x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
SECURITIES EXCHANGE ACT OF 1934 |
Nevada | 84-0928627 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
Large Accelerated Filer | Accelerated Filer | o | ||
Non-Accelerated Filer | Smaller Reporting Company | þ |
3 | ||
25 | ||
F-1 |
ITEM 1. DESCRIPTION OF BUSINESS |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
● | Level of government involvement in the economy | |
● | Control of foreign exchange | |
● | Methods of allocating resources | |
● | Balance of payments position | |
● | International trade restrictions | |
● | International conflict |
- |
- | ||
- | Actual or anticipated fluctuations in our quarterly or annual operating results |
- |
- | ||
- | Litigation involving the Company, our industry or both or investigations by regulators into our operations or those of our competitors | |
- | New laws or regulations or new interpretations of existing laws or regulations applicable to our business or operations | |
- | Changes in accounting standards policies, guidelines, interpretations or principles | |
- | Discontinued operations, layoffs or corporate actions |
- | General economic conditions or industry conditions or trends |
- |
MARKET FOR |
2010 | 2009 | |||||||||||||||
High | Low | High | Low | |||||||||||||
First Quarter | 0.023 | 0.011 | 0.375 | 0.115 | ||||||||||||
Second Quarter | 0.03 | 0.0071 | 0.225 | 0.029 | ||||||||||||
Third Quarter | 0.0085 | 0.0054 | 0.075 | 0.020 | ||||||||||||
Fourth Quarter | 0.0069 | 0.0015 | 0.060 | 0.020 |
2009 Fiscal Year | ||||||||
First Quarter | 0.375 | 0.115 | ||||||
Second Quarter | 0.225 | 0.029 | ||||||
Third Quarter | 0.075 | 0.02 | ||||||
Fourth Quarter | 0.06 | 0.02 |
2008 Fiscal Year | ||||||||
First Quarter | 3.75 | 1.50 | ||||||
Second Quarter | 2.825 | 0.75 | ||||||
Third Quarter | 0.975 | 0.35 | ||||||
Fourth Quarter | 0.425 | 0.10 |
Year ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
SELECTED STATEMENT OF OPERATIONS DATA | ||||||||||||
Revenues | $ | 45,628 | $ | 41,878 | $ | 40,007 | ||||||
Income from operations | 2,890 | 1,258 | 671 | |||||||||
Net income | 2,183 | 638 | 438 | |||||||||
Net income per weighted avg. common share-basic | $ | 0.03 | $ | 0.02 | $ | 0.02 | ||||||
SELECTED BALANCE SHEET DATA | ||||||||||||
Cash | $ | 3,977 | $ | 2,600 | $ | 1,489 | ||||||
Working capital | 13,666 | 6,124 | 3,461 | |||||||||
Total assets | 17,804 | 10,346 | 7,209 | |||||||||
Total liabilities | 3,974 | 4,277 | 3,650 | |||||||||
Stockholders' equity | 10,680 | 4,456 | 2,560 |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISLCOSURE |
Name and Age | Position | Date of Appointment |
James Jiang, | President & Chief Executive Officer | February 1, 2010 |
Paul K. Danner | President & Chief Executive Officer, Director | July 1, 2008 to February 1, 2010 |
Philip J. Rauch | Chief Financial Officer, Director | October 18, 2006 |
Philip Verges | Chairman | October 18, 2006 |
Name and Principal Position | Year | Salary $ | Stock Grant $ | Total $ | |||||||||
James Jiang, PhD, | 2010 | $ | 90,300 | $ | - | $ | 90,300 | ||||||
President & CEO (1) | 2009 | $ | - | $ | - | $ | - | ||||||
Paul K. Danner, | 2010 | $ | 12,500 | $ | - | $ | 12,500 | ||||||
President & CEO (2) | 2009 | $ | 150,000 | $ | - | $ | 150,000 | ||||||
Philip J. Rauch, CFO | 2010 | $ | 75,000 | $ | - | $ | 75,000 | ||||||
2009 | $ | 75,00 | $ | - | $ | 75,000 |
Name of Beneficial Owner | Number of Shares of Common Stock | % of Common Stock Issued and Outstanding (1) | Number of Shares of Series D Preferred Stock (2) | % of Series D Preferred Stock Issued and Outstanding | % of All Voting Shares (3) | |||||||||||||||
All current officers and directors (4) | 0 | 0 | % | 0 | 0 | % | 0 | % | ||||||||||||
NewMarket Technology, Inc. (5) | 25,000,000 | (6) | 2 | % | 5,000 | (7) | 100 | % | 53 | % |
Based on 1,493,641,196 shares of common stock outstanding on December 31, 2010 and | ||||
