,136,749, a negative working capital of $1,822,881. The Company
may need additional cash resources to operate during the upcoming
12 months, and the continuation of the Company may be dependent
upon the continuing financial support of investors, directors
and/or stockholders of the Company. However, there is no assurance
that equity or debt offerings will be successful in raising
sufficient funds to assure the eventual profitability of the
Company. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded
assets, or the amounts of and classification of liabilities that
might be necessary in the event the Company cannot continue in
existence.
This Form 10−Q contains forward-looking statements. Our actual
results could differ materially from those set forth as a result of
general economic conditions and changes in the assumptions used in
making such forward-looking statements. The following discussion
and analysis of financial condition and results of operations
relates to the operations and financial condition reported in the
financial statements of China Shianyun Group Corp., Ltd for the
periods ended September 30, 2015 and 2014 and should be read in
conjunction with such financial statements and related notes
included in this report and the Company’s Annual Report on Form
10-K for the year ended December 31, 2014. The analysis set forth
below is provided pursuant to applicable Securities and Exchange
Commission regulations and is not intended to serve as a basis for
projections of future events.
Overview and Recent Developments
We
are currently formulating and distributing consumer goods and
acting as a service provider for building of sales platform and
distribution channels in China. We enter into contracts with
factories in China to produce the products with our design,
formula, and standards to satisfy our customer needs and demands,
and distribute those
products under our registered brand names. All our registered
brands have obtained nation-wide product certifications. We monitor
the trends of market needs for healthy products in China and adjust
our product portfolio on yearly basis. During the past fiscal year,
we used general brand “GEN + ME” for our own product and used
various sub brands under “GEN+ME” for our different product lines.
During
the period ended September 30, 2015, our top sale
product was
red
wine using grape grown in original ecological environment in
Xinjiang province. We sell products under our registered
brand name primarily through our regional independent third-party
distributors in the PRC to customers mainly in Beijing, Shandong,
Zhejiang, Fujian and Guangdong Provinces. To keep up in such a
competitive industry, we constantly adjust our manufacture
and distribution strategies in China according to current economic
conditions, consumer preference, government policy and social
climate in the marketplace.
In
addition to the sales of consumer products, we also grant regional
distribution rights for the use of our trademarks and provide
continuing support services to our distributors. Observing the
potential opportunity of the huge market for online shopping in
China, as a part of our new business strategies, we established the
“Shianyun” online shopping platform based on our existing internet
platform to develop the online-to-offline commerce, link up the
online sales and offline stores and embed our internal production
system and logistics management. The application of the new
platform greatly optimizes our online sales and delivery
system.
Recent Developments—New Business Focus
The
Internet of Things, or IoT, emerged as the third wave of internet
development and is gradually merging the physical and online
worlds. The Internet of Things is the network of physical
objects or
"things" embedded with electronics, software, sensors,
and connectivity to enable objects to exchange data with the
manufacturer, operator and/or other connected devices based on the
infrastructure of International Telecommunication Union's
Global Standards Initiative.(
Source: "Internet of Things Global Standards
Initiative". ITU. Retrieved 26 June 2015.)
The Internet of Things allows objects to be sensed and
controlled remotely across existing network infrastructure
(Source:https://hbr.org/resources/pdfs/comm/verizon/18980_HBR_Verizon_IoT_Nov_14.pdf)
creating opportunities for more direct integration between
the physical world and computer-based systems, and resulting in
improved efficiency, accuracy and economic benefit. (Source:http://www.internet-of-things-research.eu/pdf/Converging_Technologies_for_Smart_Environments_and_Integrated_Ecosystems_IERC_Book_Open_Access_2013.pdf;http://www.cisco.com/web/solutions/trends/iot/introduction_to_IoT_november.pdf; http://cordis.europa.eu/fp7/ict/enet/documents/publications/iot-between-the-internet-revolution.pdf; ) Each
thing is uniquely identifiable through its embedded computing
system but is able to interoperate within the
existing Internet infrastructure. Experts estimate that
the IoT will consist of almost 50 billion objects by
2020.(Source:
Philip N. Howard (8 June 2015). "How big is the Internet of
Things and how big will it get?". The Brookings Institution.
Retrieved 26 June 2015.)
