BEIJING YIYUEQIJI SCIENCE AND TECHNOLOGY DEVELOPMENT LTD. INC.
INDEX TO FINANCIAL STATEMENTS
Nine-Months Ended September 30, 2011 (Unaudited)and Fiscal Years December 31, 2010 (Audited)
Nine-Months Ending September 30, 2011 (Unaudited) | |
UNAUDITED CONSOLIDATED BALANCE SHEETS | YIYUEQIJI-1 |
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | YIYUEQIJI-2 |
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | YIYUEQIJI-3 |
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | YIYUEQIJI-4 |
NOTES TO THE FINANCIAL STATEMENTS | YIYUEQIJI-5 |
For the period from December 29, 2009 (date of incorporation) to December 31, 2010 (Audited) | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | YIYUEQIJI-8 |
AUDITED CONSOLIDATED BALANCE SHEETS | YIYUEQIJI-9 |
AUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | YIYUEQIJI-10 |
AUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | YIYUEQIJI-11 |
AUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | YIYUEQIJI-12 |
NOTES TO THE FINANCIAL STATEMENTS | YIYUEQIJI-13 |
BEIJING YIYUEQIJI SCIENCE AND TECHNOLOGY DEVELOPMENT LTD. INC. | |
UNAUDITED BALANCE SHEETS | |
(AMOUNTS EXPRESSED IN US DOLLAR) | |
|
|
| As of September 30, 2011 |
(Unaudited) | |
ASSETS | |
Cash and cash equivalents | $ 4,513 |
Equipment, net | 8,769 |
|
|
Total Assets | $ 13,282 |
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT | |
|
|
Due to related parties | $ 234,789 |
Other payables | 2,425 |
Taxes payable | 23 |
|
|
Total Current Liabilities | 237,237 |
|
|
Total Liabilities | 237,237 |
|
|
Commitments | - |
|
|
Stockholders' Deficit: |
|
Paid-in capital | 234,379 |
Accumulated loss | (447,212) |
Accumulated other comprehensive loss | (11,122) |
|
|
Total Stockholders' Deficit | (223,955) |
|
|
Total Liabilities and Stockholders' Deficit | $ 13,282 |
The accompanying notes are an integral part of these financial statements.
YIYUEQIJI-1
BEIJING YIYUEQIJI SCIENCE AND TECHNOLOGY DEVELOPMENT LTD. INC. | ||
UNAUDITED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS | ||
(AMOUNTS EXPRESSED IN US DOLLAR) | ||
|
|
|
|
| For the Nine Months Period Ended |
|
| September 30, 2011 |
|
| (Unaudited) |
|
|
|
NET REVENUES |
| $ 52,200 |
|
|
|
COST OF REVENUES |
| - |
|
|
|
GROSS PROFIT |
| 52,200 |
|
|
|
GENERAL AND ADMINISTRATIVE EXPENSES |
| 62,676 |
|
|
|
LOSS FROM OPERATIONS |
| (10,476) |
|
|
|
LOSS BEFORE PROVISION FOR INCOME TAX |
| (10,476) |
|
|
|
PROVISION FOR INCOME TAXES |
| - |
|
|
|
NET LOSS |
| $ (10,476) |
|
|
|
COMPREHENSIVE LOSS: |
|
|
Net loss |
| $ (10,476) |
|
|
|
OTHER COMPREHENSIVE LOSS: |
|
|
Unrealized foreign currency translation loss |
| (8,833) |
|
|
|
COMPREHENSIVE LOSS |
| $ (19,309) |
The accompanying notes are an integral part of these financial statements.
YIYUEQIJI-2
BEIJING YIYUEQIJI SCIENCE AND TECHNOLOGY DEVELOPMENT LTD. INC. | ||||||||
UNAUDITED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT | ||||||||
For the Nine Months Ended September 30, 2011 | ||||||||
(AMOUNTS EXPRESSED IN US DOLLAR) | ||||||||
| ||||||||
Accumulated Other | Total | |||||||
Paid-in | Accumulated | Comprehensive | Stockholders' | |||||
| Capital | Loss | Loss | Deficit | ||||
Balance, January 1st, 2011 |
| $ 234,379 |
| $ (436,736) |
| $ (2,289) |
| $ (204,646) |
|
|
|
|
|
|
|
|
|
Net loss for the period |
| - |
| (10,476) |
| - |
| (10,476) |
|
|
|
|
|
|
|
| |
Foreign currency translation adjustment |
| - |
| - |
| (8,833) |
| (8,833) |
|
|
|
|
|
|
|
|
|
Balance, September 30, 2011 |
| $ 234,379 |
| $ (447,212) |
| $ (11,122) |
| $ (223,955) |
The accompanying notes are an integral part of these financial statements.
YIYUEQIJI-3
BEIJING YIYUEQIJI SCIENCE AND TECHNOLOGY DEVELOPMENT LTD. INC. | |||||
UNAUDITED STATEMENTS OF CASH FLOWS | |||||
(AMOUNTS EXPRESSED IN US DOLLAR) | |||||
|
|
|
|
|
|
|
|
|
|
| For the Nine Months Period Ended |
|
|
|
|
| September 30, 2011 |
|
|
|
|
| (Unaudited) |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
| |||
| Net loss |
| $ (10,476) | ||
| Adjustments to reconcile net income to net cash |
|
| ||
|
| used in operating activities: |
|
| |
|
| Depreciation |
| 1,515 | |
| Changes in assets and liabilities: |
|
| ||
|
| Accounts payable and other payables |
| 1,684 | |
|
| Taxes payable |
| (584) | |
NET CASH USED IN OPERATING ACTIVITIES |
| (7,861) | |||
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
| |||
NET CASH USED IN INVESTING ACTIVITIES |
| - | |||
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
| |||
|
| Proceeds from related parties |
| 11,515 | |
NET CASH PROVIDED BY FINANCING ACTIVITIES |
| 11,515 | |||
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE ON CASH |
| 106 | |||
|
|
|
|
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
| 3,760 | |||
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - beginning of period |
| 753 | |||
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - end of period |
| $ 4,513 | |||
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
| ||||
| Cash paid for: |
|
| ||
|
|
| Interest |
| $ - |
|
|
| Income taxes |
| - |
The accompanying notes are an integral part of these financial statements.
YIYUEQIJI-4
BEIJING YIYUEQIJI SCIENCE AND TECHNOLOGY DEVELOPMENT LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
(UNAUDITED)
NOTE 1
ORGANIZATION AND DESCRIPTION OF BUSINESS
Beijing Yiyueqiji Science and Technology Development Ltd. Inc.(the "Company") was incorporated under the laws of the People’s Republic of China on December 29, 2009.The Company is primarily engaged in the manufacturing and distributing of E-reading technology and equipment in China.
NOTE 2
UNAUDITED INFORMATION
The balance sheet of the “Company as of September 30, 2011, and thestatements of operations, stockholders deficit and cash flows for the eight -month period ended September 30, 2011have not been audited.However, in the opinion of management, such information includes all adjustments (consisting only of normal recurring adjustments) which are necessary to properly reflect the financial position of the Company as of September 30, 2011, and the results of operations for the eight-months ended September 30, 2011.
Certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, although management believes that the disclosures are adequate to make the information presented not misleading.Interim period results are not necessarily indicative of the results to be achieved for an entire year.These financial statements should be read in conjunction with the financialstatements and notes to financial statements included in the Company’s audited financial statements for the year ended December 31, 2010.
NOTE 3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The company maintains its books and accounting records in Renminbi (“RMB”), and its reporting currency is United States dollars.
USE OF ESTIMATES
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included.Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.
YIYUEQIJI-5
BEIJING YIYUEQIJI SCIENCE AND TECHNOLOGY DEVELOPMENT LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
(UNAUDITED)
NOTE 3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
IMPACT OF NEW ACCOUNTING STANDARDS
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position, or cash flow.
NOTE 4
GOING CONCERN
The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.The Company has not established enough source of revenue to cover its operating costs.The Company will engage in very limited activities without incurring any liabilities that must be satisfied in cash until a source of funding is secured.The Company will offer noncash consideration and seek equity lines as a means of financing its operations. If the Company is unable to obtain revenue producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially curtail or terminate its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders.
