| | March 31, | | | December 31, | |
| | 2009 | | | 2008 | |
| | (Unaudited) | | | (Audited) | |
| | | | | | |
Customer A | | $ | 374,854 | | | $ | 531,047 | |
Customer B | | | 622,258 | | | | 730,430 | |
Customer C | | | 713,341 | | | | 700,614 | |
Customer D | | | 642,661 | | | | 569,392 | |
Customer E | | | 727,537 | | | | 614,022 | |
Customer F | | | 578,905 | | | | 653,892 | |
Customer G | | | 587,408 | | | | 547,006 | |
| | | | | | | | |
| | $ | 4,246,964 | | | $ | 4,346,403 | |
| Recently issued 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. |
| | | June 30, 2009 | | | December 31, 2008 | |
| | | (Unaudited) | | | | |
| | | | | | | |
| Customer A | | $ | 184,260 | | | $ | 531,047 | |
| Customer B | | | 215,591 | | | | 730,430 | |
| Customer C | | | 666,546 | | | | 700,614 | |
| Customer D | | | 586,869 | | | | 569,392 | |
| Customer E | | | 360,484 | | | | 547,006 | |
| Customer F | | | 227,476 | | | | 653,892 | |
| Customer G | | | 595,922 | | | | 614,022 | |
| | | | | | | | | |
| | | $ | 2,837,148 | | | $ | 4,346,403 | |
Green Planet Bioengineering Co., Ltd.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Stated in US Dollars)
| |
2. | Summary of significant accounting policies (Cont’d) |
| |
| Recently issued accounting pronouncements |
| |
| In April 2009, the FASB issued FSP No. 141R-1 “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies”. FSP 141R-1 amends the provisions in FASB Statement 141R for the initial recognition and measurement, subsequent measurement and accounting, and disclosures for assets and liabilities arising from contingencies in business combinations. FSP 141R-1 eliminates the distinction between contractual and non-contractual contingencies, including the initial recognition and measurement criteria in Statement 141R and instead carries forward most of the provisions in SFAS 141 for acquired contingencies. FSP 141R-1 is effective for contingent assets and contingent liabilities acquired in evaluating the impact of SFAS 141(R). The management is in the process of evaluating the impact of adopting this FSP on the Company’s financial statements. |
| |
| In April 2009, the FASB issued FSP No. 157-4 “Determining Whether a Market is Not Active and a Transaction Is Not Distressed”. FSP No. 157-4 clarifies when markets are illiquid or that market pricing may not actually reflect the “real” value of an asset. If a market is determined to be inactive and market price is reflective of a distressed price then an alternative method of pricing can be used, such as a present value technique to estimate fair value. FSP No. 157-4 identifies factors to be considered when determining whether or not a market is inactive. FSP No. 157-4 would be effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009 and shall be applied prospectively. The adoption of this FSP has no material impact on the Company’s financial statements. |
| |
| In April 2009, the FASB issued FSP FAS No. 115-2 and FAS No. 124-2 “Recognition of Other-Than-Temporary Impairments”. FSP FAS No. 115-2 and FAS No. 124-2 amends the other-than-temporary impairment guidance in SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, for debt securities and the presentation and disclosure requirements of other-than-temporary impairments on debt and equity securities in the financial statements. FSP FAS No. 115-2 and FAS No. 124-2 is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The adoption of this FSP has no material impact on the Company’s financial statements. |
| |
| In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1 “Interim Disclosures about Fair Value of Financial Instruments”. FSP FAS 107-1 and APB 28-1 amends SFAS 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 as well as in annual financial statements. In addition, the FSP amends APB Opinion No. 28 “Interim Financial Reporting” to require those disclosures in summarized financial information at interim reporting periods. The FSP is effective for interim periods ending after June 15, 2009, with earlier adoption permitted for periods ending after March 15, 2009. The adoption of this FSP has no material impact on the Company’s financial statements. |
Green Planet Bioengineering Co., Ltd.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Stated in US Dollars)
2. | Summary of significant accounting policies (Cont’d) |
| |
| Recently issued accounting pronouncements (Cont’d) |
| |
| In December 2007,May 2009, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements - an Amendment165 “Subsequent Events”, which sets forth general standards of ARB No. 51”.accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is165 became effective for the fiscal year beginning after DecemberJune 15, 2008.2009. The adoption of the statement did not have athis SFAS has no material impact on the Company’s results of operations, cash flows or financial condition.statements. |
| |
| In December 2007,June 2009, the FASB issued SFAS No. 141 (Revised), “Business Combinations”166 “Accounting for Transfers of Financial Assets”. SFAS 141 (Revised) establishes principles166 removes the concept of a qualifying special-purpose entity (QSPE) from SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities and removes the exception from applying FIN 46R. This statement also clarifies the requirements for how the acquirerisolation and limitations on portions of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. Thethat are eligible for sale accounting. This 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 yearyears beginning after DecemberNovember 15, 2008.2009. The adoptionmanagement is in the process of evaluating the statement did not have a material impact of adopting this standard on the Company’s results of operations, cash flows or financial condition.statements. |
| |