(2) | Based on 5,000 shares of Series D Preferred Super Majority Voting Stock issued and outstanding, which are deemed to be the equivalent of 51% of all shares of common stock represented at and entitled to vote at any shareholder meeting of the Company. | |||
(3) | Based on 1,493,641,196 shares of common stock outstanding on December 31, 2010, the conversion of 10,000 Series C Convertible Preferred shares eligible for conversion and the Series D Preferred Stock being able to vote 51% of all shares of common stock issued and outstanding. | |||
(4) | Messrs. Jiang, Rauch and Verges, the Company’s officers and directors, do not own any common stock or options exercisable into the common stock of the Company as of December 31, 2010. This does not include shares of the Company held by NewMarket Technology, Inc. , which Messrs. Verges and Rauch are officers and directors of. | |||
(5) | NewMarket Technology, Inc.’s address is 14860 Montfort Drive, Suite 210, Dallas, | |||
(6) | NewMarket Technology, Inc. is the holder of all 10,000 outstanding shares of the Company’s Series C Convertible Preferred Shares, which are eligible for conversion into 25,000,000 shares of the common stock of the Company. The shares held by NewMarket Technology, Inc. are voted by Mr. Bruce Noller, the Chief Executive Officer of NewMarket Technology, Inc. | |||
NewMarket Technology is the holder of all 5,000 outstanding shares of the Company’s Series D Convertible Preferred Shares, (with a voting equivalent to 51% of the issued and |
2009 | 2008 | 2010 | 2009 | |||||||||||||
Audit fees | $ | 20,000 | $ | 31,796 | $ | 33,500 | $ | 20,000 | ||||||||
Audit-related fees | ||||||||||||||||
Tax fees | 0 | 0 | 0 | 0 | ||||||||||||
All other fees | 0 | 0 | ||||||||||||||
Total: | $ | 20,000 | $ | 31,796 | $ | 33,500 | $ | 20,000 |
Exhibit No. | Description | |
22 | Agreement for Purchase of Ownership Interest, dated | |
October 20, 2003, by and between Brunetti DEC, LLC and the Company. | ||
4.15 | Certificate of Designation of Series A Convertible Preferred Stock | |
4.27 | Certificate of Designation of Series B Convertible Preferred Stock | |
4.38 | Certificate of Designation of Series C Convertible Preferred Stock | |
4.48 | Certificate of Designation of Series D Convertible Preferred Stock | |
10.11 | 1995 Compensatory Stock Option Plan. | |
10.43 | Code of Ethics | |
10.54 | Agreement and Plan or Reorganization between Intercell International Corp., NewMarket China, Inc. and NewMarket Technology, Inc., dated August 7, 2007. | |
10.65 | Stock Purchase Agreement between Intercell International Corp. and NewMarket Technology, Inc. dated August 21, 2007. | |
10.78 | Equity Reorganization Agreement By and Between China Crescent Enterprises, Inc. and NewMarket Technology, Inc., dated November 16, 2009. | |
216 | List of Subsidiaries of Intercell International Corporation | |
31* | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act | |
32* | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act |
*Filed herewith. | |
1. | Incorporated by reference to the Company's Registration Statement on Form S-8, Registration No. 333-67742, and effective August 16, 2001. |
2. | Current Report on Form 8-K, dated October 20, 2003. |
3. | Form 10-KSB for the fiscal year ended September 30, 2003. |
4. | Current Report on Form 8-K, dated August 11, 2007. |
5. | Current Report on Form 8-K, dated August 24, 2007. |
6. | Form 10-KSB for the fiscal year ended December 31, 2006. |
7. | Current Report on Form 8-K, dated March 31, 2009 |
8. | Form 10-K for the fiscal year ended December 31, 2009 |
Date: April 15, 2011 | |||
By: | /s/ James Jiang | ||
James Jiang, | |||
Chief Executive Officer |
Date: April 15, 2011 | |||
By: | /s/ Philip J. Rauch | ||
Philip J. Rauch | |||
Chief Financial Officer | |||
(principal financial and accounting officer) |
/s/ James Jiang | President and | April 15, | |
James Jiang, | Chief Executive Officer | ||
/s/ Philip J. Rauch | Chief Financial Officer and | April 15, | |
Philip J. Rauch | Director | ||
