UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
☑
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended March 31,
2012
American
Jianye Greentech Holdings, LTD.
(Exact name of registrant as specified in
Charter)
Nevada
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|
333-144228
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30-0679981
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(State or other jurisdiction of
incorporation or organization)
|
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(Commission File No.)
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(IRS Employee Identification No.)
|
136-20 38th Ave. Unit 3G
Flushing, NY 11354
(Address of Principal Executive Offices)
_______________
718-395-8706
(Issuer Telephone number)
_______________
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was
required to file such reports), and (2)has been subject to such filing requirements for the past 90 days. Yes
☑
No
☐
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).
Yes
☑
No
☐
Indicate by check mark whether the registrant
is a larger accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and
large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer
☐
|
Accelerated filer
☐
|
Non-accelerated filer
☐
|
Smaller reporting company
☑
|
Indicate by check mark whether the registrant is a shell company
as defined in Rule 12b-2 of the Exchange Act. Yes
☐
No
☑
State the number of shares outstanding of each of the issuer’s
classes of common equity, as of May 17, 2012: 33,760,148 shares of common stock.
AMERICAN JIANYE GREENTECH HOLDINGS, LTD.
FORM 10-Q
March 31, 2012
INDEX
PART I-- FINANCIAL INFORMATION
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Item 1.
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Financial Statements
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 4.
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Control and Procedures
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PART II-- OTHER INFORMATION
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Item 1.
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Legal Proceedings
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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Item 3.
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Defaults Upon Senior Securities
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Other Information
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Item 6.
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Exhibits
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SIGNATURES
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ITEM 1. Financial Information
American Jianye Greentech Holdings, Ltd. and
Subsidiaries
March 31, 2012 and 2011
Index to the consolidated financial statements
Contents
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Page(s)
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Consolidated Balance Sheets at March 31, 2012 (Unaudited) and December 31, 2011
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F-2
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Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2012 and 2011 (Unaudited
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F-3
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Consolidated Statement of Stockholders’ Equity for the Year Ended December 31, 2011 and for the Three Months Ended March 31, 2012
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F-4
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Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011 (Unaudited)
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F-5
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Notes to the Consolidated Financial Statements (Unaudited)
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F-6
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American Jianye Greentech Holdings, Ltd. and Subsidiaries
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Consolidated Balance Sheets
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March 31, 2012
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December 31, 2011
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(Unaudited)
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ASSETS
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CURRENT ASSETS:
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Cash
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$
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25,984
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$
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18,266
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Accounts receivable
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-
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2,992,910
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Inventories
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694,302
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1,396,836
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Advance on purchases
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237,350
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24,443
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Prepaid value added taxes
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89,366
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215,291
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Prepaid corp. income taxes
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3,718
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14,146
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Prepayments and other current assets
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152,846
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151,906
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Total Current Assets
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1,203,566
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4,813,798
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PROPERTY, PLANT AND EQUIPMENT
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Property, plant and equipment
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24,586,544
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24,431,875
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Accumulated depreciation
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(972)
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(836)
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PROPERTY, PLANT AND EQUIPMENT, net
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24,585,572
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24,431,039
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LAND USE RIGHT
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9,543,942
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9,483,903
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Total Assets
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$
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35,333,080
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$
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38,728,740
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
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Accounts payable
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$
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125,776
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$
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1,901,217
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Advances from related parties
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261,427
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221,385
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Advances from Stockholder, Chairman and CEO
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14,888,888
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18,193,848
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Taxes payable
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86,284
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47,219
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Accrued expenses and other current liabilities
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99,818
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98,965
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Total Current Liabilities
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16,964,711
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20,462,634
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Total Liabilities
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16,964,711
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20,462,634
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COMMITMENTS AND CONTINGENCIES
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STOCKHOLDERS' EQUITY:
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Common stock: $0.001 par value, 394,500,000 shares authorized,
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33,760,148 shares issued and outstanding
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33,760
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33,760
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Additional paid-in capital
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1,030,240
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1,030,240
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Retained earnings
|
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16,455,726
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16,454,333
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Accumulated other comprehensive income:
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Foreign currency translation gain
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848,643
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747,773
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Total Stockholders' Equity
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18,368,369
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18,266,106
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Total Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
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$
|
35,333,080
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$
|
38,728,740
|
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See accompanying notes to the consolidated financial statements.
|
F-2
|
American Jianye Greentech Holdings, Ltd. and Subsidiaries
|
Consolidated Statements of Operations and Comprehensive Income
|
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For the three Months
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For the three Months
|
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Ended
|
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Ended
|
|
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March 31, 2012
|
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|
March 31, 2011
|
|
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(Unaudited)
|
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(Unaudited)
|
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NET REVENUES
|
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$
|
3,592,697
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$
|
18,742,380
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COST OF GOODS SOLD
|
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3,535,249
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15,818,070
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GROSS PROFIT
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57,448
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2,924,310
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OPERATING EXPENSES:
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Selling and General and administrative expenses
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45,521
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134,233
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Total operating expenses
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45,521
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|
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134,233
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|
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INCOME BEFORE INCOME TAXES
|
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11,927
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|
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|
2,790,077
|
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|
|
|
|
|
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INCOME TAX PROVISION
|
|
|
|
|
10,534
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|
700,238
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NET INCOME (LOSS)
|
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1,393
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2,089,839
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OTHER COMPREHENSIVE INCOME:
|
|
|
|
|
|
|
|
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|
|
Foreign currency translation gain
|
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|
|
|
100,870
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|
|
|
71,349
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|
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COMPREHENSIVE INCOME
|
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|
|
$
|
102,263
|
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|
$
|
2,161,188
|
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NET INCOME (LOSS) PER COMMON SHARE - BASIC AND DILUTED:
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#
|
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Net loss per common share - basic and diluted
|
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|
|
$
|
0.00
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$
|
0.07
|
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Weighted Average Common Shares Outstanding - basic and diluted
|
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33,760,148
|
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|
31,465,277
|
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|
|
|
|
|
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|
|
|
See accompanying notes to the consolidated financial statements.
|
F-3
|
American Jianye Greentech Holdings, Ltd. and Subsidiaries
|
Consolidated Statement of Stockholders’ Equity
|
For the Three Months Ended March 31, 2012 and 2011
|
|
|
|
|
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Common Stock, $0.001 Par Value
|
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|
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Accumulated Other Comprehensive Income
|
|
|
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|
Number of Shares
|
|
|
Amount
|
|
Additional Paid-in Capital
|
|
Retained Earnings
|
|
Foreign Currency Translation Gain
|
|
Total Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
Balance, December 31, 2010
|
|
33,110,148
|
|
$
|
33,110
|
|
$
|
926,890
|
|
$
|
9,746,971
|
|
$
|
261,489
|
|
$
|
10,968,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Issuance of common stock for services
|
|
50,000
|
|
|
50
|
|
|
13,950
|
|
|
|
|
|
|
|
|
14,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for cash at $0.15 per share
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
in the third quarter, 2011
|
|
600,000
|
|
|
600
|
|
|
89,400
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
6,707,362
|
|
|
|
|
|
6,707,362
|
|
|
Foreign currency translation gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
486,284
|
|
|
486,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,193,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2011
|
|
33,760,148
|
|
|
33,760
|
|
|
1,030,240
|
|
|
16,454,333
|
|
|
747,773
|
|
|
18,266,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
1,393
|
|
|
|
|
|
1,393
|
|
|
Foreign currency translation gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,870
|
|
|
100,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2012
|
|
33,760,148
|
|
$
|
33,760
|
|
$
|
1,030,240
|
|
$
|
16,455,726
|
|
$
|
848,643
|
|
$
|
18,368,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the consolidated financial statements.
|
F-4
|
American Jianye Greentech Holdings, Ltd. and Subsidiaries
|
Consolidated Statement of Stockholders’ Equity
|
For the Three Months Ended March 31, 2012 and 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock, $0.001 Par Value
|
|
|
|
|
|
|
Accumulated Other Comprehensive Income
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Amount
|
|
Additional Paid-in Capital
|
|
Retained Earnings
|
|
Foreign Currency Translation Gain
|
|
Total Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2010
|
|
33,110,148
|
|
$
|
33,110
|
|
$
|
926,890
|
|
$
|
9,746,971
|
|
$
|
261,489
|
|
$
|
10,968,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for services
|
|
50,000
|
|
|
50
|
|
|
13,950
|
|
|
|
|
|
|
|
|
14,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for cash at $0.15 per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in the third quarter, 2011
|
|
600,000
|
|
|
600
|
|
|
89,400
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
6,707,362
|
|
|
|
|
|
6,707,362
|
|
|
Foreign currency translation gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
486,284
|
|
|
486,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,193,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2011
|
|
33,760,148
|
|
|
33,760
|
|
|
1,030,240
|
|
|
16,454,333
|
|
|
747,773
|
|
|
18,266,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
(1,393)
|
|
|
|
|
|
(1,393)
|
|
|
Foreign currency translation gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100,870)
|
|
|
(100,870)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2012
|
|
33,760,148
|
|
$
|
33,760
|
|
$
|
1,030,240
|
|
$
|
(16,455,726)
|
|
$
|
(848,643)
|
|
$
|
18,368,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the consolidated financial statements.