| In December 2008,June 2009, the FASB issued FSP FAS 132(R)-1, “Employers’ DisclosuresSFAS No. 167 “Amendments to FASB Interpretation No. 46(R)”, which amends FASB Interpretation No. 46 (revised December 2003) to address the elimination of the concept of a qualifying special purpose entity. SFAS 167 also replaces the quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity and the obligation to absorb losses of the entity or the right to receive benefits from the entity. Additionally, SFAS 167 provides more timely and useful information about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”). FSP FAS 132(R)-1 requires additional disclosures in relation to plan assetsan enterprise’s involvement with a variable interest entity. SFAS 167 shall be effective as of defined benefit pension or other postretirement plans. FSP FAS 132(R)-1 is effective for fiscal years endingthe beginning of each reporting entity’s first annual reporting period that begins after DecemberNovember 15, 2009, with earlyfor interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application permitted.is prohibited. The Company does not anticipatemanagement is in the adoptionprocess of evaluating the impact of adopting this FSP will have a material impactstandard on its results of operations, cash flows orthe Company’s financial condition.statements. |
| |
| In AprilJune 2009, the FASB issued Staff Position (FSP)SFAS No. 115-2168 “The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments”162”, which amends existing guidanceestablishes the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB to be applied in the preparation of financial statements in conformity with generally accepted accounting principles. SFAS 168 explicitly recognizes rules and interpretive releases of the Securities and Exchange Commission under federal securities laws as authoritative GAAP for determining whether impairment is other-than-temporarySEC registrants. SFAS 168 will become effective 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 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 effectivefinancial statements issued for interim and annual reporting periods ending after JuneSeptember 15, 2009. The Company is currently evaluating the impact that the adoption of FSP FAS 115-2 and FAS 124-2 will havethis SFAS has no material impact on its results of operations, cash flows orthe Company’s financial condition.statements. |
Green Planet Bioengineering Co., Ltd.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Stated in US Dollars)
2. | Summary of significant accounting policies (Cont’d) |
| |
3. | Recently issued accounting pronouncementsFinance costs (Cont’d)
|
| |
| 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 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. 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. |
3. | Finance costs | | Three months ended March 31, | |
| | | 2009 | | | 2008 | |
| | | (Unaudited) | | | (Unaudited) | |
| | | | | | | |
| Bank loans interest | | $ | - | | | $ | 3,317 | |
| Other loans interest | | | - | | | | 34,862 | |
| Bank charges | | | 88 | | | | 29 | |
| | | | | | | | | |
| | | $ | 88 | | | $ | 38,208 | |
| | | Three months ended June 30 | | | Six months ended June 30 | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | (unaudited) | | | (unaudited) | | | (unaudited) | | | (unaudited) | |
| | | | | | | | | | | | | |
| Bank loan interest | | $ | — | | | $ | 4,166 | | | $ | — | | | $ | 7,471 | |
| Other loan interest | | | 8,174 | | | | 35,887 | | | | 8,174 | | | | 70,742 | |
| Bank charges | | | 144 | | | | 31 | | | | 232 | | | | 60 | |
| | | | | | | | | | | | | | | | | |
| | | $ | 8,318 | | | $ | 40,084 | | | $ | 8,406 | | | $ | 78,273 | |
| During the six-month periods ended March 31,June 30, 2009 and 2008, loans interest expenses payable to a related company were $Nil and $9,174$18,617 respectively. |
| |
4. | Income taxes |
| |
| United States |
| |
| The Company is subject to the United States of America Tax law at tax rate of 40.7%. No provision for the US federal income taxes has been made as the Company had no taxable income in this jurisdiction for the reporting periods. The Company has not provided deferred taxes on undistributed earnings of its non-U.S. subsidiaries or VIE as of March 31,June 30, 2009 as it was the Company’s current policy to reinvest these earnings in non-U.S. operations. |
| |
| BVI |
| |
| Elevated Throne was incorporated in the BVI and, under the current laws of the BVI, is not subject to income taxes. |
Green Planet Bioengineering Co., Ltd.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Stated in US Dollars)
4. | Income taxes (Cont’d) |
| |
| PRC |
| |
| The PRC’s legislative body, the National People’s Congress, adopted the unified Corporate Income Tax Law on March 16, 2007. This new tax law replaces the existing separate income tax laws for domestic enterprises and foreign-invested enterprises and became effective on January 1, 2008. Under the new tax law, a unified income tax ratesrate is set at 25% for both domestic enterprises and foreign-invested enterprises. |
| |
| Accordingly, Fujian Green Planet and Sanming Huajian, both of which are established in the PRC, are subject to PRC enterprise income tax at the rate of 25% on their assessable profits during the three monthssix-month periods ended March 31,June 30, 2009 and 2008. |
Green Planet Bioengineering Co., Ltd.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Stated in US Dollars)
| |
5. | Earnings per share |
| |
| The basic and diluted earnings per share is calculated using the net income and the weighted average number of shares outstanding during the reporting periods. All share and per share data have been adjusted to reflect the recapitalization of the Company in the RTO. |
| |
| The diluted earnings per share for the three and six months ended March 31,June 30, 2009 is based on the net income offor the periodsaid periods and the weighted average number of shares of 19,951,20420,017,704 and 19,984,454 outstanding respectively during the periodperiods after adjusting for the number of 4,543,4794,428,337 and 4,485,908 dilutive potential ordinary shares. The number of 5,578,333 shares of warrants granted to several consultants areis included in the calculation. |
| |
| There was no dilutive instrument outstanding during the three monthssix-month periods ended or as of March 31,June 30, 2008. Accordingly, the basic and diluted earnings per share are the same. |
6. | Inventories | | March 31, | | | December 31, | |
| | | 2009 | | | 2008 | |
| | | (Unaudited) | | | (Audited) | |
| | | | | | | |
| Raw materials | | $ | 142,324 | | | $ | 101,280 | |
| Work-in-progress | | | 233,896 | | | | 294,798 | |
| Finished goods | | | 7,848 | | | | 35,491 | |
| | | | | | | | | |
| | | $ | 384,068 | | | $ | 431,569 | |