NOTE 5
FIXED ASSETS
At September 30, 2011, property and equipment consist of the following:
(Unaudited)
Office equipment $ 12,200
Less: accumulated depreciation (3,431)
$ 8,769
Depreciation of property and equipment is provided using the straight-line method. For the nine months period ended September 30, 2011, depreciation expense amounted to $1,515.
NOTE 6
OTHER PAYABLES
At September 30, 2011, other payables consist of the following:
September 30, 2011
(Unaudited)
Payables to related parties
$ 234,789
Others
2,425
$ 237,214
YIYUEQIJI-6
BEIJING YIYUEQIJI SCIENCE AND TECHNOLOGY DEVELOPMENT LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
(UNAUDITED)
NOTE 7
CAPITAL CONTRBUTIONS:
At September 30, 2011, paid-in capital consists of the following:
September 30, 2011
(Unaudited)
Su jin
$ 119,533
Xing Zhibin
114,846
$ 234,379
Su Jin and Xing Zhibin injected RMB816,000 and RMB784,000, equivalent to $119,533 and $114,846, respectively. Beijing Yong Qin Certified Public Accountants has verified the above capital contributions, and issued the capital verification reports.
NOTE 8
COMMITMENT AND CONTIGENCIES
Other than in the normal course of business, the Company did not have significant capital and other commitments, or significant guarantees as of September 30, 2011.
NOTE 9
SUBSEQUENT EVENTS
No material subsequent event was noticed.
YIYUEQIJI-7
Stan J.H. Lee, CPA
2160 North Central Rd. Suite 209* Fort Lee *NJ 07024
P.O. Box 436402 *San Diego * CA 92143-9402
619-623-7799 *Fax 619-564-3408 * E-mail) stan2u@gmail.com
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Beijing Yiyueqiji Science and Technology Development Ltd. Inc.
We have audited the accompanying balance sheets of Beijing Yiyueqiji Science and Technology Development Ltd. Inc.as of December 31, 2010, and the related statements of operation, shareholders’ deficit and cash flows for the calendar year then ended . These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Beijing Yiyueqiji Science and Technology Development Ltd. Inc. as of December 31, 2010, and the results of its operation and its cash
flows for the calendar years aforementioned in conformity with U.S. generally accepted accounting principles.
The financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the note to the financial statements, the Company lacks liquidity and has accumulated losses from operations which raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Stan J.H. Lee, CPA
___________________
Stan J.H. Lee, CPA. CMA
December 5, 2011
Fort Lee, New Jersey
YIYUEQIJI-8
BEIJING YIYUEQIJI SCIENCE AND TECHNOLOGY DEVELOPMENT LTD. INC. | |
BALANCE SHEETS | |
(AMOUNTS EXPRESSED IN US DOLLAR) | |
|
|
| As of December 31, 2010 |
| |
ASSETS | |
Cash and cash equivalents | $ 753 |
Equipment, net | 9,897 |
| |
Total Assets | $ 10,650 |
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
Due to related parties | $ 214,023 |
Other payables | 679 |
Taxes payable | 594 |
|
|
Total Current Liabilities | 215,296 |
|
|
Total Liabilities | 215,296 |
|
|
Commitments | - |
|
|
Stockholders' Deficit: |
|
Paid-in capital | 234,379 |
Accumulated loss | (436,736) |
Accumulated other comprehensive loss | (2,289) |
|
|
Total Stockholders' Deficit | (204,646) |
|
|
Total Liabilities and Stockholders' Deficit | $ 10,650 |
The accompanying notes are an integral part of these financial statements.
YIYUEQIJI-9
BEIJING YIYUEQIJI SCIENCE AND TECHNOLOGY DEVELOPMENT LTD. INC. | ||
STATEMENTS OF LOSS AND COMPREHENSIVE LOSS | ||
(AMOUNTS EXPRESSED IN US DOLLAR) | ||
|
|
|
|
| For the period from December 29, 2009 (date of incorporation) to December 31, 2010 |
|
|
|
NET REVENUES |
| $ 129,009 |
|
|
|
COST OF REVENUES |
| 123,604 |
|
|
|
GROSS PROFIT |
| 5,405 |
|
|
|
OPERATING EXPENSES: |
|
|
Selling |
| 14,660 |
General and administrative |
| 427,481 |
|
|
|
Total Operating Expenses |
| 442,141 |
|
|
|
LOSS FROM OPERATIONS |
| (436,736) |
|
|
|
LOSS BEFORE PROVISION FOR INCOME TAX |
| (436,736) |
|
|
|
PROVISION FOR INCOME TAXES |
| - |
|
|
|
NET LOSS |
| $ (436,736) |
|
|
|
COMPREHENSIVE LOSS: |
|
|
Net loss |
| $ (436,736) |
|
|
|
OTHER COMPREHENSIVE LOSS: |
|
|
Unrealized foreign currency translation loss |
| (2,289) |
|
|
|
COMPREHENSIVE LOSS |
| $ (439,025) |
The accompanying notes are an integral part of these financial statements.
YIYUEQIJI-10
BEIJING YIYUEQIJI SCIENCE AND TECHNOLOGY DEVELOPMENT LTD. INC. | ||||||||
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT | ||||||||
For the period from December 29, 2009 (date of incorporation) to December 31, 2010 | ||||||||
(AMOUNTS EXPRESSED IN US DOLLAR) | ||||||||
| ||||||||
Accumulated Other | Total | |||||||
Paid-in | Accumulated | Comprehensive | Stockholders' | |||||
| Capital | Loss | Loss | Deficit | ||||
Balance, December 29, 2009 (date of incorporation) | $ - | $ - | $ - | $ - | ||||
Capital injection | 234,379 | 234,379 | ||||||
Net loss for the period |
| - |
| (436,736) |
| - |
| (436,736) |
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
| - |
| - |
| (2,289) |
| (2,289) |
|
|
|
|
|
|
|
|
|
Balance, December 31, 2010 |
| $ 234,379 |
| $ (436,736) |
| $ (2,289) |
| $ (204,646) |
The accompanying notes are an integral part of these financial statements.
YIYUEQIJI-11
BEIJING YIYUEQIJI SCIENCE AND TECHNOLOGY DEVELOPMENT LTD. INC. | |||||
STATEMENTS OF CASH FLOWS | |||||
(AMOUNTS EXPRESSED IN US DOLLAR) | |||||
|
|
|
|
|
|
|
|
|
|
| For the period from December 29, 2009 (date of incorporation) to December 31, 2010 |
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
| |||
| Net loss |
| $ (436,736) | ||
| Adjustments to reconcile net loss to net cash |
|
| ||
|
| used in operating activities: |
|
| |
|
| Depreciation |
| 1,771 | |
| Changes in assets and liabilities: |
|
| ||
|
| Accounts payable and other payables |
| 665 | |
|
| Taxes payable |
| 581 | |
NET CASH USED IN OPERATING ACTIVITIES |
| (433,719) | |||
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
| |||
|
| Purchase of office equipment |
| (11,457) | |
NET CASH USED IN INVESTING ACTIVITIES |
| (11,457) | |||
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
| |||
|
| Capital injection |
| 234,379 | |
|
| Proceeds from related parties |
| 209,465 | |
NET CASH PROVIDED BY FINANCING ACTIVITIES |
| 443,844 | |||
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE ON CASH |
| 2,085 | |||
|
|
|
|
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
| 753 | |||
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - beginning of period |
| - | |||
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - end of period |
| $ 753 | |||
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
| |||
| Cash paid for: |
|
| ||
|
|
| Interest |
| $ - |
|
|
| Income taxes |
| - |
The accompanying notes are an integral part of these financial statements.
YIYUEQIJI-12
BEIJING YIYUEQIJI SCIENCE AND TECHNOLOGY DEVELOPMENT LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2010
(AUDITED)
NOTE 1
ORGANIZATION AND DESCRIPTION OF BUSINESS
Beijing Yiyueqiji Science and Technology Development Ltd. Inc.(the "Company") was incorporated under the laws of the People’s Republic of China on December 29, 2009. The Company is primarily engaged in the manufacturing and distributing of E-reading technology and equipment in China.
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTION
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The company maintains its books and accounting records in Renminbi (“RMB”), and its reporting currency is United States dollars.
ACCOUNTING METHOD
The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a fiscal year ending on December 31.
USE OF ESTIMATES
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.
IMPACT OF NEW ACCOUNTING STANDARDS
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position, or cash flow.
