Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended |
Sep. 30, 2014 | |
Document And Entity Information | |
Entity Registrant Name | CHINA SHOUGUAN MINING Corp |
Document Type | 10-Q |
Document Period End Date | 30-Sep-14 |
Amendment Flag | TRUE |
Entity Central Index Key | 1493893 |
Current Fiscal Year End Date | -19 |
Entity Common Stock, Shares Outstanding | 115,000,000 |
Entity Filer Category | Smaller Reporting Company |
Entity Current Reporting Status | No |
Entity Voluntary Filers | No |
Entity Well-known Seasoned Issuer | No |
Document Fiscal Year Focus | 2014 |
Document Fiscal Period Focus | Q3 |
Amendment description | Amendment #1 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Current assets: | ||
Cash and cash equivalents | $284,666 | $248,983 |
Accounts receivable | 555,957 | 0 |
Deposits and prepayments | 118,336 | 96,854 |
Amount due from a related party | 120,197 | 0 |
Consideration receivable | 1,462,820 | 0 |
Prepaid mining rights, current | 2,145,469 | 2,158,979 |
Assets held for sale | 0 | 6,961,956 |
Total current assets | 4,687,445 | 9,466,772 |
Non-current assets: | ||
Prepaid mining rights, non-current | 4,465,942 | 5,131,944 |
Property, plant and equipment, net | 3,052,544 | 2,504,611 |
TOTAL ASSETS | 12,205,931 | 17,103,327 |
Current liabilities: | ||
Accounts payable | 554,616 | 508,659 |
Amounts due to a related party | 0 | 182,432 |
Loans payable | 7,070,981 | 9,427,468 |
Note payable, related party | 1,073,654 | 1,406,608 |
Accrued liabilities and other payable | 449,149 | 1,762,312 |
Liabilities held for sale | 0 | 874 |
Total current liabilities | 9,148,400 | 13,288,353 |
Long-term liabilities: | ||
Loans payable, unsecured | 161,911 | 241,657 |
Notes payable, related party | 1,050,083 | 0 |
Total long-term liabilities | 1,211,994 | 241,657 |
Total liabilities | 10,360,394 | 13,530,010 |
Stockholders' equity: | ||
Common stock | 11,500 | 11,500 |
Additional paid-in capital | 8,899,597 | 8,899,597 |
Subscription receivables | -718,459 | -718,459 |
Statutory reserve | 308,898 | 645,781 |
Accumulated other comprehensive income | 396,689 | 488,496 |
Accumulated deficits | -7,052,688 | -5,753,598 |
Total stockholders' equity | 1,845,537 | 3,573,317 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $12,205,931 | $17,103,327 |
CONSOLIDATED_BALANCE_SHEETS_PA
CONSOLIDATED BALANCE SHEETS PARENTHETICALS (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Stockholders' Equity, Number of Shares, Par Value and Other Disclosures [Abstract] | ||
Common Stock, par value | $0.00 | $0.00 |
Common Stock, shares authorized | 300,000,000 | 300,000,000 |
Common Stock, shares issued | 115,000,000 | 115,000,000 |
Common Stock, shares outstanding | 115,000,000 | 115,000,000 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Revenue, Net [Abstract] | ||||
Revenues, net | $554,157 | $1,292,135 | $1,919,715 | $3,771,437 |
Cost of revenue | -1,017,159 | -1,295,432 | -3,223,204 | -3,779,666 |
Gross profit (loss) | -463,002 | -3,297 | -1,303,489 | -8,229 |
Operating expenses: | ||||
General and administrative | -199,764 | -363,234 | -637,086 | -1,014,053 |
Total operating expenses | -199,764 | -363,234 | -637,086 | -1,014,053 |
Loss from operations | -662,766 | -366,531 | -1,940,575 | -1,022,282 |
Other income (expense): | ||||
Interest expense | -99,786 | -36,617 | -219,693 | -113,376 |
Interest income | 95 | 48 | 439 | 427 |
Other income | 0 | 74,062 | 454,200 | 74,062 |
Loss before income taxes | -762,457 | -329,038 | -1,705,629 | -1,061,169 |
Income tax expense | 0 | 0 | 0 | -13,664 |
NET LOSS | -762,457 | -329,038 | -1,705,629 | -1,074,833 |
Other comprehensive income: | ||||
Foreign currency translation (loss) gain | 149,157 | 22,100 | -91,807 | 10,812 |
COMPREHENSIVE LOSS | ($613,300) | ($306,938) | ($1,797,436) | ($1,064,021) |
Net loss per share - Basic and diluted | ($0.01) | $0 | ($0.01) | ($0.01) |
Weighted average common shares outstanding - Basic and diluted | 115,000,000 | 125,000,000 | 115,000,000 | 124,577,778 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Cash flows from operating activities: | ||
Net loss | ($1,705,629) | ($1,074,833) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation of property, plant and equipment | 285,445 | 375,874 |
Amortization of prepaid mining right | 1,609,154 | 1,593,946 |
Gain on disposal of a subsidiary | -454,200 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | -555,975 | 1,250,070 |
Deposits and prepayments | -21,944 | -5,925,583 |
Accounts payable | -113,754 | -171,535 |
Income tax payable | 0 | -251,213 |
Accrued liabilities and other payable | 160,348 | 170,025 |
Net cash provided used in operating activities | -796,555 | -4,033,249 |
Cash flows from investing activities: | ||
Proceeds from disposal of a subsidiary | 4,388,603 | 0 |
Purchase of plant and equipment | -651,862 | -204,344 |
Payments on leased mining rights | -975,245 | 0 |
Payments on construction in progress | 0 | -2,893 |
Net cash provided by (used in) investing activities | 2,761,496 | -207,237 |
Cash flows from financing activities: | ||
Proceeds from private placement, net of expense | 0 | 481,541 |
Proceeds from loans payable | 3,848,243 | 4,271,454 |
Repayments to loans payable | -6,224,048 | -210,432 |
Proceeds from notes payable, related party | 2,568,145 | 0 |
Repayments to notes payable, related party | -1,842,191 | -51,750 |
Amount due to a director | -302,368 | 0 |
Net cash (used in) provided by financing activities | -1,952,219 | 4,490,813 |
Effect of exchange rate changes on cash and cash equivalents | 22,961 | 78,248 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 35,683 | 328,575 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 248,983 | 227,928 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 284,666 | 556,503 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for income taxes | 0 | 264,877 |
Cash paid for interest | $219,693 | $113,437 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) (USD $) | Common Stock | Additional Paid-In Capital | Subscriptions Receivable | StatutoryReserveMember | Other Comprehensive Income / Loss | Retained Earnings / Accumulated Deficit | Total |
Beginning Balance, Amount at Dec. 31, 2013 | $11,500 | $8,899,597 | ($718,459) | $645,781 | $488,496 | ($5,753,598) | $3,573,317 |
Beginning Balance, Shares at Dec. 31, 2013 | 115,000,000 | ||||||
Disposal of a subsidiary | -336,883 | 406,539 | 69,656 | ||||
Foreign currency translation adjustment | -91,807 | -91,807 | |||||
Net income for the period | -1,705,629 | -1,705,629 | |||||
Ending Balance, amount at Sep. 30, 2014 | $11,500 | $8,899,597 | ($718,459) | $308,898 | $396,689 | ($7,052,688) | $1,845,537 |
Ending Balance, shares at Sep. 30, 2014 | 115,000,000 |
NOTE_1_BASIS_OF_PRESENTATION
NOTE 1 - BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | NOTE 1 - BASIS OF PRESENTATION |
The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. | |
In the opinion of management, the consolidated balance sheet as of December 31, 2013 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended September 30, 2014 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2014 or for any future period. | |
These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2013. | |
NOTE_2_ORGANIZATION_AND_BACKGR
NOTE 2 - ORGANIZATION AND BACKGROUND | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||
ORGANIZATION AND BACKGROUND | NOTE 2 - ORGANIZATION AND BACKGROUND | ||||||||
China ShouGuan Mining Corporation (“CHSO” or “the Company”) was incorporated in the State of Nevada on May 4, 2010. | |||||||||
The Company, through its subsidiaries and variable interest entities, is principally engaged in the project management of gold mining operations in China. In May 2009, the Company commenced its first project, the Cunli Ji Gold Mine which is located in Shandong Province, the People Republic of China (“PRC”). Following May 2011, the Company commenced its second project, the Dayuan Gold Mine which is located in Shandong Province, the PRC. | |||||||||
The details of the Company’s subsidiaries and VIEs are described below: | |||||||||
Name | Place of incorporation | Principal activities | Particulars of issued/ | Effective interest | |||||
and kind of | and place of operation | registered share | Held | ||||||