/s/ Philip M. Verges | Chairman of the Board | April 15, | |
Philip M. Verges |
/s/ Hamilton, PC | ||
Hamilton, PC |
Consolidated Balance Sheet | ||||||||
ASSETS | December 31, 2009 | December 31, 2008 | ||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 3,977,382 | $ | 2,600,498 | ||||
Accounts receivable | 6,950,902 | 4,238,294 | ||||||
Inventory | 2,751,131 | 1,858,233 | ||||||
Supplier advances and prepaid expenses | 1,804,015 | 787,149 | ||||||
Advances to affiliate | 2,000,000 | 687,567 | ||||||
Assets of discontinued operations | 9,377 | 9,377 | ||||||
Other current assets | 147,613 | 68,840 | ||||||
Total current assets | 17,640,420 | 10,249,958 | ||||||
PROPERTY AND EQUIPMENT, NET | 160,907 | 93,185 | ||||||
INTANGIBLE ASSETS | 2,597 | 2,993 | ||||||
Total assets | $ | 17,803,924 | $ | 10,346,136 | ||||
LIABILITIES AND EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 1,204,616 | $ | 1,573,643 | ||||
Short-term borrowing | 1,897,069 | 1,798,542 | ||||||
Accrued expenses and other liabilities | 563,661 | 445,258 | ||||||
Liabilities of discontinued operations | 308,683 | 308,683 | ||||||
Total current liabilities | 3,974,029 | 4,126,126 | ||||||
Long-term debt | 500,000 | 151,041 | ||||||
Total liabilities | 4,474,029 | 4,277,167 | ||||||
EQUITY | ||||||||
Common stock; $.001 par value; 1,000,000,000 shares authorized; | ||||||||
234,370,600 and 2,786,186 shares issued and outstanding | ||||||||
at December 31, 2009 and 2008, respectively | 234,371 | 2,786 | ||||||
Preferred stock; $.001 par value; 20,000,000 shares authorized; | ||||||||
Series A 0 and 250,000; Series C 10,000 and 0; | ||||||||
Series D 5,000 and 0 shares issued and outstanding | ||||||||
at December 31, 2009 and 2008, respectively | 15 | 250 | ||||||
Additional paid-in capital | 5,950,581 | 2,239,978 | ||||||
Accumulated comprehensive income | 739,511 | 820,699 | ||||||
Retained earnings | 3,755,468 | 1,392,493 | ||||||
Total China Crescent Enterprises, Inc. stockholders' equity | 10,679,946 | 4,456,206 | ||||||
Noncontrolling interest | 2,649,949 | 1,612,763 | ||||||
Total equity | 13,329,895 | 6,068,969 | ||||||
Total liabilities and equity | $ | 17,803,924 | $ | 10,346,136 |
China Crescent Enterprises, Inc. | ||||||||
Consolidated Balance Sheet | ||||||||
ASSETS | December 31, 2010 | December 31, 2009 | ||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 2,149,733 | $ | 3,977,382 | ||||
Accounts receivable | 13,441,035 | 6,950,902 | ||||||
Inventory | 1,973,101 | 2,751,131 | ||||||
Supplier advances and prepaid expenses | 2,951,443 | 1,804,015 | ||||||
Advances to affiliate | 5,300,000 | 2,000,000 | ||||||
Assets of discontinued operations | 9,377 | 9,377 | ||||||
Other current assets | 162,721 | 147,613 | ||||||
Total current assets | 25,987,410 | 17,640,420 | ||||||
PROPERTY AND EQUIPMENT, NET | 168,869 | 160,907 | ||||||
GOODWILL | 1,820,267 | - | ||||||
INTANGIBLE ASSETS | 2,201 | 2,597 | ||||||
Total assets | $ | 27,978,747 | $ | 17,803,924 | ||||
LIABILITIES AND EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 1,222,225 | $ | 1,204,616 | ||||
Short-term borrowing | 3,648,199 | 1,897,069 | ||||||
Accrued expenses and other liabilities | 762,592 | 563,661 | ||||||
Liabilities of discontinued operations | 215,243 | 308,683 | ||||||
Total current liabilities | 5,848,259 | 3,974,029 | ||||||
Long-term debt | 386,414 | 500,000 | ||||||
Total liabilities | 6,234,673 | 4,474,029 | ||||||
EQUITY | ||||||||
Common stock; $.001 par value; 3,000,000,000 shares authorized; | ||||||||
1,493,641,196 and 234,370,600 shares issued and outstanding | ||||||||
at December 31, 2010 and 2009, respectively | 1,493,641 | 234,371 | ||||||
Preferred stock; $.001 par value; 20,000,000 shares authorized; | ||||||||
Series C 10,000 and 10,000; Series D 5,000 and 5,000 shares | ||||||||
issued and outstanding at December 31, 2010 and | ||||||||
December 31, 2009, respectively | 15 | 15 | ||||||
Additional paid-in capital | 8,680,611 | 5,950,581 | ||||||