YIYUEQIJI-13
BEIJING YIYUEQIJI SCIENCE AND TECHNOLOGY DEVELOPMENT LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2010
(AUDITED)
NOTE 3
GOING CONCERN
The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not established enough source of revenue to cover its operating costs. The Company will engage in very limited activities without incurring any liabilities that must be satisfied in cash until a source of funding is secured. The Company will offer noncash consideration and seek equity lines as a means of financing its operations. If the Company is unable to obtain revenue producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially curtail or terminate its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders.
NOTE 4.
FIXED ASSETS
At December 31, 2010, property and equipment consist of the following:
December 31, 2010 | |||
Office equipment | $ 11,707 | ||
Less: accumulated depreciation | (1,810) | ||
$ 9,897 |
Depreciation of property and equipment is provided using the straight-line method. For the year ended December 31, 2010, depreciation expense amounted to $1,810.
NOTE 5.
OTHER PAYABLES
At December 31, 2010, other payables consist of the following:
December 31, 2010 | |||
Payables to related parties | $ 214,023 | ||
Others | 679 | ||
$ 214,702 |
YIYUEQIJI-14
BEIJING YIYUEQIJI SCIENCE AND TECHNOLOGY DEVELOPMENT LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2010
(AUDITED)
NOTE 6.
CAPITAL CONTRBUTIONS
At December 31, 2010, paid-in capital consists of the following:
December 31, 2010 | |||
Su jin | $ 119,533 | ||
Xing Zhibin | 114,846 | ||
$ 234,379 |
Su Jin and Xing Zhibin injected Renminbi (“RMB”)816,000 and RMB784,000, equivalent to $119,533 and $114,846, respectively. Beijing Yong Qin Certified Public Accountants has verified the above capital contributions, and issued the capital verification reports.
NOTE 7. COMMITMENT AND CONTIGENCIES
Other than in the normal course of business, the Company did not have significant capital and other commitments, or significant guarantees as of December 31, 2010.
NOTE 8. SUBSEQUENT EVENTS
There is no material subsequent event to disclose.
YIYUEQIJI-15
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC.
INDEX TO FINANCIAL STATEMENTS
Nine-Months Ended September 30, 2011 (Unaudited)and Fiscal Years December 31, 2010 and 2009 (Audited)
Nine-Months Ending September 30, 2011 (Unaudited) | |
UNAUDITED CONSOLIDATED BALANCE SHEETS | XINGWEI-1 |
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | XINGWEI-2 |
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | XINGWEI-3 |
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | XINGWEI-4 |
NOTES TO THE FINANCIAL STATEMENTS | XINGWEI-5 |
Fiscal Years December 31, 2010 and 2009 ( Audited) | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | XINGWEI-10 |
AUDITED CONSOLIDATED BALANCE SHEETS | XINGWEI-11 |
AUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | XINGWEI-12 |
AUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | XINGWEI-13 |
AUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | XINGWEI-14 |
NOTES TO THE FINANCIAL STATEMENTS | XINGWEI-15 |
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC. | |
UNAUDITED BALANCE SHEETS | |
(AMOUNTS EXPRESSED IN US DOLLAR) | |
| As of |
| September 30, 2011 |
(Unaudited) | |
ASSETS | |
Cash and cash equivalents | $373,882 |
Accounts receivable, net | 51,000 |
Inventories | 150,426 |
Advances to suppliers | 628,120 |
Other receivables, net | 14,533 |
|
|
Total Current Assets | 1,217,961 |
| |
Equipment, net | 40,889 |
|
|
Total Assets | $1,258,850 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY | |
|
|
Current Liabilities: |
|
Accounts payable | $79 |
Advance from customers | 363,458 |
Other payables | 50,371 |
Taxes payable | 26,826 |
|
|
Total Current Liabilities | 440,734 |
|
|
Total Liabilities | 440,734 |
|
|
Commitments | - |
|
|
Stockholders' Equity: |
|
Paid-in capital | 127,843 |
Statutory reserve | 65,665 |
Retained earnings | 584,479 |
Accumulated other comprehensive income | 40,129 |
|
|
Total Stockholders' Equity | 818,116 |
|
|
Total Liabilities and Stockholders' Equity | $1,258,850 |
The accompanying notes are an integral part of these financial statements.
XINGWEI-1
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC. | ||
UNAUDITED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||
(AMOUNTS EXPRESSED IN US DOLLAR) | ||
|
| For the Nine Months Period Ended |
|
| September 30, 2011 |
|
| (Unaudited) |
|
|
|
NET REVENUES |
| $2,067,318 |
|
|
|
COST OF REVENUES |
| 1,255,388 |
|
|
|
GROSS PROFIT |
| 811,930 |
|
|
|
OPERATING EXPENSES: |
|
|
Selling |
| 152,557 |
General and administrative |
| 143,928 |
|
|
|
Total Operating Expenses |
| 296,485 |
|
|
|
INCOME FROM OPERATIONS |
| 515,445 |
|
|
|
OTHER INCOME: |
| 32,654 |
|
|
|
INCOME BEFORE PROVISION FOR INCOME TAX |
| 548,099 |
|
|
|
PROVISION FOR INCOME TAXES |
| - |
|
|
|
NET INCOME |
| $548,099 |
|
|
|
COMPREHENSIVE INCOME: |
|
|
Net income |
| $548,099 |
|
|
|
OTHER COMPREHENSIVE INCOME: |
|
|
Unrealized foreign currency translation gain |
| 21,491 |
|
|
|
COMPREHENSIVE INCOME |
| $569,590 |
The accompanying notes are an integral part of these financial statements.
XINGWEI-2
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC. | ||||||||||
UNAUDITED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||||||
For the Nine Months Ended September 30, 2011 | ||||||||||
(AMOUNTS EXPRESSED IN US DOLLAR) | ||||||||||
| ||||||||||
(Accumulated Loss) | Accumulated Other | Total | ||||||||
Paid-in | Retained | Statutory | Comprehensive | Stockholders' | ||||||
| Capital | Earnings | Reserve | Income | Equity | |||||
Balance, January 1st, 2011 |
| $127,843 |
| $92,292 |
| $9,753 |
| $18,638 |
| $248,526 |
|
|
|
|
|
|
|
|
|
|
|
Net income for the period |
| - |
| 548,099 |
| - |
| - |
| 548,099 |
|
|
|
|
|
|
|
|
|
|
|
Profit appropriation to statutory reserve |
| - |
| (55,912) |
| 55,912 |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
| - |
| - |
| - |
| 21,491 |
| 21,491 |
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2011 |
| $127,843 |
| $584,479 |
| $65,665 |
| $40,129 |
| $818,116 |
The accompanying notes are an integral part of these financial statements.
XINGWEI-3
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC. | |||||
UNAUDITED STATEMENTS OF CASH FLOWS | |||||
(AMOUNTS EXPRESSED IN US DOLLAR) | |||||
|
|
|
|
|
|
|
|
|
|
| For the Nine Months Period Ended |
|
|
|
|
| September 30, 2011 |
|
|
|
|
| (Unaudited) |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
| |||
| Net income |
| $548,099 | ||
| Adjustments to reconcile net income to net cash |
|
| ||
|
| provided by operating activities: |
|
| |
|
| Depreciation |
| 7,917 | |
| Changes in assets and liabilities: |
|
| ||
|
| Accounts receivable |
| 48,730 | |
|
| Inventories |
| (121,474) | |
|
| Other receivables |
| 15,017 | |
|
| Advances to suppliers |
| (561,229) | |
|
| Accounts payable and other payables |
| 49,455 | |
|
| Taxes payable |
| (1,479) | |
|
| Advances from customers |
| 284,848 | |
NET CASH PROVIDED BY OPERATING ACTIVITIES |
| 269,884 | |||
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
| |||
|
| Purchase of office equipment |
| (10,357) | |
NET CASH USED IN INVESTING ACTIVITIES |
| (10,357) | |||
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
| |||
NET CASHPROVIDED BY FINANCING ACTIVITIES |
| - | |||
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE ON CASH |
| 784 | |||
|
|
|
|
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
| 260,311 | |||
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - beginning of period |
| 113,571 | |||
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - end of period |
| $373,882 | |||
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOWINFORMATION: |
| ||||
| Cash paid for: |
|
| ||
|
|
| Interest |
| $- |
|
|
| Income taxes |
| - |
The accompanying notes are an integral part of these financial statements.