legal entity | capital | ||||||||
Bei Sheng Limited (“BSL”) | British Virgin Islands, a limited liability company | Investment holding in GWIL and provision of mining technical advice | 50,000 issued shares of US$1 each | 100% | |||||
Golden Wide International Limited (“GWIL”) | Hong Kong, a limited liability company | 100%-investment holding in SBCL | 10,000 issued shares of HK$1 each | 100% | |||||
Shoujin Business Consulting (Shenzhen) Limited (“SBCL”) | The PRC, a limited liability company | Provision of consulting service in the PRC | RMB100,000 | 100% | |||||
Shenzhen Shouguan Investment Co., Ltd (“SSIC”) # | The PRC, a limited liability company | 99%-investment | RMB18,100,000 | N/A | |||||
holding in JinGuan and DYM, | |||||||||
respectively | |||||||||
Yantai Jinguan Investment Limited (“JinGuan”) # | The PRC, a limited liability company | 100%-investment holding in XinGuan | RMB5,000,000 | N/A | |||||
Daxinganling Yiguanyuan Mining Investment Company Limited (“DYM”) # | The PRC, a limited liability company | Mine exploration in Daxinganling | RMB4,010,000 | N/A | |||||
# represents variable interest entity (“VIE”) | |||||||||
The Company and its subsidiaries and VIEs are hereinafter collectively referred to as (“the Company”). | |||||||||
NOTE_3_GOING_CONCERN_UNCERTAIN
NOTE 3 - GOING CONCERN UNCERTAINTIES | 9 Months Ended |
Sep. 30, 2014 | |
Loan payable from director of the company (equivalent to RMB4,200,000) | |
GOING CONCERN UNCERTAINTIES | NOTE 3 - GOING CONCERN UNCERTAINTIES |
These condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. | |
As of September 30, 2014, the Company suffered the accumulated deficits of $7,052,688 from prior years and suffered from a working capital deficit of $4,460,955. The continuation of the Company as a going concern is dependent upon the continuing financial support from its stockholders or external financing. Management believes the existing stockholders will provide the additional cash to meet with the Company’s obligations as they become due. However, there can be no assurance that the Company will be able to obtain sufficient funds to meet its obligations. | |
These factors raise substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern. | |
NOTE_4_SUMMARY_OF_SIGNIFICANT_
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Accounting Policies [Abstract] | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated financial statements and notes. | |||||
Exploration Stage Company | |||||
Despite the fact that the Company commenced its production in 2009, it is still considered an exploration stage company under the criteria set forth by the Securities and Exchange Commission (“SEC”) since it has not yet demonstrated the existence of proven or probable reserves, defined by SEC Industry Guide 7 at Dayuan Gold Mine. As a result, and in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for exploration stage companies, all expenditures for exploration and evaluation of the Company’s properties are expensed as incurred until mineralized material is classified as proven or probable reserves. Accordingly, substantially all expenditures for mine development and mill construction have been expensed as incurred. Certain expenditures, such as for rolling stock or other general-purpose equipment, may be capitalized, subject to evaluation for possible impairment of the asset. As of September 30, 2014, the mineralized material at Dayuan Gold Mine did not meet the SEC’s definition of proven or probable reserves. The Company expects to remain an exploration stage company for the foreseeable future, even though it has reached commercial production. The Company will not exit the exploration stage unless and until it demonstrates the existence of proven or probable reserves that meet SEC guidelines. | |||||
Proven or Probable Reserves | |||||
The definition of proven or probable reserves is set forth in SEC Industry Guide 7. Proven reserves are reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; (b) grade and/or quality are computed from the results of detailed sampling; and (c) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established. Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. In addition, reserves cannot be considered proven or probable until they are supported by a feasibility study, indicating that the reserves have had the requisite geologic, technical and economic work performed and are economically and legally extractable at the time of the reserve determination. As of September 30, 2014, none of the Company’s mineralized resources met the definition of proven or probable reserves. | |||||
Use of Estimates | |||||
In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the periods reported. Actual results may differ from these estimates. | |||||
Basis of Consolidation | |||||
The condensed consolidated financial statements include the financial statements of CHSO, its subsidiaries and VIEs. All inter-company balances and transactions between the Company and its subsidiaries and VIEs have been eliminated upon consolidation. | |||||
The Company has adopted ASC Topic 810-10-5-8, “Variable Interest Entities” , which requires a variable interest entity or VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIEs or is entitled to receive a majority of the VIEs’ residual returns. | |||||
Variable Interest Entity | |||||
On May 15, 2010, the Company’s subsidiary, SBCL entered into a series of agreements (“VIE agreements”) amongst SSIC, JinGuan and the individual owners of SSIC, JinGuan and details of the VIE agreements are as follows : | |||||
1. Exclusive Technical Service and Business Consulting Agreement; | |||||
2. Exclusive Option Agreement; | |||||
3. Equity Pledge Agreement, to pledge their legal interest to SBCL as a security for the obligations under the Exclusive Technical Service and Business Consulting Agreement; | |||||
4. Proxy Agreement, irrevocably grant and entrust SBCL the right to exercise its voting and other stockholder’s right; | |||||
5. Operating Agreement. | |||||
With the above agreements, SBCL demonstrates its ability to control SSIC and JinGuan as the primary beneficiaries and the operating results of the VIEs was included in the condensed consolidated financial statements for the three and nine months ended September 30, 2014 and 2013. | |||||
Cash and Cash Equivalents | |||||
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. | |||||
Mining Rights, Exploration and Development Costs | |||||
Costs of mining rights are capitalized upon acquisition. | |||||
Subsequent exploration and development costs are expensed as incurred until such time as a feasibility study has been completed which establishes, in compliance with SEC Industry Guide 7 , that proven and probable reserves exist on the property. After proven and probable reserves have been established, subsequent exploration and development costs are capitalized until such time as a property is placed in-service. Following a property's in-service date, accumulated capitalized acquisition, exploration and development costs are reclassified as Mining Property assets and are subject to amortization on a units-of-production basis when its production begins. | |||||
Prepaid Mining Rights | |||||
Prepaid mining rights represent certain amount of lease prepayment made for the operation of the mining license of Dayuan Gold Mine and are being amortized using a straight-line basis over its scheduled lease term. | |||||
The rent expense on prepaid mining rights for the three months ended September 30, 2014 and 2013 was $534,954 and $528,227, respectively. | |||||
The rent expense on prepaid mining rights for the nine months ended September 30, 2014 and 2013 was $1,609,154 and $1,593,946, respectively. | |||||
As of September 30, 2014, the estimated annual amortization of the prepaid mining rights for the next five years and thereafter is as follows: | |||||
Years ending September 30: | |||||
2015 | $ | 2,145,469 | |||
2016 | 2,145,469 | ||||
2017 | 2,145,469 | ||||
2018 | 69,355 | ||||
2019 | 32,507 | ||||
Thereafter | 73,142 | ||||
Total: | $ | 6,611,411 | |||
Property, Plant and Equipment | |||||
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values: | |||||
Expected useful life | Residual value | ||||
