MONDO ACQUISITION II, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF MARCH 31, 2008
| | March 31, 2008 (unaudited) | | | December 31, 2007 | |
| | | | | | |
Current Assets: | | | | | | |
Cash and cash equivalents | | $ | 16,999 | | | $ | 16,999 | |
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Total Assets | | $ | 16,999 | | | $ | 16,999 | |
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LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
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Current Liabilities: | | | | | | | | |
Accrued expenses related to incorporation | | $ | 1,493 | | | $ | 1,493 | |
Accounts payable | | | 1,296 | | | | 1,296 | |
Total Current Liabilities | | | 2,789 | | | | 2,789 | |
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Long Term Liabilities: | | | - | | | | - | |
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Total Liabilities | | | 2,789 | | | | 2,789 | |
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Commitments and Contingencies | | | | | | | | |
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Stockholders’ Equity: | | | | | | | | |
Preferred stock, par value $0.001; 10,000,000 shares authorized, no issued and outstanding as of March 31, 2008 and December 31, 2007, respectively | | | - | | | | - | |
Common stock, $0.001 par value; 40,000,000 authorized; 1,000,000 issued and outstanding as of March 31, 2008 and December 31, 2007, respectively | | | 1,000 | | | | 1,000 | |
Additional paid in capital | | | 16,500 | | | | 16,500 | |
Accumulated deficit during development stage | | | (3,290 | ) | | | (3,290 | ) |
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Total Stockholders' Equity | | | 14,210 | | | | 14,210 | |
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Total Liabilities and Stockholders' Equity | | $ | 16,999 | | | $ | 16,999 | |
See the accompanying footnotes to unaudited condensed financial statements
MONDO ACQUISITION II, INC. |
(A DEVELOPMENT STAGE COMPANY) |
STATEMENT OF LOSSES |
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007,
FROM OCTOBER 30, 2006 (DATE OF INCEPTION) TO MARCH 31, 2008
|
(unaudited)
| | | | | | | | | |
| | For the Three Months Ended March 31, 2008 | | | For the Three Months Ended March 31, 2007 | | | For the Period From October 30, 2006 (Date of Inception ) to March 31, 2008 | |
Operating Expenses: | | | | | | | | | |
Selling, general and administrative | | $ 0 | | | $ 0 | | | $ | 3,290 | |
Net loss | | $ | 0 | | | $ | 0 | | | $ | (3,290 | ) |
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Net loss per common share (basic and fully diluted) | | $ | (0.000) | | | $ | (0.000 | ) | | $ | (0.001 | ) |
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Weighted average of common shares outstanding (basic and fully diluted) | | | 1,000,000 | | | | 1,000,000 | | | | 1,000,000 | |
See the accompanying footnotes to unaudited condensed financial statements
MONDO ACQUISITION II, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007,
FROM OCTOBER 30, 2006 (DATE OF INCEPTION) TO MARCH 31, 2008
(UNAUDITED)
| | For the Three Months Ended March 31, 2008 | | | For the Three Months Ended March 31, 2007 | | | For the Period From October 30, 2006 (Date of Inception ) to March 31, 2008 | |
Cash Flow from Operating Activities: | | | | | | | | | |
Net loss | | $ | 0 | | | $ | 0 | | | $ | (3,290 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | |
Changes in operating assets and liabilities: | | | - | | | | | | | | | |
Accounts payable and accrued expenses | | | 0 | | | | 0 | | | | 2,789 | |
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Net Cash Provided By Operating Activities | | | 0 | | | | - | | | | (501 | ) |
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Cash Flow from Investing Activities: | | | - | | | | - | | | | - | |
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Cash Flow Financing Activities: | | | | | | | | | | | | |
Proceeds from issuance of common stock to founders | | | - | | | | - | | | | 17,500 | |
Net Cash Provided By Financing Activities: | | | - | | | | - | | | | 17,500 | |
| | | | | | | | | | | | |
Net (Decrease)/Increase in Cash and Cash Equivalents | | | 0 | | | | 0 | | | | (501 | ) |
Cash and Cash Equivalents at beginning of period | | | 16,999 | | | | 17,500 | | | | -17,500 | |
Cash and Cash Equivalents at end of period | | $ | 16,999 | | | $ | 17,500 | | | $ | 16,999 | |
See the accompanying footnotes to unaudited condensed financial statements
MONDO ACQUISITION II, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
(unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
| (a) | Organization and Business: |
Mondo Acquisition II, Inc. (the “Company”), a wholly owned subsidiary of Mondo Management Corp., was incorporated in the state of Delaware on October 30, 2006 for the purpose of raising capital that is intended to be used in connection with its business plans which may include a possible merger, acquisition or other business combination with an operating business.