XINGWEI-4
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
(UNAUDITED)
NOTE 1
ORGANIZATION AND DESCRIPTION OF BUSINESS
Guangzhou Xingwei Communications Technology Ltd. Inc.(the "Company") was incorporated under the laws of the People’sRepublic of China on January 11 , 2007.The Company is primarily engaged in the service, research and development of computer software and hardware, telecom technology in China.
NOTE 2
UNAUDITED INFORMATION
The balance sheet ofthe “Company” as of September 30, 2011, and thestatements of operations, stockholders deficit and cash flows for the eight -month period ended September 30, 2011have not been audited.However, in the opinion of management, such information includes all adjustments (consisting only of normal recurring adjustments) which are necessary to properly reflect the financial position of the Company as of September 30, 2011, and the results of operations for the eight-months ended September 30, 2011.
Certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, although management believes that the disclosures are adequate to make the information presented not misleading.Interim period results are not necessarily indicative of the results to be achieved for an entire year.These financial statements should be read in conjunction with the financialstatements and notes to financial statements included in the Company’s audited financial statements for the year ended December 31, 2010.
NOTE 3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The company maintains its books and accounting records in Renminbi (“RMB”), and its reporting currency is United States dollars.
USE OF ESTIMATES
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included.Actual results could differ from those estimates.
XINGWEI-5
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
(UNAUDITED)
NOTE 3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.
TRADE ACCOUNTS RECEIVABLE
Trade accounts receivable are recorded at the contract amount after deduction of trade discounts, allowances, if any, and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience, customer specific facts and economic conditions.
The Company reviews its allowance for doubtful accounts monthly. Past due balances over 1 year and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis by aging of such balances. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. No allowance was made for the period 8-months ended September 30, 2011.
REVENUE RECOGNITION
Sales revenue is recognized at the date of shipment from the Company’s facilities to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, ownership has passed, no other significant obligations of the Company exist and collectability is reasonably assured.
The Company’s revenue consists of the invoiced value of goods, net of value-added tax (“VAT”).
FOREIGN CURRENCY TRANSLATION
The functional currency of the Company is the RMB and the RMB is not freely convertible into foreign currencies. The Company maintains its financial statements in the functional currency. 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 date. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. 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 of the Company, which are prepared using the functional currency, have been translated into United States dollars. Assets and liabilities translated at exchange rates at the balance sheet date, revenue and expenses are translated at the average exchange rates for the period, and members' equity is translated at historical exchange rates. Translation adjustments are included in accumulated other comprehensive income, a component of members’ equity.
XINGWEI-6
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
(UNAUDITED)
NOTE 3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income represents the change in equity of the Company during the periods presented from foreign currency translation adjustments.
TAXATION
Taxation on profits earned in the PRC has been calculated on the estimated assessable profits for the year at the rates of taxation prevailing in the PRC where the Company operates after taking into effect the benefits from any special tax credits or “tax holidays” allowed in the county of operations.
The Company does not accrue United States income tax since it has no operating income in the United States. The Company is organized and located in the PRC and do not conduct any business in the United States.
Enterprise income tax
In accordance with the relevant tax laws in the PRC, as a high-tech enterprise, the Company is exempted from corporate income tax for its first two profit-making years after deducting losses incurred in previous years and is entitled to a 50% tax reduction for the succeeding three years. Accordingly, the company statutory rate was 0% and 0% for the period nine-months ended September 30, 2011.
Value added tax
The Provisional Regulations of The People’s Republic of China Concerning Value Added Tax promulgated by the State Council came into effect on January 1, 1994. Under these regulations and the Implementing Rules of the Provisional Regulations of the PRC Concerning Value Added Tax, value added tax (“VAT”) is imposed on goods sold in or imported into the PRC and on processing, repair and replacement services provided within the PRC.
VAT payable in The People’s 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 VAT 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.
IMPACT OF NEW ACCOUNTING STANDARDS
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position, or cash flow.
XINGWEI-7
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
(UNAUDITED)
NOTE 4
ADVANCES TO SUPPLIES
At September 30, 2011, advances to suppliers consisted of the following:
September 30, 2011
(Unaudited)
Prepayment to third parties suppliers
US$628,120
NOTE 5
INVENTORIES
Inventories are stated at the lower of cost or market value. Cost is determined using moving weighted average method. Cost of finished goods comprises direct material, direct production cost and an allocated portion of production overheads based on normal operating capacity.
Inventories at September 30, 2011 consist of the following:
September 30, 2011
(Unaudited)
Raw material
US $144,969
Finished goods
5,457
150,426
Provision for Inventory
-
150,426
NOTE 6
PROPERTY, PLANT and EQUIPMENT
Property, plant and equipment are stated at cost less accumulated depreciation and impairment. Depreciation on property, plant and equipment is calculated on the straight-line method after taking into account their respective estimated residual values over the estimated useful lives of the assets as follows:
Furniture and office equipment
3—5 years
Maintenance and repair costs are expensed as incurred, whereas significant renewals and betterments are capitalized.
Property, Plant and Equipment at September 30, 2011 consists of the following:
September 30, 2011
(Unaudited)
Furniture and office equipment US $67,034
Less: Accumulated depreciation (26,145)
40,889
XINGWEI-8
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
(UNAUDITED)
NOTE 7
ADVANCES FROM CUSTOMERS
At September 30, 2011, advances from customers consisted of the following:
September 30, 2011
(Unaudited)
Advances from third parties customers
US $363,458
NOTE 8
CAPITAL CONTRBUTIONS
At September 30, 2011, paid-in capital consists of the following:
September 30, 2011
(Unaudited)
Zhu Chengwu
US $15,341
He Qijian
25,569
He Songtao
86,933
127,843
Zhu Chengwu, He Qijian and He Songtao injected Renminbi (“RMB”)120,000, RMB200,000 and RMB680,000, equivalent to $15,341, $25,569 and $86,933, respectively. GuangZhouHaiZheng Certified Public Accountants has verified the above capital contributions, and issued the capital verification reports.
NOTE 9
COMMITMENT AND CONTIGENCIES
Other than in the normal course of business, the Company did not have significant capital and other commitments, or significant guarantees as of September 30, 2011.
NOTE 10
SUBSEQUENT EVENTS
No material subsequent event was noticed.
XINGWEI-9
Stan J.H. Lee, CPA
2160 North Central Rd. Suite 209* Fort Lee *NJ 07024
P.O. Box 436402 *San Diego * CA 92143-9402
619-623-7799 *Fax 619-564-3408 * E-mail) stan2u@gmail.com
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC.
We have audited the accompanying balance sheet of GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC. of December 31, 2010 and 2009 and the related statements of operations, shareholders' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amount and disclosures in the combined financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SPICY GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC as of Deecember 31, 2010 and 2009, and the results of its operation and its cash flows for the aforementioned years in conformity with U.S. generally accepted accounting principles.
/s/ Stan J.H. Lee, CPA_________________________
Stan J.H. Lee, CPA, CMA
December 5, 2011
Fort Lee, New Jersey
XINGWEI-10
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC. | |||
(AMOUNTS EXPRESSED IN US DOLLAR) | |||
|
|
|
|
| As of December 31, | ||
| 2010 | 2009 | |
|
| ||
ASSETS | |||
| |||
Cash and cash equivalents | $104,726 | $113,571 | |
Accounts receivable, net | 96,637 | 1 | |
Inventories | 25,439 |
| 100,355 |
Advances to suppliers | 53,362 |
| 92,613 |
Other receivables, net | 28,645 |
| 7,049 |
| |||
Total Current Assets | 308,809 | 313,589 | |
| |||
Equipment, net | 36,846 |
| 39,306 |
| |||
Total Assets | $345,655 |
| $352,895 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
Accounts payable | - |
| 44,635 |
Advance from customers | 69,940 |
| 193,443 |
Due to related parties | - |
| - |
Other payables | - |
| - |
Taxes payable | 27,189 |
| 25,720 |
|
|
|
|
Total Current Liabilities | 97,129 |
| 263,798 |
|
|
|
|
Total Liabilities | 97,129 |
| 263,798 |
|
|
|
|
Commitments | - |
| - |
|
|
|
|
Stockholders' Equity: |
|
|
|
Paid-in capital | 127,843 |
| 127,843 |
Statutory reserve | 9,753 |
| - |
Retained earnings (Accumulated loss) | 92,292 |
| (51,283) |
Accumulated other comprehensive income | 18,638 |
| 12,537 |
|
|
|
|
Total Stockholders' Equity | 248,526 |
| 89,097 |
|
|
|
|
Total Liabilities and Stockholders' Equity | $345,655 |
| $352,895 |
The accompanying notes are an integral part of these financial statements.