| | | June 30, 2009 | | | December 31, 2008 | |
| | | (Unaudited) | | | | |
| | | | | | | |
| Raw materials | | $ | 193,462 | | | $ | 101,280 | |
| Work-in-progress | | | 187,764 | | | | 294,798 | |
| Finished goods | | | 85,499 | | | | 35,491 | |
| | | | | | | | | |
| | | | 466,725 | | | $ | 431,569 | |
| | | | | | | | | |
| | | June 30, 2009 | | | December 31, 2008 | |
| | | (Unaudited) | | | | | |
| | | | | | | | | |
| Technologies - Note (a) | | | 446,825 | | | $ | 286,065 | |
| Software | | | 3,179 | | | | 3,183 | |
| | | | | | | | | |
| | | | 450,004 | | | | 289,248 | |
| Accumulated amortization | | | (158,357 | ) | | | (130,089 | ) |
| | | | | | | | | |
| Net | | | 291,647 | | | $ | 159,159 | |
Green Planet Bioengineering Co., Ltd.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Stated in US Dollars)
7. | Intangible assets | | March 31, | | | December 31, | |
| | | 2009 | | | 2008 | |
| | | (Unaudited) | | | (Audited) | |
| | | | | | | |
| Technologies - Note (a) | | $ | 446,825 | | | $ | 286,065 | |
| Software | | | 3,179 | | | | 3,183 | |
| | | | | | | | | |
| | | | 450,004 | | | | 289,248 | |
| Accumulated amortization | | | (142,792 | ) | | | (130,089 | ) |
| | | | | | | | | |
| Net | | $ | 307,212 | | | $ | 159,159 | |
| | |
7. | Intangible assets (Cont’d) |
| | |
| Notes: |
| | |
| (a) | The technologies were purchased from third parties for producing products - Solanesol, Organic Green Barley Supplements (Paiqianshu) and Q10 Health Supplements. The application for related patent is in process and has been initially accepted by the relevant government department. |
| | |
| (b) | During the periods ended March 31,June 30, 2009 and 2008, amortization charge was $12,880$28,456 and $8,912$18,085 respectively. The estimated aggregate amortization expenses for intangible assets for the five succeeding years is as follows: |
| Year ending December 31, | | | | |
| 2009 | | $ | 47,333 | | |
| 2010 | | | 48,248 | | |
| 2011 | | | 27,103 | | |
| 2012 | | | 27,103 | | |
| 2013 | | | 27,103 | | |
| | | | | | |
| | | $ | 176,890 | | |
8. | Property, plant and equipment | | March 31, | | | December 31, | |
| | | 2009 | | | 2008 | |
| | | (Unaudited ) | | | (Audited ) | |
| Cost: | | | | | | |
| Buildings - Note (a) | | $ | 1,926,263 | | | $ | 1,928,892 | |
| Plant and machinery | | | 859,233 | | | | 860,407 | |
| Office equipment | | | 97,381 | | | | 97,514 | |
| Motor vehicles | | | 92,725 | | | | 92,851 | |
| | | | | | | | | |
| | | | 2,975,602 | | | | 2,979,664 | |
| Accumulated depreciation | | | (598,250 | ) | | | (546,505 | ) |
| | | | | | | | | |
| | | | 2,377,352 | | | | 2,433,159 | |
| Construction in progress - Note (b) | | | 709,939 | | | | 710,908 | |
| | | | | | | | | |
| Net | | $ | 3,087,291 | | | $ | 3,144,067 | |
| Year ending December 31, | | | | | |
| 2009 | | $ | 31,449 | |
| 2010 | | | 48,248 | |
| 2011 | | | 27,103 | |
| 2012 | | | 27,103 | |
| 2013 | | | 27,103 | |
| | | | | |
| | | $ | 161,006 | |
8. | Property, plant and equipment |
| | | June 30, 2009 | | | December 31, 2008 | |
| | | (Unaudited) | | | | |
| Cost: | | | | | | |
| Buildings - Note (a) | | $ | 1,926,263 | | | $ | 1,928,892 | |
| Plant and machinery | | | 1,065,913 | | | | 860,407 | |
| Office equipment | | | 102,470 | | | | 97,514 | |
| Motor vehicles | | | 92,725 | | | | 92,851 | |
| | | | | | | | | |
| | | | 3,187,371 | | | | 2,979,664 | |
| Accumulated depreciation | | | (653,993 | ) | | | (546,505 | ) |
| | | | | | | | | |
| | | | 2,533,378 | | | | 2,433,159 | |
| Construction in progress - Note (b) | | | 709,939 | | | | 710,908 | |
| | | | | | | | | |
| Net | | | 3,243,317 | | | $ | 3,144,067 | |
Green Planet Bioengineering Co., Ltd.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Stated in US Dollars)
| | |
8. | Property, plant and equipment (Cont’d) |
| | |
| Notes: |
| | |
| (a) | Property certificates of buildings with carrying amount of $1,671,996$1,648,881 as of March 31,June 30, 2009 are yet to be obtained. The application of legal title is in process and the management expects there will be no legal hindrance in obtaining the legal title and no extra cost will be incurred. |
| | |
| (b) | Construction in progress mainly comprises capital expenditure for construction of the Company’s new office and machinery. |
| | |
| (c) | During the reporting periods, depreciation is included in: |
| | | | Three months ended March 31, | |
| | | | 2009 | | | 2008 | |
| | | | (Unaudited) | | | (Unaudited) | |
| | | | | | | | |
| | Cost of sales | | $ | 29,508 | | | $ | 28,158 | |
| | Administrative expenses | | | 22,983 | | | | 21,931 | |
| | | | | | | | | | |
| | | | $ | 52,491 | | | $ | 50,089 | |
| | | Three months ended June 30 | | | Six months ended June 30 | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | (unaudited) | | | (unaudited) | | | (unaudited) | | | (unaudited) | |
| | | | | | | | | | | | | |
| Cost of sales | | $ | 32,783 | | | $ | 28,986 | | | $ | 62,291 | | | $ | 57,138 | |
| Administrative expenses | | | 22,997 | | | | 22,576 | | | | 45,980 | | | | 44,503 | |
| | | | | | | | | | | | | | | | | |
| Cost of sales | | $ | 55,780 | | | $ | 51,562 | | | $ | 108,271 | | | $ | 101,641 | |
| (d) | Certain plant and equipment with net book value of $800,842 have been pledged for the loan granted to the Company (Note 13). |
| | | June 30, 2009 | | | December 31, 2008 | |
| | | (Unaudited) | | | |
| | | | | | |
| Land use rights | | $ | 1,122,534 | | | $ | 7,901,606 | |
| Accumulated amortization | | | (71,982 | ) | | | (60,392 | ) |
| | | | | | | | | |
| | | $ | 1,050,552 | | | $ | 7,841,214 | |
9. | Land use rights | | March 31, | | | December 31, | |
| | | 2009 | | | 2008 | |
| | | (Unaudited) | | | (Audited) | |
| | | | | | | |
| Land use rights | | $ | 7,890,834 | | | $ | 7,901,606 | |
| Accumulated amortization | | | (66,146 | ) | | | (60,392 | ) ) |
| | | | | | | | | |
| | | $ | 7,824,688 | | | $ | 7,841,214 | |
| The carrying amount of land use rights as of March 31,June 30, 2009 comprises threetwo land use rights, which were requiredacquired for building factories and offices, with carrying amounts of $959,881, $96,507$95,974 and $6,768,300$954,578 respectively. |
| |
