Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Mar. 31, 2015 | May. 28, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | American Nano Silicon Technologies, Inc. | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2015 | |
Amendment Flag | false | |
Entity Central Index Key | 1,415,917 | |
Current Fiscal Year End Date | --09-30 | |
Entity Common Stock, Shares Outstanding | 46,917,445 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Entity Incorporation, State Country Name | California | |
Entity Incorporation, Date of Incorporation | Sep. 6, 1996 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2015 | Sep. 30, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 55,068 | $ 97,233 |
Accounts receivable, net | 234,533 | 577,303 |
Inventory, net of reserve | 361,227 | 397,094 |
Advance Payments | 125,131 | 137,575 |
Prepaid expense and other receivables | 123,447 | 136,235 |
Prepaid value-added tax | 108,101 | 70,168 |
Total current assets | 1,007,507 | 1,415,608 |
Property, plant and equipment, net | 19,913,526 | 20,545,631 |
Other assets: | ||
Land use rights, net | 976,546 | 986,449 |
Total other assets | 976,546 | 986,449 |
Total Assets | 21,897,579 | 22,947,688 |
Current liabilities: | ||
Accounts payable | 418,132 | 234,686 |
Short term loans | 11,463,891 | 10,096,451 |
Taxes payable | 114,763 | 114,435 |
Due to related parties-current portion | 3,563,897 | 3,165,014 |
Long term loans-current portion | 6,200,554 | 1,508,465 |
Accrued expenses and other payables | 1,437,223 | 1,136,888 |
Total current liabilities | 23,198,460 | 16,255,939 |
Long-term liabilities | ||
Long term loans | 4,766,471 | |
Total Long Term Liabilities | 4,766,471 | |
Total liabilities | 23,198,460 | 21,022,410 |
Stockholders' (Deficiency) Equity | ||
Common stock, $0.0001 par value, 200,000,000 shares authorized; 46,917,445 shares issued and outstanding as of March 31, 2015 and September 30, 2014, respectively | 4,692 | 4,692 |
Additional paid-in-capital | 14,772,979 | 14,640,456 |
Accumulated other comprehensive income | 2,296,550 | 2,297,685 |
Accumulated deficit | (18,375,102) | (15,017,555) |
Total Stockholders' (Deficiency) Equity | (1,300,881) | 1,925,278 |
Total Liabilities and Stockholders' (Deficiency) Equity | $ 21,897,579 | $ 22,947,688 |
CONSOLIDATED BALANCE SHEETS PAR
CONSOLIDATED BALANCE SHEETS PARENTHETICAL - $ / shares | Mar. 31, 2015 | Sep. 30, 2014 |
CONSOLIDATED BALANCE SHEETS PARENTHETICAL | ||
Common stock par value | $ 0.0001 | $ 0.0001 |
Common stock shares authorized | 200,000,000 | 200,000,000 |
Common stock shares issued | 46,917,445 | 46,917,445 |
Common stock shares outstanding | 46,917,445 | 46,917,445 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | |
Revenues | ||||
Revenues | $ 145,971 | $ 244,654 | $ 936,110 | $ 590,524 |
Cost of Goods Sold | 590,899 | 643,743 | 1,719,732 | 1,393,703 |
Gross Loss | (444,928) | (399,089) | (783,622) | (803,179) |
Operating Expenses | ||||
Research and development expense | 81,664 | 98,147 | ||
Selling, general and administrative | 279,864 | 313,941 | 544,347 | 558,609 |
Total operating expense | 279,864 | 395,605 | 544,347 | 656,756 |
Loss from operations | (724,792) | (794,694) | (1,327,969) | (1,459,935) |
Other Income (Expense) | ||||
Interest expense - related party | (101,250) | (53,887) | (164,666) | (268,776) |
Interest expense, net | (1,159,287) | (819,879) | (1,919,313) | (1,185,214) |
Other income | 47,474 | 1,555 | 54,401 | 3,532 |
Total other income(expense) | (1,213,063) | (872,211) | (2,029,578) | (1,450,458) |
Loss Before Income Taxes | (1,937,855) | (1,666,905) | (3,357,547) | (2,910,393) |
Provision for Income Taxes | 43 | 141 | ||
Net Loss | (1,937,855) | (1,666,948) | (3,357,547) | (2,910,534) |
Other Comprehensive Loss | ||||
Foreign currency translation adjustment | (6,398) | (49,480) | (1,135) | (1,612) |
Comprehensive Loss | $ (1,944,253) | $ (1,716,428) | $ (3,358,682) | $ (2,912,146) |
Loss per common share | ||||
Loss per common share - Basic and diluted | $ (0.04) | $ (0.04) | $ (0.07) | $ (0.06) |
Weighted average number of common shares | ||||
Weighted average number of common shares - Basic and diluted | 46,917,445 | 46,917,445 | 46,917,445 | 46,917,445 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash flows from operating activities: | ||
Net Loss | $ (3,357,547) | $ (2,910,534) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Inventory markdown | 54,098 | |
Depreciation and amortization | 777,131 | 743,359 |
Imputed interest expense for non interest bearing related party loans | 132,522 | 124,222 |
Changes in operating assets and liabilities: | ||
Change in accounts receivable | 344,014 | 77,602 |
Change in inventory | (16,885) | (21,390) |
Change in advances to suppliers | 12,909 | 121,044 |
Change in prepaid expense and other receivables | 13,248 | (7,403) |
Change in prepaid value-added tax | (37,587) | (9,303) |
Change in accounts payable | 182,149 | (95,913) |
Change in taxes payable | (86) | (18,691) |
Change in accrued expenses and other payables | 295,638 | (128,114) |