XINGWEI-11
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC. | ||||
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||
(AMOUNTS EXPRESSED IN US DOLLAR) | ||||
|
|
|
|
|
|
| For the Years Ended December 31, | ||
|
| 2010 |
| 2009 |
|
|
|
|
|
NET REVENUES |
| $1,061,817 |
| $1,452,667 |
|
|
|
|
|
COST OF REVENUES |
| 666,623 |
| 924,272 |
|
|
|
|
|
GROSS PROFIT |
| 395,194 |
| 528,395 |
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
Selling |
| 87,160 |
| 96,476 |
General and administrative |
| 197,808 |
| 372,515 |
|
|
|
|
|
Total Operating Expenses |
| 284,968 |
| 468,991 |
|
|
|
|
|
INCOME FROM OPERATIONS |
| 110,226 |
| 59,404 |
|
|
|
|
|
OTHER INCOME: |
| 43,102 |
| - |
|
|
|
|
|
INCOME BEFORE PROVISION FOR INCOME TAX | 153,328 |
| 59,404 | |
|
|
|
|
|
PROVISION FOR INCOME TAXES |
| - |
| 8,530 |
|
|
|
|
|
NET INCOME |
| $153,328 |
| $50,874 |
|
|
|
|
|
COMPREHENSIVE INCOME: |
|
|
|
|
Net income |
| $153,328 |
| $50,874 |
|
|
|
|
|
OTHER COMPREHENSIVE INCOME: |
|
|
|
|
Unrealized foreign currency translation gain |
| 6,101 |
| 60 |
|
|
|
|
|
COMPREHENSIVE INCOME |
| $159,429 |
| $50,934 |
The accompanying notes are an integral part of these financial statements.
XINGWEI-12
GUANGZHOU XINWEI COMMUNICATIONS TECHNOLOGY LTD. INC. | ||||||||||
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||||||
For the Years Ended December 31, 2009 and 2010 | ||||||||||
(AMOUNTS EXPRESSED IN US DOLLAR) | ||||||||||
| ||||||||||
(Accumulated Loss) | Accumulated Other | Total | ||||||||
Paid-in | Retained | Statutory | Comprehensive | Stockholders' | ||||||
| Capital | Earnings | Reserve | Income | Equity | |||||
Balance, January 1, 2009 | $127,843 | $(102,157) | $- | $12,477 | $38,163 | |||||
Net income for the year |
| - |
| 50,874 |
| - |
| - |
| 50,874 |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
| - |
| - |
| - |
| 60 |
| 60 |
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2009 |
| 127,843 |
| (51,283) |
| - |
| 12,537 |
| 89,097 |
|
|
|
|
|
|
|
|
|
|
|
Net income for the year |
| - |
| 153,328 |
| - |
| - |
| 153,328 |
|
|
|
|
|
|
|
|
|
|
|
Profit appropriation to statutory reserve |
| - |
| (9,753) |
| 9,753 |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
| - |
| - |
| - |
| 6,101 |
| 6,101 |
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2010 |
| $127,843 |
| $92,292 |
| $9,753 |
| $18,638 |
| $248,526 |
The accompanying notes are an integral part of these financial statements.
XINGWEI-13
GUANGZHOU XINWEI COMMUNICATIONS TECHNOLOGY LTD. INC. | |||||||
STATEMENTS OF CASH FLOWS | |||||||
(AMOUNTS EXPRESSED IN US DOLLAR) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
| For the Year Ended December 31, | ||
|
|
|
|
| 2010 |
| 2009 |
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
| |||
| Net income |
| $153,328 |
| $50,874 | ||
| Adjustments to reconcile net income to net cash |
|
|
|
| ||
|
| (used in) provided by operating activities: |
|
|
|
| |
|
| Depreciation |
| 9,296 |
| 5,691 | |
| Changes in assets and liabilities: |
|
|
|
| ||
|
| Accounts receivable |
| (94,578) |
| 167 | |
|
| Inventories |
| 76,368 |
| (67,768) | |
|
| Other receivables |
| (20,922) |
| (1,252) | |
|
| Advances to suppliers |
| 41,228 |
| (89,561) | |
|
| Accounts payable and other payables |
| (45,039) |
| (14,088) | |
|
| Taxes payable |
| 656 |
| 25,609 | |
|
| Advances from customers |
| (126,749) |
| 149,561 | |
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES |
| (6,412) |
| 59,233 | |||
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
| |||
|
| Purchase of office equipment |
| (5,695) |
| (36,058) | |
NET CASH USED IN INVESTING ACTIVITIES |
| (5,695) |
| (36,058) | |||
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
| |||
NET CASHPROVIDED BY FINANCING ACTIVITIES |
| - |
| - | |||
|
|
|
|
|
|
| |
EFFECT OF EXCHANGE RATE ON CASH |
| 3,262 |
| 96 | |||
|
|
|
|
|
|
|
|
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (8,845) |
| 23,271 | ||||
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - beginning of year |
| 113,571 |
| 90,300 | |||
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - end of year |
| $104,726 |
| $113,571 | |||
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOWINFORMATION: |
|
|
|
| |||
| Cash paid for: |
|
|
|
| ||
|
|
| Interest |
| $- |
| $- |
|
|
| Income taxes |
| - |
| $8,530 |
The accompanying notes are an integral part of these financial statements.
XINGWEI-14
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
(AUDITED)
NOTE 1
ORGANIZATION AND DESCRIPTION OF BUSINESS
Guangzhou Xingwei Communications Technology Ltd. Inc. (the "Company") was incorporated under the laws of the People’s Republic of China on January 11th , 2007. The Company is primarily engaged in the service, research and development of computer software and hardware, telecom technology in China.
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The company maintains its books and accounting records in Renminbi (“RMB”), and its reporting currency is United States dollars.
ACCOUNTING METHOD
The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a fiscal year ending on December 31.
USE OF ESTIMATES
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.
TRADE ACCOUNTS RECEIVABLE
Trade accounts receivable are recorded at the contract amount after deduction of trade discounts, allowances, if any, and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience, customer specific facts and economic conditions.
XINGWEI-15
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
(AUDITED)
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
TRADE ACCOUNTS RECEIVABLE (CONTINUED)
The Company reviews its allowance for doubtful accounts monthly. Past due balances over 1 year and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis by aging of such balances. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. No allowance was made for the years ended December 31, 2009 and 2010.
REVENUE RECOGNITION
Sales revenue is recognized at the date of shipment from the Company’s facilities to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, ownership has passed, no other significant obligations of the Company exist and collectibility is reasonably assured.
The Company’s revenue consists of the invoiced value of goods, net of value-added tax (“VAT”).
FOREIGN CURRENCY TRANSLATION
The functional currency of the Company is the RMB and the RMB is not freely convertible into foreign currencies. The Company maintains its financial statements in the functional currency. 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 date. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. 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 of the Company, which are prepared using the functional currency, have been translated into United States dollars. Assets and liabilities translated at exchange rates at the balance sheet date, revenue and expenses are translated at the average exchange rates for the period, and members' equity is translated at historical exchange rates. Translation adjustments are included in accumulated other comprehensive income, a component of members’ equity.
ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income represents the change in equity of the Company during the periods presented from foreign currency translation adjustments.
XINGWEI-16
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
(AUDITED)
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
TAXATION
Taxation on profits earned in the PRC has been calculated on the estimated assessable profits for the year at the rates of taxation prevailing in the PRC where the Company operates after taking into effect the benefits from any special tax credits or “tax holidays” allowed in the county of operations.
The Company does not accrue United States income tax since it has no operating income in the United States. The Company is organized and located in the PRC and do not conduct any business in the United States.
Enterprise income tax
In accordance with the relevant tax laws in the PRC, as a high-tech enterprise, the Company is exempted from corporate income tax for its first two profit-making years after deducting losses incurred in previous years and is entitled to a 50% tax reduction for the succeeding three years. Accordingly, the company statutory rate was 0% and 0% for the years 2009 and 2010, respectively.