Plant and machinery | 5-10 years | 5% | |||
Motor vehicles | 5 years | 5% | |||
Office equipment | 3-5 years | 5% | |||
Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations. | |||||
Depreciation expense for the three months ended September 30, 2014 and 2013 were $102,469 and $106,639, respectively. | |||||
Depreciation expense for the nine months ended September 30, 2014 and 2013 were $285,445 and $375,874, respectively. | |||||
Construction in Progress | |||||
Construction in progress is stated at cost, which includes the costs of self-constructed assets, including mine development assets during the construction phase. Indirect overhead costs are not included in the cost of self-constructed assets. Construction in progress is not depreciated until such time as the assets are completed and put into operational use. No capitalized interest is incurred during the period of construction. | |||||
Impairment of Long-Lived Assets | |||||
In accordance with the provisions of ASC Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets ”, all long-lived assets held and used by the Company are annually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to estimated future undiscounted cash flows expected to be generated by the asset. Future cash flows are based on estimated quantities of gold and other recoverable metals, expected price of gold and other commodity (considering current and historical prices, price trends and related factors), production levels and cash costs of production, capital and reclamation costs, all based on detailed engineering life-of-mine plans. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. | |||||
Numerous factors including, but not limited to, such things as unexpected grade changes, gold recovery problems, shortages of equipment and consumables, equipment failures, and collapse of pit walls, could impact our ability to achieve forecasted production schedules from proven and probable reserves. Additionally, commodity prices, capital expenditure requirements and reclamation costs could differ from the assumptions used in the cash flow models used to assess impairment. The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material can ultimately be mined economically. There has been no impairment charge for the periods presented. | |||||
Revenue Recognition | |||||
In accordance with the ASC Topic 605, “Revenue Recognition” , the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable and collectibility is reasonably assured. | |||||
(a) Product sales | |||||
The Company derives revenues from the sales of non-refined gold concentrate to smelters, whereas the smelter usually takes 6 days for the production from non-refined gold concentrate to gold bullion. The Company generally recognizes its revenues, net of value-added taxes ("VAT") at the time of gold bullion is produced by the smelter and its selling price is determined by the market value of gold bullion quoted by the Shanghai Gold Exchange. | |||||
The Company is subject to VAT which is levied on the standard gold products at the standard rate of 17% on the invoiced value of sales. | |||||
(b) Interest income | |||||
Interest income is recognized on a time apportionment basis, taking into account the principal amounts outstanding and the interest rates applicable. | |||||
Comprehensive Income | |||||
ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying condensed consolidated statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit. | |||||
Income taxes | |||||
The Company adopts ASC Topic 740, “Income Taxes” regarding accounting for uncertainty in income taxes which prescribes the recognition threshold and measurement attributes for financial statement recognition and measurement of tax positions taken or expected to be taken on a tax return. In addition, the guidance requires the determination of whether the benefits of tax positions will be more likely than not sustained upon audit based upon the technical merits of the tax position. For tax positions that are determined to be more likely than not sustained upon audit, a company recognizes the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement in the financial statements. For tax positions that are not determined to be more likely than not sustained upon audit, a company does not recognize any portion of the benefit in the financial statements. The guidance provides for de-recognition, classification, penalties and interest, accounting in interim periods and disclosure. | |||||
For the three and nine months ended September 30, 2014 and 2013, the Company did not have any interest and penalties associated with tax positions. As of September 30, 2014, the Company did not have any significant unrecognized uncertain tax positions. | |||||
The Company conducts major businesses in the PRC and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the foreign tax authority. | |||||
Net loss per share | |||||
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income (loss) per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted income (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive. | |||||
Foreign Currencies Translation | |||||
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 transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations. | |||||
The reporting currency of the Company is the United States Dollars ("US$"). The Company's subsidiary in the PRC maintain its books and records in its local currency, Renminbi Yuan ("RMB"), which is functional currency as being the primary currency of the economic environment in which the entity operates. | |||||
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement” , using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity. | |||||
Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective period: | |||||
30-Sep-14 | 30-Sep-13 | ||||
Period-end RMB:US$1 exchange rate | 6.1525 | 6.148 | |||
Period average RMB:US$1 exchange rate | 6.1523 | 6.211 | |||
Related Parties | |||||
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence. | |||||
Segment Reporting | |||||
ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. For the three and nine months ended September 30, 2014, the Company operates in one reportable operating segment in the PRC. | |||||
Fair Value of Financial Instruments | |||||
The carrying value of the Company’s financial instruments include cash, amounts due from (to) related parties, deposits and prepayments, accounts payable, amount due to a related party, income tax payable, accrued liabilities and other payable. Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair values. The carrying value of the Company’s loans and notes payable approximated its fair value based on the current market prices or interest rates for similar debt instruments. | |||||
The Company also follows the guidance of ASC Topic 820-10, “ Fair Value Measurements and Disclosures ” ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows: | |||||
-Level 1: Observable inputs such as quoted prices in active markets; | |||||
-Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and | |||||
-Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions | |||||
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. | |||||
Recent Accounting Pronouncements | |||||
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations. | |||||
NOTE_5_DISPOSAL_OF_A_SUBSIDIAR
NOTE 5 - DISPOSAL OF A SUBSIDIARY | 9 Months Ended |
Sep. 30, 2014 | |
Property, Plant and Equipment [Abstract] | |
DISPOSAL OF A SUBSIDIARY | NOTE 5 - DISPOSAL OF A SUBSIDIARY |
On March 31, 2014, the Company and its former variable interest entity, Penglai XinGuan Investment Limited completed a Definitive Share and Asset Agreement with an independent third party to sell and transfer all assets and liabilities primarily related to Cunliji Mine Project, at a purchase price of approximately $7,300,000 (Equivalent to RMB 45 million). It resulted in a gain of $454,200 (equivalent to RMB 2.78 million) from disposal of a subsidiary and a consideration receivable of $1,462,820 (equivalent to RMB 9 million) at September 30, 2014, which is expected to be fully received by the end of December 2014. | |
NOTE_6_AMOUNT_DUE_TO_A_RELATED
NOTE 6 - AMOUNT DUE TO A RELATED PARTY | 9 Months Ended |