Seeing
the prospect of the Chinese IoT market, from the second quarter of
2015, we concentrate all our resources on the research of IoT
market and devices. We plan to develop our IoT business based on
the “GEN + ME” chips and the accompanying IoT system. In the third
quarter of 2015, our new IoT system is completed, it can
be connected to the internet, mobile internet and optical
subnetwork, and fall across all areas of peoples’ lives, including
food, smart home devices, shopping, entertainment, travelling,
microfinance services, delivery and storages services, smart
communities and even starting own business etc. We also updated the
existing “Shianyun” platform to embed the new IoT system, which
provides the information and logistic management services to the
customers using the “Shianyun” platform. During the
three months ended September 30, 2015, the sale of newly introduced
IoT system and “GEN + ME” chips generated revenue of
$722,440.
We
expect the design of our new IoT system will be continually
developed and rapidly distributed to the communities in the forth
quarter of 2015. The sales of “GEN + ME” chips and the
accompanying IoT system with the related supporting services will
be our core business in the future. We believe that our IoT system
is the link in an evolutionary chain that began with the ability to
“connect” online, developing since then to the point where people
can use that connectedness to innovate and do business more
efficiently. We expect that the revenue and market share
from IoT business will be expanding at high growth rates.. As we
only just completed our innovation of our IoT system and at an
early stage of promoting and distributing our new product and
technology, we cannot assure you that this new business model will
be successful and profitable and when we will be able to generate
revenue from this model if any at all.
Results of Operations
Results
of Operations – Three Months Ended September 30, 2015 as Compared
to Three Months Ended September 30, 2014
| |
|
Three
months ended
|
|
|
|
|
|
|
|
| |
|
September
30,
|
|
|
Increase/
|
|
|
%
|
|
|
|
|
2015
|
|
|
2014
|
|
|
(decrease)
|
|
|
change
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
725,039
|
|
|
|
48,652
|
|
|
|
676,387
|
|
|
|
1,390.3
|
|
|
Cost
of sales
|
|
|
179,138
|
|
|
|
10,494
|
|
|
|
168,644
|
|
|
|
1,607.1
|
|
|
Selling
and distribution expenses
|
|
|
5,600
|
|
|
|
12,795
|
|
|
|
(7,195)
|
|
|
|
(56.2)
|
|
|
General
and administrative expenses
|
|
|
98,162
|
|
|
|
270,680
|
|
|
|
(172,518)
|
|
|
|
(63.7)
|
|
|
Recover
of bad debt
|
|
|
1,001,648
|
|
|
|
-
|
|
|
|
1,001,648
|
|
|
|
N/A
|
|
|
Income/(loss)
before income taxes
|
|
|
1,452,066
|
|
|
|
(245,306)
|
|
|
|
1,697,372
|
|
|
|
N/A
|
|
|
Provision
for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Net
income/(loss)
|
|
$
|
1,452,066
|
|
|
|
(245,306)
|
|
|
|
1,697,372
|
|
|
|
N/A
|
|
Revenues
Revenue
for the three months ended September 30, 2015 amounted to $725,039,
represents a substantial increase of $676,387 or 1,390.3% compared
to $48,652 for the same period in 2014. Revenue for the
three months ended September 30, 2015 and 2014 are analyzed as
follows:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended
September
30,
|
|
|
Increase/
|
|
|
%
|
|
| |
|
2015
|
|
|
2014
|
|
|
(decrease)
|
|
|
change
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of consumer products
|
|
$
|
725,039
|
|
|
$
|
48,652
|
|
|
|
676,387
|
|
|
|
1,390.3
|
|
|
Regional
distribution rights
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
| |
|
|
725,039
|
|
|
|
48,652
|
|
|
|
676,387
|
|
|
|
1,390.3
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Sale of consumer products
Our
sales of consumer products in the three months ended September 30,
215 consist of sales of red wine, natural eggs, growing and
producing in the farm in Xinjiang Province, which are all produced
by ecologically breeding methods. The rebound in the sales of
consumer products as we temporarily suspended our sales of consumer
products in first half of 2014 to adjust our product portfolio to
find the consumer preference..
In
the first half of 2015, observing the fast growth of the IoT market
in China, we have been focusing on designing “GEN+Me”chip and
accompanying IoT system. We have completed our research
on IoT system in the third quarter of 2015, which have been widely
introduced to the market. The sales revenue of
“GEN+Me”chips reached $368,538 in the three months ended September
30, 215. We also provided supply chain management and solution
services to the customers based on the logistic information
gathering from our “GEN+Me”chips and the newly developed IoT
system, which generated revenue of $353,901 in this
quarter. We believed the IoT system, “GEN+Me”chips and
“Shianyun” platform create immense growth potential for our
operation.