Accumulated comprehensive income | 973,004 | 739,511 | ||||||
Retained earnings | 7,956,899 | 3,755,468 | ||||||
Total China Crescent Enterprises, Inc. stockholders' equity | 19,104,170 | 10,679,946 | ||||||
Noncontrolling interest | 2,639,904 | 2,649,949 | ||||||
Total equity | 21,744,074 | 13,329,895 | ||||||
Total liabilities and equity | $ | 27,978,747 | $ | 17,803,924 | ||||
See accompanying notes to consolidated financial statements. |
Consolidated Statement of Operations | ||||||||||||
Year ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
REVENUE | $ | 45,628,397 | $ | 41,877,584 | $ | 40,007,006 | ||||||
COST OF SALES | 41,578,424 | 39,538,508 | 38,211,067 | |||||||||
Gross Margin | 4,049,973 | 2,339,076 | 1,795,939 | |||||||||
OPERATING EXPENSES | ||||||||||||
Selling, general and administrative expenses | 1,138,739 | 1,064,491 | 1,085,982 | |||||||||
Depreciation and amortization | 21,448 | 16,332 | 38,900 | |||||||||
Total expenses | 1,160,187 | 1,080,823 | 1,124,882 | |||||||||
Income from operations | 2,889,786 | 1,258,253 | 671,057 | |||||||||
OTHER INCOME (EXPENSE) | ||||||||||||
Gain on sale of fixed assets | - | - | 303,631 | |||||||||
Interest income | - | 463 | 8 | |||||||||
Interest expense | (191,717 | ) | (193,095 | ) | (57,996 | ) | ||||||
Other income | 102,687 | 233,280 | 82,799 | |||||||||
Other expense | (7,453 | ) | (6,694 | ) | (8,827 | ) | ||||||
Total other income (expense) | (96,483 | ) | 33,954 | 319,615 | ||||||||
Net income before income tax (credit) and | ||||||||||||
minority interest | 2,793,303 | 1,292,207 | 990,672 | |||||||||
Foreign income tax | (73,497 | ) | (40,602 | ) | (132,202 | ) | ||||||
Minority interest in consolidated subsidiary | (537,186 | ) | (613,286 | ) | (420,646 | ) | ||||||
Net income | 2,182,620 | 638,319 | 437,824 | |||||||||
Other comprehensive income | ||||||||||||
Gain (loss) on investment security | 8,368 | (4,184 | ) | (1,109 | ) | |||||||
Foreign currency translation gain (loss) | (89,556 | ) | 497,796 | 473,056 | ||||||||
Comprehensive income | $ | 2,101,432 | $ | 1,131,931 | $ | 909,771 | ||||||
Income per weighted-average common share-basic | $ | 0.03 | $ | 0.41 | $ | 0.48 | ||||||
Income per weighted-average common share-diluted | $ | 0.03 | $ | 0.16 | $ | 0.19 | ||||||
Number of weighted average common shares o/s-basic | 79,488,437 | 1,567,489 | 904,795 | |||||||||
Number of weighted average common shares o/s-diluted | 79,488,437 | 3,918,724 | 2,261,988 |
China Crescent Enterprises, Inc. | ||||||||
Consolidated Statement of Operations | ||||||||
Year ended December 31, | ||||||||
2010 | 2009 | |||||||
REVENUE | $ | 78,187,546 | $ | 45,628,397 | ||||
COST OF SALES | 71,635,967 | 41,578,424 | ||||||
Gross Margin | 6,551,579 | 4,049,973 | ||||||
OPERATING EXPENSES | ||||||||
Selling, general and administrative expenses | 2,019,376 | 1,138,739 | ||||||
Depreciation and amortization | 33,649 | 21,448 | ||||||
Total expenses | 2,053,025 | 1,160,187 | ||||||
Income from operations | 4,498,554 | 2,889,786 | ||||||
OTHER INCOME (EXPENSE) | ||||||||
Gain on sale of fixed assets | - | - | ||||||
Interest income | - | - | ||||||
Interest expense | (149,468 | ) | (191,717 | ) | ||||
Other income | 379,581 | 102,687 | ||||||
Other expense | (11,878 | ) | (7,453 | ) | ||||
Total other income (expense) | 218,235 | (96,483 | ) | |||||
Net income before income tax (credit) and | ||||||||
minority interest | 4,716,789 | 2,793,303 | ||||||
Foreign income tax | (525,403 | ) | (73,497 | ) | ||||
Minority interest in consolidated subsidiary | 10,045 | (537,186 | ) | |||||
Net income | 4,201,431 | 2,182,620 | ||||||
Other comprehensive income | ||||||||
Gain (loss) on investment security | - | 8,368 | ||||||
Foreign currency translation gain (loss) | 233,493 | (89,556 | ) | |||||
Comprehensive income | $ | 4,434,924 | $ | 2,101,432 | ||||
Income per weighted-average common share-basic | $ | 0.01 | $ | 0.03 | ||||
Income per weighted-average common share-diluted | $ | 0.01 | $ | 0.03 | ||||