| The legal title of the second and thirdfirst land use rightsright with carrying amount of $6,864,807$95,974 has not yet been transferred to the Company. The application of legal title is in the process and the management expects there will be no legal hindrance in obtaining the legal titles and no extra costs will be incurred. |
| |
| The land use right with carrying amount of $6,768,300 has not been used and developed. Accordingly, no amortization was provided for the reporting periods. |
| |
| During the periodsthree months ended March 31,June 30, 2009, and 2008, amortization charge was $5,836 and $5,569 respectively and was included in administrative expenses. The estimated amortization chargethe Company made an arrangement with the government to move part of the land use rights to operating leases for other pieces of land to promote its newer product portfolio such as fertilizers and pesticides. $5,823,375, representing the carrying value for the five succeeding years is as follows:land use rights of $6,768,300 less outstanding land use rights payable of $944,925 (Note 11(a)), has been transferred to prepayments for the new land leases. The new operating leases commenced on July 1, 2009 and will be paid over a 30 year period. |
Green Planet Bioengineering Co., Ltd.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Stated in US Dollars)
| |
9. | Land use rights (Cont’d) |
| |
| During the periods ended June 30, 2009 and 2008, amortization charge was $11,676 and $11,302 respectively and was included in administrative expenses. The estimated amortization charges of land use rights for the five succeeding years are as follows: |
| Year ending December 31, | | | | | |
| 2009 | | $ | 11,673 | |
| 2010 | | | 23,346 | |
| 2011 | | | 23,346 | |
| 2012 | | | 23,346 | |
| 2013 | | | 23,346 | |
| | | | | |
| | | $ | 105,057 | |
10. | Prepayments of operating lease |
| |
| The prepayments represent the carrying value of the land use rights transferred under the new operating leases (Note 9). The lower cost of raw materials will fully or partially offset the cost for the new operating leases. |
| Year ending December 31, | | | | |
| 2009 | | $ | 75,957 | | |
| 2010 | | | 163,621 | | |
| 2011 | | | 163,621 | | |
| 2012 | | | 163,621 | | |
| 2013 | | | 163,621 | | |
| | | | | | |
| | | $ | 730,441 | | |
11. | Other payables and accrued expenses | | | | | | |
| | | June 30, 2009 | | | December 31, 2008 | |
| | | (Unaudited) | | | |
| | | | | | |
| Rental payable | | $ | 6,226 | | | $ | 1,834 | |
| Salaries payable | | | 61,272 | | | | 59,497 | |
| Other accrued expenses | | | 60,436 | | | | 61,707 | |
| Value-added tax payable | | | 115,515 | | | | 134,078 | |
| Land use rights payable - Note (a) | | | — | | | | 1,004,895 | |
| | | | | | | | | |
| | | $ | 243,449 | | | $ | 1,262,011 | |
10. | Other payables and accrued expenses | | March 31, | | | December 31, | |
| | | 2009 | | | 2008 | |
| | | (Unaudited) | | | (Audited) | |
| | | | | | | |
| Rental payable | | $ | 4,029 | | | $ | 1,834 | |
| Salaries payable | | | 64,937 | | | | 59,497 | |
| Other accrued expenses | | | 62,997 | | | | 61,707 | |
| Value-added tax payable | | | 160,419 | | | | 134,078 | |
| Land use rights payable - Note (a) | | | 945,034 | | | | 1,004,895 | |
| Receipts in advance | | | 131,850 | | | | - | |
| | | | | | | | | |
| | | $ | 1,369,266 | | | $ | 1,262,011 | |
| Note: |
| | |
| (a) | As detailed in note 9 to the condensed consolidated financial statements, the Company has made an arrangement with the government to move part of the land use rights to promote its newer product portfolio. The payable is interest-free and repayable by instalments with lastCompany has no further payment due on December 31, 2009.obligations regarding the land use rights. |
| | |
11.12. | Amounts due to a related party and a stockholder |
| | |
| The amounts are interest-free, unsecured and repayable on demand. |
Green Planet Bioengineering Co., Ltd.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Stated in US Dollars)
| | |
12.13. | LoanSecured loan from governmenta financial institution |
| | |
| The government loan was designated forcarries interest at 7.434% per annum and is repayable within one year. It is secured by a research project. It was interest-free, unsecured and had been fully repaid during the current reporting period.guarantee put up by a guarantee company. |
| |
| The Company is required to pay a counter guarantee of $146,500 and guarantee charges calculated at 1.8% per annum on the loan principal to the guarantee company. The counter guarantee was paid in July 2009. |
| |
13.14. | Common stock |
| | |
| On January 15, 2009, the Company issued 404,000 shares of its common stock to several management personnel of the Company in return for their services rendered (Note 15)16). On the same day, the Company issued 763,700 shares of its common stock pursuant to the exercise of 763,700 warrants with an exercise price of $0.001 per share previously granted to certain consultants (Note 15)16). The Company received proceeds of $764. |
Green Planet Bioengineering Co., Ltd.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Stated in US Dollars)
14. | |
15. | Statutory reserve |
| |
| The Company’s statutory reserve comprise statutory reserve fund of Sanming Huajian. In accordance with the relevant laws and regulations of the PRC, Sanming Huajian and Fujian Green Planet are required to set aside at least 10% of their after-tax net profit each year, if any, to fund the statutory reserve until the balance of the reserve reaches 50% of their respective registered capital. The statutory reserve is not distributable in the form of cash dividends to the Company and can be used to make up cumulative prior year losses. |
| |
15.16. | Stock-based compensation |
| |
| During the three months six-month periods ended March 31, June 30, 2009, the Company recognized total non-cash stock-based compensation of $13,130 in connection with 404,000 shares of common stocks issued to several management personnel of the Company in return for their services rendered (Note 13)14). $12,318, $487 and $325 of the stock-based compensation were charged to the statementsstatement of income and comprehensive income as administrative expenses, research and development expenses and selling expenses respectively. |
| |