(b) Regional distribution rights
Since
third quarter of 2010, the Company has granted regional
distribution rights in the PRC for using “GEN+Me”
trademark.
Revenues
from regional distribution rights include initial fees and
continuing management fee income. All amounts received will be
initially recognized as receipt in advance, and will be recognized
as revenues when the following criteria are met:
|
(i)
|
Initial
admission fee income is generally recorded upon completion of
admission procedures, when the rights to use the “GEN+ME” trademarks
are granted to the users, and when collectability is reasonably
assured.
|
|
(ii)
|
Continuing
management fee income represent regular contractual payments
received for our supporting services, which are recognized as
revenue when earned, generally on a straight line
basis.
|
The
continuing supporting services included adverting campaign, band
promotion activities and training services provided to the
distributor for the next three years after distribution rights
granted. The continuing management fee will be recognized on a
yearly basis. During the three months ended September 30, 2015, we
did not recruit any new distributor or provide any supporting
services to our existing distributors as we were experiencing a
transitional period to clearing out our inventories and developing
the IoT business.
Cost of
sales and services
Cost
of sales and services amounted $179,138 and $10,494 for three
months ended September 30, 2015 and 2014, respectively. Cost of
sales and services represents cost of consumer products sold and
operation cost incurred for the cost for regional distribution
rights business. The operation cost for services mainly included
the expenses for recruiting new distributors, maintaining the
relations with regional distributors, and research and development
cost for our on-line nationwide platform which can link up the
whole custom food industrial chain including producer, distributors
and end-users. The cost of sales and services increased $168,644 or
1,607.1% during the three months ended September 30, 2015 was due
to that we sold the remaining inventories at cost
for the new IoT business during this period.
Selling
and distribution expenses
Selling
and distribution expenses for the three months ended September 30,
2015 and 2014 amounted to $5,600 and $12,795, respectively. The
decrease of $7,195 or 59.2% was mainly attributable to less
advertising campaigns and product promotions in the three months
ended September 30, 2015 according to recent adjustment of our
business focus.
General
and administrative expenses
General and administrative expenses decreased by $172,518 or 63.7%
from $270,680 for the third quarter of 2014 to $98,162 for the same
period in 2015. The drop of general and administrative expenses was
to cope with our new IoT business, which mainly included the staff
cost and maintenance for the IoT system.
Recovery
of bad debt
During
the three months ended September 30, 2015, Beijing Shanghan
International Trading Limited repaid the outstanding receivables of
$1,001,648, which had previously been provided as a part of our
allowance for bad debts. The amount was reversed from the allowance
of bad debt and recorded as other income.
Income/(loss) before
income taxes and provision for income taxes
The
Company recorded a pretax income of $1,452,066 for the three months
ended September 30, 2015, compared to a pretax loss of $245,306 for
the three months ended September 30, 2014. The substantial change
was mainly attributable to the recovery of bad debts amounted to
$1,001,648 and our new revenue sourcing from the IoT business
during the period.
There
was no PRC income tax provision for the second quarter of 2015 as
substantial amount of taxable income were absorbed by accumulated
losses incurred in previous years. The Company did not
recognize deferred tax assets in the three months ended September
30, 2014 for net operating loss based on that no sufficient future
taxable profits will be available to allow all or part of the
deferred tax asset to be utilized.