| (b) | Development Stage Company: |
The Company is currently a development stage company under the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 7. All activities of the Company to date relate to its organization, initial funding and share issuances.
The Company has not begun principal operations and as is common with a development stage company, the Company has had recurring losses during its development stage. The Company’s financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other material assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. In the interim, shareholders of the Company have committed to meeting its minimal operating expenses.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
| (d) | Cash and Cash Equivalents: |
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with original maturities of three months or less to be cash equivalents.
MONDO ACQUISITION II, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
(unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
The Company has implemented the provisions on Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS 109 requires that income tax accounts be computed using the liability method. Deferred taxes are determined based upon the estimated future tax effects of differences between the financial reporting and tax reporting bases of assets and liabilities given the provisions of currently enacted tax laws.
Any deferred tax asset is considered immaterial and has been fully offset by a valuation allowance because at this time the Company believes that it is more likely than not that the future tax benefit will not be realized as the Company has no current operations.
In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, treatment of interest and penalties, and disclosure of such positions. Effective January 1, 2007, the Company adopted the provisions of FIN 48, as required. As a result of implementing FIN 48, there has been no adjustment to the Company’s financial statements and the three months ending March 31, 2008.
| (f) | Loss per Common Share: |
Basic loss per share is calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each reporting period. The Company does not have any potentially dilutive instruments.
| (g) | Fair Value of Financial Instruments: |
The carrying value of cash equivalents and accrued expenses approximates fair value due to the short period of time to maturity.
NOTE 2 - RECENT ACCOUNTING PRONOUNCEMENTS:
SFAS No. 141(R), “Business Combinations” — This statement includes a number of changes in the accounting and disclosure requirements for new business combinations occurring after its effective date. The changes in accounting requirements include: acquisition costs will be expensed as incurred; noncontrolling (minority) interests will be valued at fair value; acquired contingent liabilities will be recorded at fair value; acquired research and development costs will be recorded at fair value as an intangible asset with indefinite life; restructuring costs will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and changes in income tax uncertainties after the acquisition date will generally affect income tax expense. The statement is effective for new business combinations occurring on or after the first reporting period beginning on or after December 15, 2008.
SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements: An Amendment of ARB No. 51” — This statement changes the accounting and reporting for noncontrolling (minority) interests in subsidiaries and for deconsolidation of a subsidiary. Under the revised basis, the noncontrolling interest will be shown in the balance sheet as a separate line in equity instead of as a liability. In the income statement, separate totals will be shown for consolidated net income including noncontrolling interest, noncontrolling interest as a deduction, and consolidated net income attributable to the controlling interest. In addition, changes in ownership interests in a subsidiary that do not result in deconsolidation are equity transactions if a controlling financial interest is retained. If a subsidiary is deconsolidated, the parent company will now recognize gain or loss to net income based on fair value of the noncontrolling equity at that date. The statement is effective prospectively for fiscal years and interim periods beginning on or after December 15, 2008, but upon adoption will require restatement of prior periods to the revised bases of balance sheet and net income presentation.
MONDO ACQUISITION II, INC.
( DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
(unaudited)
NOTE 3 - CAPITAL STOCK:
The total number of shares of capital stock which the Company shall have authority to issue is fifty million (50,000,000). These shares shall be divided into two classes with 40,000,000 shares designated as common stock at $.001 par value (the “Common Stock”) and 10,000,000 shares designated as preferred stock at $.001 par value (the “Preferred Stock”). The Preferred stock of the Company shall be issued by the Board of Directors of the Company in one or more classes or one or more series within any class and such classes or series shall have such voting powers, full or limited, or no voting powers, and such designations, preferences, limitations or restrictions as the Board of Directors of the Company may determine, from time to time.
Holders of shares of Common Stock shall be entitled to cast one vote for each share held at all stockholders' meetings for all purposes, including the election of directors. The Common Stock does not have cumulative voting rights.
No holder of shares of stock of any class shall be entitled as a matter of right to subscribe for or purchase or receive any part of any new or additional issue of shares of stock of any class, or of securities convertible into shares of stock of any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of dividend.
On December 8, 2006, the Company issued 1,000,000 shares of Common Stock to Mondo Management Corp. at a purchase price of $.0175 per share, for an aggregate purchase price of $17,500.
The Company had 1,000,000 shares of common stock issued and outstanding at March 31, 2008 and March 31, 2007. As of March 31, 2008 and March 31, 2007 the Company had no preferred stock issued and outstanding.
MONDO ACQUISITION II, INC.
( DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2008
(unaudited)
NOTE 4 - RELATED PARTIES:
The officers, directors and stockholders of the Company are affiliated with Sichenzia Ross Friedman Ference LLP, an entity providing legal services to the Company at no cost. The Company recorded the fair value of such legal services to reflect all the costs of doing business in the Company’s financial statements.
NOTE 5 - INCOME TAXES:
For income tax reporting purposes, the Company's aggregate unused net operating losses of approximately $3,200 will expire through 2026, subject to limitations of Section 382 of the Internal Revenue Code, as amended. The deferred tax asset related to the carry forward was deemed to be approximately $900. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, because in the opinion of management based upon the development stage and the likelihood of a future Section 382 limitation it is more likely than not that the benefits will not be realized.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Some of the statements contained in this Form 10-Q that are not historical facts are "forward-looking statements" which can be identified by the use of terminology such as "estimates," "projects," "plans," "believes," "expects," "anticipates," "intends," or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Form 10-Q, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:
· Item 2 | Our ability to attractManagement’s Discussion and retain management,Analysis of Financial Condition and Results of Operations |
· | Our ability to raise capital when needed and on acceptable terms and conditions; |
· | The intensity of competition; and |
· | General economic conditions. |
All written and oral forward-looking statements made in connection with this Form 10-Q that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.
The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements.
Overview
Green Planet Bioengineering Co., Limited (“Green Planet”) (formally Mondo Acquisition II, Inc.) was incorporated in the State of Delaware on October 30, 2006. Since inception, we have been engaged in organizational efforts to obtain initial financing. We were formed as a vehicle to pursue a business combination through the acquisition of, or merger with, an operating business. We filed a registration statement on Form 10-SB with the U.S. Securities and Exchange Commission (the “SEC”) on May 2, 2007, and since its effectiveness, we have focused our efforts to identify a possible business combination. On October 2, 2008, we changed our name to Green Planet.
On October 24, 2008 (“Closing Date”), we executed and consummated a Share Exchange Agreement by and among (i) Elevated Throne Overseas Ltd., a British Virgin Islands limited liability company which is the parent company of FuJian Green Planet Bioengineering Co., Ltd., a wholly foreign-owned enterprise (“WFOE”) organized under the laws of the People’s Republic of China (“PRC”); (ii) the stockholders of 100% of Elevated Throne Overseas Ltd.’s common stock (the “Elevated Throne Overseas Ltd.’s Shareholders”); and (iii) our then-controlling stockholder, Cris Neely (who owned 93.5%). Prior to the Share Exchange Agreement, Mr. Min Zhao and Ms. Min Yan Zheng were the controlling persons of Elevated Throne Overseas Ltd. (100%). At closing, we acquired control of Elevated Throne Overseas Ltd., by issuing to the Elevated Throne Overseas Ltd.’s Shareholders (Mr. Zhao and Ms. Zheng) 14,141,667 shares of our Common Stock in exchange for all of the outstanding capital stock of Elevated Throne Overseas Ltd. (the “Transaction”). Immediately after the Closing Date of this transaction, we had a total of 15,141,667 shares of common stock outstanding, with the Elevated Throne Overseas Ltd.’s Shareholders owning approximately 93.40% of our outstanding common stock, and the balance held by those who held the common stock prior to the Closing Date. Upon closing of the Transaction, Mr. Min Zhao and Ms. Min Yan Zheng became our controlling shareholders and we no longer were a “blank check” company.