| The Company granted certain consultants warrants to purchase in aggregate 5,578,333 shares of its common stock in year 2008. The exercise price of 4,718,333 warrants granted in October 2008 is $0.001 while the remaining 860,000 warrants granted in December 2008 is $0.01. All warrants were fully vested on the date of grant and will expire in 5 years from the respective date of grant. |
| |
| The aggregate fair value of the warrants granted was $169,739 at the dates of grant, which was determined using the Black-Scholes option valuation model with the following assumptions: risk-free interest rate of 3.61% to 4.56%, volatility of 60%, nil expected dividends and expected life of 5 years. The Company recognized the total charge of $169,739 in the statement of income and comprehensive income during the year ended December 31, 2008. |
| |
| The warrants activity during the three months ended March 31, 2009 is as follows: |
| | | | | Number of warrants | |
| | | | | Outstanding | | | | | | | | | Outstanding | |
| | | | | as of | | | | | | Granted/ | | | as of | |
| | Exercise | | | January | | | | | | forfeited/ | | | March | |
Month of grant | | price | | | | 1, 2009 | | | Exercised | | | cancelled | | | | 31, 2009 | |
| | | | | | | | | | | | | | | | | |
October 2008 | | $ | 0.001 | | | | 4,718,333 | | | | (763,700 | ) | | | - | | | | 3,954,633 | |
December 2008 | | $ | 0.01 | | | | 860,000 | | | | - | | | | - | | | | 860,000 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | 5,578,333 | | | | (763,700 | ) | | | - | | | | 4,814,633 | |
Green Planet Bioengineering Co., Ltd.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Stated in US Dollars)
| |
16. | Stock-based compensation (Cont’d) |
| |
| The warrants activity during the six-month periods ended June 30, 2009 is as follows: |
| | | | | | Number of warrants | |
| Month of grant | | Exercise price | | | Outstanding as of January 1, 2009 | | | Exercised | | | Granted/ forfeited/ cancelled | | | Outstanding as of June 30, 2009 | |
| | | | | | | | | | | | | | | | |
| October 2008 | | $ | 0.001 | | | | 4,718,333 | | | | (763,700 | ) | | | — | | | | 3,954,633 | |
| December 2008 | | $ | 0.01 | | | | 860,000 | | | | — | | | | — | | | | 860,000 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | 5,578,333 | | | | (763,700 | ) | | | — | | | | 4,814,633 | |
16.17. | Defined contribution plan |
| | |
| Pursuant to the relevant PRC regulations, the Company is required to make contributions at a rate of 29% of the average salaries for the latest fiscal year-end of Fujian Province to a defined contribution retirement scheme organized by a state-sponsored social insurance plan in respect of the retirement benefits for the Company'sCompany’s employees in the PRC. The only obligation of the Company with respect to retirement scheme is to make the required contributions under the plan. No forfeited contribution is available to reduce the contribution payable in the future years. The defined contribution plan contributions were charged to the statementsstatement of income and comprehensive income. |
| | |
| The Company contributed $11,547$23,638 and $10,898$22,237 to the scheme for the three monthssix-month periods ended March 31,June 30, 2009 and 2008 respectively. |
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17.18. | Commitments and contingencies |
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| (a) | Capital commitments |
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| | (i) | As of MarchJune 30, 2009 and December 31, 2009,2008, the Company had capital commitmentscommitment of $53,473 and $53,545 respectively in respect of the acquisition of property, plant and equipment that were contracted but not provided for in the condensed consolidated financial statementsstatements. |
Green Planet Bioengineering Co., Ltd.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Stated in US Dollars)
| |
18. | Commitments and contingencies (Cont’d) |
| | |
| (a) | Capital commitments (Cont’d) |
| | | |
| | (ii) | As of June 30, 2009 and December 31, 2008, the Company had capital commitment of $307,650 and $161,370 respectively in respect of the followings:acquisition of intangible assets that were contracted but not provided for in the financial statements. |
| | | March 31, | | | December 31, | |
| | | 2009 | | | 2008 | |
| | | (Unaudited) | | | (Audited) | |
| | | | | | | |
| Acquisition of plant and machinery | | $ | 210,405 | | | $ | 53,545 | |
| Acquisition of intangible assets | | | 161,150 | | | | 161,370 | |
| | | | | | | | | |
| | | $ | 371,555 | | | $ | 214,915 | |
| | | |
| | | The deposits for the acquisition of intangible assets represent prepayments to certain academic institutions to acquire new technologies, which are still in progress and not ready for use at the respective balance sheet dates. The amounts will be transferred to intangible assets for amortization upon completion of the development. |
| | | |
| (b) | Operating lease arrangements |
| | |
| | As of March 31,June 30, 2009, the Company had twothree non-cancelable operating leases for its office premises.premises and lands. The leases will expire inat various dates through year 2010 to 2039 and the expected payments as of March 31,June 30, 2009 were $19,705,$52,698,028. The main part of the 30 year payments pertains to the Company’s use of the operating leases for the new product portfolio, of which will fall due as follows: $9,413 in year 2009 and $10,292 in year 2010.part is already paid with the land use rights payments. |
| | |
| | The rental expenses relating to the operating leases were $3,077$11,036 and $2,726$5,532 for the three monthssix-month periods ended March 31,June 30, 2009 and 2008 respectively. The lower cost of raw materials will fully or partially offset the cost for the new operating leases. |
| | |
| (c) | On June 17, 2009, the Company entered into a Preferred Share Purchase Agreement with ONE Holdings Corp. (“ONE”) pursuant to which the Company agreed to sell and ONE agreed to acquire 30,239 shares of the Company’s preferred stock (“Preferred Stock”). Each share of the Preferred Stock shall (a) provide ONE with the right to vote 1,000 votes on all matters submitted to a vote of the Company’s shareholders and (b) be convertible into 1,000 shares of the Company’s common stock. ONE paid to the Company for the said shares of Preferred Stock $15,000,000 which was paid by ONE through the issuance to the Company 10,329,551 shares of ONE’s common stock. The transaction closed on July 22, 2009 upon receipt of all required documents and stock certificates. |