Number of weighted average common shares o/s-basic | 625,826,320 | 76,465,837 | ||||||
Number of weighted average common shares o/s-diluted | 725,359,016 | 101,465,837 | ||||||
See accompanying notes to consolidated financial statements. |
Consolidated Statement of Stockholders' Equity | ||||||||||||||||||||||||||||||||
Additional | Accumulated | Total | ||||||||||||||||||||||||||||||
Number of Shares | Par Value of Stock | Paid-In | Comprehensive | Retained | Stockholders' | |||||||||||||||||||||||||||
Preferred | Common | Preferred | Common | Capital | Income/(Loss) | Earnings | Equity | |||||||||||||||||||||||||
BEGINNING BALANCE, December 31, 2006 | 250,000 | 1,037,737 | $ | 250 | $ | 1,038 | $ | 1,477,226 | $ | (144,860 | ) | $ | 316,350 | $ | 1,650,004 | |||||||||||||||||
Issuance of shares due to warrant exercise | 32,449 | 32 | (32 | ) | 0 | |||||||||||||||||||||||||||
Other comprehensive income | 471,947 | 471,947 | ||||||||||||||||||||||||||||||
Net income | 437,824 | 437,824 | ||||||||||||||||||||||||||||||
BALANCE, December 31, 2007 | 250,000 | 1,070,186 | 250 | 1,070 | 1,477,194 | 327,087 | 754,174 | 2,559,774 | ||||||||||||||||||||||||
Issuance of shares for exchange of debt | 1,716,000 | 1,716 | 762,784 | 764,500 | ||||||||||||||||||||||||||||
Other comprehensive income | 493,612 | 493,612 | ||||||||||||||||||||||||||||||
Net income | 638,319 | 638,319 | ||||||||||||||||||||||||||||||
BALANCE, December 31, 2008 | 250,000 | 2,786,186 | 250 | 2,786 | 2,239,978 | 820,699 | 1,392,493 | 4,456,205 | ||||||||||||||||||||||||
Issuance of preferred shares for purchase of | ||||||||||||||||||||||||||||||||
additional interest in subsidiary | 750 | 1 | 749,999 | 180,355 | 930,355 | |||||||||||||||||||||||||||
Conversion of Series B preferred stock | (750 | ) | 81,027,024 | (1 | ) | 81,027 | (81,026 | ) | - | |||||||||||||||||||||||
Exchange of Series A preferred stock for | ||||||||||||||||||||||||||||||||
issuance of Series C & D preferred stock | (235 | ) | 235 | - | ||||||||||||||||||||||||||||
Conversion of note payable | 21,649,669 | 21,650 | 228,222 | 249,872 | ||||||||||||||||||||||||||||
Issuance of shares in exchange for debt | 128,907,721 | 128,908 | 2,813,173 | 2,942,081 | ||||||||||||||||||||||||||||
Other comprehensive income | (81,188 | ) | (81,188 | ) | ||||||||||||||||||||||||||||
Net income | 2,182,620 | 2,182,620 | ||||||||||||||||||||||||||||||
ENDING BALANCE, December 31, 2009 | 250,000 | 234,370,600 | 15 | 234,371 | 5,950,581 | 739,511 | 3,755,468 | 10,679,945 |
China Crescent Enterprises, Inc. | ||||||||||||||||||||||||||||||||
Consolidated Statement of Stockholders' Equity | ||||||||||||||||||||||||||||||||
Additional | Accumulated | Total | ||||||||||||||||||||||||||||||
Number of Shares | Par Value of Stock | Paid-In | Comprehensive | Retained | Stockholders' | |||||||||||||||||||||||||||
Preferred | Common | Preferred | Common | Capital | Income/(Loss) | Earnings | Equity | |||||||||||||||||||||||||
BEGINNING BALANCE, December 31, 2008 | 250,000 | 2,786,186 | $ | 250 | $ | 2,786 | $ | 2,239,978 | $ | 820,699 | $ | 1,392,493 | $ | 4,456,205 | ||||||||||||||||||
Issuance of preferred shares for purchase of | ||||||||||||||||||||||||||||||||
additional interest in subsidiary | 750 | 1 | 749,999 | 180,355 | 930,355 | |||||||||||||||||||||||||||
Conversion of Series B preferred stock | (750 | ) | 81,027,024 | (1 | ) | 81,027 | (81,026 | ) | - | |||||||||||||||||||||||
Exchange of Series A preferred stock for | - | |||||||||||||||||||||||||||||||
issuance of Series C & D preferred stock | (235,000 | ) | (235 | ) | 235 | - | ||||||||||||||||||||||||||
Conversion of note payable | 21,649,669 | 21,650 | 228,222 | 249,872 | ||||||||||||||||||||||||||||
Issuance of shares in exchange for debt | 128,907,721 | 128,908 | 2,813,173 | 2,942,081 | ||||||||||||||||||||||||||||
Other comprehensive income | (81,188 | ) | (81,188 | ) | ||||||||||||||||||||||||||||
Net income | 2,182,620 | 2,182,620 | ||||||||||||||||||||||||||||||