|
F-4
|
American Jianye Greentech Holdings, Ltd. and Subsidiaries
|
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three Months
|
|
|
For the three Months
|
|
|
|
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
|
|
|
|
March 31, 2012
|
|
|
March 31, 2011
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
$
|
1,393
|
|
|
$
|
2,089,839
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
|
|
Depreciation expense
|
|
|
|
|
131
|
|
|
|
126
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
|
3,011,857
|
|
|
|
(4,065,653)
|
|
|
|
Inventories
|
|
|
|
|
711,377
|
|
|
|
-
|
|
|
|
Advance on purchases
|
|
|
|
|
18,565
|
|
|
|
(274)
|
|
|
|
Prepaid value added taxes
|
|
|
|
|
127,287
|
|
|
|
-
|
|
|
|
Prepaid corp income taxes
|
|
|
|
|
10,518
|
|
|
|
(2,724,080)
|
|
|
|
Prepayments and other current assets
|
|
|
|
|
140,087
|
|
|
|
(108,475)
|
|
|
|
Accounts payable
|
|
|
|
|
(2,158,858)
|
|
|
|
4,469,367
|
|
|
|
Customer deposits
|
|
|
|
|
1,502,518
|
|
|
|
-
|
|
|
|
Taxes payable
|
|
|
|
|
38,766
|
|
|
|
-
|
|
|
|
Accrued expenses and other current liabilities
|
|
|
|
|
480
|
|
|
|
7,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
|
|
|
|
3,404,121
|
|
|
|
(331,405)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Cash
|
|
|
|
|
-
|
|
|
|
(60,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN INVESTING ACTIVITIES
|
|
|
|
|
-
|
|
|
|
(60,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
Advances from (repayment made to) related parties
|
|
|
|
|
38,639
|
|
|
|
(9,718)
|
|
|
Advances from stockholder, Chairman and CEO
|
|
|
|
|
(3,425,126)
|
|
|
|
(686,503)
|
|
|
Subscription receivable
|
|
|
|
|
-
|
|
|
|
510,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
|
|
(3,386,487)
|
|
|
|
(186,221)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
|
|
|
|
9,916
|
|
|
|
1,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH
|
|
|
|
|
7,718
|
|
|
|
(576,621)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at beginning of the period
|
|
|
|
|
18,266
|
|
|
|
655,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at end of period
|
|
|
|
$
|
25,984
|
|
|
$
|
79,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
Income tax paid
|
|
|
|
$
|
-
|
|
|
$
|
1,136,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the consolidated financial statements.
|
F-5
|
American Jianye Greentech Holdings, Ltd. and
Subsidiaries
March 31, 2012 and 2011
Notes to the Consolidated Financial Statements
(Unaudited)
Note 1 – Organization and Operations
American Jianye Greentech Holdings, Ltd.
(formerly Gateway Certifications, Inc.)
American Jianye Greentech
Holdings, Ltd. (the ‘Company” or “American Jianye”) was originally incorporated on August 30, 2006, under
the laws of the State of Nevada as Gateway Certifications, Inc.
On
November 16, 2009, the Company amended its Articles of Incorporation, and changed its name to American Jianye Greentech Holdings,
Ltd. upon acquisition of Jianye Greentech Holdings Limited to better indentify the Company with the business conducted,
through
its wholly owned subsidiaries in China,
the manufacturing and distribution of ethanol and methanol based
alternative fuel for automobile use.
Jianye Greentech Holdings Ltd. and Subsidiaries
Jianye Greentech Holdings Ltd.
Jianye
Greentech Holdings Ltd (“Jianye BVI”) was incorporated on April 17, 2008 under the laws of
the Territory of
the
British Virgin Islands.
Formation of Hong Kong Jianye
Greentech Holdings Ltd.
On
May 2, 2008 Jianye BVI formed Hong Kong Jianye Greentech Holdings Limited (“Jianye Hong Kong”) under the laws of
under
the laws of the Hong Kong Special Administrative Region (“HK SAR”) of the People’s Republic of China (“PRC”)
.
Jianye BVI and Jianye Hong
Kong currently have no operations and operate as investment holding companies.
Formation of Heilongjian New
Jianye New Clean Fuel Distribution Ltd.
On September 28, 2009,
Jianye Hong Kong formed Heilongjian New Jianye New Clean Fuel Distribution Ltd. (“Heilongjian New Jianye”) with the
registered capital of $50,000. Heilongjian New Jianye engages in the manufacturing and distribution of ethanol and methanol based
alternative fuel for automobile use.
Acquisition of Jianye Greentech Holdings
Ltd. and Subsidiaries Recognized as a Reverse Acquisition
On November 16, 2009, the
Company entered into and consummated the
Agreement and Plan of Share Exchange (the “Exchange Agreement”)
with all of the shareholders (the “Shareholders”) of Jianye Greentech Holdings, Ltd
. ("Jianye BVI").
Pursuant to the
Exchange Agreement
, (i)
the Company and Gateway Certifications,
LLC (“GCL”), a New York limited liability company formed by the former controlling shareholders of the Company entered
into an Asset Divestiture Agreement whereby the Company assigned all of the previous operating assets of the Company to GCL in
exchange for the assumption of all of the Company’s liabilities to the members of GCL, who, as the former principal shareholders
of the Company controlling 8,343,000 common shares of the Company, agreed to return and cancel their 7,950,000 shares of Common
Stock of the Company
; the Company (ii) acquired 100% of the issued and outstanding capital of Jianye BVI for
3,548,796
common shares of the Company; (iii) effectuated a 7.89-for-1 (1:7.89) forward stock split (“Forward Stock Split”)
post cancellation of 7,950,000 shares by then controlling stockholder of the Company and issuance of
3,548,796 shares of its common stock to Jianye BVI stockholders
; and (iv)
amended its Articles
of Incorporation to: (iv)(a) authorize the creation of a class of 5,500,000 shares of blank check preferred stock; (iv)(b) increased
the number of shares of the authorized capital stock to 400,000,000 shares of which 394,500,000 shall be Common Stock, par value
$0.001 per share and 5,500,000 shall be preferred stock, par value $0.001 per share; and (iii)(c) changed its name to American
Jianye Greentech Holdings Ltd.
Total number of common shares issued represents approximately 90.0% of the Company’s
outstanding stock immediately post acquisition; Jianye BVI became a wholly owned subsidiary of the Company; and the management
team of Jianye BVI were appointed as the Officers and Directors of the Company.
As a result of the ownership interests of the former stockholders of Jianye BVI, for financial statement
reporting purposes, t
he merger between the Company and
Jianye
BVI
has been treated as a reverse acquisition
with Jianye BVI deemed the accounting acquirer
and the Company deemed the accounting acquiree
under the purchase method of accounting in accordance with section 805-10-55
of the FASB Accounting Standards Codification. The reverse merger is deemed a capital transaction and the net assets of
Jianye
BVI
(the
accounting acquirer) are carried forward to the Company (the legal acquirer and the reporting entity) at
their carrying value before the combination. The acquisition process utilizes the capital structure of the Company and the assets
and liabilities of
Jianye BVI
which are recorded at historical cost. The equity of the Company
is the historical equity of
Jianye BVI
retroactively restated to reflect the number of shares
issued by the Company in the transaction.
Formation of Liaoning Jianye
Greentech Fuel Ltd.
On June 23, 2010, Jianye
Hong Kong formed Liaoning Jianye Greentech Fuel Ltd. (“Liaoning Jianye”) with the registered capital of $5million.
Liaoning Jianye engages in the manufacturing and distribution of ethanol and methanol based alternative fuel for automobile use.
F-6
Note 2 – Summary of Significant Accounting
Policies
Basis of Presentation - Unaudited Interim Financial Information
The accompanying unaudited
interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations
of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The
unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in
the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results
are not necessarily indicative of the results for the full year. These unaudited interim consolidated financial statements
should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2011 and
notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on May 20, 2012.
Principles of Consolidation
The consolidated financial
statements include all accounts of the Company and its controlled entities as of the reporting period ending date(s) and for the
reporting period(s) as follows:
Entity
|
Jurisdiction or Place of Incorporation
|
Attributable Interest
|
|
|
|
Jianye Greentech Holdings Ltd.
|
The Territory of the British Virgin Islands
|
100%
|
|
|
|
Hong Kong Jianye Greentech Holdings Limited
|
Hong Kong SAR
|
100%
|
|
|
|
Heilongjian New Jianye New Clean Fuel Distribution Ltd.
|
PRC
|
100%
|
|
|
|
Liaoning Jianye Greentech Energy Ltd.
|
PRC
|
100%
|
All inter-company balances
and transactions have been eliminated.
Reclassification
Certain amounts
in
the prior period financial statements
have been reclassified to conform to the current period
presentation
. These reclassifications had no effect on reported earnings.
Use of Estimates and Assumptions
The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
The Company’s significant
estimates and assumptions include the fair value of financial instruments; allowance for doubtful accounts; inventory valuation
and obsolescence; the carrying value
, recoverability and impairment, if any, of long-lived assets, including
the values assigned to and the estimated useful lives of property, plant and equipment, and
land use rights;
interest rate;
revenue recognized or recognizable; sales returns and allowances; valued added tax rate;
income
tax rate and related tax provision, reporting currency of the Company, functional currency of the PRC subsidiaries, and foreign
currency exchange rate
.