| | |
| | As part of the transaction, the Company has also agreed that 35% of the ONE’s shares to be issued to the Company shall be deposited into an Escrow and in the event the Company’s EBITDA for fiscal year 2009 is less than the Company’s EBITDA for fiscal 2008, the number of shares of ONE’s stock issued to the Company shall be proportionately reduced as provided for in the Preferred Stock Purchase Agreement. The Company is also subject to a lockup and leak out period and has one Piggy-Back Registration right as further defined in the Preferred Stock Purchase Agreement. |
Green Planet Bioengineering Co., Ltd.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Stated in US Dollars)
18. | |
19. | Segment information |
| |
| The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company is solely engaged in the manufacture, marketing, sale and distribution of extracts from tobacco leaves residues. Since the nature of the products, their production processes, the type of their customers and their distribution methods are substantially similar, management considers they are as a single reportable segment under SFAS 131 “Disclosures about Segments of an Enterprise and Related Information”. |
| |
| All of the Company’s long-lived assets and revenues classified based on the customers are located in the PRC. |
| |
19.20. | Related party transactions |
| |
| Apart from the transactions as disclosed in notes 3 and 1112 to the condensed consolidated financial statements, during the six-month periods ended March 31,June 30, 2009 and 2008, the Company paid rental expenses of $879$1,758 and $839$1,702 respectively to a related company in which a stockholder, who is also the director of the Company, has a beneficial interest. |
| |
21. | Subsequent events |
| |
| On July 8, 2009, the Company obtained a secured loan from a financial institution with the principal amount of $1,201,300. The loan carries interest at 7.434% per annum, and is secured by the Company’s properties and repayable within one year. |
| |
| On July 22, 2009, the Company announced that its majority control had been acquired by ONE Holdings, Corp. (“ONE”). ONE acquired in a series of transactions approximately 82% of the outstanding shares of common stock of the Company on a fully diluted basis. The transactions involved the acquisition of common shares and warrants from the Company’s majority shareholders and the acquisition by ONE of the Company’s Class A Preferred Shares (Note 18(c)). ONE paid the stockholders with a combination of cash and an aggregate of 22,265,613 shares of ONE’s common stock. |
| |
| Apart from the foregoing, the Company has evaluated all other subsequent events through August 14, 2009, the date these financial statements were issued, and determined that there were no subsequent events or transactions that required recognition or disclosure in the financial statements. |
Part I | FINANCIAL INFORMATION |
| |
Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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 applied for an extension of the contribution period to December 31, 2009 with the relevant government bureau.
As 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 the Reverse Merger Transaction, we were a public reporting “blank check” company in the development stage. From and after the Closing Date of the Share Exchange Agreement, we are no longer a “blank check” company and our primary operations consist of the business 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'sCompany’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 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 quartersix months ended March 31,June 30, 2009 versus the six months ended June 30, 2008 and quarter ended March 31,June 30, 2009 versus quarter ended June 30, 2008; (ii) liquidity and capital resources; (iii) a discussion of the Company’s risk factors; and (iv) Company’s critical accounting policies.
QuarterSix Months Ended March 31,June 30, 2009 versus March 31,June 30, 2008
Net Sales
The Company generated net sales of $2,297,621$4,467,369 for the periodsix months ended March 31,June 30, 2009 compared to $2,192,799$4,866,876 for the periodsix months ended March 31,June 30, 2008, an increasea decrease of $104,822$399,507 or 5%8%. The Company continuesdecrease in sales is mainly due to show sales growth despitean estimated temporary downturn in the economic crises.economy compared to last year’s activities. In addition, the increase was mainly attributablecompany’s product and customer mix shifted slightly which as well attributed to the increasing demand forreduction in sales. Furthermore, certain sales orders related to new products were delayed into the Company’s products and a broader product portfolio cateringthird quarter. The Company anticipates the return to a higher number of customers.historical growth trends in the third quarter.
Cost of Sales
Cost of sales was $852,686$1,841,273 for the periodsix months ended March 31,June 30, 2009 compared to $850,797$1,843,353 for the periodsix months ended March 31,June 30, 2008, an increasea decrease of $1,889.$2,080. The slight increasedecrease is due to higherthe lower net sales. We experienced a relatively 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 periodsix months ended March 31,June 30, 2009 was $1,444,935$2,626,096 compared to $1,342,002$3,023,523 for the same period of last year, an increasea decrease of $102,933$397,427 (or 8%13%). The gross profit margin was 62.9%59% and 61.2%62% for the periodssix months ended March 31,June 30, 2009 and 2008, respectively. respectively. The Company continues to show stability in its market pricing as well as continuity in its manufacturing operations. The Companymain reason for the lower gross profit is currently not experiencing any price pressure due to the high market demand for its products.a temporarily change in customer and product mix.
Operating Income
The operating income amounted to $1,140,223$1,981,689 for quartersix months ended March 31,June 30, 2009 compared to $1,130,911$2,448,982 for same quarterperiod in 2008, which is an increasea decrease of 1%19%.