Results of Operations – Nine Months Ended September 30, 2015 as
Compared to Nine Months Ended September 30,
2014
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine
months ended
September
30,
|
|
|
Increase/
|
|
|
%
|
|
| |
|
2015
|
|
|
2014
|
|
|
(decrease)
|
|
|
change
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,531,838
|
|
|
|
207,249
|
|
|
|
1,324,589
|
|
|
|
639.1
|
|
|
Cost
of sales
|
|
|
707,795
|
|
|
|
10,494
|
|
|
|
697,301
|
|
|
|
6,644.8
|
|
|
Selling
and distribution expenses
|
|
|
16,957
|
|
|
|
72,624
|
|
|
|
(55,667
|
)
|
|
|
(76.7
|
)
|
|
General
and administrative expenses
|
|
|
506,640
|
|
|
|
1,327,924
|
|
|
|
(821,284
|
)
|
|
|
(61.8
|
)
|
|
Recover
of bad debt
|
|
|
2,262,308
|
|
|
|
-
|
|
|
|
2,262,308
|
|
|
|
N/A
|
|
|
Income/(loss)
before income taxes
|
|
|
2,562,754
|
|
|
|
(1,194,439
|
)
|
|
|
3,757,193
|
|
|
|
N/A
|
|
|
Provision
for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Net
income/( loss)
|
|
$
|
2,562,754
|
|
|
|
(1,194,439
|
)
|
|
|
3,757,193
|
|
|
|
N/A
|
|
Revenues
Revenue
for the nine months ended September 30, 2015 amounted to
$1,531,838, which represents a remarkable increase of $1,324,589
or 639.1% when compared to $207,249 for the same period
last year. Revenues for the nine months ended September 30, 2015
and 2014 are analyzed as follows:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine
months ended September 30,
|
|
|
Increase/
|
|
|
%
|
|
| |
|
2015
|
|
|
2014
|
|
|
(decrease)
|
|
|
change
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of consumer products
|
|
$
|
1,531,838
|
|
|
|
207,249
|
|
|
|
1,324,589
|
|
|
|
639.1
|
|
|
Regional
distribution rights
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
| |
|
|
1,531,838
|
|
|
|
207,249
|
|
|
|
1,324,589
|
|
|
|
639.1
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Sale of consumer products
We
modified our sales strategies in the nine months ended September
30, 2014. After adjusting our product portfolio in accordance with
consumers’ preference in 2014 and clearing out of our inventories
for new IoT business, the sales of consumer products amounted
$809,398 during the nine months ended September 30, 2015. Observing
the fast growth of the IoT market in China, we have been focusing
on designing “GEN+Me”chip and accompanying IoT system since 2015.
In the third quarter of 2015, our “GEN+Me”chips and IoT system have
been successfully developed and introduced. Revenue of $722,440
generated from IoT business, which drove our income significantly
increasing by $1,324,589 or 639.1%.
(b) Regional distribution rights
Since
our modification of business strategies in 2014, our revenues from
regional distribution rights dropped
significantly. During the first three quarters of 2015,
we did not recruit any new distributor nor provided any supporting
service to our existing distributors because we were focusing on
setting up the IoT business. As a result, we did not generate any
revenue from regional distribution rights.
Cost of
sales
Cost
of sales and services for the nine months ended September 30, 2015
and 2014 amounted to $707,795 and $10,494, respectively. Cost of
sales represents cost of consumer products sold and operation cost
in regional distribution rights business. The increase of cost of
sales and services during the nine months ended September 30, 2015
reflected the increasing sales of consumer products in the first
half of 2015.
Selling
and distribution expenses
Selling
expenses for the nine months ended September 30, 2015 and 2014
amounted to $16,957 and $72,624, respectively. The decrease in
selling and distribution expenses of $55,667 or 76.7% was primarily
attributed to the emerging of IoT business, which has changed the
traditional marketing strategies.
General
and administrative expenses
General
and administrative expenses decreased by $821,284 or 61.8% from
$1,327,924 for the nine months ended September 30, 2014 to $506,640
for the same period in 2015. The reduction of general and
administrative expenses was mainly due to additional cost incurred
in the nine months ended September 30, 2014, which represented the
travelling expenses and conference fee for group meeting amounted
to approximately $460,000 and disposal loss on equipment amounting
to $41,862. In addition, the new IoT business also led to a
traditional office expenses reduction.
Income/(loss) before
income taxes and provision for income taxes
The
Company recorded a pretax gain of $2,562,754 for the nine months
ended September 30, 2015, compared to a pretax loss of $1,194,439
for the nine months ended September 30, 2014. The
difference was mainly due to the recovery of bad debts and the
growing revenue from sales of consumer products and our new
promising IoT business.
There
was no PRC income tax provision for the nine months ended September
30, 2015 as the pretax income were absorbed by accumulated losses
incurred in previous years.