Elevated Throne Overseas Ltd. owns 100% of FuJian Green Planet Bioengineering Co., Ltd., which is a WFOE under the laws of the PRC. WFOE has entered into a series of contractual arrangements with Sanming Huajian Bio-Engineering Co., Ltd., a limited liability company headquartered in, and organized under the laws of, the PRC. The PRC restructuring transaction closed as of October 24, 2008. However, Fujian Green Planet Bioengineering Co., Ltd. is required under the agreements to complete additional post-closing steps required in order to maintain its good standing under PRC law. These steps include Fujian Green Planet Bioengineering Co., Ltd. making required regulatory filings and giving proof to regulatory authorities that it has received the required portion of its registered capital as of the deadline required under PRC law. To date no License Payment has been made and the Company has been working with the regulatory authorities in order to extend the payment timeline and satisfy the requirements. The Company has not realized any revenues from operations since inception, and its planapplied for an extension of operation for the next twelve months iscontribution period to locate a suitable acquisition or merger candidate and consummate a business combination. The Company may need additional cash advances from stockholders or loans from other parties to pay for operating expenses untilDecember 31, 2009 with the Company consummates the merger with a privately-held company. Although it is currently anticipated that the Company can satisfy its cash requirements with additional cash advances or loans from other parties, if needed, for at least the next twelve months, the Company can provide no assurance that it can continue to satisfy its cash requirements for such period.relevant government bureau.
Since our formation on October 30, 2006, our purpose has been to effect a business combination with an operating business which we believe has significant growth potential. We are currently considered to be a “blank check” company in as much as we have no specific business plans, no operations, revenues or employees. We currently have no definitive agreements or understanding with any prospective business combination candidates and have not targeted any business for investigation and evaluation nor are there any assurances that we will find a suitable business with which to combine. The implementation of our business objectives is wholly contingent upon a business combination and/or the successful sale of securities in the company. We intend to utilize the proceeds of any offering, any sales of equity securities or debt securities, bank and other borrowings or a combination of those sources to effect a business combination with a target business which we believe has significant growth potential. While we may, under certain circumstances, seek to effect business combinations with more than one target business, unless and until additional financing is obtained, we will not have sufficient proceeds remaining after an initial business combination to undertake additional business combinations.
As a result of our limited resources, we expect to effect only a single business combination. Accordingly, the prospects for our success will be entirely dependent upon the future performance of a single business. Unlike certain entities that have the resources to consummate several business combinations or entities operating in multiple industries or multiple segments of a single industry, we will not have the resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. A target business may be dependent upon the development or market acceptance of a single or limited number of products, processes or services, in which case there will be an even higher risk that the target business will not prove to be commercially viable.
Our officers are only requiredAs a result of the Reverse Merger Transaction, we acquired 100% of the capital stock of Elevated Throne Overseas Ltd. and consequently, control of the business and operations of Elevated Throne Overseas Ltd., FuJian Green Planet Bioengineering Co., Ltd., and Sanming Huajian Bio-Engineering Co., Ltd. Prior to devotethe Reverse Merger Transaction, we were a very limited portionpublic reporting “blank check” company in the development stage. From and after the Closing Date of their time to our affairs on a part-time or as-needed basis. We expect to use outside consultants, advisors, attorneys and accountants as necessary, none of which will be hired on a retainer basis. We do not anticipate hiring any full-time employees so long asthe Share Exchange Agreement, we are seekingno longer a “blank check” company and evaluatingour primary operations consist of the business opportunities.and operations of Sanming Huajian Bio-Engineering Co., Ltd., which are conducted in China.