Selling Expenses
Selling expenses totaled $56,031$76,557 and $56,347$117,928 for the quarterssix months ended March 31,June 30, 2009 and March 31,June 30, 2008, respectively. The main cost drivers were personnel costs, travel and costs related to various marketing campaigns. The Company has not added any sales staff compared to the same period of last year.
Administrative Expenses
Administrative expenses amounted to $212,215$494,811 and $127,889$347,379 for the quarterssix months ended March 31,June 30, 2009 and March 31,June 30, 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$73,039 and $26,855$109,234 for the quarterssix months ended March 31, ofJune 30, 2009 and March 31,June 30, 2008 respectively. The slight increasedecrease in R&D expenses pertainsis due to thea cost savings program. The Company’s efforts to broaden and strengthen its product portfolio which shall lead to increased competitiveness forwill continue, however, at a slower pace until the Company.economy is stabilizing and the sales activities are increasing.
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 refundable 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 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 revised 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 had no taxable income in this jurisdiction for the reporting periods.
Net Income
The net income for the Company was $1,458,582 and $1,817,130 for the six months ended June 30, 2009 and June 30, 2008 respectively. The net profit margin was 33% and 37% for the same periods, respectively. The Company continues to show a strong profit margin despite a financial down turn.
Three Months Ended June 30, 2009 versus June 30, 2008
Net Sales
The Company generated net sales of $2,169,748 for the three months ended June 30, 2009 compared to $2,680,637 for the three months ended June 30, 2008, a decrease of $510,889 or 19%. The decrease in sales is mainly due to an estimated temporary downturn in the economy compared to last year’s activities. In addition, the company’s product and customer mix shifted slightly which as well attributed to the reduction in sales. Furthermore, certain sales orders related to new products were delayed into the third quarter. The Company anticipates the return to historical growth trends in the third quarter.
Cost of Sales
Cost of sales was $988,587 for the three months ended June 30, 2009 compared to $994,445 for the three months ended June 30, 2008, a decrease of $5,858. The slight decrease is due to a temporarily change in product and customer mix. 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 three months ended June 30, 2009 was $1,181,161 compared to $1,686,192 for the same period of last year, a decrease of $505,031 (or 30%). The gross profit margin was 54% and 63% for the three months ended June 30, 2009 and 2008, respectively. The Company continues to show stability in its market pricing as well as continuity in its manufacturing operations. The main reason for the lower gross profit is due to a temporarily change in customer and product mix. Furthermore, a few sales orders related to new products were delayed into the third quarter.
Operating Income
The operating income amounted to $841,466 for quarter ended June 30, 2009 compared to $1,335,863 for same quarter in 2008, which is a decrease of 37%.
Selling Expenses
Selling expenses totaled $35,362 and $61,647 for the three months ended June 30, 2009 and June 30, 2008, respectively. The main cost drivers were personnel costs, travel and costs related to various marketing campaigns. The Company has not added any sales staff compared to the same period of last year. In addition, the Company made efforts to lower expenses due to a slower sales quarter.
Administrative Expenses
Administrative expenses amounted to $267,760 and $206,303 for the three months ended June 30, 2009 and June 30, 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 made efforts to lower expenses due to a slower sales quarter.
Research and Development Expenses
Research and development (R&D) expenses totaled $36,573 and $82,379 for the three months ended June 30, of 2009 and June 30, 2008 respectively. The decrease in R&D expenses is due to a cost savings program. The Company’s efforts to broaden and strengthen its product portfolio will continue, however, at a slower pace until the economy is stabilizing and the sales activities are increasing.
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 refundable 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 revised 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 had no taxable income in this jurisdiction for the reporting periods.
Net Income
The net income for the Company was $842,725$615,857 and $862,203$956,551 for the quartersthree months ended March 31,June 30, 2009 and March 31,June 30, 2008 respectively. The net profit margin was 36.7%28% and 39.3%36% for the same periods, respectively. The decrease in net income is mainly due to a temporary downturn in the economy compared to last year’s activities resulting in lower sales. In addition, the company’s product and customer mix shifted slightly which contributed to a lower gross profit margin. The expenses were slightly lower in the second quarter compare to the same period last year. Furthermore, a few sales orders related to new products were delayed into the third quarter.
Liquidity and Capital Resources
The Company’s working capital and long-term funding primarily comes from operating cash flow and loans, while ourthe financial resources are used in capital expenditures, operating activities and repayment of loans. Net cash flow provided by operating activities amounted to $441,881$264,275 for quarterthe six months ended March 31,June 30, 2009 compared to $524,888$1,420,421 for same quarterperiod in 2008. The slightly lower cash inflow is mainly due to extended payment termsprepayments of land to a few customers to earn additional business.be used for the Company’s operations ($1,817,840). The Company’s trade receivables totaled $4,881,909$3,660,761 as of March 31,June 30, 2009 compared to $4,346,403 as of December 31, 2008. No allowance for doubtful debts was provided for the quartersix months ended March 31,June 30, 2009. The Company believes it has a strong and loyal customer base. The inventory amounted to $384,068$466,725 and $431,569 as of March 31,June 30, 2009 and December 31, 2008 respectively. The lowerslightly higher inventory level is due to, increased operational efficiency and improved overall planning.as mentioned above, a delay in shipment of a few sales orders. The main part of the inventory as of March 31,June 30, 2009 consists of work in progressraw material ($233,896)193,462). Future operations are 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 is 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.
Subsequent Event
On July 8, 2009, the Company obtained a secured loan from a financial institution with the principal amount of $1,201,300. The loan carries interest at 7.434% per annum, and is secured by the Company’s properties and repayable within one year.
On July 22, 2009 Green Planet announced that majority control of the Company had been acquired by ONE Holdings, Corp. (“ONE”). ONE acquired in a series of transactions approximately 82% of the outstanding shares of common stock of Green Planet on a fully diluted basis. The transactions involved the acquisition of common shares and warrants from the majority shareholders of Green Planet and the acquisition by ONE of Class A Preferred Shares of Green Planet. ONE paid the shareholders with a combination of cash and an aggregate of 22,265,613 shares of ONE’s common stock.