Cash and
cash equivalents
As
of September 30, 2015, the Company had a total cash and cash
equivalents of $5,056,086, compared to $35,324 as of December 31,
2014. The cash was mainly used to fund our operations. The
Company’s cash flows for the three months ended September 30, 2015
are analyzed as follows:
Cash Flow
from Continuing Operations
| |
|
Three
months ended
|
|
|
|
|
September
30,
|
|
|
|
|
2015
|
|
|
2014
|
|
| |
|
|
|
|
|
|
|
Net
cash provided by /(used in) operating activities
|
|
$
|
5,742,824
|
|
|
$
|
(501,754)
|
)
|
|
Net
cash (used in)/provided by investing activities
|
|
|
(48,869)
|
|
|
|
149,047
|
|
|
Net
cash (used in)/provided by financing activities
|
|
|
(731,086)
|
|
|
|
205,252
|
|
|
Net
decrease in cash and cash equivalents
|
|
$
|
4,962,869
|
|
|
$
|
(147,455)
|
)
|
During the nine months ended September 30, 2015, we had net cash
provided by operating activities of $5,742,824, as compared to net
cash used in operating activities of $501,754 for the same period
in 2014. The change in cash inflow from operating activities was
primarily due to the cash inflow from the collection of long
outstanding balances and substantial increase in sales revenue
during the period.
Our
cash flow used in investing activities for the nine months ended
September 30, 2015 amounted to $48,869 as compared to net cash
provided by investing activities of $1149,047 for nine months ended
September 30, 2014. The net cash used in investing activities
mainly represented purchase of equipment and machinery. The net
cash provided by investing actives in the nine months ended
September 30, 2014 mainly contributed by the proceeds from disposal
of equipment.
Our
cash flows used in financing activities for the nine months ended
September 30, 2015 amounted to $731,086, as compared to net cash
provided by financing activities for the same period of 2014
amounted to $205,252. The cash used in financing activities in the
nine months ended September 30, 2015 mainly represented the
repayment of temporary advances to a director.
Working
Capital
As
of September 30, 2015, the Company recorded a working capital
deficit of $1,822,881, compared to a deficit of $4,485,669 as of
December 31, 2014. The increase in working capital was mainly due
to our new profit point of growth from IoT business and the
recovery of bad debts in the nine months ended September 30, 2015.
We are exploring sources of additional financing, including
short-term financing from our distributors and other parties. In
addition, we are closely monitoring cash balances, cash needs and
expense levels.
Going
Concern
As
of September 30, 2015, the Company has accumulated deficits of
$3,136,749, a negative working capital of $1,822,881. The Company
may need additional cash resources to operate during the upcoming
12 months, and the continuation of the Company may be dependent
upon the continuing financial support of investors, directors
and/or stockholders of the Company. However, there is no assurance
that equity or debt offerings will be successful in raising
sufficient funds to assure the eventual profitability of the
Company. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded
assets, or the amounts of and classification of liabilities that
might be necessary in the event the Company cannot continue in
existence.
Off-Balance Sheet Transactions
We
do not maintain any off-balance sheet transactions, arrangements,
obligations or other relationships with unconsolidated entities or
others that are reasonably likely to have a material current or
future effect on our financial condition, cash flows, revenues or
expenses, results of operations, liquidity, capital expenditures or
capital resources.
Critical
Accounting Policies and Estimates
Our
financial statements and related public financial information are
based on the application of accounting principles generally
accepted in the United States ("US GAAP"). US GAAP
requires the use of estimates; assumptions, judgments and
subjective interpretations of accounting principles that have an
impact on the assets, liabilities, revenues and expenses amounts
reported. These estimates can also affect supplemental information
contained in our external disclosures including information
regarding contingencies, risk and financial condition. We believe
our use of estimates and underlying accounting assumptions adhere
to GAAP and are consistently and conservatively applied. We
base our estimates on historical experience and on various other
assumptions that we believe to be reasonable under the
circumstances. Actual results may differ materially from these
estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our
financial statements.
We
believe the following is among the most critical accounting
policies that impact our consolidated financial statements. We
suggest that our significant accounting policies, as described in
our consolidated financial statements in the Summary of Significant
Accounting Policies, be read in conjunction with this Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
The
Company generates revenues mainly from sale of consumer products
and also revenue from regional distribution rights.
The
Company recognizes revenue when products are delivered and
customers take ownership and assume risk of loss, collection of the
relevant receivable is probable, persuasive evidence of an
arrangement exists and selling price is fixed or
determinable.