Value added tax
The Provisional Regulations of The People’s Republic of China Concerning Value Added Tax promulgated by the State Council came into effect on January 1, 1994. Under these regulations and the Implementing Rules of the Provisional Regulations of the PRC Concerning Value Added Tax, value added tax (“VAT”) is imposed on goods sold in or imported into the PRC and on processing, repair and replacement services provided within the PRC.
VAT payable in The People’s 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 VAT 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.
IMPACT OF NEW ACCOUNTING STANDARDS
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position, or cash flow.
XINGWEI-17
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
(AUDITED)
NOTE 3
ADVANCES TO SUPPLIERS
At December 31, 2010 and 2009, advances to suppliers consisted of the following:
December 31, 2010 | December 31, 2009 | |||||
US$ | US$ | |||||
Prepayment to third parties suppliers | 53,362 | 92,613 | ||||
NOTE 4
INVENTORIES
Inventories are stated at the lower of cost or market value. Cost is determined using moving weighted average method. Cost of finished goods comprises direct material, direct production cost and an allocated portion of production overheads based on normal operating capacity.
Inventories at December 31, 2010 and 2009 consist of the following:
December 31, 2010 | December 31, 2009 | ||
US$ | US$ | ||
Raw material | 14,068 | 37,063 | |
Production cost | 1,183 | - | |
Finished goods | 10,188 | 63,292 | |
25,439 | 100,355 | ||
Provision for Inventory | - | - | |
25,439 | 100,355 |
NOTE 5
PROPERTY, PLANT and EQUIPMENT
Property, plant and equipment are stated at cost less accumulated depreciation and impairment. Depreciation on property, plant and equipment is calculated on the straight-line method after taking into account their respective estimated residual values over the estimated useful lives of the assets as follows:
Furniture and office equipment | 3—5 years |
Maintenance and repair costs are expensed as incurred, whereas significant renewals and betterments are capitalized.
XINGWEI-18
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
(AUDITED)
NOTE 5
PROPERTY, PLANT and EQUIPMENT (CONTINUED)
Property, Plant and Equipment at December 31, 2009 and 2010 consists of the following:
December 31, 2010 | December 31, 2009 | ||
US$ | US$ | ||
Furniture and office equipment | 54,185 | 46,910 | |
Less: Accumulated depreciation | (17,338) | (7,604) | |
36,847 | 39,306 |
NOTE 6
ADVANCES FROM CUSTOMERS
At December 31, 2010 and 2009, advances from customers consisted of the following:
December 31, 2010 | December 31, 2009 | |||||
US$ | US$ | |||||
Advances from third parties customers | 69,940 | 193,443 | ||||
NOTE 7
CAPITAL CONTRBUTIONS
At December 31, 2010 and 2009, paid-in capital consists of the following:
December 31, 2010 | December 31, 2009 | ||
Zhu Chengwu | US$ 15,341 | US$ 15,341 | |
He Qijian | 25,569 | 25,569 | |
He Songtao | 86,933 | 86,933 | |
127,843 | 127,843 |
Zhu Chengwu, He Qijian and He Songtao injected Renminbi (“RMB”)120,000, RMB200,000 and RMB680,000, equivalent to $15,341, $25,569 and $86,933, respectively. GuangZhou HaiZheng Certified Public Accountants has verified the above capital contributions, and issued the capital verification reports.
XINGWEI-19
GUANGZHOU XINGWEI COMMUNICATIONS TECHNOLOGY LTD. INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
(AUDITED)
NOTE 8
COMMITMENT AND CONTIGENCIES
Other than in the normal course of business, the Company did not have significant capital and other commitments, or significant guarantees as of December 31, 2010 and 2009.
NOTE 9
SUBSEQUENT EVENTS
There is no material subsequent event to disclose.
XINGWEI-20
AMS-INT ASIA LIMITED AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Nine-Months Ending September 30, 2011 (Unaudited)and Fiscal Years December 31, 2010 and 2009
Nine-Months Ending September 30, 2011 (Unaudited) | |
UNAUDITED CONSOLIDATED BALANCE SHEETS | AMS-1 |
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | AMS-2 |
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | AMS-3 |
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | AMS-4 |
NOTES TO THE FINANCIAL STATEMENTS | AMS-5 |
Fiscal Years December 31, 2010 and 2009 ( Audited) | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | AMS-8 |
AUDITED CONSOLIDATED BALANCE SHEETS | AMS-9 |
AUDITEDCONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | AMS-10 |
AUDITEDCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | AMS-11 |
AUDITEDCONSOLIDATED STATEMENTS OF CASH FLOWS | AMS-12 |
NOTES TO THE FINANCIAL STATEMENTS | AMS-13 |
AMS-INT ASIA LIMITED AND SUBSIDIARIES | |
UNAUDITED CONSOLIDATED BALANCE SHEETS | |
(AMOUNTS EXPRESSED IN US DOLLAR) | |
|
|
| As of September 30, 2011 (Unaudited) |
| |
ASSETS | |
Cash and cash equivalents | $ 1,073,903 |
Inventories | 168,890 |
Advances to suppliers | 628,120 |
Other receivables, net | 22,219 |
|
|
Total Current Assets | 1,944,132 |
| |
Equipment, net | 60,393 |
|
|
Total Assets | $ 2,004,525 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY | |
|
|
Current Liabilities: |
|
Accounts payable | $ 79 |
Advance from customers | 363,458 |
Due to related parties | 234,789 |
Other payables | 65,165 |
Taxes payable | 26,849 |
|
|
Total Current Liabilities | 690,340 |
|
|
Total Liabilities | 690,340 |
|
|
Commitments | - |
|
|
Stockholders' Equity: |
|
Additional paid-in capital | 1,276,052 |
Statutory reserve | 65,665 |
Accumulated loss | (56,645) |
Accumulated other comprehensive income | 29,113 |
|
|
Total Stockholders' Equity | 1,314,185 |
|
|
Total Liabilities and Stockholders' Equity | $ 2,004,525 |
The accompanying notes are an integral part of these financial statements.
AMS-1
AMS-INT ASIA LIMITED AND SUBSIDIARIES | ||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||
(AMOUNTS EXPRESSED IN US DOLLAR) | ||
|
|
|
|
|
|
|
| For the Nine Months Period Ended September 30, 2011 (Unaudited) |
|
|
|
|
|
|
NET REVENUES |
| $ 2,119,518 |
|
|
|
COST OF REVENUES |
| 1,255,388 |
|
|
|
GROSS PROFIT |
| 864,130 |
|
|
|
OPERATING EXPENSES: |
|
|
Selling |
| 152,557 |
General and administrative |
| 400,517 |
|
|
|
Total Operating Expenses |
| 553,074 |
|
|
|
INCOME FROM OPERATIONS |
| 311,056 |
|
|
|
OTHER INCOME: |
| 32,654 |
|
|
|
INCOME BEFORE PROVISION FOR INCOME TAX |
| 343,710 |
|
|
|
PROVISION FOR INCOME TAXES |
| - |
|
|
|
NET INCOME |
| $ 343,710 |
|
|
|
COMPREHENSIVE INCOME: |
|
|
Net income |
| $ 343,710 |
|
|
|
OTHER COMPREHENSIVE INCOME: |
|
|
Unrealized foreign currency translation gain |
| 12,763 |
|
|
|
COMPREHENSIVE INCOME |
| $ 356,473 |
The accompanying notes are an integral part of these financial statements.
AMS-2
AMS-INT ASIA LIMITED AND SUBSIDIARIES | ||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||||||
For the Nine Months Ended September 30, 2011 | ||||||||||
(AMOUNTS EXPRESSED IN US DOLLAR) | ||||||||||
| ||||||||||
Additional | Accumulated Other | Total | ||||||||
Paid-in | Accumulated | Statutory | Comprehensive | Stockholders' | ||||||
| Capital | Loss | Reserve | Income | Equity | |||||
Balance, January 1st, 2011 |
| $ 362,222 | $ (344,443) | $ 9,753 | $ 16,350 | $ 43,882 | ||||
|
|
|
|
|
|
|
|
|
|
|
Capital injection |
| 863,854 |
| - |
| - |
| - |
| 863,854 |
|
|
|
|
|
|
|
|
|
|
|
Acquisition of a subsidiary |
| 49,976 |
| - |
| - |
| - |
| 49,976 |
|
|
|
|
|
|
|
|
|
|
|
Net income for the period |
| - |
| 343,710 |
| - |
| - |
| 343,710 |
|
|
|
|
|
|
|
|
|
| |
Profit appropriation to statutory reserve |
| - |
| (55,912) |
| 55,912 |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
| - |
| - |
| - |
| 12,763 |
| 12,763 |
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2011 |
| $ 1,276,052 |
| $ (56,645) |
| $ 65,665 |
| $ 29,113 |
| $ 1,314,185 |
The accompanying notes are an integral part of these financial statements.