Those significant accounting estimates or assumptions bear the risk of
change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions
are difficult to measure or value.
Management
bases its estimates on historical experience and on various assumptions that are believed to be reasonable
in relation to
the financial statements taken as a whole
under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Management
regularly
evaluates the key factors and assumptions used to develop the
estimates utilizing currently
available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations,
if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The Company follows paragraph
825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has
adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure
the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting
principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements.
To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes
a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.
The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
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Level 1
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Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
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Level 2
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Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
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Level 3
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Pricing inputs that are generally observable inputs and not corroborated by market data.
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Financial assets are considered
Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and
at least one significant model assumption or input is unobservable.
The fair value hierarchy
gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority
to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described
above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of
the Company’s financial assets and liabilities, such as cash, accounts receivable, advance on purchases, prepayments and
other current assets, accounts payable, customer deposits, corporate income tax payable, accrued expenses and other current liabilities
approximate their fair values because of the short maturity of these instruments.
The Company’s Level
3 financial liabilities consist of the derivative warrant issued in July 2008 for which there is no current market for these securities
such that the determination of fair value requires significant judgment or estimation. The Company valued the automatic
conditional conversion, re-pricing/down-round, change of control; default and follow-on offering provisions using a lattice model,
with the assistance of a valuation specialist, for which management understands the methodologies. These models incorporate transaction
details such as Company stock price, contractual terms, maturity, risk free rates, as well as assumptions about future financings,
volatility, and holder behavior as of the date of issuance and each balance sheet date.
Transactions involving
related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market
dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party
transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations
can be substantiated.
It is not, however, practical
to determine the fair value of advances from significant stockholder and lease arrangement with the significant stockholder due
to their related party nature.
Fair Value of Non-Financial Assets or
Liabilities Measured on a Recurring Basis
The Company’s non-financial
assets include inventories. The Company identifies potentially excess and slow-moving inventories by evaluating turn rates, inventory
levels and other factors. Excess quantities are identified through evaluation of inventory aging, review of inventory turns and
historical sales experiences. The Company provides lower of cost or market reserves for such identified excess and slow-moving
inventories. The Company establishes a reserve for inventory shrinkage, if any, based on the historical results of physical inventory
cycle counts.
Carrying Value, Recoverability and Impairment
of Long-Lived Assets
The Company has adopted
paragraph 360-10-35-17 of the FASB Accounting Standards Codification for its long-lived assets. The Company’s long-lived
assets, which include property, plant and equipment and land use rights are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable.
The Company assesses the
recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived
asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment,
if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using
the asset’s expected future discounted cash flows or market value, if readily determinable. When long-lived assets are determined
to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book
values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.
The Company considers the
following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance
or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the
manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or
changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased
competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory
changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the
occurrence of such events.
The key assumptions used
in management’s estimates of projected cash flow deal largely with forecasts of sales levels, gross margins, and operating
costs of the manufacturing facilities. These forecasts are typically based on historical trends and take into account recent developments
as well as management’s plans and intentions. Any difficulty in manufacturing or sourcing raw materials on a cost effective
basis would significantly impact the projected future cash flows of the Company’s manufacturing facilities and potentially
lead to an impairment charge for long-lived assets. Other factors, such as increased competition or a decrease in the desirability
of the Company’s products, could lead to lower projected sales levels, which would adversely impact cash flows. A significant
change in cash flows in the future could result in an impairment of long lived assets.
The impairment charges,
if any, is included in operating expenses in the accompanying consolidated statements of income and comprehensive income (loss).
Cash Equivalents
The Company considers all
highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Accounts Receivable and Allowance for
Doubtful Accounts
Accounts
receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. The Company follows paragraph 310-10-50-9
of the FASB Accounting Standards Codification to estimate the allowance for doubtful accounts.
The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the
customer’s current credit worthiness, as determined by the review of their current credit information; and determines the
allowance for doubtful accounts based on historical write-off experience, customer specific facts and economic conditions.
Outstanding
account balances are reviewed individually for collectability. The allowance for doubtful accounts is the Company’s best
estimate of the amount of probable credit losses in the Company’s existing accounts receivable. Bad debt expense is included
in general and administrative expenses, if any. Pursuant to paragraph 310-10-50-2
of the FASB Accounting Standards Codification
account balances are charged off against the allowance after all means of collection have been exhausted
and the potential for recovery is considered remote. The Company has adopted paragraph 310-10-50-6
of the FASB Accounting
Standards Codification and determine when receivables are past due or delinquent based on how recently payments have been received.
The Company does not have
any off-balance-sheet credit exposure to its customers.
Advance on Purchases
Advance
on purchases primarily represent amounts paid to vendors for future delivery of products ranging from three (3) months to nine
(9) months
, all of which were fully or partially refundable depending upon the terms and conditions of the purchase agreements
.
Inventories
Inventory Valuation
The Company values inventories,
consisting of raw materials, packaging material and finished goods, at the lower of cost or market
.
Cost is determined on the first-in and first-out (“FIFO”) method for raw materials and packaging materials and
the weighted average cost method for finished goods. Cost of finished goods comprises direct labor, direct materials, direct production
cost and an allocated portion of production overhead. The Company
reduces inventories for the diminution
of value, resulting from product obsolescence, damage or other issues affecting marketability, equal to the difference between
the cost of the inventory and its estimated market value. Factors utilized in the determination of estimated market
value include (i) current sales data and historical return rates, (ii) estimates of future demand, (iii) competitive pricing pressures,
(iv) new product introductions, (v) product expiration dates, and (vi) component and packaging obsolescence.
Inventory Obsolescence and
Markdowns
The Company evaluates its
current level of inventories considering historical sales and other factors and, based on this evaluation, classify inventory markdowns
in the income statement as a component of cost of goods sold pursuant to Paragraph 420-10-S99 of the FASB Accounting Standards
Codification to adjust inventories to net realizable value. These markdowns are estimates, which could vary significantly from
actual requirements if future economic conditions, customer demand or competition differ from expectations. Other significant estimates
include the allocation of variable and fixed production overheads. While variable production overheads are allocated to each unit
of production on the basis of actual use of production facilities, the allocation of fixed production overhead to the costs of
conversion is based on the normal capacity of the Company’s production facilities, and recognizes abnormal idle facility
expenses as current period charges. Certain costs, including categories of indirect materials, indirect labor and other indirect
manufacturing costs which are included in the overhead pools are estimated. The management of the Company determines its normal
capacity based upon the amount of operating hours of the manufacturing machinery and equipment in a reporting period.
Property, Plant and Equipment
Property, plant and equipment
are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to
operations as incurred. Depreciation of property, plant and equipment is computed by the straight-line method
(after
taking into account their respective estimated residual values)
over the assets estimated useful lives ranging from five
(5) years to twenty (20) years. Upon sale or retirement of property, plant and equipment, the related cost and accumulated depreciation
are removed from the accounts and any gain or loss is reflected in the consolidated statements of income and comprehensive income.
Leasehold improvements, if any, are amortized on a straight-line basis over the term of the lease or
the estimated useful lives, whichever is shorter.
Upon becoming fully amortized, the related cost and accumulated amortization
are removed from the accounts.
Construction
in progress represents direct costs of construction or the acquisition cost of
long-lived assets
.
Under
U.S. GAAP, all costs associated with construction of long-lived assets should
be reflected as long-term as part of construction-in-progress.
Capitalization of these costs ceases
and the construction in progress is transferred to property, plant and equipment when substantially all of the activities necessary
to prepare the
long-lived assets
for their intended use are completed. No depreciation is provided
until the construction of the
long-lived assets
is complete and ready for their intended use.
Land Use Right
Land use right represents
the cost to obtain the right to use certain parcel of land in the City of Tieling, Liaoning Province, PRC. Land use right is carried
at cost and amortized on a straight-line basis over the life of the right of fifty (50) years. Upon becoming fully amortized, the
related cost and accumulated amortization are removed from the accounts.
Customer Deposits
Customer
deposits primarily represent amounts received from customers for future delivery of products
, all of which were fully or
partially refundable depending upon the terms and conditions of the sales agreements
.
Leases
Lease agreements are evaluated
to determine whether they are capital leases or operating leases in accordance with paragraph 840-10-25-1 of the FASB Accounting
Standards Codification (“Paragraph 840-10-25-1”). When substantially all of the risks and benefits of property ownership
have been transferred to the Company, as determined by the test criteria in Paragraph 840-10-25-1, the lease then qualifies as
a capital lease. Capital lease assets are depreciated on a straight line method, over the capital lease assets estimated useful
lives consistent with the Company’s normal depreciation policy for tangible fixed assets. Interest charges are expensed over
the period of the lease in relation to the carrying value of the capital lease obligation.
Rent expense for operating
leases, which may include free rent or fixed escalation amounts in addition to minimum lease payments, is recognized on a straight-line
basis over the duration of each lease term.
Related Parties
The Company follows subtopic
850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party
transactions.
Pursuant to Section 850-10-20
the related parties include a. affiliates of the Company; b. entities for which investments
in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection
of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit
of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal
owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls
or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties
might be prevented from fully pursuing its own separate interests; and g. other parties that can significantly influence the
management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties
and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully
pursuing its own separate interests.