Revenues
from regional distribution rights include initial fees and
continuing management fee income. All moneys received will be
initially recognized as receipt in advance, and will be recognized
as revenues when the following criteria are met:
| |
(i)
Initial admission fee income is generally recorded upon completion
of admission procedures, when the rights to use the
“GEN+ME” trademarks are granted to the users, and when
collectability is reasonably assured.
|
| |
(ii)
Continuing management fee income represent regular contractual
payments received for our supporting services, which are recognized
as revenue when earned, generally on a straight line
basis.
|
Recent Accounting Pronouncements
In
May 2014, the FASB issued ASU No. 2014-09, Revenue from
Contracts with Customers, which is included in ASC
606, Revenue from Contracts with Customers. This ASU is a
comprehensive new revenue recognition model that creates a single
source of revenue guidance for all companies in all industries. The
model is more principles-based than current guidance, and is
primarily based on recognizing revenue at an amount that reflects
consideration to which the entity expects to be entitled to in
exchange for transferring goods or services to a customer. The
guidance will be effective for the Company's interim and annual
reporting periods beginning January 1, 2017. The standard allows
the Company to transition to the new model using either a full or
modified retrospective approach, and early adoption is not
permitted. The Company is currently evaluating the impact this
standard will have on its business practices, financial condition,
results of operations, and disclosures.
In
August 2014, the FASB issued ASU No. 2014-15, Presentation of
Financial Statements—Going Concern (Subtopic 205-40): Disclosure of
Uncertainties about an Entity’s Ability to Continue as a Going
Concern, which is intended to define management’s responsibility to
evaluate whether there is substantial doubt about an organization’s
ability to continue as a going concern and to provide related
footnote disclosures. This ASU provides guidance to an
organization’s management, with principles and definitions that are
intended to reduce diversity in the timing and content of
disclosures that are commonly provided by organizations today in
the financial statement footnotes. The amendments are effective for
annual periods ending after December 15, 2016, and interim periods
within annual periods beginning after December 15, 2016. Early
application is permitted for annual or interim reporting periods
for which the financial statements have not previously been issued.
The Company does not intend to early adopt this standard. The
Company does not expect the adoption of this standard to have an
impact on its financial statements.
On
January 9, 2015, FASB published ASU 2015-01, Simplifying Income
Statement Presentation by Eliminating the Concept of Extraordinary
Items. The ASU applies to all entities and is effective for fiscal
years, and interim periods within those fiscal years, beginning
after December 15, 2015. A reporting entity may apply the
amendments prospectively. A reporting entity also may apply the
amendments retrospectively to all prior periods presented in the
financial statements. Early adoption is permitted provided that the
guidance is applied from the beginning of the fiscal year of
adoption. The Company does not expect the adoption of ASU 2015-01
to have material impact on the Company's consolidated financial
statement.
In
April 2015, the FASB issued ASU 2015-03, Interest – Imputation of
Interest (Subtopic 835-30): Simplifying the Presentation of Debt
Issuance Costs. This ASU requires debt issuance costs related to a
recognized debt liability be presented in the balance sheet as a
direct deduction from the carrying value of that debt liability,
consistent with debt discounts. The recognition and measurement
guidance for debt issuance costs are not affected by this ASU. The
amendments in this ASU are effective retrospectively for fiscal
years, and interim periods within those years, beginning after
December 15, 2015. Early adoption is permitted. The Company does
not expect the impact of adopting this ASU to be material to the
Company’s financial statements and related
disclosures.
In
May 2015, the FASB issued ASU 2015-07, Fair Value Measurement
(Topic 820), Disclosures for Investments in Certain Entities
That Calculate Net Asset Value per Share (or Its
Equivalent) (ASU 2015-07), which removes the requirement
to categorize within the fair value hierarchy investments for which
fair value is measured using the net asset value per share
practical expedient. The amendments also remove the requirement to
make certain disclosures for all investments that are eligible to
be measured at fair value using the net asset value per share
practical expedient. Instead, such disclosures are restricted only
to investments that the entity has decided to measure using the
practical expedient. This standard is effective for interim and
annual periods beginning after December 15, 2015. PGE will adopt
the amendments contained in ASU 2015-07 on January 1, 2016, which
is not expected to have an impact on the Company’s consolidated
financial position, consolidated results of operations, or
consolidated cash flows.
In
July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330),
Simplifying the Measurement of Inventory (ASU 2015-11), which
changes the measurement principle for inventory from the lower
of cost or market tolower of cost and net realizable value.