Cash used in operating activities | (1,600,396) | (2,125,121) |
Cash flows from investing activities: | ||
Additions to property and equipment | (58,952) | (270,415) |
Cash used in investing activities | (58,952) | (270,415) |
Cash Flows From Financing Activities | ||
Proceeds (repayment) of related parties loans, net | 386,477 | (3,245,907) |
Proceeds from short term loans, net | 1,327,632 | 2,125,023 |
Repayment of long term loans, net | (96,495) | 3,751,455 |
Cash provided by financing activities | 1,617,614 | 2,630,571 |
Effect of exchange rate changes on cash and cash equivalents | (431) | (1,867) |
Increase(decrease) in cash and cash equivalents | (42,165) | 233,168 |
Cash and Cash Equivalents - Beginning of the period | 97,233 | 75,901 |
Cash and Cash Equivalents - End of the period | 55,068 | 309,069 |
During the period, cash was paid for the following: | ||
Interest expense | $ 1,605,471 | 1,299,232 |
Income tax | $ 141 |
Note 1 - Organization and Basis
Note 1 - Organization and Basis of Presentation | 6 Months Ended |
Mar. 31, 2015 | |
Notes | |
Note 1 - Organization and Basis of Presentation | Note 1 Organization and Nature of Business American Nano-Silicon Technologies, Inc. (the Company or ANNO) was incorporated in the State of California on September 6, 1996. Since 2006, the Company has been primarily engaged in the business of manufacturing and distributing refined consumer chemical products through its subsidiaries, Nanchong Chunfei Nano-Silicon Technologies Co., Ltd. (Nanchong Chunfei), Sichuan Chunfei Refined Chemicals Co., Ltd. (Chunfei Chemicals), and Sichuan Hedi Veterinary Medicines Co., Ltd. (Hedi Medicines). On May 28, 2013, the Company assigned 10% of the equity in Chunfei Chemicals to each of Mr. Fachun Pu, Mr. Qiwei Zhang and Mr. Jianbo Liu, and assigned 5% of the equity in Hedi Medicines to Mr. Fachun Pu, and the assignees paid to the Company cash equal to the registered equity amount. At the same time, Messrs Pu, Zhang and Liu agreed to hold those equity interests solely for the benefit of the Company, to pay over to the Company any distributions or dividends they receive, to vote their interests as directed by the Company, and to resell the interests to the Company at its option for cash equal to the registered equity amount. |
Note 2 - Summary of Significant
Note 2 - Summary of Significant Accounting Policies | 6 Months Ended |
Mar. 31, 2015 | |
Notes | |
Note 2 - Summary of Significant Accounting Policies | Note 2 Summary of Significant Accounting Policies Basis Of Presentation and Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of March 31, 2015 and the results of operations and cash flows for the six month periods ended March 31, 2015 and 2014. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the six months ended March 31, 2015 are not necessarily indicative of the results to be expected for any subsequent periods or for the entire year ending September 30, 2015. The balance sheet at September 30, 2014 has been derived from the audited financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commissions rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended September 30, 2014 as included in our Annual Report on Form 10-K. Reclassifications Certain amounts of prior period were reclassified for presentation purposes. Fair Value of Financial Instruments The Company adopted the provisions of Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1- Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2- Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3- Inputs are unobservable inputs which reflect the reporting entitys own assumptions. The carrying amounts reported in the balance sheets for cash, accounts receivable, inventory, taxes payable, due to related parties, prepaid expenses, other receivables, advance to suppliers, short-term loan, accounts payable, other payables and accrued expenses approximate their fair market value based on the short-term nature of these instruments. The carrying value of the long-term debt approximates fair value based on market rates and terms currently available to the Company. The Company did not identify any assets or liabilities that are required to be presented on the consolidated balance sheet at fair value in accordance with ASC 820. Taxation Income Taxes The Company accounts for income tax under the provisions of ASC 740-10-25, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes are recognized for all significant temporary differences between tax and financial statements bases of assets and liabilities. Valuation allowances will also be established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. Uncertain Tax Positions During the course of business, there are certain transactions and calculations for which the ultimate tax determination is uncertain. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes may be due. These reserves are established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable. We adjust these reserves in light of changing facts and circumstances, such as the outcome of a tax audit or changes in the tax law. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate. Value Added Tax Value added tax is imposed on goods sold in or imported in the PRC. Value added tax payable in the Peoples Republic of China is charged on an aggregated basis at a rate of 13% or 17% (depending on the type of goods involved) on the full price collected for the goods sold or, in the case of taxable services provided, at a rate of 17% on the charges for the taxable services provided, but excluding, in respect of both goods and services, any amount paid in respect of value added tax included in the price or charges, and less any deductible value added tax already paid by the taxpayer on purchases of goods and services in the same financial year. Earnings (Loss) Per Share Earnings per share are calculated in accordance with the FASB ASC 260, Earnings per share. Basic earnings per share are based upon the weighted average number of common shares outstanding, but excluding shares issued as compensation that have not yet vested. Diluted earnings per share are based on the assumption that all dilutive convertible shares and stock options were converted or exercised, and that all unvested shares have vested. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of accounts receivable, advances to suppliers and other receivables arising from its normal business activities. The Company does not require collateral or other security to support these receivables. The company routinely assesses the financial strength of its debtors and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts. Foreign Currency Translation The Companys principal country of operations is the PRC. The financial position and results of operations of the Company are determined using the local currency, Renminbi (RMB), as the functional currency. Foreign currency transactions are translated at the applicable rates of exchange in effect at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. Revenues and expenses are translated at the average exchange rates in effect during the reporting period. Equity accounts are translated in the historical exchange rate when the transactions took place. Asset and liability accounts at March 31, 2015 and September 30, 2014 were translated at 6.1312 RMB to $1.00 and at 6.1534 RMB to $1.00, respectively, which were the exchange rates on the balance sheet dates. Equity accounts were stated at their historical rate. The average translation rates applied to the statements of income and cash flows for the six months ended March 31, 2015 and 2014 were 6.1463 RMB and 6.1237 RMB to $1.00, respectively. RMB is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the Peoples Bank of China (the PBOC) or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC, which are determined largely by supply and demand. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders' equity as "Accumulated Other Comprehensive Income". Gain or loss from translation adjustments is included in the statement of operations. |
Note 3 - Going Concern
Note 3 - Going Concern | 6 Months Ended |
Mar. 31, 2015 | |
Notes | |
Note 3 - Going Concern | Note 3 Going Concern As shown in the accompanying financial statements, the Companys current liabilities exceed its current assets by $22.2 million as of March 31, 2015. The current cash and inventory level will not be sufficient to support the Companys operations and repayments of the loans. In addition, the Company has suffered negative gross profit and negative cash flows from its operations for the past two years. These factors, among others, raise substantial doubt about the Companys ability to continue as a going concern. The Company will need additional funds to meet its operating and financing obligations until sufficient cash flows are generated from anticipated production to sustain operations and to fund future development and financing obligations. We expect, but provide no assurance, that affiliate companies owned by the Companys largest shareholder and president, Mr. Pu Fachun, will continue to provide necessary funding for the Companys normal operations. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Note 4 - Inventory
Note 4 - Inventory | 6 Months Ended |
Mar. 31, 2015 | |
Notes | |
Note 4 - Inventory | Note 4 Inventory The inventory as of March 31, 2015 and September 30, 2014 consisted of the following: March 31 , 2015 September 30, 201 4 Raw materials $ 88,297 $ 125,338 Packing supplies 79,484 70,126 Work in process 89,525 75,199 Finished goods 103,921 126,431 Total $ 361,227 $ 397,094 |
Note 5 - Related Party Transact
Note 5 - Related Party Transactions | 6 Months Ended |
Mar. 31, 2015 | |
Notes | |