The
financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense
allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated
in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall
include: a. the nature of the relationship(s) involved; ; b. a description of the transactions, including transactions
to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such
other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the
dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change
in the method of establishing the terms from that used
in the preceding period; and d. amounts due from or to related
parties as of the date of each balance sheet presented and, if not otherwise
apparent, the terms and
manner of settlement.
Commitment and Contingencies
The
Company follows subtopic 450-20 of
the FASB Accounting Standards Codification to report accounting for contingencies.
Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the
Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent
liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal
proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates
the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought
or expected to be sought therein.
If the assessment of a
contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated,
then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates
that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would
be disclosed.
Loss contingencies considered
remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management
does not believe, based upon information available at this time, that these matters will have a material adverse effect on the
Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such
matters will not materially and adversely affect the Company’s business, financial position, and results of operations or
cash flows.
Revenue Recognition
The Company applies paragraph
605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized
or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are
met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to
the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
The Company derives its
revenues from sales contracts with customers with revenues being generated upon the shipment of merchandise. Persuasive evidence
of an arrangement is demonstrated via sales invoice or contract; product delivery is evidenced by warehouse shipping log as well
as a signed acknowledgement of receipt from the customers or a signed bill of lading from the third party trucking company and
title transfers upon shipment, based on free on board (“FOB”) warehouse terms
; the
sales price to the customer is fixed upon acceptance of the signed purchase order or contract and there is no separate sales rebate,
discount, or volume incentive.
When the Company recognizes revenue, no provisions are made for returns
because, historically, there have been very few sales returns and adjustments that have impacted the ultimate collection of revenues.
The Company
markets
and distributes ethanol and methanol based alternative fuel for automobile use
and follows Section 605-45-45 (formerly EITF
99-19) (“ASC Section 605-45-45”) of the FASB Accounting Standards Codification for revenue recognition to report revenue
gross as a principal for its sales since the Company (1) acts as principal in the transaction, (2) takes title to the products,
(3) has risks and rewards of ownership, such as the risk of loss for collection, delivery, or returns, and (4) does not act as
an agent or broker (including performing services, in substance, as an agent or broker) with compensation on a commission or fee
basis on its sales. The management of the Company determined that the Company should report revenue based on the gross amount billed
to a customer when considering each of the following eight (8) indicators of gross revenue reporting listed in ASC Paragraph 605-45-45-4
through 605-45-45-14 as specified (1)
The entity is the primary obligor in the arrangement — The
Company signs a product sales agreement with its customer and represents in writing that the Company is responsible for fulfillment,
including the acceptability of the product(s) or service(s) ordered or purchased by the customer; (2) The entity has general inventory
risk (before customer order is placed or upon customer return); (3) The entity has latitude in establishing price — The Company
has reasonable latitude, within economic constraints, to establish the exchange price with a customer for the product or service;
(4) The entity changes the product or performs part of the service — The Company developed a method for blending the raw
materials in its manufacturing process, through its proprietary technology, catalysts can be mixed with fuel and alcohols to become
a finished product to be sold after pumping and piping; (5) The entity has discretion in supplier selection — The Company
has multiple suppliers for the products ordered by a customer and discretion to select the supplier that will provide the product(s)
or service(s) ordered by a customer; (6) The entity is involved in the determination of product or service specifications —
The Company determines the nature, type, characteristics, or specifications of the product(s) or service(s) ordered by the customer;
(7) The entity has physical loss inventory risk of purchased inventories after customer order; and (8) The entity has credit risk
— The Company is responsible for collecting the sales price from its customer but must pay the amount owed to its supplier
after the supplier performs, regardless of whether the sales price is fully collected.
Net sales of products represent
the invoiced value of goods, net of consumption tax (“Consumption Tax”) and value added taxes (“VAT”).
The Company is subject to (i) Consumption Tax and (ii) VAT which are levied on all of the Company’s products at the rate
of 2% and 17%, respectively, on the invoiced value of sales. Sales or Output VAT is borne by customers in addition to the invoiced
value of sales and Purchase or Input VAT is borne by the Company in addition to the invoiced value of purchases to the extent not
refunded for export sales.
Shipping
and Handling Costs
The
Company accounts for shipping and handling fees in accordance with
paragraph 605-45-45-19 of the FASB Accounting Standards
Codification
. While amounts charged to customers for shipping products are included in revenues, the
related costs are classified in cost of
goods sold as incurred.
Foreign Currency Transactions
The Company applies
the guidelines as set out in Section 830-20-35 of the FASB Accounting Standards Codification (“Section 830-20-35”)
for foreign currency transactions. Pursuant to Section 830-20-35 of the FASB Accounting Standards Codification, foreign currency
transactions are transactions denominated in currencies other than U.S. Dollar, the Company’s reporting currency or Chinese
Yuan or Renminbi, the Company’s Chinese operating subsidiaries' functional currency. Foreign currency transactions may produce
receivables or payables that are fixed in terms of the amount of foreign currency that will be received or paid. A change in exchange
rates between the functional currency and the currency in which a transaction is denominated increases or decreases the expected
amount of functional currency cash flows upon settlement of the transaction. That increase or decrease in expected functional currency
cash flows is a foreign currency transaction gain or loss
that generally shall be included in determining net income for
the period in which the exchange rate changes. Likewise, a transaction gain or loss (measured from the transaction date
or
the most recent intervening balance sheet date, whichever is later) realized upon settlement of a foreign currency transaction
generally shall be included in determining net income for the period in which the transaction is settled. The exceptions to this
requirement for inclusion in net income of transaction gains and losses pertain to certain intercompany transactions and to transactions
that are designated as, and effective as, economic hedges of net investments and foreign currency commitments. Pursuant to Section
830-20-25 of the FASB Accounting Standards Codification, the following shall apply to all foreign currency transactions of an enterprise
and its investees: (a) at the date the transaction is recognized, each asset, liability, revenue, expense, gain, or loss arising
from the transaction shall be measured and recorded in the functional currency of the recording entity by use of the exchange rate
in effect at that date as defined in section 830-10-20 of the FASB Accounting Standards Codification; and (b) at each balance sheet
date, recorded balances that are denominated in currencies other than the functional currency or reporting currency of the recording
entity shall be adjusted to reflect the current exchange rate.
E
quity Instruments
Issued to Parties Other Than Employees for Acquiring Goods or Services
The Company
accounts
for
equity instruments issued to
parties other than employees for acquiring goods or services
under guidance of Sub-topic 505-50 of the FASB Accounting Standards Codification (“Sub-topic 505-50”)
.
Pursuant
to
Section 505-50-30,
all transactions in which goods or services are the consideration received
for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value
of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of
the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable
that performance will occur.
The fair value of share
options or warrant award is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of
assumptions for inputs are as follows:
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Expected term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of
the contractual term of the instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments.
Pursuant to paragraph 718-50-S99-1,
it may be appropriate to use the
simplified method
, if (i) A company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its equity shares have been publicly traded; (ii) A company significantly changes the terms of its share option grants or the types of employees that receive share option grants such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term; or (iii) A company has or expects to have significant structural changes in its business such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term. The Company uses the simplified method to calculate expected term of share options and similar instruments
as the
company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term
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Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.
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Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected life of the share options and similar instruments.
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Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the contractual life of the share options and similar instruments.
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Pursuant to ASC paragraph
505-50-25-7, if fully vested, nonforfeitable equity instruments are issued at the date the grantor and grantee enter into an agreement
for goods or services (no specific performance is required by the grantee to retain those equity instruments), then, because of
the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date has been reached.
A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is entered into). Whether
the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized as contra-equity
under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to ASC paragraph 505-50-45-1,
a grantor may conclude that an asset (other than a note or a receivable) has been received in return for fully vested, nonforfeitable
equity instruments that are issued at the date the grantor and grantee enter into an agreement for goods or services (and no specific
performance is required by the grantee in order to retain those equity instruments). Such an asset shall not be displayed as contra-equity
by the grantor of the equity instruments. The transferability (or lack thereof) of the equity instruments shall not affect the
balance sheet display of the asset. This guidance is limited to transactions in which equity instruments are transferred to other
than employees in exchange for goods or services. Section 505-50-30 provides guidance on the determination of the measurement date
for transactions that are within the scope of this Subtopic.
Pursuant to Paragraphs
505-50-25-8 and 505-50-25-9, an entity may grant fully vested, nonforfeitable equity instruments that are exercisable by the grantee
only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves
specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same
manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with,
or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a stock option that the
counterparty has the right to exercise expires unexercised.
Pursuant to paragraph 505-50-30-S99-1,
if the Company receives a right to receive future services in exchange for unvested, forfeitable equity instruments, those equity
instruments are treated as unissued for accounting purposes until the future services are received (that is, the instruments are
not considered issued until they vest). Consequently, there would be no recognition at the measurement date and no entry should
be recorded.
Income
Tax Provision
The Company accounts for
income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to
reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not
that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in the Consolidated Statements of Income and Comprehensive Income
in the period that includes the enactment date.
The
Company adopted
section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”)
.