BALANCE, December 31, 2009 | 15,000 | 234,370,600 | 15 | 234,371 | 5,950,581 | 739,511 | 3,755,468 | 10,679,945 | ||||||||||||||||||||||||
Issuance of shares in exchange for debt | 301,153,509 | 301,154 | 824,392 | 1,125,546 | ||||||||||||||||||||||||||||
Conversion of note payable | 640,551,688 | 640,551 | 1,264,111 | 1,904,662 | ||||||||||||||||||||||||||||
Common stock issued in exchange for trade payables | 317,565,399 | 317,565 | 641,527 | 959,092 | ||||||||||||||||||||||||||||
Other comprehensive income | 233,493 | 233,493 | ||||||||||||||||||||||||||||||
Net income | 4,201,431 | 4,201,431 | ||||||||||||||||||||||||||||||
ENDING BALANCE, December 31, 2010 | 15,000 | 1,493,641,196 | $ | 15 | $ | 1,493,641 | $ | 8,680,611 | $ | 973,004 | $ | 7,956,899 | $ | 19,104,169 | ||||||||||||||||||
See accompanying notes to consolidated financial statements. |
Consolidated Statement of Cash Flows | ||||||||||||
Year ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net Income | $ | 2,182,620 | $ | 638,319 | $ | 437,824 | ||||||
Adjustments to reconcile net earnings to net cash | ||||||||||||
provided (used) by operating activities: | ||||||||||||
Non-controlling interest in consolidated subsidiary | 537,186 | 613,286 | 420,646 | |||||||||
Depreciation | 21,448 | 16,332 | 38,900 | |||||||||
Gain on sale of fixed assets | - | - | (303,631 | ) | ||||||||
Changes in operating assets and liabilities: | ||||||||||||
(Increase) decrease in accounts receivable | (2,054,206 | ) | (957,274 | ) | (1,010,760 | ) | ||||||
(Increase) decrease in deposits and other assets | (1,064,832 | ) | (468,609 | ) | 163,716 | |||||||
(Increase) decrease in inventory | (792,898 | ) | (161,810 | ) | (650,812 | ) | ||||||
Increase (decrease) in accounts payable | (375,770 | ) | (491,351 | ) | 1,299,415 | |||||||
Increase (decrease) in accrued expenses and other payables | 119,330 | 81,226 | 445,127 | |||||||||
Net cash provided/(used) by operating activities | (1,427,122 | ) | (729,881 | ) | 840,425 | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Purchase of property and equipment | - | (16,616 | ) | |||||||||
Advances to affiliates | ||||||||||||
Purchased retained earnings | 180,355 | |||||||||||
Sale of property and equipment | 52,681 | - | 17,467 | |||||||||
Net cash provided by investing activities | 233,036 | - | 851 | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Proceeds from short-term borrowings | 500,000 | 1,153,200 | - | |||||||||
Proceeds from long-term debt | 500,000 | 148,415 | - | |||||||||
Payments on short-term borrowings | - | (740,317 | ) | |||||||||
Payments on long-term debt | - | - | ||||||||||
Proceeds from sale of convertible preferred stock | - | - | - | |||||||||
Net cash provided/(used) by financing activities | 1,000,000 | 1,301,615 | (740,317 | ) | ||||||||
Effect of exchange rates on cash | 1,570,970 | 539,990 | 219,471 | |||||||||
Net increase in cash and equivalents | 1,376,884 | 1,111,724 | 320,430 | |||||||||
CASH, beginning of period | 2,600,498 | 1,488,774 | 1,168,344 | |||||||||
CASH, end of period | $ | 3,977,382 | $ | 2,600,498 | $ | 1,488,774 | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||||||
Non-Cash Financing Activities: | ||||||||||||
Common stock issued to settle debt | $ | 2,942,081 | $ | 764,500 | $ | - |
China Crescent Enterprises, Inc. | ||||||||
Consolidated Statement of Cash Flows | ||||||||
Year ended December 31, | ||||||||
2010 | 2009 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net Income | $ | 4,201,431 | $ | 2,182,620 | ||||
Adjustments to reconcile net earnings to net cash | ||||||||
provided (used) by operating activities: | ||||||||
Non-controlling interest in consolidated subsidiary | (10,045 | ) | 537,186 | |||||
Depreciation | 33,649 | 21,448 | ||||||
Gain on sale of fixed assets | - | - | ||||||
Changes in operating assets and liabilities: | ||||||||
(Increase) decrease in accounts receivable | (6,490,133 | ) | (2,054,206 | ) | ||||
(Increase) decrease in deposits and other assets | (1,162,536 | ) | (1,064,832 | ) | ||||