Sep. 30, 2014 | |
Commitments And Contingencies Information Of Term Of Operating Leases (Details) | |
AMOUNT DUE FROM A RELATED PARTY | NOTE 6 - AMOUNT DUE FROM A RELATED PARTY |
As of September 30, 2014, amount due from a related party represented temporary advances made to Mr. Zhang, the director of the Company, which was unsecured, interest-free and repayable on demand. | |
NOTE_7_LOANS_PAYABLE
NOTE 7 - LOANS PAYABLE | 9 Months Ended | |||||
Sep. 30, 2014 | ||||||
Non-deductible items | ||||||
LOANS PAYABLE | NOTE 7 - LOANS PAYABLE | |||||
As of September 30, 2014 and December 31, 2013, the Company also held the following short-term and long-term loans payable to third parties: | ||||||
September 30, | December 31, | |||||
2014 | 2013 | |||||
Loans payable to certain individuals and financial institutions in the PRC: | ||||||
Loans payable to individuals, unsecured: | ||||||
Equivalent to RMB4,500,000 (2013: RMB4,500,000) with interest rate at 2.7% per annum, payable at its maturity, due May 7, 2015 | $ | 731,410 | $ | 736,016 | ||
Equivalent to RMB7,400,000 (2013: RMB7,400,000) with interest rate at 2.7% per annum, payable at its maturity, due May 7, 2015 | 1,202,763 | 1,210,337 | ||||
Equivalent to RMB1,320,825 (2013: RMB8,000,000) with interest rate at 5.18% per annum, payable at its maturity, due June 14, 2015 | 214,680 | 1,308,472 | ||||
Equivalent to RMB2,700,000 (2013: RMB2,700,000) with interest rate at 5.18% per annum, payable at its maturity, due March 27, 2015 | 438,846 | 441,609 | ||||
Equivalent to RMB2,448,144 (2013: RMB4,942,600) with interest rate at the bank of China Benchmark Lending Rate, payable at its maturity, due March 7, 2015 | 397,911 | 808,407 | ||||
Equivalent to RMB5,000,000 (2013: RMB22,000,000) with interest rate at 2% per annum, payable at its maturity, due August 12, 2014 | 812,678 | 3,598,299 | ||||
Equivalent to RMB9,000,000 (2013: RMB0) interest-free, due October 28, 2014 | 1,462,820 | - | ||||
Equivalent to RMB2,000,000 interest-free, payable at its maturity, fully repaid on January 17, 2014 | - | 327,118 | ||||
Equivalent to RMB 1,631,396 (2013: RMB2,074,429) with effective interest rate at 8.97% per annum, payable with monthly principal and interest payments, due February 28, 2017 | 265,160 | 339,292 | ||||
5,526,268 | 8,769,550 | |||||
Loans payable to financial institutions: | ||||||
Equivalent to RMB5,500,000 with interest rate at the bank of China Benchmark Lending Rate, payable at its maturity, full repaid on April 15, 2014, which is secured by the property and personal guarantee provided by the director | - | 899,575 | ||||
Equivalent to RMB5,500,000 with interest rate at 1.5 times of the Bank of China Benchmark Lending Rate, payable at its maturity, due April 16, 2015, which is secured by the property and personal guarantee provided by the director | 893,946 | - | ||||
Equivalent to RMB5,000,000 with interest rate at 1.1 times of the Bank of China Benchmark Lending Rate, payable at its maturity, due April 24, 2015, which is collateralized by its pledged deposit provided by the director | 812,678 | - | ||||
Total loans payable | 7,232,892 | 9,669,125 | ||||
Less: long-term portion | -161,911 | -241,657 | ||||
Total current portion | $ | 7,070,981 | $ | 9,427,468 | ||
As of September 30, 2014, the minimum future payments of the loans payable in the next three years are as follow: | ||||||
Years ending September 30: | ||||||
2015 | $ | 7,070,981 | ||||
2016 | 112,175 | |||||
2017 | 49,736 | |||||
Total: | $ | 7,232,892 | ||||
NOTE_8_NOTES_PAYABLE_RELATED_P
NOTE 8 - NOTES PAYABLE, RELATED PARTY | 9 Months Ended | ||||||
Sep. 30, 2014 | |||||||
Variable interest entity | |||||||
NOTES PAYABLE, RELATED PARTY | NOTE 8 - NOTES PAYABLE, RELATED PARTY | ||||||
As of September 30, 2014, the Company held the following notes payable to Mr. Zhang, the director of the Company: | |||||||
Equivalent to RMB2,500,000, unsecured and interest free, due on March 9, 2015 | 406,339 | ||||||
Equivalent to RMB3,000,000, unsecured and interest free, due on July 22, 2015 | 487,607 | ||||||
Equivalent to RMB8,000,000, unsecured, with interest rate at 1.3 times of the Bank of China Benchmark Lending Rate, payable with monthly principal and interest payments, due on April 21, 2020 | 1,229,791 | ||||||
Total | 2,123,737 | ||||||
Less: long-term portion | -1,050,083 | ||||||
Current portion | $ | 1,073,654 | |||||
As of September 30, 2014, the minimum future payments of the aggregate notes due to a related party in the next five years and thereafter are as follows: | |||||||
Years ending September 30: | |||||||
2015 | $ | 1,073,654 | |||||
2016 | 195,622 | ||||||
2017 | 212,945 | ||||||
2018 | 231,802 | ||||||
2019 | 252,328 | ||||||
Thereafter | 157,386 | ||||||
Total: | $ | 2,123,737 | |||||
The interest expense to a related party amounted to $66,479 and $40,605 for the nine months ended September 30, 2014 and 2013, respectively. | |||||||
NOTE_9_INCOME_TAXES
NOTE 9 - INCOME TAXES | 9 Months Ended | ||||||
Sep. 30, 2014 | |||||||
– Local Deferred | |||||||
INCOME TAXES | NOTE 9 - INCOME TAXES | ||||||
For the nine months ended September 30, 2014 and 2013, the local (United States) and foreign components of profit (loss) before income taxes were comprised of the following: | |||||||
Nine months ended | |||||||
September 30, | |||||||
2014 | 2013 | ||||||
Tax jurisdictions from: | |||||||
– Local | $ | - | $ | - | |||
– Foreign | -1,705,629 | -1,061,169 | |||||
Loss before income taxes | $ | -1,705,629 | $ | -1,061,169 | |||
The provision for income taxes consisted of the following: | |||||||
Nine months ended | |||||||
September 30, | |||||||
2014 | 2013 | ||||||
Current: | |||||||
– Local | $ | - | $ | - | |||
– Foreign, representing by: | |||||||
Hong Kong | - | - | |||||
The PRC | - | 13,664 | |||||
Deferred: | |||||||
– Local | - | - | |||||
– Foreign | - | - | |||||
Income tax expense | $ | - | $ | 13,664 | |||
The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company has subsidiaries that operate in various countries: United States, BVI, Hong Kong and the PRC that are subject to taxes in the jurisdictions in which they operate, as follows: | |||||||
United States of America | |||||||
The Company is registered in the State of Nevada and is subject to the tax laws of the United States of America. | |||||||
British Virgin Island | |||||||
Under the current BVI law, Bei Sheng is not subject to tax on its income or profits. | |||||||
Hong Kong | |||||||
Golden Wide is subject to Hong Kong Profits Tax, which is charged at the statutory income rate of 16.5% on assessable income. For the nine months ended September 30, 2014 and 2013, Golden Wide suffered from an operating loss of $1,235 and $2,898, respectively. | |||||||
The PRC | |||||||
The Company generated its income from its subsidiaries and VIEs operating in the PRC for the nine months ended September 30, 2014and 2013, which are subject to the Corporate Income Tax Law of the People’s Republic of China (the “New CIT Law”) at a unified income tax rate of 25%. A reconciliation of income tax rate to the effective income tax rate for the nine months ended September 30, 2014 and 2013 is as follows: | |||||||
Nine months ended | |||||||
September 30, | |||||||
2014 | 2013 | ||||||
Loss before income taxes | $ | (1,667,008) | $ | -1,022,977 | |||
Statutory income tax rate | 25% | 25% | |||||
Income tax expense at the statutory tax rate | (416,752) | -255,744 | |||||
Net operating loss not recognized as deferred tax asset | 310,012 | -306,906 | |||||
Non-taxable items | -296,469 | - | |||||
Non-deductible items | 403,209 | 576,314 | |||||
Income tax expense | $ | - | $ | 13,664 | |||
As of September 30, 2014, the Company incurred $4,113,504 of aggregate net operating loss carryforwards available to offset its taxable income for income tax purposes. The Company has provided for a full valuation allowance against the deferred tax assets of $1,028,376 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future. | |||||||
NOTE_10_CONCENTRATIONS_OF_RISK
NOTE 10 - CONCENTRATIONS OF RISK | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Risks and Uncertainties [Abstract] | ||||||||||||||
CONCENTRATIONS OF RISK | NOTE 10 - CONCENTRATIONS OF RISK | |||||||||||||