Green Planet headquartered in Aventura, FL with its main operations located in Sanming and Fuzhou, China, is a high-tech bioengineering enterprise that engages in research, development, production and sale of various organic health and agricultural products originating from residues of tobacco leaves. The Company's primary products are Coenzyme Q10 (“CoQ10”), a health supplement that supports the cardiovascular system and a patented organic health supplement called “Paiqianshu”. Paiqianshu comes in both liquid and tablet forms and it’s made from natural green barley shoot extraction. The Company operates R&D, manufacturing, and distribution of its products primarily in the Company following a business combination. Although we intend to scrutinize closely the management of a prospective target business in connection with our evaluation of a business combination with a target business, our assessment of management may be incorrect. We cannot assure you that we will find a suitable business with which to combine.PRC.
Results of Operations and Financial Condition
In this Section, the Company will discuss the following: (i) results of operations and financial condition for the quarter ended March 31, 2009 versus the quarter ended March 31, 2008; (ii) liquidity and capital resources; (iii) a discussion of the Company’s risk factors; and (iv) Company’s critical accounting policies.
Quarter Ended March 31, 2009 versus March 31, 2008
Net Sales
The Company generated net sales of $2,297,621 for the period ended March 31, 2009 compared to $2,192,799 for the period ended March 31, 2008, an increase of $104,822 or 5%. The Company continues to show sales growth despite the economic crises. In addition, the increase was mainly attributable to the increasing demand for the Company’s products and a broader product portfolio catering to a higher number of customers.
Cost of Sales
Cost of sales was $852,686 for the period ended March 31, 2009 compared to $850,797 for the period ended March 31, 2008, an increase of $1,889. The slight increase is due to higher net sales. We experienced a stable raw material pricing during the two measuring periods. Furthermore, the Company has strong relationships with its vendors.
Gross profit
The gross profit for the period ended March 31, 2009 was $1,444,935 compared to $1,342,002 for the same period of last year, an increase of $102,933 (or 8%). The gross profit margin was 62.9% and 61.2% for the periods ended March 31, 2009 and 2008, respectively. The Company continues to show stability in its market pricing as well as continuity in its manufacturing operations. The Company is currently not experiencing any price pressure due to the high market demand for its products.
Operating Income
The operating income amounted to $1,140,223 for quarter ended March 31, 2009 compared to $1,130,911 for same quarter in 2008, which is an increase of 1%.
Selling Expenses
Selling expenses totaled $56,031 and $56,347 for the quarters ended March 31, 2009 and March 31, 2008, respectively. The main cost drivers were personnel costs, travel and costs related to various marketing campaigns. The Company has not conductedadded any active operations since inception, exceptsales staff compared to the same period of last year.
Administrative Expenses
Administrative expenses amounted to $212,215 and $127,889 for itsthe quarters ended March 31, 2009 and March 31, 2008, respectively. The main expenses were attributable to management and staff, accounting, audit fees and facilities expenses. The main reasons for the increase are attributable to various public company expenses such as legal advice, audit fees, and filing fees. In addition, the Company reported a non-cash impacting stock issuance cost of $12,318 in the quarter ended March 31, 2009.
Research and Development Expenses
Research and development (R&D) expenses totaled $36,466 and $26,855 for the quarters ended March 31, of 2009 and March 31, 2008 respectively. The slight increase in R&D expenses pertains to the Company’s efforts to locate a suitable acquisitionbroaden and strengthen its product portfolio, which shall lead to increased competitiveness for the Company.