Note 5 - Related Party Transactions | Note 5 Related Party Transactions The Company periodically borrows money from its shareholders to finance the operations. These loans are all due on demand. The details of loans from related parties are as follows: March 31 , 2015 September 30, 201 4 Short term: Sichuan Chunfei Real Estate $ 670,050 $ 1,212,670 Sichuan Chunfei Daily Chemical 1,750,556 755,759 Sichuan Shubei Feed Co. Ltd. 63,120 62,891 Zhang, Qiwei, a shareholder 34,251 - Pu Fachun, Chief Executive Officer 1,045,920 1,133,694 Total $ 3,563,897 $ 3,165,014 Sichuan Chunfei Daily Chemicals Co. Ltd (Daily Chemical) and Sichuan Chunfei Real Estate (Chunfei Real Estate) are owned by Mr. Pu Fachun. Sichuan Shubei Feed Co. Ltd. is owned by Mr. Pu Xidi, son of Mr. Pu Fachun. The Company recorded imputed interest at 6% per annum and recorded $69,035 and $132,522 for non-interest bearing related party loans for the three and six months ended March 31, 2015, respectively. The Company recorded imputed interest at 6% per annum and recorded $42,551 and $124,222 for non-interest bearing related party loans for the three and six months ended March 31, 2014, respectively. Interest expense for interest-bearing related party loans was $32,215 and $32,144 for the three and six months ended March 31, 2015, respectively. Interest expense for interest-bearing related party loans was $11,336 and $144,554 for the three and six months ended March 31, 2014, respectively. The following table summarized related party loans with interest and non interest as of March 31, 2015: Non interest bearing Bearing interest from 1%-2.3% per month Short term loan $ 2,944,117 $ 619,780 Long term loan - - $ 2,944,117 $ 619,780 |
Note 6 - Short Term Loans and L
Note 6 - Short Term Loans and Long Term Loans | 6 Months Ended |
Mar. 31, 2015 | |
Notes | |
Note 6 - Short Term Loans and Long Term Loans | Note 6 Short Term Loans and Long Term Loans The short term loans as of March 31, 2015 and September 30, 2014 consisted of the following: March 31, 2015 September 30, 2014 a) Loan payable to Nanchong City Bureau of Finance due on demand, fixed interest rate of 0.465% per month $ - $ 650,047 b) Loan payable to Nanchong Commercial Bank, due on March 7, 2015, at a fixed interest rate of 6.9% per annum, guaranteed by a third party - 812,559 c) Loan payable to Nanchong Commercial Bank, due on July 23, 2015, at a fixed interest rate of 6.9% per annum, guaranteed by a third party 815,500 812,559 d) Loan payable to Nanchong Commercial Bank, due on March 23, 2016, at a fixed interest rate of 6.1525% per annum, guaranteed by a third party 815,500 - e) Loan payable to Bank of Communications due on July 27, 2015, at an interest rate of 7.8% per annum and guaranteed by a third party and Mr. Pu, Chairman and CEO of the Company 815,500 812,559 f) Individual loans from unrelated parties, which are due on demand and bearing a weighted average interest rate of 2.68% per month 9,017,391 7,008,727 Total Short Term Loans $ 11,463,891 $ 10,09 6,451 a) Individual loans from unrelated parties bearing a weighted average interest rate of 2.73% per month 1,370,654* 1,462,094 b) Individual loans from various investors, bearing interest of 12% per annum and due on July 1, 2015, as extended 100,000 100,000 c) Loan payable to Jialing Rural Credit Cooperative Union due on December 19, 2015 at an interest rate of 10.764% per annum, secured by Chunfei Chemicals real property and Chunfei Real Estates real property 4,729,900 4,712,842 Less: current portion of long term loans (6,200,554) (1,508,465) Total Long Term Loans $ - $ 4,766, 471 *Loans in the amount of $19,371 will be due on August 12, 2015. Loans in the amount of $1,351,283 are due on demand. The Company pledged its land use right and its building and equipment to a third party to secure the bank loans. The Company recorded interest expense of $1,159,287 and $1,919,313 for the three and six months ended March 31, 2015, respectively. The Company recorded interest expense of $819,879 and $1,185,214 for the three and six months ended March 31, 2014, respectively. |
Note 7 - Income Taxes
Note 7 - Income Taxes | 6 Months Ended |
Mar. 31, 2015 | |
Notes | |
Note 7 - Income Taxes | Note 7 Income Taxes The Companys subsidiaries are governed by the Income Tax Law of the Peoples Republic of China. Their income is taxed at the 25% statutory rate. Hedi Medicine has been taxed at a flat rate of 260 RMB per quarter since calendar 2012. The following table reconciles the U.S. statutory rates to the Companys effective tax rate for the six months ended March 31, 2015 and 2014: Six months Ended March 31 2015 2014 US statutory income tax rate 35 % 35% Non-taxable item in US 0 % 0% Change in valuation allowance - US -35 % -35% China income tax statutory rate 25 % 25% Change in valuation allowance - China -25 % -25% Effective rate - - As of March 31, 2015, net operating loss carry forwards for United States and China income tax purposes amounted to $2.5 million and $20 million, which may be available to reduce future years' taxable income. These carry forwards will expire, if not utilized, beginning in 2028 through 2034 for U.S tax purpose and 2019 to 2020 for China income tax purposes. Management believes that the realization of the benefits arising from the losses recognized in the US is uncertain due to the Company's business