(Increase) decrease in inventory | 778,030 | (792,898 | ) | |||||
Increase (decrease) in accounts payable | 17,609 | (375,770 | ) | |||||
Increase (decrease) in accrued expenses and other payables | (165,931 | ) | 119,330 | |||||
Net cash used in operating activities | (2,797,926 | ) | (1,427,122 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Advances to affiliate | (3,300,000 | ) | - | |||||
Purchase of retained earnings | - | 180,355 | ||||||
Sale of property and equipment | - | 52,681 | ||||||
Net cash provided/(used) by investing activities | (3,300,000 | ) | 233,036 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from short-term borrowings | 816,881 | 500,000 | ||||||
Proceeds from long-term debt | 1,760,644 | 500,000 | ||||||
Payments on short-term borrowings | - | - | ||||||
Payments on long-term debt | - | - | ||||||
Proceeds from sale of convertible preferred stock | - | - | ||||||
Net cash provided by financing activities | 2,577,525 | 1,000,000 | ||||||
Effect of exchange rates on cash | 1,692,752 | 1,570,970 | ||||||
Net increase/(decrease) in cash and equivalents | (1,827,649 | ) | 1,376,884 | |||||
CASH, beginning of period | 3,977,382 | 2,600,498 | ||||||
CASH, end of period | $ | 2,149,733 | $ | 3,977,382 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
Non-Cash Financing Activities: | ||||||||
Common stock issued to settle debt | $ | 3,989,300 | $ | 2,942,081 | ||||
See accompanying notes to consolidated financial statements. |
Cash | $ | 9,377 | ||
Total assets (all current) | $ | 9,377 | ||
Accounts payable | $ | 179,473 | ||
Related party payable | 25,035 | |||
Line of credit | 10,735 | |||
Total liabilities (all current) | $ | 215,243 |
Annual | Amount | Annual | Principal | |||||||||||||||
Interest | Maturity | Outstanding | Interest | Maturity | Outstanding | |||||||||||||
Institution | Rate | Date | at 12/31/09 | Rate | Date | at 12/31/10 | ||||||||||||
Shanghai Pudong Development Bank | 5.78 | % | 12/04/10 | $ | 395,662 | (1 | ) | 6/21/14 | $ | 386,414 | ||||||||
Shanghai Pudong Development Bank | 5.31 | % | 12/14/10 | $ | 952,520 | |||||||||||||
Guangdong Development Bank | (1 | ) | 1/31/10 | $ | 548,887 | |||||||||||||
Total: | $ | 1,897,069 |
(1) | The interest rate for this note is variable based on an official government rate. At December 31, |
Annual | Principal | ||||||||||
Interest | Maturity | Outstanding | |||||||||
Note | Rate | Date | at 12/31/10 | ||||||||
1 | 10% | 7/7/11 | $ | 37,500 | |||||||
2 | 10% | 7/7/11 | $ | 37,500 | |||||||
3 | 8% | 6/15/11 | $ | 436,987 | |||||||
4 | 8% | 6/15/11 | $ | 210,000 |
Annual | Principal | ||||||||||
Interest | Maturity | Outstanding | |||||||||
Note | Rate | Date | at 12/31/10 | ||||||||
1 | 5% | 7/7/11 | $ | 95,000 | |||||||
2 | 5% | 7/7/11 | $ | 117,262 |
Annual | Amount | ||||||||
Interest | Maturity | Outstanding | |||||||
Institution | Rate | Date | at 12/31/10 | ||||||
Shanghai Pudong Development Bank | 5.58% | 11/27/11 | $ | 1,466,920 | |||||
Shanghai Pudong Development Bank | 5.31% | 11/27/11 | $ | 953,646 | |||||
Bank of Ningbo | 5.31% | 6/24/11 | $ | 293,384 | |||||
Total: | $ | 2,713,950 |
301,153,509 shares of |
● | 640,551,688 shares of common stock were issued pursuant to the conversion of notes payable into equity. | |
● | 317,565,399 shares of common stock were issued pursuant to various agreements to exchange $959,092 in trade payables for equity. |
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | |||||||||||||
Outstanding at beginning of Year | 4,750,000 | $ | 0.43 | 4,762,500 | $ | 0.44 | ||||||||||
Granted | - | - | - | - | ||||||||||||
Cancelled | - | - | - | - | ||||||||||||
Expired | - | - | ( 12,500 | ) | - | |||||||||||
- | - | - | - | |||||||||||||
Outstanding at end of year | 4,750,000 | $ | 0.43 | 4,750,000 | $ | 0.43 | ||||||||||
Options exercisable at end of Year | 4,750,000 | $ | 0.43 | 4,750,000 | $ | 0.43 |
December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | |||||||||||||