Section 740-10-25
addresses the determination of whether tax benefits claimed or expected to
be claimed on a tax return should be recorded in the financial statements. Under
Section 740-10-25
,
the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized
in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty
(50) percent likelihood of being realized upon ultimate settlement.
Section 740-10-25
also provides
guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires
increased disclosures.
The estimated future tax
effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated
balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred
tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.
Management makes judgments
as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax
liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions.
In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax
jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Uncertain Tax Positions
The
Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the
provisions of
Section 740-10-25
for the interim period ended March 31, 2012 or 2011.
Foreign Currency Translation
The Company follows Section
830-10-45 of the FASB Accounting Standards Codification (“Section 830-10-45”) for foreign currency translation to translate
the financial statements of the foreign subsidiary from the functional currency, generally the local currency, into U.S. Dollars.
Section 830-10-45 sets out the guidance relating to how a reporting entity determines the functional currency of a foreign entity
(including of a foreign entity in a highly inflationary economy), re-measures the books of record (if necessary), and characterizes
transaction gains and losses. Pursuant to Section 830-10-45, the assets, liabilities, and operations of a foreign entity shall
be measured using the functional currency of that entity. An entity’s functional currency is the currency of the
primary economic environment in which the entity operates; normally, that is the currency of the environment, or local currency,
in which an entity primarily generates and expends cash.
The functional currency
of each foreign subsidiary is determined based on management’s judgment and involves consideration of all relevant economic
facts and circumstances affecting the subsidiary. Generally, the currency in which the subsidiary transacts a majority of its transactions,
including billings, financing, payroll and other expenditures, would be considered the functional currency, but any dependency
upon the parent and the nature of the subsidiary’s operations must also be considered. If a subsidiary’s functional
currency is deemed to be the local currency, then any gain or loss associated with the translation of that subsidiary’s financial
statements is included in accumulated other comprehensive income. However, if the functional currency is deemed to be the U.S. Dollar,
then any gain or loss associated with the re-measurement of these financial statements from the local currency to the functional
currency would be included in the consolidated statements of income and comprehensive income (loss). If the Company disposes of
foreign subsidiaries, then any cumulative translation gains or losses would be recorded into the consolidated statements of income
and comprehensive income (loss). If the Company determines that there has been a change in the functional currency of a subsidiary
to the U.S. Dollar, any translation gains or losses arising after the date of change would be included within the statement
of income and comprehensive income (loss).
Based on an assessment
of the factors discussed above, the management of the Company determined the relevant subsidiaries’ local currencies to be
their respective functional currencies.
The financial records of
the Company's Chinese operating subsidiaries are maintained in their local currency, the Renminbi (“RMB”), which is
the functional currency. Assets and liabilities are translated from the local currency into the reporting currency, U.S. dollars,
at the exchange rate prevailing at the balance sheet date. Revenues and expenses are translated at weighted average exchange rates
for the period to approximate translation at the exchange rates prevailing at the dates those elements are recognized in the consolidated
financial statements. Foreign currency
translation gain (loss) resulting from the process of translating the local currency
financial statements into U.S. dollars are included in determining accumulated other comprehensive income in the consolidated statement
of stockholders’ equity.
RMB is not a fully convertible
currency. All foreign exchange transactions involving RMB must take place either through the People’s Bank of China (the
“PBOC”) or other institutions authorized to buy and sell foreign exchange. The exchange rate adopted for the foreign
exchange transactions are the rates of exchange quoted by the PBOC. Commencing July 21, 2005, China adopted a managed floating
exchange rate regime based on market demand and supply with reference to a basket of currencies. The exchange rate of the US dollar
against the RMB was adjusted from approximately RMB 8.28 per U.S. dollar to approximately RMB 8.11 per U.S. dollar on
July 21, 2005. Since then, the PBOC administers and regulates the exchange rate of the U.S. dollar against the RMB taking
into account demand and supply of RMB, as well as domestic and foreign economic and financial conditions.
Unless otherwise noted,
the rate presented below per U.S. $1.00 was the midpoint of the interbank rate as quoted by OANDA Corporation (www.oanda.com) contained
in its consolidated financial statements. Management believes that the difference between RMB vs. U.S. dollar exchange rate quoted
by the PBOC and RMB vs. U.S. dollar exchange rate reported by OANDA Corporation were immaterial. Translations do not imply that
the RMB amounts actually represent, or have been or could be converted into, equivalent amounts in U.S. dollars. Translation of
amounts from RMB into U.S. dollars has been made at the following exchange rates for the respective periods:
|
March 31, 2012
|
|
|
December 31, 2011
|
|
|
March 31, 2011
|
|
|
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheets
|
|
6.3185
|
|
|
|
6.3585
|
|
|
|
6.5501
|
|
|
|
6.5918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statements of income and comprehensive income (loss)
|
|
6.3089
|
|
|
|
6.4640
|
|
|
|
6.5713
|
|
|
|
|
|
Comprehensive Income (Loss)
The
Company has applied
section 220-10-45 of the FASB Accounting Standards Codification
. This statement
establishes rules for the reporting of comprehensive income and its components. Comprehensive income (loss), for the Company, consists
of net income (loss), change in unrealized loss of marketable securities and foreign currency translation adjustments and is presented
in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) and Stockholders’ Equity.
Net Income (Loss) per Common Share
Net income (loss) per common
share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.
Basic
net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common
stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the
weighted average number of shares of common stock and potentially outstanding shares of common stock during the period
to
reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, stock options
and warrants
.
There
were no potentially dilutive shares outstanding
for the
interim period ended March 31, 2012 or
2011
.
Cash Flows Reporting
The Company adopted paragraph
230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according
to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the
indirect or reconciliation method (“Indirect method”) as defined by
paragraph 230-10-45-25
of the FASB Accounting Standards Codification
to report net cash flow from operating activities by adjusting
net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating
cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are
included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent
of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes
on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash
and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts
or payments in the period pursuant to
paragraph 830-230-45-1 of the FASB Accounting Standards Codification
.
Subsequent Events
The Company follows the
guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company
will evaluate subsequent events through the date when the financial statements are issued. Pursuant to ASU 2010-09 of the
FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely
distributed to users, such as through filing them on EDGAR.
Recently
Issued Accounting Pronouncements
FASB Accounting
Standards Update No. 2011-05
In June 2011, the FASB
issued the FASB Accounting Standards Update No. 2011-05 “
Comprehensive Income” (“ASU 2011-05”),
which
was the result of a joint project with the IASB and
amends the guidance in ASC 220,
Comprehensive Income,
by eliminating the option to present components of other comprehensive
income (OCI) in the statement of stockholders’ equity. Instead, the new guidance now gives entities the option to present
all non-owner changes in stockholders’ equity either as a single continuous statement of comprehensive income or as two separate
but consecutive statements. Regardless of whether an entity chooses to present comprehensive income in a single continuous statement
or in two separate but consecutive statements, the amendments require entities to present all reclassification adjustments from
OCI to net income on the face of the statement of comprehensive income.
The amendments in this
Update should be applied retrospectively and are effective for public entity for fiscal years, and interim periods within those
years, beginning after December 15, 2011.
FASB Accounting
Standards Update No. 2011-08
In September 2011, the
FASB issued the FASB Accounting Standards Update No. 2011-08 “
Intangibles—Goodwill and Other:
Testing Goodwill for Impairment” (“ASU 2011-08”).
This Update is to simplify how public and nonpublic
entities test goodwill for impairment. The amendments permit an entity to first assess qualitative factors to determine whether
it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining
whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. Under the amendments in this Update,
an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than
not that its fair value is less than its carrying amount.
The guidance is effective
for interim and annual periods beginning on or after December 15, 2011.
Early
adoption is permitted.
FASB Accounting
Standards Update No. 2011-10
In December 2011, the FASB
issued the FASB Accounting Standards Update No. 2011-10
“Property, Plant and Equipment: Derecognition of in Substance
Real Estate-a Scope Clarification” (“ASU 2011-09”).
This Update is to resolve the diversity in practice as
to how financial statements have been reflecting circumstances when parent company reporting entities cease to have controlling
financial interests in subsidiaries that are in substance real estate, where the situation arises as a result of default on nonrecourse
debt of the subsidiaries.
The amended guidance is
effective for annual reporting periods ending after June 15, 2012
for public entities. Early adoption is permitted.
FASB Accounting
Standards Update No. 2011-11
In December 2011, the FASB
issued the FASB Accounting Standards Update No. 2011-11
“Balance Sheet: Disclosures about Offsetting Assets and Liabilities”
(“ASU 2011-11”).
This Update requires an entity to disclose information about
offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements
on its financial position.
The objective of this disclosure is to facilitate comparison between
those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial
statements on the basis of IFRS.
The amended guidance is
effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.
FASB Accounting
Standards Update No. 2011-12
In December 2011, the FASB
issued the FASB Accounting Standards Update No. 2011-12
“Comprehensive Income: Deferral of the Effective Date for Amendments
to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update
No. 2011-05” (“ASU 2011-12”).
This Update is a deferral of the effective date pertaining to reclassification
adjustments out of accumulated other comprehensive income in ASU 2011-05. FASB is to going to reassess the costs and benefits of
those provisions in ASU 2011-05 related to reclassifications out of accumulated other comprehensive income. Due to the time required
to properly make such a reassessment and to evaluate alternative presentation formats, the FASB decided that it is necessary to
reinstate the requirements for the presentation of reclassifications out of accumulated other comprehensive income that were in
place before the issuance of Update 2011-05.