operations being primarily conducted in China and foreign income not being recognized in the United States for federal income tax purposes. It is also uncertain that the China business operations will generate taxable income in the future. Accordingly, the Company has provided a 100% valuation allowance as of the balance sheet dates, for the temporary differences related to the loss carry-forwards. $2,500,000 $20,000,000 The following table reconciles the changes in deferred tax asset for the six months ended March 31, 2015 and 2014: March 31 , 2015 March 31 , 2014 United States: Deferred tax asset-beginning $ 872,859 $ 855,293 Addition: loss carry-forward 7,815 10,651 Valuation allowance-beginning (872,859 ) (855,293) Addition: valuation allowance (7,815 ) (10,651) Deferred tax asset net $ - $ - March 31 , 2015 March 31 , 2014 China: Deferred tax asset -beginning $ 3,663,881 $ 2,084,623 Addition: loss carry-forward 833,805 719,990 Valuation allowance-beginning (3,663,881 ) (2,084,623) Addition: valuation allowance (833,805 ) (719,990) Deferred tax asset- net $ - $ - The Companys open tax years for its federal and state income tax returns are for the tax years after 2011. These tax returns are subject to examination by the tax authorities. |
Note 8 - Concentration
Note 8 - Concentration | 6 Months Ended |
Mar. 31, 2015 | |
Notes | |
Note 8 - Concentration | Note 8 Concentration For the three months ended March 31, 2015, two customers accounted for 69% and 21% of total sales, respectively. For the six months ended March 31, 2015, two customers accounted for 44% and 44% of total sales, respectively. For the six months ended March 31, 2014, two customers accounted for 73% and 10% of total sales. For the three months ended March 31, 2014, one customer accounted for 80% of total sales. |
Note 9 - Commitment and Conting
Note 9 - Commitment and Contingencies | 6 Months Ended |
Mar. 31, 2015 | |
Notes | |
Note 9 - Commitment and Contingencies | Note 9 Commitment and Contingencies LITIGATION During the 2013 fiscal year, Jian Zhou, a shareholder, commenced a legal action against American Nano Silicon Technologies, Inc. in the PRC. Mr. Zhou alleges that he is entitled to 857,142 shares of American Nano common stock in connection with the acquisition of Nanchong Chunfei by American Nano in 2007. In response to the allegation, American Nano has asserted that all of the shares to which Mr. Zhou was entitled were issued to him. The trial court has dismissed Mr. Zhous claim, and he has appealed the dismissal to the court of appeals. |
Note 10 - Subsequent Events
Note 10 - Subsequent Events | 6 Months Ended |
Mar. 31, 2015 | |
Notes | |
Note 10 - Subsequent Events | NOTE 1 0 SUBSEQUENT EVENTS The Company has evaluated subsequent events for purposes of recognition or disclosure through the date these financial statements were issued, and has determined that there was no material event that occurred subsequent to March 31, 2015 which would require adjustments to or disclosure in the financial statements. |
Note 2 - Summary of Significa16
Note 2 - Summary of Significant Accounting Policies: Basis of Accounting (Policies) | 6 Months Ended |
Mar. 31, 2015 | |
Policies | |
Basis of Accounting | Basis Of Presentation and Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of March 31, 2015 and the results of operations and cash flows for the six month periods ended March 31, 2015 and 2014. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the six months ended March 31, 2015 are not necessarily indicative of the results to be expected for any subsequent periods or for the entire year ending September 30, 2015. The balance sheet at September 30, 2014 has been derived from the audited financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commissions rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended September 30, 2014 as included in our Annual Report on Form 10-K. |
Note 2 - Summary of Significa17
Note 2 - Summary of Significant Accounting Policies: Reclassifications (Policies) | 6 Months Ended |
Mar. 31, 2015 | |
Policies | |
Reclassifications | Reclassifications Certain amounts of prior period were reclassified for presentation purposes. |
Note 2 - Summary of Significa18
Note 2 - Summary of Significant Accounting Policies: Fair Value of Financial Instruments (Policies) | 6 Months Ended |
Mar. 31, 2015 | |
Policies | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company adopted the provisions of Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1- Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2- Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3- Inputs are unobservable inputs which reflect the reporting entitys own assumptions. The carrying amounts reported in the balance sheets for cash, accounts receivable, inventory, taxes payable, due to related parties, prepaid expenses, other receivables, advance to suppliers, short-term loan, accounts payable, other payables and accrued expenses approximate their fair market value based on the short-term nature of these instruments. The carrying value of the long-term debt approximates fair value based on market rates and terms currently available to the Company. The Company did not identify any assets or liabilities that are required to be presented on the consolidated balance sheet at fair value in accordance with ASC 820. |