The Company is exposed to the following concentrations of risk: | ||||||||||||||
(a) Major customers | ||||||||||||||
For the three and nine months ended September 30, 2014, there was a single customer who accounted for 100% of the Company’s revenues with $555,957 accounts receivable balance at period-end. | ||||||||||||||
For the three and nine months ended September 30, 2013, the customer who accounts for 10% or more of the Company’s revenues and its outstanding balance at period-end date, are presented as follows: | ||||||||||||||
Three months ended September 30, 2013 | 30-Sep-13 | |||||||||||||
Customer | Revenue | Percentage | Accounts | |||||||||||
of revenue | receivable, trade | |||||||||||||
Customer A | $ | 691,351 | 54% | $ | - | |||||||||
Customer D | 600,784 | 46% | - | |||||||||||
Total: | $ | 1,292,135 | 100% | $ | - | |||||||||
Nine months ended September 30, 2013 | 30-Sep-13 | |||||||||||||
Revenue | Percentage | Accounts | ||||||||||||
Customer | of revenue | receivable, trade | ||||||||||||
Customer D | $ | 2,885,628 | 77% | $ | - | |||||||||
Customer A | 885,809 | 23% | - | |||||||||||
Total: | $ | 3,771,437 | 100% | $ | - | |||||||||
All customers are located in the PRC. | ||||||||||||||
(b) Major vendors | ||||||||||||||
For the three and nine months ended September 30, 2014, the vendors who account for 10% or more of the Company’s purchases and its outstanding balance at period-end date, are presented as follows: | ||||||||||||||
Three months ended September 30, 2014 | 30-Sep-14 | |||||||||||||
Purchases | Percentage | Accounts | ||||||||||||
Vendor | of purchases | payable, trade | ||||||||||||
Vendor A | Total: | $ | 343,644 | 100% | $ | 170,743 | ||||||||
Nine months ended September 30, 2014 | 30-Sep-14 | |||||||||||||
Purchases | Percentage | Accounts | ||||||||||||
Vendor | of purchases | payable, trade | ||||||||||||
Vendor A | $ | 959,076 | 79% | $ | 170,743 | |||||||||
Vendor B | 252,228 | 21% | 89,684 | |||||||||||
Total: | $ | 1,211,304 | 100% | $ | 260,427 | |||||||||
For the three and nine months ended September 30, 2013, the vendors who account for 10% or more of the Company’s purchases and its outstanding balance at period-end date, are presented as follows: | ||||||||||||||
Three months ended September 30, 2013 | 30-Sep-13 | |||||||||||||
Purchases | Percentage | Accounts | ||||||||||||
Vendor | of purchases | payable, trade | ||||||||||||
Vendor A | $ | 632,259 | 65% | $ | 271,881 | |||||||||
Vendor D | 188,353 | 19% | 122,435 | |||||||||||
Total: | $ | 820,612 | 84% | $ | 394,316 | |||||||||
Nine months ended September 30, 2013 | 30-Sep-13 | |||||||||||||
Purchases | Percentage | Accounts | ||||||||||||
Vendor | of purchases | payable, trade | ||||||||||||
Vendor A | $ | 1,749,701 | 60% | $ | 271,881 | |||||||||
Vendor D | 637,400 | 21% | 122,435 | |||||||||||
Vendor C | 280,063 | 10% | - | |||||||||||
Total: | $ | 2,667,164 | 91% | $ | 394,316 | |||||||||
(c) Credit risk | ||||||||||||||
Financial instruments that are potentially subject to credit risk consist principally of accounts receivables. The Company believes the concentration of credit risk in its accounts and retention receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. Credit is extended based on evaluation of a customer's financial condition. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. | ||||||||||||||
(d) Interest rate risk | ||||||||||||||
As the Company has no significant interest-bearing assets, the Company’s income and operating cash flows are substantially independent of changes in market interest rates. | ||||||||||||||
The Company’s interest-rate risk arises from borrowings under notes and loans. The Company manages interest rate risk by varying the issuance and maturity dates variable rate debt, limiting the amount of variable rate debt, and continually monitoring the effects of market changes in interest rates. As of September 30, 2014, borrowings under these notes and loans were at fixed and variable rates. | ||||||||||||||
(e) Exchange rate risk | ||||||||||||||
The reporting currency of the Company is US$, to date the majority of the revenues and costs are denominated in RMB and a significant portion of the assets and liabilities are denominated in RMB. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$ and RMB. If RMB depreciates against US$, the value of RMB revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk. | ||||||||||||||
(f) Economic and political risks | ||||||||||||||
The Company's operations are conducted in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy. | ||||||||||||||
The Company's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation. | ||||||||||||||
(g) Mining industry risks | ||||||||||||||
The Company's mining operations are subject to extensive national and local governmental regulations in China, which regulations may be revised or expanded at any time. Generally, compliance with these regulations requires the Company to obtain permits issued by government regulatory agencies. Certain permits require periodic renewal or review of their conditions. The Company cannot predict whether it will be able to obtain or renew such permits or whether material changes in permit conditions will be imposed. The inability to obtain or renew permits or the imposition of additional conditions could have a material adverse effect on the Company's ability to develop and operate its mines. | ||||||||||||||
(h) Risk on changing price in gold | ||||||||||||||
At present, the price of gold in the PRC is generally in line with the price of gold in the international market. There are many factors influencing the price of gold in the international market, including the international economic situation (in particular the economic situation in the US), petroleum prices, fluctuations in the exchange rates of the US$, fluctuations in the stock and other financial investment markets and various political, military, social and economic contingencies. These factors are beyond the control of the Company. Changes in the prices of the gold in the PRC and in the exchange rate of Renminbi as a result of these may adversely affect the operating results of the Company. Under the relevant PRC laws and regulations, hedging activities presently are not permitted in gold tracing in the PRC market. The Company has not been involved in hedging transactions or any alternative measures to manage the potential price risk. | ||||||||||||||
NOTE_11_RELATED_PARTY_TRANSACT
NOTE 11 - RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2014 | |
Related Party Transactions [Abstract] | |
NOTE 11 - RELATED PARTY TRANSACTIONS | NOTE 11 - RELATED PARTY TRANSACTIONS |
For the nine months ended September 30, 2014 and 2013, the Company paid interest expense of $66,479 and $40,605 to its director on related party notes payable for the nine months ended September 30, 2014 and 2013, respectively. | |
For the nine months ended September 30, 2014, the director of the Company also provided his personal guarantee and his personal assets as security to the loan borrowings at no charge. | |
NOTE_12_COMMITMENTS_AND_CONTIN
NOTE 12 - COMMITMENTS AND CONTINGENCIES | 9 Months Ended | |||||||||
Sep. 30, 2014 | ||||||||||
Current: | ||||||||||
COMMITMENTS AND CONTINGENCIES | NOTE 12 - COMMITMENTS AND CONTINGENCIES | |||||||||
(a) Operating lease commitments | ||||||||||
The Company is committed under several non-cancelable operating leases for office premises and mining rights with the terms ranging from 1 to 10 years, with fixed monthly rentals or scheduled payments. Total rent expenses (excluding amortization of prepaid mining rights) for the nine months ended September 30, 2014 and 2013 was $88,173 and $85,985, respectively. | ||||||||||
As of September 30, 2014, the Company has the aggregate future minimum rental payments due under these non-cancelable operating leases, as follows: | ||||||||||
Operating lease commitments | ||||||||||
Office premises | Mine operating rights | Total | ||||||||
Year ending September 30, | ||||||||||
2015 | $ | 107,357 | $ | - | $ | 107,357 | ||||
2016 | 42,489 | - | 42,489 | |||||||
2017 | - | - | - | |||||||
2018 | - | 7,151,564 | 7,151,564 | |||||||
Total: | $ | 149,846 | $ | 7,151,564 | $ | 7,301,410 | ||||