Income Taxes
Income tax is accounted for using the tax effect accounting method, whereby the income tax expense of the current period is determined based on the total amount of the income tax payable for the period and the amount of the tax effect of timing differences. The liability method is used in determining the tax effect of the timing differences. The Company records its income taxes based on the requirements of SFAS No. 109, “Accounting for Income Taxes,” which includes an estimate of taxes payable or merger transaction. No revenuerefundable for the current period and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our financial statements or tax returns.
Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The management periodically assesses the realisability of deferred tax assets and the adequacy of deferred tax liabilities, including the results of local, state, federal tax audits or estimates and judgments used.
The Company operates in the People’s Republic of China and is subject to its tax laws. In accordance with the relevant tax laws and regulations of the People’s Republic of China, the corporation income tax rate has been generated byrevised to 25% across the board for all enterprises, whether domestic or foreign-owned from 33% with effect from January 1, 2008. The Company is subject to the United States of America Tax law at a tax rate of 40.7%. No provision for the US federal income taxes has been made as the Company during such period, and it is unlikelyhad no taxable income in this jurisdiction for the Company will have any revenues unless it is able to consummate or effect an acquisition of, or merger with, an operating company, of which there can be no assurance.reporting periods.
Net lossIncome
The net income for the three monthsCompany was $842,725 and $862,203 for the quarters ended March 31, 20082009 and 2007 was $0 and $0. Net loss for the period from October 30, 2006 (Date of Inception ) to March 31, 2008 respectively. The net profit margin was $3,290.36.7% and 39.3% for the same periods, respectively.
Liquidity and Capital Resources
The Company’s working capital and long-term funding primarily comes from operating cash flow and loans, while our financial resources are used in capital expenditures, operating activities and repayment of loans. Net cash flow provided by operating activities amounted to $441,881 for quarter ended March 31, 2009 compared to $524,888 for same quarter in 2008. The slightly lower cash inflow is due to extended payment terms to a few customers to earn additional business. The Company’s trade receivables totaled $4,881,909 as of March 31, 2009 compared to $4,346,403 as of December 31, 2008. No allowance for doubtful debts was provided for the quarter ended March 31, 2009. The Company will not have any revenues from anybelieves it has a strong and loyal customer base. The inventory amounted to $384,068 and $431,569 as of March 31, 2009 and December 31, 2008 respectively. The lower inventory level is due to increased operational efficiency and improved overall planning. The main part of the inventory as of March 31, 2009 consists of work in progress ($233,896). Future operations absent a merger or other business combination with an operatingare estimated to be funded by the company’s strong net income, which greatly contributes to the Company’s positive cash inflow. In addition, the company and no assurance can be given that such a merger or other business combination will occur or that the Company can engage in any public or private salesis working aggressively to reduce its accounts receivables to further strengthen its cash position. The main part of the Company’s cash outflow is estimated to pertain to R&D and administrative expenses. In addition, based on the strong demand for the Company’s products, the Company plans to add necessary equipment to its manufacturing facility to match the market demand. However, this will be in strong correlation with the product demand factor and the Company’s cash inflow.
Foreign Currency Translation
The Company’s operating entity, Sanming Huajian Bio-Engineering Co., Ltd. maintains its financial statements in the functional currency of the People’s Republic of China, which is the “Renminbi” (RMB). Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.
For financial reporting purposes, the financial statements are prepared using the functional currency Renminbi, which have been translated into United States dollars. Assets and liabilities are translated at the exchange rates at the balance sheet dates, revenue and expenses are translated at the average exchange rates and stockholders’ equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity.
Exchange Rates | | 3/31/2009 | | 3/31/2008 | |
| | | | | |
Fiscal period/year end RMB : US$ exchange rate | | 6.83 | | 7.00 | |
| | | | | |
Average period/yearly RMB : US$ exchange rate | | 6.83 | | 7.15 | |
The RMB: US$ exchange rate as of December 31, 2008 was 6.85.
RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation.
Significant Estimates
Critical accounting polices include the areas where we have made what we consider to be particularly subjective or complex judgments in making estimates and where these estimates can significantly impact our financial results under different assumptions and conditions.