Note 2 - Summary of Significa19
Note 2 - Summary of Significant Accounting Policies: Income Taxes (Policies) | 6 Months Ended |
Mar. 31, 2015 | |
Policies | |
Income Taxes | Income Taxes The Company accounts for income tax under the provisions of ASC 740-10-25, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes are recognized for all significant temporary differences between tax and financial statements bases of assets and liabilities. Valuation allowances will also be established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. |
Note 2 - Summary of Significa20
Note 2 - Summary of Significant Accounting Policies: Uncertain Tax Positions (Policies) | 6 Months Ended |
Mar. 31, 2015 | |
Policies | |
Uncertain Tax Positions | Uncertain Tax Positions During the course of business, there are certain transactions and calculations for which the ultimate tax determination is uncertain. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes may be due. These reserves are established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable. We adjust these reserves in light of changing facts and circumstances, such as the outcome of a tax audit or changes in the tax law. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate. |
Note 2 - Summary of Significa21
Note 2 - Summary of Significant Accounting Policies: Value Added Tax (Policies) | 6 Months Ended |
Mar. 31, 2015 | |
Policies | |
Value Added Tax | Value Added Tax Value added tax is imposed on goods sold in or imported in the PRC. Value added tax payable in the Peoples Republic of China is charged on an aggregated basis at a rate of 13% or 17% (depending on the type of goods involved) on the full price collected for the goods sold or, in the case of taxable services provided, at a rate of 17% on the charges for the taxable services provided, but excluding, in respect of both goods and services, any amount paid in respect of value added tax included in the price or charges, and less any deductible value added tax already paid by the taxpayer on purchases of goods and services in the same financial year. |
Note 2 - Summary of Significa22
Note 2 - Summary of Significant Accounting Policies: Earnings (loss) Per Share (Policies) | 6 Months Ended |
Mar. 31, 2015 | |
Policies | |
Earnings (loss) Per Share | Earnings (Loss) Per Share Earnings per share are calculated in accordance with the FASB ASC 260, Earnings per share. Basic earnings per share are based upon the weighted average number of common shares outstanding, but excluding shares issued as compensation that have not yet vested. Diluted earnings per share are based on the assumption that all dilutive convertible shares and stock options were converted or exercised, and that all unvested shares have vested. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. |
Note 2 - Summary of Significa23
Note 2 - Summary of Significant Accounting Policies: Concentration of Credit Risk (Policies) | 6 Months Ended |
Mar. 31, 2015 | |
Policies | |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of accounts receivable, advances to suppliers and other receivables arising from its normal business activities. The Company does not require collateral or other security to support these receivables. The company routinely assesses the financial strength of its debtors and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts. |
Note 2 - Summary of Significa24
Note 2 - Summary of Significant Accounting Policies: Foreign Currency Translation (Policies) | 6 Months Ended |
Mar. 31, 2015 | |
Policies | |
Foreign Currency Translation | Foreign Currency Translation The Companys principal country of operations is the PRC. The financial position and results of operations of the Company are determined using the local currency, Renminbi (RMB), as the functional currency. Foreign currency transactions are translated at the applicable rates of exchange in effect at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. Revenues and expenses are translated at the average exchange rates in effect during the reporting period. Equity accounts are translated in the historical exchange rate when the transactions took place. Asset and liability accounts at March 31, 2015 and September 30, 2014 were translated at 6.1312 RMB to $1.00 and at 6.1534 RMB to $1.00, respectively, which were the exchange rates on the balance sheet dates. Equity accounts were stated at their historical rate. The average translation rates applied to the statements of income and cash flows for the six months ended March 31, 2015 and 2014 were 6.1463 RMB and 6.1237 RMB to $1.00, respectively. RMB is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the Peoples Bank of China (the PBOC) or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC, which are determined largely by supply and demand. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders' equity as "Accumulated Other Comprehensive Income". Gain or loss from translation adjustments is included in the statement of operations. |