Outstanding at beginning of Year | 190,000 | $ | 10.86 | 190,000 | $ | 10.86 | ||||||||||
Granted | - | - | - | - | ||||||||||||
Cancelled | - | - | - | - | ||||||||||||
Expired | - | - | - | - | ||||||||||||
Exercised | - | - | - | - | ||||||||||||
Outstanding at end of year | 190,000 | $ | 10.86 | 190,000 | $ | 10.86 | ||||||||||
Options exercisable at end of Year | 190,000 | $ | 10.86 | 190,000 | $ | 10.86 |
Options Outstanding | Options Outstanding | Options Exercisable | Options Outstanding | Options Exercisable | ||||||||||||||||||||
Range of Exercise Prices | Number of Options | Remaining Contractual Life | Weighted Average Exercise Price | Number of Options | Exercise Price | Range of Exercise Prices | Number of Options | Remaining Contractual Life | Weighted Average Exercise Price | Number of Options | Exercise Price | |||||||||||||
$0.41-0.51 | 4,750,000 | 4-5 years | $ 0.43 | 4,750,000 | $ 0.41-0.51 | |||||||||||||||||||
$3.50-12.75 | 190,000 | 3-4 years | $ | 10.86 | 190,000 | $3.50-12.75 |
Year ended December 31, | ||||||||
2009 | 2008 | |||||||
Net income, as reported | $ | 2,182,620 | $ | 638,319 | ||||
Basic earnings per share: | ||||||||
Basic weighted average shares outstanding | 79,488,437 | 1,567,489 | ||||||
Basic earnings per common share | $ | 0.03 | $ | 0.41 | ||||
Diluted earnings per share: | ||||||||
Basic weighted average shares outstanding | 79,488,437 | 1,567,489 | ||||||
Effective of dilutive instruments | - | 2,351,235 | ||||||
Diluted weighted average shares outstanding | 79,488,437 | 3,918,724 | ||||||
Diluted earnings per common share | $ | 0.03 | $ | 0.16 |
Year ended December 31, | ||||||||
2010 | 2009 | |||||||
Net income, as reported | $ | 4,201,431 | $ | 2,182,620 | ||||
Basic earnings per share: | ||||||||
Basic weighted average shares outstanding | 625,826,320 | 76,465,837 | ||||||
Basic earnings per common share | $ | 0.01 | $ | 0.03 | ||||
Diluted earnings per share: | ||||||||
Basic weighted average shares outstanding | 625,826,320 | 76,465,837 | ||||||
Effective of dilutive instruments | 99,532,696 | 25,000,000 | ||||||
Diluted weighted average shares outstanding | 725,359,016 | 101,465,837 | ||||||
Diluted earnings per common share | $ | 0.01 | $ | 0.02 |
Foreign Currency | Gain (Loss) on | |||||||
Translation Adjustment | Investment Security | |||||||
Balance at January 1, 2007 | $ | (141,785 | ) | $ | (3,075 | ) | ||
Change for the year ended December 31, 2007 | 473,056 | (1,109 | ) | |||||
Balance at January 1, 2008 | $ | 331,271 | $ | (4,184 | ) | |||
Change for the year ended December 31, 2008 | 497,796 | (4,184 | ) | |||||
Balance at December 31, 2008 | 829,067 | (8,368 | ) | |||||
Change for the year ended December 31, 2009 | (89,556 | ) | 8,368 | |||||
Balance at December 31, 2009 | $ | 739,511 | $ | - |
Foreign Currency | Gain (Loss) on | |||||||
Translation Adjustment | Investment Security | |||||||
Balance at December 31, 2008 | $ | 829,067 | $ | (8,368 | ) | |||
Change for the year ended December 31, 2009 | (89,556 | ) | 8,368 | |||||
Balance at December 31, 2009 | 739,511 | - | ||||||
Change for the year ended December 31, 2010 | 233,493 | - | ||||||
Balance at December 31, 2010 | $ | 973,004 | $ | - |
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
2009: | ||||||||||||||||
Revenues | $ | 7,429 | $ | 9,557 | $ | 13,344 | $ | 15,298 | ||||||||
Operating income | 223 | 1,294 | 982 | 391 | ||||||||||||
Net income | 112 | 1,023 | 744 | 304 | ||||||||||||
Income per share, basic | $ | 0.00 | $ | 0.01 | $ | 0.01 | $ | 0.01 | ||||||||
Income per share, diluted | $ | 0.00 | $ | 0.01 | $ | 0.01 | $ | 0.01 | ||||||||
2008: | ||||||||||||||||
Revenues | $ | 8,516 | $ | 10,675 | $ | 11,145 | $ | 11,542 | ||||||||
Operating income | 162 | 521 | 360 | 215 | ||||||||||||
Net income | 97 | 265 | 155 | 121 | ||||||||||||
Income per share, basic | $ | 0.08 | $ | 0.18 | $ | 0.08 | $ | 0.07 | ||||||||
Income per share, diluted | $ | 0.03 | $ | 0.07 | $ | 0.03 | $ | 0.03 | ||||||||