We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates, judgments and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. Actual results could be different than those estimates.
Recent Accounting Pronouncements
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities - an Amendment to FASB Statement 133”. SFAS 161 provides new disclosure requirements for an entity’s derivative and hedging activities. SFAS 161 is effective for financial statements issued for fiscal years beginning after November 15, 2008. The adoption of the statement did not have a material impact on the Company’s results of operations, cash flows or financial condition.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements - an Amendment of ARB No. 51”. SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for the fiscal year beginning after December 15, 2008. The adoption of the statement did not have a material impact on the Company’s results of operations, cash flows or financial condition.
In December 2007, the FASB issued SFAS No. 141 (Revised), “Business Combinations”. SFAS 141 (Revised) establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141 is effective for the fiscal year beginning after December 15, 2008. The adoption of the statement did not have a material impact on the Company’s results of operations, cash flows or financial condition.
In December 2008, the FASB issued FSP FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”). FSP FAS 132(R)-1 requires additional disclosures in relation to plan assets of defined benefit pension or other postretirement plans. FSP FAS 132(R)-1 is effective for fiscal years ending after December 15, 2009 with early application permitted. The Company does not anticipate the adoption of this FSP will have a material impact on its results of operations, cash flows or financial condition.
In April 2009, the FASB issued Staff Position (FSP) No. 115-2 and No. 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments”, which amends existing guidance for determining whether impairment is other-than-temporary for debt securities. The FSP requires an entity to assess whether it intends to sell, or it is more likely than not that it will be required to sell a security in an unrealized loss position before recovery of its amortized cost basis. If either of these criteria is met, the entire difference between amortized cost and fair value is recognized in earnings. For securities that do not meet the aforementioned criteria, the amount of impairment recognized in earnings is limited to raise working capital.the amount related to credit losses, while impairment related to other factors is recognized in other comprehensive income. Additionally, the FSP expands and increases the frequency of existing disclosures about other-than-temporary impairments for debt and equity securities. This FSP is effective for interim and annual reporting periods ending after June 15, 2009. The Company is dependent upon future loans fromcurrently evaluating the impact that the adoption of FSP FAS 115-2 and FAS 124-2 will have on its present stockholdersresults of operations, cash flows or management, and there can be no assurances that its present stockholders or management will make any loans to the Company. At March 31, 2008, the Company had cash of $16,999 and working capital of $14,210.financial condition.
In April 2009, the FASB issued Staff Position (FSP) No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset and Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”. This FSP provides additional guidance for determining the fair value of assets and liabilities when the volume and level of activity for the asset or liability have significantly decreased. FSP FAS 157-4 also provides guidance on identifying circumstances that indicate an observed transaction used to determine fair value is not orderly and, therefore, is not indicative of fair value. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. The Company's present material commitments are professional and administrative fees and expenses associated withCompany does not anticipate the preparationadoption of its filings with the SEC and other regulatory requirements. In the event that the Company engages in any merger or other business combination with an operating company, itthis FSP will have additionala material commitments. Although the Company from time to time may engage in discussions regarding a mergerimpact on its results of operations, cash flows or other combination with an operating company, we cannot offer any assurances that we will engage in any merger or other combination with an operating company within the next twelve months.financial condition.
Off BalanceIn April 2009, the FASB issued Staff Position (FSP) No. 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments”. This FSP amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies that were previously only required in annual financial statements. This FSP is effective for interim reporting periods ending after June 15, 2009. The Company does not anticipate the adoption of this FSP will have a material impact on its results of operations, cash flows or financial condition.
Off-Balance Sheet Arrangements
We do not have no significantany off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.investors.
N/AThe Company operates in the People’s Republic of China, of which has its own currency. This may cause the Company to experience and be exposed to different market risks such as changes in interest rates and currency deviations.
