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)

Nevada
83-0506099
(State or Other Jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

18/F., Development Centre Building,
South of Renmin Rd. LuoHu District, Shenzhen,
  
Guandong Province, China
n/a
(Address of principal executive offices)
(Zip Code)

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.
   
Large accelerated filer o
Accelerated filer o
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

 
 
 

 
 

CHINA SHIANYUN GROUP CORP., LTD.



     
  
Part I – Financial Information
 
  
  
  
  
     
 
Part II – Other Information
 
     
     

 
 
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

   
September 30,
2015
   
December 31,
2014
 
   
(Unaudited)
   
(Audited)
 
Assets
           
Current assets
           
      Cash and cash equivalents
  $ 5,056,086     $ 35,324  
      Accounts receivable
    338,285       378,298  
      Inventories
    8,826       31,865  
      Amount due from a director
    55,965          
      Prepaid expenses and other receivables
    124,077       809,652  
Total current assets
    5,583,239       1,255,139  
                 
Property, plant and equipment, net
    2,092,604       2,177,348  
Land use rights, net
    92,342       95,805  
                 
Total assets
  $ 7,768,185     $ 3,528,292  
                 
Liabilities and stockholders’ equity
           
Liabilities
           
Current liabilities
           
Accounts payable
  $ 246,291     $ 111,853  
Accrued expenses and other payables
    4,786,613       2,266,692  
Receipt in advance
    157,600       465,837  
Taxes payable
    2,148,783       2,098,507  
Amount due to a director
    66,833       797,919  
                 
Total liabilities
  $ 7,406,120     $ 5,740,808  
                 
Stockholders’ equity
               
Common stock: Par value $0.001 per share; 400,000,000 shares authorized, 776,837 shares issued and outstanding
    777       777  
Additional paid in capital
    3,435,412       3,435,412  
Accumulated deficits
    (3,136,749 )     (5,699,503 )
Accumulated other comprehensive income
    62,625       50,798  
Total stockholders’ equity
  $ 362,065     $ (2,212,516 )
                 
Total liabilities and stockholders’ equity
  $ 7,768,185     $ 3,528,292  
                 
 
See accompanying notes to condensed consolidated financial statements


CHINA SHIANYUN GROUP CORP., LTD. AND SUBSIDIARIES
AND COMPREHENSIVE INCOME
(UNAUDITED)
   
For the three months
 ended September 30,
   
For the nine months
ended September 30,
 
   
2015
   
2014
   
2015
   
2014
 
                         
Revenues
  $ 725,039       48,652       1,531,838       207,249  
                                 
Cost of sales and services
    179,138       10,494       707,795       10,494  
                                 
Selling and distribution
    5,600       12,795       16,957       72,624  
                                 
General and administrative expense (inclusive of depreciation and allowances)
    98,162       270,680       506,640       1,327,924  
                                 
Operating income/(loss)
    442,139       (245,317 )     300,446       (1,203,793 )
                                 
Other income/(expenses)
                               
Other income
    8,279       11       -       9,354  
Recovery of bad debt
    1,001,648       -       2,262,308       -  
Other expense
    -       -       -       -  
Total other income/(expenses)
    1,009,927       11       2,262,308       9,354  
                                 
Income/(loss) from operations before provision for income taxes
    1,452,066       (245,306 )     2,562,754       (1,194,439 )
                                 
Provision for income taxes
    -       -       -       -  
                                 
Net income/(loss) for the period
  $ 1,452,066       (245,306 )     2,562,754       (1,194,439 )
                                 
Other comprehensive income
                               
Gain/(loss) on foreign currency translation
    10,226       (18,646 )     11,827       10,421  
                                 
Total comprehensive income/(loss) for the period
  $ 1,462,292       (263,952 )     2,574,581       (1,184,018 )
                                 
                                 
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
    -       6,532  
Interest income
    -       (9,354 )
Recovery of bad debt
    (2,262,308 )     -  
Changes in operating assets and liabilities:
               
Decrease in accounts receivable
    2,302,321       166,702  
Decrease/(increase) in inventories
    23,039       (197,838 )
Decrease in prepaid expenses and other receivables
    685,575       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  
                 
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.
 
 
 
(b)
Inventories
 
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.
 
(d)
Revenue Recognition
 
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.
 
(e)
Earnings Per Share
 
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

 
 
25

 



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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