Note 4 - Inventory_ Schedule of
Note 4 - Inventory: Schedule of Inventory, Current (Tables) | 6 Months Ended |
Mar. 31, 2015 | |
Tables/Schedules | |
Schedule of Inventory, Current | March 31 , 2015 September 30, 201 4 Raw materials $ 88,297 $ 125,338 Packing supplies 79,484 70,126 Work in process 89,525 75,199 Finished goods 103,921 126,431 Total $ 361,227 $ 397,094 |
Note 5 - Related Party Transa26
Note 5 - Related Party Transactions: Schedule of Related Party Transactions (Tables) | 6 Months Ended |
Mar. 31, 2015 | |
Tables/Schedules | |
Schedule of Related Party Transactions | March 31 , 2015 September 30, 201 4 Short term: Sichuan Chunfei Real Estate $ 670,050 $ 1,212,670 Sichuan Chunfei Daily Chemical 1,750,556 755,759 Sichuan Shubei Feed Co. Ltd. 63,120 62,891 Zhang, Qiwei, a shareholder 34,251 - Pu Fachun, Chief Executive Officer 1,045,920 1,133,694 Total $ 3,563,897 $ 3,165,014 |
Note 5 - Related Party Transa27
Note 5 - Related Party Transactions: Schedule of related party loans with interest and non interest (Tables) | 6 Months Ended |
Mar. 31, 2015 | |
Tables/Schedules | |
Schedule of related party loans with interest and non interest | Non interest bearing Bearing interest from 1%-2.3% per month Short term loan $ 2,944,117 $ 619,780 Long term loan - - $ 2,944,117 $ 619,780 |
Note 6 - Short Term Loans and28
Note 6 - Short Term Loans and Long Term Loans: Schedule of Debt (Tables) | 6 Months Ended |
Mar. 31, 2015 | |
Tables/Schedules | |
Schedule of Debt | March 31, 2015 September 30, 2014 a) Loan payable to Nanchong City Bureau of Finance due on demand, fixed interest rate of 0.465% per month $ - $ 650,047 b) Loan payable to Nanchong Commercial Bank, due on March 7, 2015, at a fixed interest rate of 6.9% per annum, guaranteed by a third party - 812,559 c) Loan payable to Nanchong Commercial Bank, due on July 23, 2015, at a fixed interest rate of 6.9% per annum, guaranteed by a third party 815,500 812,559 d) Loan payable to Nanchong Commercial Bank, due on March 23, 2016, at a fixed interest rate of 6.1525% per annum, guaranteed by a third party 815,500 - e) Loan payable to Bank of Communications due on July 27, 2015, at an interest rate of 7.8% per annum and guaranteed by a third party and Mr. Pu, Chairman and CEO of the Company 815,500 812,559 f) Individual loans from unrelated parties, which are due on demand and bearing a weighted average interest rate of 2.68% per month 9,017,391 7,008,727 Total Short Term Loans $ 11,463,891 $ 10,09 6,451 a) Individual loans from unrelated parties bearing a weighted average interest rate of 2.73% per month 1,370,654* 1,462,094 b) Individual loans from various investors, bearing interest of 12% per annum and due on July 1, 2015, as extended 100,000 100,000 c) Loan payable to Jialing Rural Credit Cooperative Union due on December 19, 2015 at an interest rate of 10.764% per annum, secured by Chunfei Chemicals real property and Chunfei Real Estates real property 4,729,900 4,712,842 Less: current portion of long term loans (6,200,554) (1,508,465) Total Long Term Loans $ - $ 4,766, 471 |
Note 7 - Income Taxes_ Schedule
Note 7 - Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables) | 6 Months Ended |
Mar. 31, 2015 | |
Tables/Schedules | |
Schedule of Effective Income Tax Rate Reconciliation | Six months Ended March 31 2015 2014 US statutory income tax rate 35 % 35% Non-taxable item in US 0 % 0% Change in valuation allowance - US -35 % -35% China income tax statutory rate 25 % 25% Change in valuation allowance - China -25 % -25% Effective rate - - |
Note 7 - Income Taxes_ Schedu30
Note 7 - Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Tables) | 6 Months Ended |
Mar. 31, 2015 | |
Tables/Schedules | |
Schedule of Deferred Tax Assets and Liabilities | March 31 , 2015 March 31 , 2014 United States: Deferred tax asset-beginning $ 872,859 $ 855,293 Addition: loss carry-forward 7,815 10,651 Valuation allowance-beginning (872,859 ) (855,293) Addition: valuation allowance (7,815 ) (10,651) Deferred tax asset net $ - $ - March 31 , 2015 March 31 , 2014 China: Deferred tax asset -beginning $ 3,663,881 $ 2,084,623 Addition: loss carry-forward 833,805 719,990 Valuation allowance-beginning (3,663,881 ) (2,084,623) Addition: valuation allowance (833,805 ) (719,990) Deferred tax asset- net $ - $ - |
Note 1 - Organization and Bas31
Note 1 - Organization and Basis of Presentation (Details) | 6 Months Ended |
Mar. 31, 2015 | |
Details | |
Entity Incorporation, State Country Name | California |
Entity Incorporation, Date of Incorporation | Sep. 6, 1996 |
Note 2 - Summary of Significa32
Note 2 - Summary of Significant Accounting Policies: Foreign Currency Translation (Details) | Mar. 31, 2015 | Sep. 30, 2014 | Mar. 31, 2014 |
Foreign Currency Translation | 6.1312 | 6.1534 | |