NOTE_13_SUBSEQUENT_EVENTS
NOTE 13 - SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 13 - SUBSEQUENT EVENTS |
The Company evaluated and disclosed the material subsequent events through the date the financial statements were issued and filed with this Form 10-Q. | |
NOTE_4_SUMMARY_OF_SIGNIFICANT_1
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (POLICIES) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Summary Of Significant Accounting Policies Policies | |||||
Exploration Stage Company | Exploration Stage Company | ||||
Despite the fact that the Company commenced its production in 2009, it is still considered an exploration stage company under the criteria set forth by the Securities and Exchange Commission (“SEC”) since it has not yet demonstrated the existence of proven or probable reserves, defined by SEC Industry Guide 7 at Dayuan Gold Mine. As a result, and in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for exploration stage companies, all expenditures for exploration and evaluation of the Company’s properties are expensed as incurred until mineralized material is classified as proven or probable reserves. Accordingly, substantially all expenditures for mine development and mill construction have been expensed as incurred. Certain expenditures, such as for rolling stock or other general-purpose equipment, may be capitalized, subject to evaluation for possible impairment of the asset. As of September 30, 2014, the mineralized material at Dayuan Gold Mine did not meet the SEC’s definition of proven or probable reserves. The Company expects to remain an exploration stage company for the foreseeable future, even though it has reached commercial production. The Company will not exit the exploration stage unless and until it demonstrates the existence of proven or probable reserves that meet SEC guidelines. | |||||
Proven or Propable Reserves | Proven or Probable Reserves | ||||
The definition of proven or probable reserves is set forth in SEC Industry Guide 7. Proven reserves are reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; (b) grade and/or quality are computed from the results of detailed sampling; and (c) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established. Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. In addition, reserves cannot be considered proven or probable until they are supported by a feasibility study, indicating that the reserves have had the requisite geologic, technical and economic work performed and are economically and legally extractable at the time of the reserve determination. As of September 30, 2014, none of the Company’s mineralized resources met the definition of proven or probable reserves. | |||||
Use of Estimates | Use of Estimates | ||||
In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the periods reported. Actual results may differ from these estimates. | |||||
Basis of Consolidation | Basis of Consolidation | ||||
The condensed consolidated financial statements include the financial statements of CHSO, its subsidiaries and VIEs. All inter-company balances and transactions between the Company and its subsidiaries and VIEs have been eliminated upon consolidation. | |||||
The Company has adopted ASC Topic 810-10-5-8, “Variable Interest Entities” , which requires a variable interest entity or VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIEs or is entitled to receive a majority of the VIEs’ residual returns. | |||||
Variable Interest Entity | Variable Interest Entity | ||||
On May 15, 2010, the Company’s subsidiary, SBCL entered into a series of agreements (“VIE agreements”) amongst SSIC, JinGuan and the individual owners of SSIC, JinGuan and details of the VIE agreements are as follows : | |||||
1. Exclusive Technical Service and Business Consulting Agreement; | |||||
2. Exclusive Option Agreement; | |||||
3. Equity Pledge Agreement, to pledge their legal interest to SBCL as a security for the obligations under the Exclusive Technical Service and Business Consulting Agreement; | |||||
4. Proxy Agreement, irrevocably grant and entrust SBCL the right to exercise its voting and other stockholder’s right; | |||||
5. Operating Agreement. | |||||
With the above agreements, SBCL demonstrates its ability to control SSIC and JinGuan as the primary beneficiaries and the operating results of the VIEs was included in the condensed consolidated financial statements for the three and nine months ended September 30, 2014 and 2013. | |||||
Cash and Cash Equivalents | Cash and Cash Equivalents | ||||
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. | |||||
Mining Rights, Exploration and Development Costs | Mining Rights, Exploration and Development Costs | ||||
Costs of mining rights are capitalized upon acquisition. | |||||
Subsequent exploration and development costs are expensed as incurred until such time as a feasibility study has been completed which establishes, in compliance with SEC Industry Guide 7 , that proven and probable reserves exist on the property. After proven and probable reserves have been established, subsequent exploration and development costs are capitalized until such time as a property is placed in-service. Following a property's in-service date, accumulated capitalized acquisition, exploration and development costs are reclassified as Mining Property assets and are subject to amortization on a units-of-production basis when its production begins. | |||||
Prepaid Mining Rights | Prepaid Mining Rights | ||||
Prepaid mining rights represent certain amount of lease prepayment made for the operation of the mining license of Dayuan Gold Mine and are being amortized using a straight-line basis over its scheduled lease term. | |||||
The rent expense on prepaid mining rights for the three months ended September 30, 2014 and 2013 was $534,954 and $528,227, respectively. | |||||
The rent expense on prepaid mining rights for the nine months ended September 30, 2014 and 2013 was $1,609,154 and $1,593,946, respectively. | |||||
As of September 30, 2014, the estimated annual amortization of the prepaid mining rights for the next five years and thereafter is as follows: | |||||
Years ending September 30: | |||||
2015 | $ | 2,145,469 | |||
2016 | 2,145,469 | ||||
2017 | 2,145,469 | ||||
2018 | 69,355 | ||||
2019 | 32,507 | ||||
Thereafter | 73,142 | ||||
Total: | $ | 6,611,411 | |||
Property, Plant and Equipment | Property, Plant and Equipment | ||||
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values: | |||||
Expected useful life | Residual value | ||||
Plant and machinery | 5-10 years | 5% | |||
Motor vehicles | 5 years | 5% | |||
Office equipment | 3-5 years | 5% | |||
Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations. | |||||
Depreciation expense for the three months ended September 30, 2014 and 2013 were $102,469 and $106,639, respectively. | |||||
Depreciation expense for the nine months ended September 30, 2014 and 2013 were $285,442 and $375,874, respectively. | |||||
Construction in Progress | Construction in Progress | ||||
Construction in progress is stated at cost, which includes the costs of self-constructed assets, including mine development assets during the construction phase. Indirect overhead costs are not included in the cost of self-constructed assets. Construction in progress is not depreciated until such time as the assets are completed and put into operational use. No capitalized interest is incurred during the period of construction. | |||||
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets | ||||
In accordance with the provisions of ASC Topic 360-10-5, “ Impairment or Disposal of Long-Lived Assets ”, all long-lived assets held and used by the Company are annually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to estimated future undiscounted cash flows expected to be generated by the asset. Future cash flows are based on estimated quantities of gold and other recoverable metals, expected price of gold and other commodity (considering current and historical prices, price trends and related factors), production levels and cash costs of production, capital and reclamation costs, all based on detailed engineering life-of-mine plans. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. | |||||