Item 4T. Controls and Procedures.Item 3 | Quantitative and Qualitative Disclosures about Market Risk |
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| Not Applicable |
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Item 4 | Controls and Procedures |
(a) Evaluation of Disclosure ControlsControl and Procedures
As of March 31, 2008, we carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosureDisclosure controls and procedures were effective in ensuringare controls and other procedures that are designed to ensure that information required to be disclosed by us in our periodiccompany reports filed or submitted under the Securities Exchange Act of 1934, or the “Exchange Act,” is recorded, processed, summarized and reported, within the time periods specified for each reportin the SEC’s rules and forms. Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that such information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our principalchief executive officer and principalchief financial officers,officer, as appropriate to allow timely decisions regarding disclosure.
The Company’s management with the participation of the Company’s Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company’s disclosure controls and procedures as of March 31, 2009. Based upon this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective and designed to ensure that material information required to be disclosed by the Company in the reports that if files or persons performing similar functions,submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and regulations and accumulated and communicated to them as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate “internal control over financial reporting” as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal Controls.control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our 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 generally accepted accounting principles, and includes those policies and procedures that:
| i. | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
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| ii. | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
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| iii. | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. |
As of December 31, 2008 and as reported in our 10-K filing, management used the framework set forth in the report entitled “Internal Control – Integrated Framework” published by the Committee of Sponsoring Organizations of the Tread way commission to evaluate the effectiveness of our internal control over financial reporting. Based on its evaluation, our management concluded that at December 31, 2008 there is a material weakness in internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
The Company’s material weakness in its internal control over financial reporting relates to the monitoring and review of work performed in the preparation of audit and financial statements, footnotes, and financial data provided to the Company’s registered public accounting firm in connection with the annual audit. All of our financial reporting is carried out by the finance manager and experienced outside consultants. The lack of accounting staff results in a lack of segregation of duties necessary for an effective system of internal control. The material weakness identified did not result in the restatement of any previously reported financial statements for 2008 or any other related financial disclosure, nor does management believe that it had any effect on the accuracy of the Company’s financial statements for the current reporting period.
In order to mitigate this material weakness to the fullest extent possible, all quarterly and annual financial reports are reviewed by the Chief Executive Officer and the Board of Directors for reasonableness. All unexpected results are investigated. At any time, if it appears that any control can be implemented to continue to mitigate such weakness, it is immediately implemented. We intend to implement appropriate procedures for monitoring and review the work performed by our finance manager and outside consultants. The Company is seeking a permanent placement for the Chief Financial Officer position.
During the most recently completed fiscal quarter, there has been no change in our internal controlscontrol over financial reporting that has materially affected or is reasonablereasonably likely to materially affect, our internal control over financial reporting during the quarter covered by this Report.reporting.
Part II. II | OTHER INFORMATION |
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Item 1 | Legal Proceedings |
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| None |
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Item 2 | Market for Common Equity and Related Stockholder Matters |
Item 1. | Legal Proceedings |
The Company’s common stock is not traded on any exchange and is not available on any quotation system. There has not been any sale of any unregistered securities for the period ended March 31, 2009.
None
Not applicable
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
None.
Item 3. 3 | Defaults Uponupon Senior Securities |
None.
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| None |
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Item 4. 4 | Submission of Matters to a Vote of Security Holders |
Not applicable
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| None |
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Item 5. 5 | Other Information |
Not applicable
Exhibit Number | Description of Exhibit |
31 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated underSection 302 of the Securities and ExchangeSarbanes-Oxley Act of 1934, as amended2002 |
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| Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
SIGNATURES
In accordance withPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrantRegistrant has duly caused this report to be signed on its behalf by the undersigned,undersigned; thereunto duly authorized.authorized this 15th day of May, 2009.
| Mondo Acquisition II, Inc.GREEN PLANET BIOENGINEERING CO., LTD. |
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Date: May 15, 20082009 | By: | /s/ Darrin M. OcasioMin Zhao | |
| | Darrin M. OcasioMin Zhao | |
| | President (PrincipalChief Executive Officer and Principal Financial and Accounting Officer) | |
| | (Principal Executive Officer and | |
| | Principal Financial Officer) | |
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