All
other requirements in Update 2011-05 are not affected by this Update, including the requirement to report comprehensive income
either in a single continuous financial statement or in two separate but consecutive financial statements. Public entities should
apply these requirements for fiscal years, and interim periods within those years, beginning after December 15, 2011
.
Other Recently
Issued, but Not Yet Effective Accounting Pronouncements
Management does not believe
that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the
accompanying consolidated financial statements.
F-6
Note 3 – Accounts Receivable
Accounts receivable at
March 31, 2012 and December 31, 2011 consisted of the following:
|
|
March 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
$
|
-
|
|
|
$
|
2,992,910
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
|
(-
|
)
|
|
|
(-
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
|
$
|
2,992,910
|
|
|
|
|
|
|
|
|
Note 4 – Inventories
Inventories at March 31,
2012 and December 31, 2011 consisted of the following:
|
|
March 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Raw materials
|
|
$
|
694,302
|
|
|
$
|
1,396,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
694,302
|
|
|
$
|
1,396,836
|
|
|
|
|
|
|
|
|
Slow-Moving or Obsolescence
Markdowns
The Company did not record
any inventory obsolescence adjustments for the interim period ended March 31, 2012 or 2011.
Lower of Cost or
Market Adjustments
There was no lower of cost
or market adjustments for the interim period ended March 31, 2012 or 2011.
Note 5 – Property, Plant and Equipment
Property, plant and equipment,
stated at cost, less accumulated depreciation at March 31, 2012 and December 31, 2011 consisted of the following:
|
Estimated Useful Life (Years)
|
|
March 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
Construction-in-progress (i)(ii)
|
|
|
$
|
24,584,890
|
|
|
$
|
24,430,232
|
|
|
|
|
|
|
|
|
|
|
|
Office equipment
|
5
|
|
|
1,654
|
|
|
|
1,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,586,544
|
|
|
|
24,431,875
|
|
|
|
|
|
|
|
|
|
|
|
Less accumulated depreciation (iii)
|
|
|
|
(972
|
)
|
|
|
(836
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
24,585,572
|
|
|
$
|
24,431,039
|
|
(i)
Construction-in-progress
Liaoning Jianye expended RMB155,339,629
to construct an ethanol and methanol manufacturing facility as of March 31, 2012, which was recorded as construction in progress
included in the consolidated balance sheets.
(ii)
Capitalized
Interest
For the interim period ended March
31, 2012 and 2011, the Company did not capitalize any interest to fixed assets.
(iii) Depreciation and Amortization
Expense
Depreciation and amortization expense
for the
interim period ended March 31, 2012 and 2011
was $131 and $126, respectively.
Note 6 – Land Use Right and Land Use
Right Deposit
Liaoning Jianye
On September 2, 2010, the
Company entered into an agreement with the Chinese government, whereby the Company made a deposit of RMB11,000,000 in aggregate
towards the acquisition of the right to use 80,404.50 square meter of land for RMB60,303,400. On April 13, 2011, the Company paid
an additional RMB49,303,400 to acquire the land use right and is in the process of obtaining the related certificate of the land
use right expiring September 9, 2060. The purchase price and related acquisition costs shall be amortized over the term of the
right of approximately fifty (50) years when the land is ready for its intended use.
Land use right, stated
at cost, less accumulated amortization at December 31, 2011 and 2010, consisted of the following:
|
|
March 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Liaoning Jianye
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land use right and land use right deposit
|
|
$
|
9,543,942
|
|
|
$
|
9,483,903
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization (i)
|
|
|
(-
|
)
|
|
|
(-
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
9,543,942
|
|
|
$
|
9,483,903
|
|
|
|
|
|
|
|
|
(i) Amortization Expense
The Company did not record any amortization
expense for the
interim period ended March 31, 2012 or 2011
.
F-7
Note 7 – Related Party Transactions
Related parties
Related parties with whom the Company had transactions
are:
Related Parties
|
|
Relationship
|
|
|
|
Haipeng Wang
|
|
Chairman, President and CEO of the Company
|
|
|
|
Harbin Dayang Trading Co., Ltd. (“Dayang”)
|
|
An entity owned by the Chairman (15%) and his farther (70%)
|
|
|
|
Heilongjiang Jianye Real Estates Co., Ltd.
|
|
An entity owned by the Chairman (1.14%) and Dayang (97.72%)
|
|
|
|
Heilongjiang Jianye Fuel Co., Ltd.
|
|
An entity owned by the Chairman and Heilongjiang Jianye Real Estates Co., Ltd. (97.83% in aggregate)
|
|
|
|
Heilongjiang Jianye Property Management Co., Ltd.
|
|
An entity owned and controlled by the Chairman (8.33%) and his farther (25%)
|
|
|
|
Zhaodong Jianye Fuel Co., Ltd.
|
|
An entity owned by the farther of the Chairman (100%)
|
Advances from
Related
Parties
From time to time, the
Chairman, CEO and significant stockholder of the Company and related parties advance funds to the Company for working capital purpose.
Those advances are unsecured, non-interest bearing and due on demand.
Transactions with Zhao Dong Jianye Fuel Co., Ltd.
Purchases from
Zhao Dong Jianye Fuel Co., Ltd.
For the interim period
ended March 31, 2012 or 2011, Heilongjiang New Jianye did not purchase any fuel from Zhao Dong Jianye Fuel Co., Ltd.
Operating Lease of
Property, Plant and Equipment and Facilities
with Zhao Dong Jianye Fuel Co., Ltd.
On
December 1, 2011, Heilongjiang New Jianye entered into a non-cancellable operating lease for
certain property, plant, equipment
and facilities expiring one (1) year from date of signing.
Heilongjiang New Jianye
is required
to pay RMB100,000 per month over the term of the lease.
Note 8 – Stockholders’ Equity
Shares Authorized
Upon formation
the
aggregate number of shares which the Corporation shall have authority to issue is fifty million (50,000,000) shares, all of which
are designated as “Common Stock” with a par value of $0.001 per share.
On November 16, 2009, the
Company
amended its Articles of Incorporation to: (a) authorize the creation of a class of 5,500,000
shares of blank check preferred stock; (b) increased the number of shares of the authorized capital stock to 400,000,000 shares
of which 394,500,000 shall be Common Stock, par value $0.001 per share and 5,500,000 shall be preferred stock, par value $0.001
per share
.
Common Stock
Immediately prior to the
consummation of the Exchange Agreement giving retroactive effect of share cancellation in connection with the Exchange Agreement
on November 16, 2009, the Company had 3,100,770 common shares issued and outstanding.
The Company issued 28 million
shares of its common stock to Jianye BVI stockholders upon consummation of the Exchange Agreement on November 16, 2009.
Issuance of Common Stock
In April, 2010, 299,378
of the cancelled shares were restored and reported as issued and fully paid common stock.
In the second quarter of
2010 the Company issued 10,000 shares for financial consulting services, valued at $1.00 per share or $10,000 on the date of issuance.
On October 1, 2010, the
Company sold 100,000 shares of its common stock at $0.40 per share for $40,000 in cash.
On
December 14, 2010, the Company sold 1,000,000 shares of its common stock at $0.70 per share for $350,000 in cash and $350,000 in
stock subscription receivable, 200,000 shares of common stock at $0.50 per share for $100,000 in stock subscription receivable
and 600,000 shares of common stock at $0.15 per share for $60,000 in stock subscription receivable, all of the stock subscription
receivables were reported as
an asset on the consolidated balance sheet
at December 31, 2010
as the proceeds have been received in the first quarter of 2011 prior to the issuance of the financial statements.
In the third quarter of
2011 the Company issued 50,000 shares of its common stock for financial consulting services, valued at $0.28 per share or $14,000
on the date of issuance.
On December 14, 2010, the
Company entered into a stock subscription agreement with an investor whereby the Company agreed to sell 600,000 shares of its common
stock at $0.15 per share for $90,000. In the third quarter of 2011 the Company received the $90,000 proceeds and issued 600,000
shares of its common stock pursuant to the stock subscription agreement.
F-9
Note 9 – Concentrations and Credit
Risk
Customers
and
Credit Concentrations
Customer concentrations
for the interim period ended March 31, 2012 and 2011 and credit concentrations at March 31, 2012 and December 31, 2011 are as follows:
|
Net Sales
for the Interim
Period Ended
|
|
|
Accounts receivable
At
|
|
|
March 31, 2012
|
|
|
March 31, 2011
|
|
|
March 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer #113101 Maoming Gang'an
|
|
-
|
%
|
|
|
31.8
|
%
|
|
|
-
|
%
|
|
|
-
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer #113116 Harbin Fengyan
|
|
-
|
%
|
|
|
25.3
|
%
|
|
|
-
|
%
|
|
|
-
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer #113117 Daqing Fengyan
|
|
-
|
%
|
|
|
22.3
|
%
|
|
|
-
|
%
|
|
|
-
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer #113118 Guangdong Maoqi Guangxi Branch
|
|
91.2
|
%
|
|
|
-
|
%
|
|
|
-
|
%
|
|
|
28.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer #113119 Nanning Youyi (Significant Business Party)
|
|
8.8
|
%
|
|
|
-
|
%
|
|
|
-
|
%
|
|
|
71.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100.0
|
%
|
|
|
79.4
|
%
|
|
|
-
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
A
reduction in sales from or loss of such customers would have a material adverse effect on
the Company’s
results of operations and financial condition.