Net realizable value is defined as the “estimated selling prices in
the ordinary course of business, less reasonably predictable costs
of completion, disposal and transportation.” ASU 2015-11 eliminates
the guidance that entities consider replacement cost or net
realizable value less an approximately normal profit margin in the
subsequent measurement of inventory when cost is determined on a
first-in, first-out or average cost basis. The provisions of ASU
2015-11 are effective for public entities with fiscal years
beginning after December 15, 2016, or January 1, 2017 for PGE, and
interim periods within those fiscal years. Early adoption is
permitted. The Company is in the process of evaluating the impact
to its consolidated financial position, consolidated results of
operations, and consolidated cash flows of the adoption of ASU
2015-11.
In
September 2015, the Financial Accounting Standards Board ("FASB")
issued Accounting Standards Update ("ASU") No. 2015-16, “Business
Combinations (Topic 805): Simplifying the Accounting for
Measurement-Period Adjustments” (“ASU 2015-16”), which requires
that an acquirer recognize adjustments to provisional amounts that
are identified during the measurement period in the reporting
period in which the adjustment amounts are determined. ASU 2015-16
is effective for fiscal years, and interim reporting periods within
those fiscal years, beginning after December 15, 2015.
The
Company does not expect the adoption of these guidance to have a
material impact on its consolidated financial
statements.
Not
applicable.
|
(a)
|
Evaluation of Disclosure Controls and Procedures
|
Disclosure
controls and procedures (as defined in Rules 13a – 15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) are designed to ensure that information
required to be disclosed in our reports filed under the Exchange
Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission’s rules
and forms. This information is accumulated and communicated to
management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions
regarding required disclosures. Management is responsible for
establishing and maintaining adequate internal control over
financial reporting.
We
performed an evaluation, under the supervision and with the
participation of our management, including our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures as
of the end of the period covered by this report. Based on this
evaluation, our Chief Executive Officer and our Acting Chief
Financial Officer have concluded that, as of September 30, 2015,
our disclosure controls and procedures were ineffective in ensuring
that information required to be disclosed in reports filed under
the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods
specified by the Securities and Exchange Commission, and were
ineffective in providing reasonable assurance that information
required to be disclosed by the Company in such reports is
accumulated and communicated to the Company’s management, including
its Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding required
disclosure.
We
do not expect that our disclosure controls and procedures will
prevent all errors and all instances of fraud. Disclosure controls
and procedures, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the
objectives of the disclosure controls and procedures are met.
Further, the design of disclosure controls and procedures must
reflect the fact that there are resource constraints, and the
benefits must be considered relative to their costs. Because of the
inherent limitations in all disclosure controls and procedures, no
evaluation of disclosure controls and procedures can provide
absolute assurance that we have detected all our control
deficiencies and instances of fraud, if any. The design of
disclosure controls and procedures also is based partly on certain
assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated
goals under all potential future conditions.
For
more information regarding our controls and procedures, including
the deficiencies identified by our management and the remediation
methods adopted by us, please refer to Item 9A. Controls and
Procedures in our Annual Report on Form 10-K for fiscal
year ended December 31, 2014, filed with the SEC on March 31,
2015.
(b) Changes in Internal Control Over Financial
Reporting
In
connection with the preparation of our financial statements for the
fiscal year ended December 31, 2014, the management determined that
our internal control environment is not properly designed due to
the existence of certain material weaknesses and that it did not
operate effectively to ensure that the Company’s financial
statements (and related financial statement disclosures) were
prepared in accordance with US generally accepted accounting
principles (US GAAP). In order to remediate the material
weakness discussed above, we hired additional accounting staff who
are familiar with PRC GAAP and US GAAP in the preparation of
financial statements in accordance with US GAAP, and, once our cash
flows from operations improves to a level where we are able to, we
intend to recruit experienced professionals to augment our
financial staff for sufficient US GAAP, financial reporting, which
would improve our controls and procedures with the regard to
financial statements preparation and improve the knowledge of U.S.
accounting standards for our current accounting staff. As
of the end of the period covered by this
quarter’s report,
we continue the process of implementing and maintaining the
remediation measures, but we cannot assure when or if we will be
able to successfully implement these remedial
measures. For more information regarding our controls
and procedures, please refer to Item 9A. Controls and
Procedures in our Annual Report on Form 10-K for fiscal year ended
December 31, 2014, filed with the SEC on March 31,
2015.
There
were no changes in our internal control over financial reporting
(as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the fiscal quarter covered by this Report that
has materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
None.
None.
None.
None.
None.