Apart from the foregoing, the Company has evaluated all other subsequent events through August 14, 2009, the date these financial statements were issued, and determined that there were no subsequent events or transactions that required recognition or disclosure in the financial statements.
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 | | 6/30/2009 | | 6/30/2008 | |
| | | | | | | | |
| Fiscal period/year end RMB: US $exchange rate | | | 6.84 | | | 6.87 | |
| | | | | | | | |
| Average period/yearly RMB: US $exchange rate | | | 6.84 | | | 7.07 | |
| | | | | | | | |
| The RMB: US$ exchange rate as of December 31, 2008 was 6.85. | | | | | | | |
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)FSP No. 141R-1 “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies. FSP 141R-1 amends the provisions in FASB Statement 141R for the initial recognition and measurement, subsequent measurement and accounting, and disclosures for assets and liabilities arising from contingencies in business combinations. FSP 141R-1 eliminates the distinction between contractual and non-contractual contingencies, including the initial recognition and measurement criteria in Statement 141R and instead carries forward most of the provisions in SFAS 141 for acquired contingencies. FSP 141R-1 is effective for contingent assets and contingent liabilities acquired in evaluating the impact of SFAS 141(R). The management is in the process of evaluating the impact of adopting this FSP on the Company’s financial statements.
In April 2009, the FASB issued FSP No. 157-4 “Determining Whether a Market is Not Active and a Transaction Is Not Distressed”. FSP No. 157-4 clarifies when markets are illiquid or that market pricing may not actually reflect the “real” value of an asset. If a market is determined to be inactive and market price is reflective of a distressed price then an alternative method of pricing can be used, such as a present value technique to estimate fair value. FSP No. 157-4 identifies factors to be considered when determining whether or not a market is inactive. FSP No. 157-4 would be effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009 and shall be applied prospectively. The adoption of this FSP has no material impact on the Company’s financial statements.
In April 2009, the FASB issued FSP FAS No. 115-2 and FAS No. 124-2 “Recognition and Presentation of Other-Than-Temporary Impairments”, whichImpairments. FSP FAS No. 115-2 and FAS No. 124-2 amends existingthe other-than-temporary impairment guidance in SFAS No. 115, Accounting for determining whether impairment is other-than-temporaryCertain Investments in Debt and Equity Securities, 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 recoverysecurities and the presentation and disclosure requirements 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 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 foron debt and equity securities. Thissecurities in the financial statements. FSP FAS No. 115-2 and FAS No. 124-2 is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company is currently evaluating the impact that the adoption of this FSP FAS 115-2 and FAS 124-2 will havehas no material impact on its results of operations, cash flows orthe Company’s financial condition.statements.
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 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. 107-1 and APB 28-1 “Interim Disclosures about Fair Value of Financial Instruments”. This FSP FAS 107-1 and APB 28-1 amends FASB StatementSFAS No. 107, Disclosures“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 requiredas well as in annual financial statements. ThisIn addition, the FSP amends APB Opinion No. 28, “Interim Financial Reporting,” to require those disclosures in summarized financial information at interim reporting periods. The FSP is effective for interim reporting periods ending after June 15, 2009, with earlier adoption permitted for periods ending after March 15, 2009. The Company does not anticipate the adoption of this FSP will have ahas no material impact on its results of operations, cash flows orthe Company’s financial condition.statements.
In May 2009, the FASB issued SFAS No. 165 “Subsequent Events”, which sets forth general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 became effective after June 15, 2009. The adoption of this SFAS has no material impact on the Company’s financial statements.
In June 2009, the FASB issued SFAS No. 166 “Accounting for Transfers of Financial Assets”. SFAS 166 removes the concept of a qualifying special-purpose entity (QSPE) from SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities and removes the exception from applying FIN 46R. This statement also clarifies the requirements for isolation and limitations on portions of financial assets that are eligible for sale accounting. This statement is effective for fiscal years beginning after November 15, 2009. The management is in the process of evaluating the impact of adopting this standard on the Company’s financial statements.
In June 2009, the FASB issued SFAS No. 167 “Amendments to FASB Interpretation No. 46(R)”, which amends FASB Interpretation No. 46 (revised December 2003) to address the elimination of the concept of a qualifying special purpose entity. SFAS 167 also replaces the quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity and the obligation to absorb losses of the entity or the right to receive benefits from the entity. Additionally, SFAS 167 provides more timely and useful information about an enterprise’s involvement with a variable interest entity. SFAS 167 shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The management is in the process of evaluating the impact of adopting this standard on the Company’s financial statements.
In June 2009, the FASB issued SFAS No. 168 “The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162”, which establishes the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB to be applied in the preparation of financial statements in conformity with generally accepted accounting principles. SFAS 168 explicitly recognizes rules and interpretive releases of the Securities and Exchange Commission under federal securities laws as authoritative GAAP for SEC registrants. SFAS 168 will become effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of this SFAS has no material impact on the Company’s financial statements.
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, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Market Risks
The 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.
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Item 3 | Quantitative and Qualitative Disclosures about Market Risk |
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| Not Applicable |
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Item 4 | Controls and Procedures |
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Disclosure Control and Procedures |
Disclosure Control and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in company 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 in the SEC’s rules and forms. Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our chief executive officer and chief financial 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,June 30, 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 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 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:
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| 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 control over financial reporting that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.
Part 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 |
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.
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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 June 30, 2009. |
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Item 3 | Defaults upon Senior Securities |
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| None |
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Item 4 | Submission of Matters to a Vote of Security Holders |
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| None |
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Item 5 | Other Information |
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| None |
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| Exhibits |
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(a) | Exhibits |
| Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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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
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned; thereunto duly authorized this 1514th day of May,August, 2009.
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GREEN PLANET BIOENGINEERING CO., LTD. |
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Date: May 15,August 14, 2009 | By: | /s/ Min Zhao | |
| | Min Zhao | |
| | Chief Executive Officer | |
| | (Principal Executive Officer and | |
| | Principal Financial Officer) | |