Vendor Concentrations
Vendor purchase concentrations
for the interim period ended March 31, 2012 and 2011 and accounts payable concentration at March 31, 2012 and December 31, 2011
are as follows:
|
Net Purchase
for the Interim
Period Ended
|
|
|
Accounts Payable
at
|
|
|
March 31, 2012
|
|
|
March 31, 2011
|
|
|
March 31, 2012
|
|
|
December 31,
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vendor #212101 HaerbinFengyan
|
|
-
|
%
|
|
|
-
|
%
|
|
|
27.4
|
%
|
|
|
-
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vendor #212102 Maoming Hongchang
|
|
13.9
|
%
|
|
|
51.5
|
%
|
|
|
60.1
|
%
|
|
|
8.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vendor #212105 Nanning Tuorui
|
|
43.5
|
%
|
|
|
-
|
%
|
|
|
-
|
%
|
|
|
-
|
%
|
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|
|
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|
Vendor #212108 Daqing Oil Field
|
|
-
|
%
|
|
|
36.6
|
%
|
|
|
-
|
%
|
|
|
-
|
%
|
|
|
|
|
|
|
|
|
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|
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|
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Vendor #212109 Nanning Youyi (Significant Business Party)
|
|
40.8
|
%
|
|
|
-
|
%
|
|
|
-
|
%
|
|
|
90.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
|
|
|
|
|
|
98.2
|
%
|
|
|
88.1
|
%
|
|
|
87.5
|
%
|
|
|
98.2
|
%
|
|
|
|
|
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|
Significant Business Party
The Company purchases the
raw material and sells finished products from a significant business party (“Significant Business Party”).
A
reduction in sales from or loss of the Significant Business Party would have a material adverse effect on
the
Company’s results of operations and financial condition.
Credit Risk
Financial instruments that
potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents.
As of March 31, 2012, substantially
all of the Company’s cash and cash equivalents were held by major financial institutions located in the PRC, none of which
are insured. However, the Company has not experienced losses on these accounts and management believes that the Company is not
exposed to significant risks on such accounts.
Foreign Currency Risk
The Company is exposed
to fluctuations in foreign currencies for transactions denominated in currencies other than RMB, the functional currency due to
the fact the majority of the Company’s purchasing activities are transacted in foreign currencies.
The
Company had no foreign currency hedges in place for the interim period ended March 31, 2012 or 2011
to
reduce such exposure.
Note 10 - Foreign Operations
Operations
Substantially all of the
Company’s operations are carried out and all of its assets are located in the PRC. Accordingly, the Company’s business,
financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC. The
Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, monetary policies,
anti-inflationary measures, currency fluctuation and remittances and methods of taxation, among other things.
Dividends and Reserves
Under the laws of the PRC,
net income after taxation can only be distributed as dividends after appropriation has been made for the following: (i) cumulative
prior years’ losses, if any; (ii) allocations to the “Statutory Surplus Reserve” of at least 10% of net income
after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company’s registered
capital; (iii) allocations of 5-10% of income after tax, as determined under PRC accounting rules and regulations, to the Company’s
“Statutory Common Welfare Fund”, which is established for the purpose of providing employee facilities and other collective
benefits to employees in PRC; and (iv) allocations to any discretionary surplus reserve, if approved by stockholders.
As of March 31, 2012, the
Company had no
Statutory Surplus Reserve and the Statutory Common Welfare Fund established and
segregated in retained earnings.
Note 11 – Subsequent Events
The Company has evaluated
all events that occurred after the balance sheet date through the date when the financial statements were issued. The Management
of the Company determined that there were no reportable subsequent events to be disclosed.
F-10
Item 2. Management's Discussion and Analysis
Of Financial Condition And Plan Of Operation.
This Quarterly Report contains forward-looking
statements within the meaning of the federal securities laws. These include statements about our expectations, beliefs, intentions
or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend,"
"plan," "will," "we believe," "management believes" and similar language. The forward-looking
statements are based on the current expectations of the Company and are subject to certain risks, uncertainties and assumptions,
including those set forth in the discussion under "Management's Discussion and Analysis of Financial Condition and Results
of Operations" in this report. Actual results may differ materially from results anticipated in these forward-looking statements.
We base the forward-looking statements on information currently available to us, and we assume no obligation to update them.
Investors are also advised to refer to the
information in our previous filings with the Securities and Exchange Commission (SEC), especially on Forms 10-K, 10-Q and 8-K,
in which we discuss in more detail various important factors that could cause actual results to differ from expected or historic
results. It is not possible to foresee or identify all such factors. As such, investors should not consider any list of such factors
to be an exhaustive statement of all risks and uncertainties or potentially inaccurate assumptions.
Results of Operations
Jianye Greentech Holdings Ltd (“Jianye BVI”)
was incorporated on April 17, 2008 under the laws of British Virgin Islands. Jianye BVI is a holding company that owns 100% of
Hong Kong Jianye Greentech Holdings Limited (“Jianye Hong Kong”), a corporation incorporated on May 2, 2008 under the
laws of Hong Kong. Jianye BVI and Jianye Hong Kong currently have no operations and operate as investment holding companies. On
September 28, 2009, Jianye Hong Kong established Heilongjiang New Jianye New Clean Fuel Marketing Ltd. (“Jianye China”),
a wholly owned subsidiary in China, with registered capital of US$50,000. As a result, Jianye BVI owns 100% of the equity of Jianye
China through Jianye Hong Kong. Jianye China’s primary business is to distribute ethanol and methanol as alternative fuel
for automobile use.
Heilongjian New Jianye Clean Fuel Marketing
Ltd. (“Jianye China”) commenced operations in September 2009.
Jianye
China’s primary business is to distribute ethanol and methanol as alternative fuel for automobile use.
For the three months ended March 31, 2012, we derived
our revenues of $3,592,697 from the sales of methanol-based and ethanol based fuels to our customers, comparing to $18,742,380
for the three months ended March 31, 2011. The Company experienced major drop in revenues due to the significant slow-down of general
economy in 2012 in comparison with 2011.
Our gross profit margin during the three months ended
March 31, 2012 was 2%, compared to 16% for the same period in 2011. This figure represents our regular gross profit margin as a
marketing company and distributor. The price increase in the raw materials contributed to the increase in cost of goods sold and
thus the decrease of the gross margin in 2012 in comparison with that of 2011. We expect our gross profit margin to improve once
the Company’s own refinery is built and commences fuel production. The construction of factory and production facilities
is expected to be complete by the end of 2012.
Selling, general and administrative expenses
for the
three months ended March 31, 2012
were $45,521 or 1% of net sales,
compared to $134,233 or 1% for the same period of the last fiscal year. Selling, general and administrative expenses consist primarily
of payroll, local taxes, investor relation expenses and professional fees.
Due to the factors discussed above, income
from operations for the
three months ended March 31, 2012
was $11,927, and
net income after income taxes for the same period was $1,393, compared to $2,790,077 and $2,089,839 respectively for the same period
in 2011.
Liquidity and Capital Resources
Overview
As of March 31, 2012 we
had working capital deficiency of $15,761,145, an increase of $112,309 over net working capital deficiency of $15,648,836 at December
31, 2011.
We finances our daily operations
mainly by cash flows generated from our business operations and advance from our major shareholders. Major capital expenditures
in the year of 2011 were primarily financed by cash flows generated from business operations and advance from our Chairman and
CEO. As of March 31, 2012 we had approximately $34,130,486 in capital expenditure that were mainly related to acquisition of land
use right and the construction cost of an ethanol and methanol manufacturing facility located in Liaoning Province, P.R China.
Cash
Our cash as of March 31,
2012 was $25,984, an increase of $7,718 from $18,266 as of December 31, 2011. The increase in the interim period
ended March 31, 2012 was primarily attributable to a number of factors, including the following:
-
Net cash provided by operating activities
Net cash provided by operating activities
was $3,404,121 for the three months ended March 31, 2012, representing an increase of $3,735, 526 from $(331,405) for the comparable
period in 2011. The net income for the three months ended March 31, 2012 in the amount of $1,393 represented a decrease
of $3,001,857 from $2,089,839 for the comparable period in 2011. There are non-cash charges of depreciation in the amount
of $131 that increased the net income but did not have the effect of reducing the balance of cash and cash equivalents. The net
increase of operating cash flow is also a result of accounts receivable decrease in the amount of $3,011,857, inventory decrease
in the amount of $711,377, advance on purchase decrease in the amount of $18,565, prepaid valued added tax and income tax and other
prepayments decrease in the amount of $277,892, customer deposit increase in the amount of $1,502,518, tax payable increase in
the amount of $38,766 and accrued liabilities increase of $480, net with an accounts payable decrease of $2,158,858.
-
Net cash used in investing activities
The Company did not incurred any
cash expenditures for investing activities during the three months ended March 31, 2012.