AMS-3
AMS-INT ASIA LIMITED AND SUBSIDIARIES | ||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(AMOUNTS EXPRESSED IN US DOLLAR) | ||||
|
|
|
|
|
|
|
|
| For the Nine Months Period Ended |
|
|
|
| September 30, 2011 |
|
|
|
| (Unaudited) |
CASH FLOWS FROM OPERATING ACTIVITIES: |
| |||
Net income | $ 343,710 | |||
Adjustments to reconcile net income to net cash |
| |||
provided by operating activities: |
| |||
Depreciation | 9,432 | |||
Changes in assets and liabilities: |
| |||
Accounts receivable | 48,730 | |||
Inventories | (139,574) | |||
Other receivables | 7,483 | |||
Advances to suppliers | (561,229) | |||
Accounts payable and other payables | 63,264 | |||
Taxes payable | (2,063) | |||
Advances from customers | 284,847 | |||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 54,600 | |||
|
| |||
CASH FLOWS FROM INVESTING ACTIVITIES: |
| |||
Purchase of office equipment | (20,882) | |||
NET CASH USED IN INVESTING ACTIVITIES | (20,882) | |||
|
| |||
CASH FLOWS FROM FINANCING ACTIVITIES: |
| |||
Capital injection | 863,854 | |||
Acquisition of a subsidiary | 49,976 | |||
Proceeds from related parties | 11,516 | |||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 925,346 | |||
|
| |||
EFFECT OF EXCHANGE RATE ON CASH | 1,268 | |||
|
| |||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 960,332 | |||
|
| |||
CASH AND CASH EQUIVALENTS - beginning of period | 113,571 | |||
|
| |||
CASH AND CASH EQUIVALENTS - end of period | $ 1,073,903 | |||
|
| |||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
| |||
Cash paid for: |
| |||
Interest | $ - | |||
Income taxes | - | |||
The accompanying notes are an integral part of these financial statements.
AMS-4
AMS-INT ASIA LIMITED AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
(UNAUDITED)
NOTE 1
ORGANIZATION AND DESCRIPTION OF BUSINESS
AMS-INT Asia Limited (the "Company") was incorporated under the laws of Hong Kong Special Administrative Region (“HKSAR”) of the People’s Republic of China (“PRC”) on August 6th, 2010. The Company is primarily engaged in the growing and selling of agriculture products in China.
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The company maintains its books and accounting records in U.S. dollar (“US$”), and its reporting currency is US$.
USE OF ESTIMATES
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost or market value. Cost is determined using moving weighted average method. Cost of finished goods comprises direct material, direct production cost and an allocated portion of production overheads based on normal operating capacity.
REVENUE RECOGNITION
Sales revenue is recognized at the date of shipment from the Company’s facilities to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, ownership has passed, no other significant obligations of the Company exist and collectibility is reasonably assured.
The Company’s revenue consists of the invoiced value of goods, net of value-added tax (“VAT”).
ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income represents the change in equity of the Company during the periods presented from foreign currency translation adjustments.
AMS-5
AMS-INT ASIA LIMITED AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
(UNAUDITED)
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
TAXATION
Taxation on profits earned in the PRC has been calculated on the estimated assessable profits for the year at the rates of taxation prevailing in the PRC where the Company operates after taking into effect the benefits from any special tax credits or “tax holidays” allowed in the county of operations.
The Company does not accrue United States income tax since it has no operating income in the United States. The Company is organized and located in the PRC and do not conduct any business in the United States.
Enterprise income tax
In accordance with the relevant tax laws in the PRC, as an agriculture growing enterprise, the Company is exempted from corporate income tax from 2010 to 2012. Accordingly, the company statutory rate was 0% and 0% for the periods ended September 30, 2011 and 2010.
Value added tax
The Provisional Regulations of The People’s Republic of China Concerning Value Added Tax promulgated by the State Council came into effect on January 1, 1994. Under these regulations and the Implementing Rules of the Provisional Regulations of the PRC Concerning Value Added Tax, value added tax is imposed on goods sold in or imported into the PRC and on processing, repair and replacement services provided within the PRC.
In accordance with the relevant tax laws in the PRC, as an agriculture growing enterprise, the Company is exempted from VAT for the periods ended September 30, 2011 and 2010.
IMPACT OF NEW ACCOUNTING STANDARDS
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position, or cash flow.
NOTE 3
EQUIPMENT
Equipment are stated at cost less accumulated depreciation and impairment. Depreciation on property, plant and equipment is calculated on the straight-line method after taking into account their respective estimated residual values over the estimated useful lives of the assets as follows:
Office equipment
3-5 years
Maintenance and repair costs are expensed as incurred, whereas significant renewals and betterments are capitalized.
AMS-6
AMS-INT ASIA LIMITED AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
(UNAUDITED)
NOTE 3
EQUIPMENT (CONTINUED)
Equipment at September 30, 2011 consists of the following:
September 30, 2011
(Unaudited)
Office equipment $ 89,970
Less: accumulated depreciation (29,577)
$ 60,393
For the period ended September 30, 2011, the Company recorded depreciation of US$9,432, respectively.
NOTE 4
COMMITMENT AND CONTIGENCIES
Other than in the normal course of business, the Company did not have significant capital and other commitments, or significant guarantees as of September 30, 2011.
NOTE 5
SUBSEQUENT EVENTS
No material subsequent event was noticed.
AMS-7
Stan J.H. Lee, CPA
2160 North Central Rd. Suite 209* Fort Lee *NJ 07024
P.O. Box 436402 *San Diego * CA 92143-9402
619-623-7799 *Fax 619-564-3408 * E-mail) stan2u@gmail.com
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of
AMS-INT ASIA LIMITED AND SUBSIDIARIES
We have audited the accompanying balance sheet of AMS-INT ASIA LIMITED AND SUBSIDIARIES
of December 31, 2010 and 2009 and the related statements of operations, shareholders' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amount and disclosures in the combined financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AMS-INT ASIA LIMITED AND SUBSIDIARIES as of December 31, 2010 and 2009, and the results of its operation and its cash flows for the aforementioned years in conformity with U.S. generally accepted accounting principles.
/s/ Stan J.H. Lee, CPA_________________________
Stan J.H. Lee, CPA, CMA
December 5, 2011
Fort Lee, New Jersey
AMS-8
AMS-INT ASIA LIMITED AND SUBSIDIARIES | |||
CONSOLIDATED BALANCE SHEETS | |||
(AMOUNTS EXPRESSED IN US DOLLAR) | |||
|
|
|
|
| As of December 31, | ||
| 2010 | 2009 | |
|
| ||
ASSETS | |||
| |||
Cash and cash equivalents | 105,479 | 113,571 | |
Accounts receivable, net | 96,637 | 1 | |
Inventories | 25,439 |
| 100,355 |
Advances to suppliers | 53,362 |
| 92,613 |
Other receivables, net | 28,645 |
| 7,049 |
| |||
Total Current Assets | 309,562 | 313,589 | |
| |||
Equipment, net | 46,744 |
| 39,306 |
| |||
Total Assets | $ 356,306 |
| $ 352,895 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
Accounts payable | - |
| 44,635 |
Advance from customers | 69,940 |
| 193,443 |
Due to related parties | 214,023 |
| - |
Other payables | 679 |
| - |
Taxes payable | 27,782 |
| 25,720 |
|
|
|
|
Total Current Liabilities | 312,424 |
| 263,798 |
|
|
|
|
Total Liabilities | 312,424 |
| 263,798 |
|
|
|
|
Commitments | - |
| - |
|
|
|
|
Stockholders' Equity: |
|
|
|
Additional paid-in capital | 362,222 |
| 127,843 |
Statutory reserve | 9,753 |
| - |
Accumulated loss | (344,443) |
| (51,283) |
Accumulated other comprehensive income | 16,350 |
| 12,537 |
|
|
|
|
Total Stockholders' Equity | 43,882 |
| 89,097 |
|
|
|
|
Total Liabilities and Stockholders' Equity | $ 356,306 |
| $ 352,895 |
The accompanying notes are an integral part of these financial statements.