Numerous factors including, but not limited to, such things as unexpected grade changes, gold recovery problems, shortages of equipment and consumables, equipment failures, and collapse of pit walls, could impact our ability to achieve forecasted production schedules from proven and probable reserves. Additionally, commodity prices, capital expenditure requirements and reclamation costs could differ from the assumptions used in the cash flow models used to assess impairment. The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material can ultimately be mined economically. There has been no impairment charge for the periods presented. | |||||
Revenue Recognition | Revenue Recognition | ||||
In accordance with the ASC Topic 605, “Revenue Recognition” , the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable and collectibility is reasonably assured. | |||||
(a) Product sales | |||||
The Company derives revenues from the sales of non-refined gold concentrate to smelters, whereas the smelter usually takes 6 days for the production from non-refined gold concentrate to gold bullion. The Company generally recognizes its revenues, net of value-added taxes ("VAT") at the time of gold bullion is produced by the smelter and its selling price is determined by the market value of gold bullion quoted by the Shanghai Gold Exchange. | |||||
The Company is subject to VAT which is levied on the standard gold products at the standard rate of 17% on the invoiced value of sales. | |||||
(b) Interest income | |||||
Interest income is recognized on a time apportionment basis, taking into account the principal amounts outstanding and the interest rates applicable. | |||||
Comprehensive Income | Comprehensive Income | ||||
ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying condensed consolidated statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit. | |||||
Income Taxes | Income taxes | ||||
The Company adopts ASC Topic 740, “Income Taxes” regarding accounting for uncertainty in income taxes which prescribes the recognition threshold and measurement attributes for financial statement recognition and measurement of tax positions taken or expected to be taken on a tax return. In addition, the guidance requires the determination of whether the benefits of tax positions will be more likely than not sustained upon audit based upon the technical merits of the tax position. For tax positions that are determined to be more likely than not sustained upon audit, a company recognizes the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement in the financial statements. For tax positions that are not determined to be more likely than not sustained upon audit, a company does not recognize any portion of the benefit in the financial statements. The guidance provides for de-recognition, classification, penalties and interest, accounting in interim periods and disclosure. | |||||
For the three and nine months ended September 30, 2014 and 2013, the Company did not have any interest and penalties associated with tax positions. As of September 30, 2014, the Company did not have any significant unrecognized uncertain tax positions. | |||||
The Company conducts major businesses in the PRC and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the foreign tax authority. | |||||
Net Loss Per Share | Net loss per share | ||||
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income (loss) per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted income loss per share is computed similar to basic income loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive. | |||||
Foreign Currencies Translation | Foreign Currencies Translation | ||||
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 transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations. | |||||
The reporting currency of the Company is the United States Dollars ("US$"). The Company's subsidiary in the PRC maintain its books and records in its local currency, Renminbi Yuan ("RMB"), which is functional currency as being the primary currency of the economic environment in which the entity operates. | |||||
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement” , using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity. | |||||
Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective period: | |||||
30-Sep-14 | 30-Sep-13 | ||||
Period-end RMB:US$1 exchange rate | 6.1525 | 6.148 | |||
Period average RMB:US$1 exchange rate | 6.1523 | 6.211 | |||
Related Parties | Related Parties | ||||
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence. | |||||
Segment Reporting | Segment Reporting | ||||
ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. For the three and nine months ended September 30, 2014, the Company operates in one reportable operating segment in the PRC. | |||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | ||||
The carrying value of the Company’s financial instruments include cash, amounts due from (to) related parties, deposits and prepayments, accounts payable, amount due to a related party, income tax payable, accrued liabilities and other payable. Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair values. The carrying value of the Company’s loans and notes payable approximated its fair value based on the current market prices or interest rates for similar debt instruments. | |||||
The Company also follows the guidance of ASC Topic 820-10, “ Fair Value Measurements and Disclosures ” ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows: | |||||
-Level 1: Observable inputs such as quoted prices in active markets; | |||||
-Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and | |||||
-Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions | |||||
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. | |||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | ||||
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations. | |||||
NOTE_2_ORGANIZATION_AND_BACKGR1
NOTE 2 - ORGANIZATION AND BACKGROUND (TABLES) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Purchases Vendor A | |||||||||
Company's subsidiaries and VIEs | Name | Place of incorporation | Principal activities | Particulars of issued/ | Effective interest | ||||
and kind of | and place of operation | registered share | Held | ||||||
legal entity | capital | ||||||||
Bei Sheng Limited (“BSL”) | British Virgin Islands, a limited liability company | Investment holding in GWIL and provision of mining technical advice | 50,000 issued shares of US$1 each | 100% | |||||
Golden Wide International Limited (“GWIL”) | Hong Kong, a limited liability company | 100%-investment holding in SBCL | 10,000 issued shares of HK$1 each | 100% | |||||
Shoujin Business Consulting (Shenzhen) Limited (“SBCL”) | The PRC, a limited liability company | Provision of consulting service in the PRC | RMB100,000 | 100% | |||||
Shenzhen Shouguan Investment Co., Ltd (“SSIC”) # | The PRC, a limited liability company | 99%-investment | RMB18,100,000 | N/A | |||||
holding in JinGuan and DYM, respectively | |||||||||
Yantai Jinguan Investment Limited (“JinGuan”) # | The PRC, a limited liability company | 100%-investment holding in XinGuan | RMB5,000,000 | N/A | |||||
Daxinganling Yiguanyuan Mining | The PRC, a limited liability company | Mine exploration in Daxinganling | RMB4,010,000 | N/A | |||||
Investment Company Limited | |||||||||
(“DYM”) # |
NOTE_4_SUMMARY_OF_SIGNIFICANT_2
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (TABLES) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Summary Of Significant Accounting Policies Tables | |||||
Estimated annual amortization of the prepaid mining rights | Years ending September 30: | ||||
2015 | $ | 2,145,469 | |||
2016 | 2,145,469 | ||||
2017 | 2,145,469 | ||||
2018 | 69,355 | ||||
2019 | 32,507 | ||||
Thereafter | 73,142 | ||||
Total: | $ | 6,611,411 | |||
Property, plant and equipment expected useful life | Expected useful life | Residual value | |||
Plant and machinery | 5-10 years | 5% | |||
Motor vehicles | 5 years | 5% | |||
Office equipment | 3-5 years | 5% | |||
Foreign currencies translation RMB into USD | 30-Sep-14 | 30-Sep-13 | |||
Period-end RMB:US$1 exchange rate | 6.1525 | 6.148 | |||
Period average RMB:US$1 exchange rate | 6.1523 | 6.211 |
NOTE_7_LOANS_PAYABLE_UNSECURED