-
Net cash used in financing activities
Net cash used in financing
activities was $3,386,487 for the three months ended March 31, 2012, as compared to $186,221 for the comparable period in 2011. During
the three months ended March 31, 2012, the company repaid $3,425,126 of advances from Stockholder, Chairman and CEO and received
advances from related parties in the amount of $38,639.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.
Critical Accounting Policies and Estimates
The Company’s financial statements are
prepared in accordance with accounting principles generally accepted in the United States, which require us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes
these estimates using the best information available at the time the estimates are made. However, actual results could differ materially
from those estimates.
The most critical accounting policies are listed
below:
Revenue Recognition
The Company applies paragraph 605-10-S99-1
of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable
and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive
evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii)
the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
The Company derives its revenues from sales
contracts with customers with revenues being generated upon the shipment of merchandise. Persuasive evidence of an arrangement
is demonstrated via sales invoice or contract; product delivery is evidenced by warehouse shipping log as well as a signed acknowledgement
of receipt from the customers or a signed bill of lading from the third party trucking company and title transfers upon shipment,
based on free on board (“FOB”) warehouse terms; the sales price to the customer is fixed upon acceptance of the signed
purchase order or contract and there is no separate sales rebate, discount, or volume incentive. When the Company recognizes revenue,
no provisions are made for returns because, historically, there have been very few sales returns and adjustments that have impacted
the ultimate collection of revenues.
The Company markets and distributes ethanol
and methanol based alternative fuel for automobile use and follows Section 605-45-45 (formerly EITF 99-19) (“ASC Section
605-45-45”) of the FASB Accounting Standards Codification for revenue recognition to report revenue gross as a principal
for its sales since the Company (1) acts as principal in the transaction, (2) takes title to the products, (3) has risks and rewards
of ownership, such as the risk of loss for collection, delivery, or returns, and (4) does not act as an agent or broker (including
performing services, in substance, as an agent or broker) with compensation on a commission or fee basis on its sales. The management
of the Company determined that the Company should report revenue based on the gross amount billed to a customer when considering
each of the following eight (8) indicators of gross revenue reporting listed in ASC Paragraph 605-45-45-4 through 605-45-45-14
as specified (1) The entity is the primary obligor in the arrangement — The Company signs a product sales agreement with
its customer and represents in writing that the Company is responsible for fulfillment, including the acceptability of the product(s)
or service(s) ordered or purchased by the customer; (2) The entity has general inventory risk (before customer order is placed
or upon customer return); (3) The entity has latitude in establishing price — The Company has reasonable latitude, within
economic constraints, to establish the exchange price with a customer for the product or service; (4) The entity changes the product
or performs part of the service — The Company developed a method for blending the raw materials in its manufacturing process,
through its proprietary technology, catalysts can be mixed with fuel and alcohols to become a finished product to be sold after
pumping and piping; (5) The entity has discretion in supplier selection — The Company has multiple suppliers for the products
ordered by a customer and discretion to select the supplier that will provide the product(s) or service(s) ordered by a customer;
(6) The entity is involved in the determination of product or service specifications — The Company determines the nature,
type, characteristics, or specifications of the product(s) or service(s) ordered by the customer; (7) The entity has physical loss
inventory risk of purchased inventories after customer order; and (8) The entity has credit risk — The Company is responsible
for collecting the sales price from its customer but must pay the amount owed to its supplier after the supplier performs, regardless
of whether the sales price is fully collected.
Foreign Currency Translation
The Company follows Section 830-10-45 of the
FASB Accounting Standards Codification (“Section 830-10-45”) for foreign currency translation to translate the financial
statements of the foreign subsidiary from the functional currency, generally the local currency, into U.S. Dollars. Section 830-10-45
sets out the guidance relating to how a reporting entity determines the functional currency of a foreign entity (including of a
foreign entity in a highly inflationary economy), re-measures the books of record (if necessary), and characterizes transaction
gains and losses. Pursuant to Section 830-10-45, the assets, liabilities, and operations of a foreign entity shall be measured
using the functional currency of that entity.
The functional currency of the Company is Chinese
Yuan Renminbi (“RMB”). The current exchange rates used by the Company as of March 31, 2012 and December 31, 2011 to
translate the Chinese RMB to the U.S. Dollars are 6.3185:1 and 6.3585:1, respectively. Revenues and expenses are translated using
the prevailing average exchange rates at 6.3089:1, and 6.5804:1 for the three months ended March 31, 2012 and 2011, respectively.
Translation adjustments are included in other comprehensive income (loss).
Impact of Accounting Pronouncements
There were no recent accounting pronouncements
that have had a material effect on the Company’s financial position or results of operations.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk.
Not required for smaller reporting companies.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Regulations under the Securities Exchange Act
of 1934 (the “Exchange Act”) require public companies to maintain “disclosure controls and procedures,”
which are defined as controls and other procedures that are designed to ensure that information required to be disclosed by the
issuer in the reports that it files or submits 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. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal
executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.
We conducted an evaluation, with the participation
of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of
March 31, 2012. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of March
31, 2012, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses
described below.
In light of the material weaknesses described
below, we performed additional analysis to ensure our financial statements were prepared in accordance with generally accepted
accounting principles. Accordingly, we believe that the financial statements included in this report fairly present, in all material
respects, our financial condition, results of operations and cash flows for the periods presented.
A material weakness is a control deficiency
(within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control
deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements
will not be prevented or detected. Management has identified the following two material weaknesses which have caused management
to conclude that, as of March 31, 2012, our disclosure controls and procedures were not effective at the reasonable assurance level:
1. We do not have written
documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting
is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the quarter ending March 31, 2012. Management
evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of
our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
2. We do not have sufficient
segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of
all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation
of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management
evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and
has concluded that the control deficiency that resulted represented a material weakness.
To address these material weaknesses, management
performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all
material respects, our financial position, results of operations and cash flows for the periods presented.
Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule
13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the issuer’s
principal executive and principal financial officers and effected by the issuer’s board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with accounting principles generally accepted in the United States of America and includes
those policies and procedures that:
·
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect
the transactions and dispositions of the assets of the issuer;
·
Provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts
and expenditures of the Company are being made only in accordance with authorizations of management and directors of the issuer;
and
·
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of the issuer’s assets that could have a material effect on the financial statements
Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement
preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements
may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations
are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce,
though not eliminate, this risk.
As of the end of our most recent quarter, management
assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control
over financial reporting established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded
that, as of March 31, 2012, such internal control over financial reporting was not effective. This was due to deficiencies that
existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls
and that may be considered to be material weaknesses.
The matters involving internal control over
financial reporting that our management considered to be material weaknesses under the standards of the Public Company Accounting
Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of
a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring
of required internal controls and procedures; and (2) inadequate segregation of duties consistent with control objectives of having
segregation of the initiation of transactions, the recording of transactions and the custody of assets. The aforementioned material
weaknesses were identified by our Chief Financial Officer in connection with the review of our financial statements as of March
31, 2012.
Management believes that the material weaknesses
set forth in items (1) and (2) above did not have an effect on our financial results. However, management believes that the lack
of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective
oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement
in our financial statements in future periods.
This quarterly report does not include an attestation
report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report
was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the SEC that permit
the Company to provide only the management's report in this annual report.
Management's Remediation Initiatives
In an effort to remediate the identified material
weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series
of measures:
We intend to our personnel resources and technical
accounting expertise within the accounting function. First, we intend to create a position to segregate duties consistent with
control objectives of having separate individuals perform (i) the initiation of transactions, (ii) the recording of transactions
and (iii) the custody of assets. Second, we intend to create a senior position to focus on financial reporting and standardizing
and documenting our accounting procedures with the goal of increasing the effectiveness of the internal controls in preventing
and detecting misstatements of accounting information. Third, we plan to appoint one or more outside directors to our board of
directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the
oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates
and assumptions made by management when funds are available to us. We anticipate the costs of implementing these remediation initiatives
will be approximately $37,500 to $50,000 a year in increased salaries, legal and accounting expenses.
Management believes that the appointment of
one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning
audit committee and a lack of a majority of outside directors on our Board.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
To the best knowledge of the officers and directors, the Company
was not a party to any legal proceeding or litigation as of March 31, 2012.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
Exhibit
|
|
Description of Exhibit
|
31.1
|
|
Chief Executive Officer Certification of Periodic Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Chief Financial Officer Certification of Periodic Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.1
|
|
Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
|
|
|
|
32.2
|
|
Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
|
|
|
|
101
|
|
The following materials from American Jianye Greentech Holdings, Ltd.’s Quarterly Report on Form 10-Q for the period ended March 31, 2012 are formatted in eXtensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheet; (ii) the Condensed Consolidated Statement of Operations;, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements. This Exhibit 101 is deemed not filed for purposes of Sections 11 or 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections
|
SIGNATURES
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.
AMERICAN JIANYE GREENTECH HOLDINGS, LTD.
|
|
By:
|
/s/
Haipeng Wang
|
Name: Haipeng Wang
|
Title: President
|
Date: May 22, 2012
|
(Principal Executive Officer)
|
By:
|
/s/
Yulin Yang
|
Name: Yulin Yang
|
Title: Chief Financial Officer
|
Date: May 22, 2012
|
(Principal Accounting Officer)
|
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