Exhibits
|
Exhibit
Number
|
Description*
|
|
31.1
|
Certification
of Chief Executive Officer filed pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
31.2
|
Certification
of Chief Financial Officer filed pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification
of Chief Executive Officer furnished 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 Chief Financial Officer furnished 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 Extension Schema Document
|
|
|
101.CAL
|
XBRL
Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
XBRL
Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
XBRL
Taxonomy Extension Labels Linkbase Document
|
|
|
101.PRE
|
XBRL
Taxonomy Extension Presentation Linkbase Document
|
|
| |
|
| |
|
|
*
Filed herewith
|
|
| |
|
In
accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
| |
|
| |
|
| |
|
| |
|
| |
CHINA SHIANYUN GROUP CORP., LTD.
|
| |
|
| |
|
|
Dated:
November 16, 2015
|
/s/
Ye Xing Zhang
|
| |
Ye
Xing Zhang
|
| |
Chief
Executive Officer
|
| |
|
| |
|
| |
|
|
Dated:
November 16, 2015
|
/s/ Deng
Lin
|
| |
Deng
Lin
|
| |
Chief
Financial Officer and Chief Accounting Officer
|
EXHIBIT 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER OF
CHINA SHIANYUN GROUP CORP., LTD.
PURSUANT TO § 302 OF THE SARBANES-OXLEY ACT OF 2002
I,
Xingzhang Ye, certify that:
|
1.
|
I
have reviewed this quarterly report on Form 10-Q for the period
ended September 30, 2015, of China Shianyun Group Corp.,
Ltd.;
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
|
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
|
|
|
b)
|
Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
|
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
|
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal
control over financial reporting; and
|
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of
the registrant’s board of directors (or persons performing the
equivalent functions):
|
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information;
and
|
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal
control over financial reporting.
|
|
Date: November 16, 2015
|
|
|
|
Dat
|
|
/s/
Xingzhang Ye
|
|
|
|
Xingzhang Ye
Chief Executive Officer
|
Exhibit 31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER OF
CHINA SHIANYUN GROUP CORP., LTD.
PURSUANT TO § 302 OF THE SARBANES-OXLEY ACT OF 2002
I,
Lin Deng, certify that:
|
1.
|
I
have reviewed this quarterly report on Form 10-Q for the period
ended September 30, 2015, of China Shianyun Group.,
Ltd.;
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
|
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
|
|
|
b)
|
Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
|
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
|
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal
control over financial reporting; and
|
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of
the registrant’s board of directors (or persons performing the
equivalent functions):
|
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information;
and
|
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal
control over financial reporting.
|
|
Date: November 16, 2015
|
|
|
| |
|
/s/ Lin
Deng
|
|
|
|
Lin Deng
Chief Financial Officer
|
Exhibit 32.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER OF
CHINA SHIANYUN GROUP CORP., LTD.
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
§ 906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of China Shianyun Group Corp.,
Ltd. (the “Company”) on Form 10-Q for the period ended September
30, 2015, as filed with the Securities and Exchange Commission on
the date hereof (the “Report”), I, Xingzhang Ye, Chief Executive
Officer of the Company, do hereby certify, pursuant to 18 U.S.C. §
1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of
2002, based on my knowledge, that:
| |
1)
|
The
Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
|
| |
2)
|
The
information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
|
/s/ Xinzhang
Ye
Xingzhang Ye
Chief Executive Officer
November 16, 2015
This
certification accompanies the Report pursuant to § 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent
required by the Sarbanes-Oxley Act of 2002, be deemed filed by the
Company for purposes of §18 of the Securities Exchange Act of 1934,
as amended.
Exhibit 32.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER OF
CHINA SHIANYUN GROUP CORP., LTD.
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
§ 906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of China Shianyun Group Corp.,
Ltd. (the “Company”) on Form 10-Q for the period ended September
30, 2015, as filed with the Securities and Exchange Commission on
the date hereof (the “Report”), I, Lin Deng, Chief Financial
Officer of the Company, do hereby certify, pursuant to 18 U.S.C. §
1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of
2002, based on my knowledge, that:
| |
1)
|
The
Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
|
| |
2)
|
The
information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
|
/s/ Lin
Deng
Lin Deng
Chief Financial Officer
November 16, 2015
This
certification accompanies the Report pursuant to § 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent
required by the Sarbanes-Oxley Act of 2002, be deemed filed by the
Company for purposes of §18 of the Securities Exchange Act of 1934,
as amended.
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