AMS-9
AMS-INT ASIA LIMITED AND SUBSIDIARIES | ||||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||
(AMOUNTS EXPRESSED IN US DOLLAR) | ||||
|
|
|
|
|
|
| For the Years Ended December 31, | ||
|
| 2010 |
| 2009 |
|
|
|
|
|
NET REVENUES |
| $ 1,190,826 |
| $ 1,452,667 |
|
|
|
|
|
COST OF REVENUES |
| 790,227 |
| 924,272 |
|
|
|
|
|
GROSS PROFIT |
| 400,599 |
| 528,395 |
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
Selling |
| 101,819 |
| 96,476 |
General and administrative |
| 625,289 |
| 372,515 |
|
|
|
|
|
Total Operating Expenses |
| 727,108 |
| 468,991 |
|
|
|
|
|
(LOSS) INCOME FROM OPERATIONS |
| (326,509) |
| 59,404 |
|
|
|
|
|
OTHER INCOME: |
| 43,102 |
| - |
|
|
|
|
|
(LOSS) INCOME BEFORE PROVISION FOR INCOME TAX | (283,407) |
| 59,404 | |
|
|
|
|
|
PROVISION FOR INCOME TAXES |
| - |
| 8,530 |
|
|
|
|
|
NET (LOSS) INCOME |
| $ (283,407) |
| $ 50,874 |
|
|
|
|
|
COMPREHENSIVE (LOSS) INCOME: |
|
|
|
|
Net (loss) income |
| $ (283,407) |
| $ 50,874 |
|
|
|
|
|
OTHER COMPREHENSIVE INCOME: |
|
|
|
|
Unrealized foreign currency translation gain |
| 3,813 |
| 60 |
|
|
|
|
|
COMPREHENSIVE (LOSS) INCOME |
| $ (279,594) |
| $ 50,934 |
The accompanying notes are an integral part of these financial statements.
AMS-10
AMS-INT ASIA LIMITED AND SUBSIDIARIES | ||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||||||
For the Years Ended December 31, 2010 and 2009 | ||||||||||
(AMOUNTS EXPRESSED IN US DOLLAR) | ||||||||||
| ||||||||||
Additional | Accumulated Other | Total | ||||||||
Paid-in | Accumulated | Statutory | Comprehensive | Stockholders' | ||||||
| Capital | Loss | Reserve | Income | Equity | |||||
Balance, January 1, 2009 | $ 127,843 | $ (102,157) | $ - | $ 12,477 | $ 38,163 | |||||
Net income for the year |
| - |
| 50,874 |
| - |
| - |
| 50,874 |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
| - |
| - |
| - |
| 60 |
| 60 |
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2009 |
| 127,843 |
| (51,283) |
| - |
| 12,537 |
| 89,097 |
|
|
|
|
|
|
|
|
|
|
|
Acquisition of a variable interest entity |
| 234,379 |
| - |
| - |
| - |
| 234,379 |
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year |
| - |
| (283,407) |
| - |
| - |
| (283,407) |
|
|
|
|
|
|
|
|
|
|
|
Profit appropriation to statutory reserve |
| - |
| (9,753) |
| 9,753 |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
| - |
| - |
| - |
| 3,813 |
| 3,813 |
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2010 |
| $ 362,222 |
| $ (344,443) |
| $ 9,753 |
| $ 16,350 |
| $ 43,882 |
The accompanying notes are an integral part of these financial statements.
AMS-11
AMS-INT ASIA LIMITED AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(AMOUNTS EXPRESSED IN US DOLLAR) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
| For the Year Ended December 31, | ||
|
|
|
|
| 2010 |
| 2009 |
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
| |||
| Net (loss) income |
| $ (283,407) |
| $ 50,874 | ||
| Adjustments to reconcile net (loss) income to net cash |
|
|
|
| ||
|
| (used in) provided by operating activities: |
|
|
|
| |
|
| Depreciation |
| 11,068 |
| 5,691 | |
| Changes in assets and liabilities: |
|
|
|
| ||
|
| Accounts receivable |
| (94,578) |
| 167 | |
|
| Inventories |
| 76,368 |
| (67,768) | |
|
| Other receivables |
| (20,922) |
| (1,252) | |
|
| Advances to suppliers |
| 41,228 |
| (89,561) | |
|
| Accounts payable and other payables |
| (44,374) |
| (14,088) | |
|
| Taxes payable |
| 1,237 |
| 25,609 | |
|
| Advances from customers |
| (126,748) |
| 149,561 | |
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES |
| (440,128) |
| 59,233 | |||
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
| |||
|
| Purchase of office equipment |
| (17,153) |
| (36,058) | |
NET CASH USED IN INVESTING ACTIVITIES |
| (17,153) |
| (36,058) | |||
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
| |||
|
| Acquisition of a variable interest entity |
| 234,379 |
| - | |
|
| Proceeds from related parties |
| 209,465 |
| - | |
NET CASH PROVIDED BY FINANCING ACTIVITIES |
| 443,844 |
| - | |||
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE ON CASH |
| 5,345 |
| 96 | |||
|
|
|
|
|
|
|
|
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (8,092) |
| 23,271 | ||||
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - beginning of year |
| 113,571 |
| 90,300 | |||
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - end of year |
| $ 105,479 |
| $ 113,571 | |||
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
| |||
| Cash paid for: |
|
|
|
| ||
|
|
| Interest |
| $ - |
| $ - |
|
|
| Income taxes |
| - |
| $ 8,530 |
The accompanying notes are an integral part of these financial statements.
AMS-12
AMS-INT ASIA LIMITED AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
NOTE 1
ORGANIZATION AND DESCRIPTION OF BUSINESS
AMS-INT Asia Limited (the "Company") was incorporated under the laws of Hong Kong Special Administrative Region (“HKSAR”) of the People’s Republic of China (“PRC”) on August 6th, 2010. The Company is primarily engaged in the growing and selling of agriculture products in China.
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The company maintains its books and accounting records in U.S. dollar (“US$”), and its reporting currency is US$.
USE OF ESTIMATES
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost or market value. Cost is determined using moving weighted average method. Cost of finished goods comprises direct material, direct production cost and an allocated portion of production overheads based on normal operating capacity.
REVENUE RECOGNITION
Sales revenue is recognized at the date of shipment from the Company’s facilities to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, ownership has passed, no other significant obligations of the Company exist and collectibility is reasonably assured.
The Company’s revenue consists of the invoiced value of goods, net of value-added tax (“VAT”).
ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income represents the change in equity of the Company during the periods presented from foreign currency translation adjustments.
AMS-13
AMS-INT ASIA LIMITED AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
TAXATION
Taxation on profits earned in the PRC has been calculated on the estimated assessable profits for the year at the rates of taxation prevailing in the PRC where the Company operates after taking into effect the benefits from any special tax credits or “tax holidays” allowed in the county of operations.
The Company does not accrue United States income tax since it has no operating income in the United States. The Company is organized and located in the PRC and do not conduct any business in the United States.
Enterprise income tax
In accordance with the relevant tax laws in the PRC, as an agriculture growing enterprise, the Company is exempted from corporate income tax from 2010 to 2012. Accordingly, the company statutory rate was 0% and 0% for the periods ended December 31, 2010 and 2009.
Value added tax
The Provisional Regulations of The People’s Republic of China Concerning Value Added Tax promulgated by the State Council came into effect on January 1, 1994. Under these regulations and the Implementing Rules of the Provisional Regulations of the PRC Concerning Value Added Tax, value added tax is imposed on goods sold in or imported into the PRC and on processing, repair and replacement services provided within the PRC.
In accordance with the relevant tax laws in the PRC, as an agriculture growing enterprise, the Company is exempted from VAT for the periods ended December 31, 2010 and 2009.
IMPACT OF NEW ACCOUNTING STANDARDS
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position, or cash flow.
NOTE 3
COMMITMENT AND CONTIGENCIES
Other than in the normal course of business, the Company did not have significant capital and other commitments, or significant guarantees as of September 30, 2011.
NOTE 4
SUBSEQUENT EVENTS
There is no material subsequent event to disclose.
AMS-14