Statements of Income and Cash Flow | |||
Foreign Currency Translation | 6.1463 | 6.1237 |
Note 4 - Inventory_ Schedule 33
Note 4 - Inventory: Schedule of Inventory, Current (Details) - USD ($) | Mar. 31, 2015 | Sep. 30, 2014 |
Details | ||
Inventory, Raw Materials, Gross | $ 88,297 | $ 125,338 |
Packing Supplies | 79,484 | 70,126 |
Inventory, Work in Process, Gross | 89,525 | 75,199 |
Inventory, Finished Goods, Gross | 103,921 | 126,431 |
Inventory, net of reserve | $ 361,227 | $ 397,094 |
Note 5 - Related Party Transa34
Note 5 - Related Party Transactions: Schedule of Related Party Transactions (Details) - USD ($) | Mar. 31, 2015 | Sep. 30, 2014 |
Due to related parties-current portion | $ 3,563,897 | $ 3,165,014 |
Sichuan Chunfei Real Estate | ||
Due to related parties-current portion | 670,050 | 1,212,670 |
Sichuan Chunfei Daily Chemical | ||
Due to related parties-current portion | 1,750,556 | 755,759 |
Sichuan Shubei Feed Co Ltd | ||
Due to related parties-current portion | 63,120 | 62,891 |
Zhang, Qiwei, a shareholder | ||
Due to related parties-current portion | 34,251 | |
Pu Fachun | ||
Due to related parties-current portion | $ 1,045,920 | $ 1,133,694 |
Note 5 - Related Party Transa35
Note 5 - Related Party Transactions (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | |
Imputed interest expense for non interest bearing related party loans | $ 69,035 | $ 42,551 | $ 132,522 | $ 124,222 |
Interest expense - related party | 101,250 | 53,887 | 164,666 | 268,776 |
Interest bearing | ||||
Interest expense - related party | $ 32,215 | $ 11,336 | $ 32,144 | $ 144,554 |
Note 5 - Related Party Transa36
Note 5 - Related Party Transactions: Schedule of related party loans with interest and non interest (Details) - USD ($) | Mar. 31, 2015 | Sep. 30, 2014 |
Due to related parties-current portion | $ 3,563,897 | $ 3,165,014 |
Non interest bearing | ||
Short term loan | 2,944,117 | |
Due to related parties-current portion | 2,944,117 | |
Interest bearing | ||
Short term loan | 619,780 | |
Due to related parties-current portion | $ 619,780 |
Note 6 - Short Term Loans and37
Note 6 - Short Term Loans and Long Term Loans: Schedule of Debt (Details) - USD ($) | Mar. 31, 2015 | Sep. 30, 2014 |
Short term loans | $ 11,463,891 | $ 10,096,451 |
Long-term Debt, Excluding Current Maturities | 4,766,471 | |
Long-term Debt, Current Maturities | (6,200,554) | (1,508,465) |
Short Term Loan A | ||
Short term loans | 650,047 | |
Short Term Loan B | ||
Short term loans | 812,559 | |
Short Term Loan C | ||
Short term loans | 815,500 | 812,559 |
Short Term Loan D | ||
Short term loans | 815,500 | |
Short Term Loan E | ||
Short term loans | 815,500 | 812,559 |
Short Term Loan F | ||
Short term loans | 9,017,391 | 7,008,727 |
Long Term Loan A | ||
Long-term Debt, Excluding Current Maturities | 1,370,654 | 1,462,094 |
Long Term Loan B | ||
Long-term Debt, Excluding Current Maturities | 100,000 | 100,000 |
Long Term Loan C | ||
Long-term Debt, Excluding Current Maturities | $ 4,729,900 | $ 4,712,842 |
Note 6 - Short Term Loans and38
Note 6 - Short Term Loans and Long Term Loans (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | |
Details | ||||
Interest Expense, Other | $ 1,159,287 | $ 819,879 | $ 1,919,313 | $ 1,185,214 |
Note 7 - Income Taxes_ Schedu39
Note 7 - Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details) | 6 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
UnitedStates | ||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 35.00% | 35.00% |
Non-taxable item | 0.00% | 0.00% |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent | (35.00%) | (35.00%) |
China | ||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 25.00% | 25.00% |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent | (25.00%) | (25.00%) |
Note 7 - Income Taxes (Details)
Note 7 - Income Taxes (Details) | Mar. 31, 2015USD ($) |
UnitedStates | |
Operating Loss Carryforwards | $ 2,500,000 |
China | |
Operating Loss Carryforwards | $ 20,000,000 |
Note 7 - Income Taxes_ Schedu41
Note 7 - Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
UnitedStates | ||
Deferred Tax Assets, Net, Current | $ 872,859 | $ 855,293 |
Deferred Tax Assets, Operating Loss Carryforwards | 7,815 | 10,651 |
Deferred Tax Assets, Valuation Allowance, Current | (872,859) | (855,293) |
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | (7,815) | (10,651) |
CHINA | ||
Deferred Tax Assets, Net, Current | 3,663,881 | 2,084,623 |
Deferred Tax Assets, Operating Loss Carryforwards | 833,805 | 719,990 |
Deferred Tax Assets, Valuation Allowance, Current | (3,663,881) | (2,084,623) |
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | $ (833,805) | $ (719,990) |
Note 8 - Concentration (Details
Note 8 - Concentration (Details) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | |
Details | ||||
Concentration Risk, Customer | two customers accounted for 69% and 21% of total sales | one customer accounted for 80% of total sales | two customers accounted for 44% and 44% of total sales | two customers accounted for 73% and 10% of total sales |