NOTE 7 - LOANS PAYABLE, UNSECURED (TABLES) | 9 Months Ended | |||||
Sep. 30, 2014 | ||||||
Non-deductible items | ||||||
Short and Long Term Loans Payable To Third parties | September 30, | December 31, | ||||
2014 | 2013 | |||||
Loans payable to certain individuals and financial institutions in the PRC: | ||||||
Loans payable to individuals, unsecured: | ||||||
Equivalent to RMB4,500,000 (2013: RMB4,500,000) with interest rate at 2.7% per annum, payable at its maturity, due May 7, 2015 | $ | 731,410 | $ | 736,016 | ||
Equivalent to RMB7,400,000 (2013: RMB7,400,000) with interest rate at 2.7% per annum, payable at its maturity, due May 7, 2015 | 1,202,763 | 1,210,337 | ||||
Equivalent to RMB1,320,825 (2013: RMB8,000,000) with interest rate at 5.18% per annum, payable at its maturity, due June 14, 2015 | 214,680 | 1,308,472 | ||||
Equivalent to RMB2,700,000 (2013: RMB2,700,000) with interest rate at 5.18% per annum, payable at its maturity, due March 27, 2015 | 438,846 | 441,609 | ||||
Equivalent to RMB2,448,144 (2013: RMB4,942,600) with interest rate at the bank of China Benchmark Lending Rate, payable at its maturity, due March 7, 2015 | 397,911 | 808,407 | ||||
Equivalent to RMB5,000,000 (2013: RMB22,000,000) with interest rate at 2% per annum, payable at its maturity, due August 12, 2014 | 812,678 | 3,598,299 | ||||
Equivalent to RMB9,000,000 (2013: RMB0) interest-free, due October 28, 2014 | 1,462,820 | - | ||||
Equivalent to RMB2,000,000 interest-free, payable at its maturity, fully repaid on January 17, 2014 | - | 327,118 | ||||
Equivalent to RMB 1,631,396 (2013: RMB2,074,429) with effective interest rate at 8.97% per annum, payable with monthly principal and interest payments, due February 28, 2017 | 265,160 | 339,292 | ||||
5,526,268 | 8,769,550 | |||||
Loans payable to financial institutions: | ||||||
Equivalent to RMB5,500,000 with interest rate at the bank of China Benchmark Lending Rate, payable at its maturity, full repaid on April 15, 2014, which is secured by the property and personal guarantee provided by the director | - | 899,575 | ||||
Equivalent to RMB5,500,000 with interest rate at 1.5 times of the Bank of China Benchmark Lending Rate, payable at its maturity, due April 16, 2015, which is secured by the property and personal guarantee provided by the director | 893,946 | - | ||||
Equivalent to RMB5,000,000 with interest rate at 1.1 times of the Bank of China Benchmark Lending Rate, payable at its maturity, due April 24, 2015, which is collateralized by its pledged deposit provided by the director | 812,678 | - | ||||
Total loans payable | 7,232,892 | 9,669,125 | ||||
Less: long-term portion | -161,911 | -241,657 | ||||
Total current portion | $ | 7,070,981 | $ | 9,427,468 | ||
Minimum Future Payments Of The Aggregate Long-Term Loans Payable | Years ending September 30: | |||||
2015 | $ | 7,070,981 | ||||
2016 | 112,175 | |||||
2017 | 49,736 | |||||
Total: | $ | 7,232,892 |
NOTE_8_NOTES_PAYABLE_RELATED_P1
NOTE 8 - NOTES PAYABLE, RELATED PARTY (TABLES) | 9 Months Ended | ||||||
Sep. 30, 2014 | |||||||
Variable interest entity | |||||||
Notes payable to affiliate Mr. Zhang | Equivalent to RMB2,500,000, unsecured and interest free, due on March 9, 2015 | 406,339 | |||||
Equivalent to RMB3,000,000, unsecured and interest free, due on July 22, 2015 | 487,607 | ||||||
Equivalent to RMB8,000,000, unsecured, with interest rate at 1.3 times of the Bank of China Benchmark Lending Rate, payable with monthly principal and interest payments, due on April 21, 2020 | 1,229,791 | ||||||
Total | 2,123,737 | ||||||
Less: long-term portion | -1,050,083 | ||||||
Current portion | $ | 1,073,654 | |||||
Minimum future payments of aggregate notes due to related party | Years ending September 30: | ||||||
2015 | $ | 1,073,654 | |||||
2016 | 195,622 | ||||||
2017 | 212,945 | ||||||
2018 | 231,802 | ||||||
2019 | 252,328 | ||||||
Thereafter | 157,386 | ||||||
Total: | $ | 2,123,737 |
NOTE_9_INCOME_TAXES_TABLES
NOTE 9 - INCOME TAXES (TABLES) | 9 Months Ended | ||||||
Sep. 30, 2014 | |||||||
LOANS PAYABLE, UNSECURED {1} | |||||||
Foreign Components Of Loss Before Income Taxes | Nine months ended | ||||||
September 30, | |||||||
2014 | 2013 | ||||||
Tax jurisdictions from: | |||||||
– Local | $ | - | $ | - | |||
– Foreign | -1,705,629 | -1,061,169 | |||||
Loss before income taxes | $ | -1,705,629 | $ | -1,061,169 | |||
The Provision For Income Taxes | Nine months ended | ||||||
September 30, | |||||||
2014 | 2013 | ||||||
Current: | |||||||
– Local | $ | - | $ | - | |||
– Foreign, representing by: | |||||||
Hong Kong | - | - | |||||
The PRC | - | 13,664 | |||||
Deferred: | |||||||
– Local | - | - | |||||
– Foreign | - | - | |||||
Income tax expense | $ | - | $ | 13,664 | |||
Reconciliation Of Income Tax Rate To The Effective Income Tax Rate | Nine months ended | ||||||
September 30, | |||||||
2014 | 2013 | ||||||
Loss before income taxes | $ | (1,667,008) | $ | -1,022,977 | |||
Statutory income tax rate | 25% | 25% | |||||
Income tax expense at the statutory tax rate | (416,752) | -255,744 | |||||
Net operating loss not recognized as deferred tax asset | 310,012 | -306,906 | |||||
Non-taxable items | -296,469 | - | |||||
Non-deductible items | 403,209 | 576,314 | |||||
Income tax expense | $ | - | $ | 13,664 |
NOTE_10_CONCENTRATIONS_OF_RISK1
NOTE 10 - CONCENTRATIONS OF RISK (TABLES) | 3 Months Ended | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||||||||||||||||||||||||||||||||||||||||||
Concentration of risk major vendors (Details) | |||||||||||||||||||||||||||||||||||||||||||||||
Major Customers, Revenues and Accounts Receivable | Three months ended September 30, 2013 | 30-Sep-13 | Nine months ended September 30, 2013 | 30-Sep-13 | |||||||||||||||||||||||||||||||||||||||||||
Customer | Revenue | Percentage | Accounts | Revenue | Percentage | Accounts | |||||||||||||||||||||||||||||||||||||||||
of revenue | receivable, trade | Customer | of revenue | receivable, trade | |||||||||||||||||||||||||||||||||||||||||||
Customer A | $ | 691,351 | 54% | $ | - | Customer D | $ | 2,885,628 | 77% | $ | - | ||||||||||||||||||||||||||||||||||||
Customer D | 600,784 | 46% | - | Customer A | 885,809 | 23% | - | ||||||||||||||||||||||||||||||||||||||||
Total: | $ | 1,292,135 | 100% | $ | - | Total: | $ | 3,771,437 | 100% | $ | - | ||||||||||||||||||||||||||||||||||||
Major Vendors, Accounts Payable | Three months ended September 30, 2014 | 30-Sep-14 | Three months ended September 30, 2013 | 30-Sep-13 | Nine months ended September 30, 2014 | 30-Sep-14 | Nine months ended September 30, 2013 | 30-Sep-13 | |||||||||||||||||||||||||||||||||||||||
Purchases | Percentage | Accounts | Purchases | Percentage | Accounts | Purchases | Percentage | Accounts | Purchases | Percentage | Accounts | ||||||||||||||||||||||||||||||||||||
Vendor | of purchases | payable, trade | Vendor | of purchases | payable, trade | Vendor | of purchases | payable, trade | Vendor | of purchases | payable, trade | ||||||||||||||||||||||||||||||||||||
Vendor A | Total: | $ | 343,644 | 100% | $ | 170,743 | Vendor A | $ | 632,259 | 65% | $ | 271,881 | Vendor A | $ | 959,076 | 79% | $ | 170,743 | Vendor A | $ | 1,749,701 | 60% | $ | 271,881 | |||||||||||||||||||||||
Vendor D | 188,353 | 19% | 122,435 | Vendor B | 252,228 | 21% | 89,684 | Vendor D | 637,400 | 21% | 122,435 | ||||||||||||||||||||||||||||||||||||
Vendor C | 280,063 | 10% | - | ||||||||||||||||||||||||||||||||||||||||||||
Total: | $ | 820,612 | 84% | $ | 394,316 | Total: | $ | 1,211,304 | 100% | $ | 260,427 | ||||||||||||||||||||||||||||||||||||
Total: | $ | 2,667,164 | 91% | $ | 394,316 |
NOTE_12_COMMITMENTS_AND_CONTIN1
NOTE 12 - COMMITMENTS AND CONTINGENCIES (TABLES) | 9 Months Ended | |||||||||
Sep. 30, 2014 | ||||||||||
Note 12 - Commitments And Contingencies Tables | ||||||||||
Future Minimum Rental Payments Due | Operating lease commitments | |||||||||
Office premises | Mine operating rights | Total | ||||||||
Year ending September 30, | ||||||||||
2015 | $ | 107,357 | $ | - | $ | 107,357 | ||||
2016 | 42,489 | - | 42,489 | |||||||
2017 | - | - | - | |||||||
2018 | - | 7,151,564 | 7,151,564 | |||||||
Total: | $ | 149,846 | $ | 7,151,564 | $ | 7,301,410 |
NOTE_2_ORGANIZATION_AND_BACKGR2
NOTE 2 - ORGANIZATION AND BACKGROUND - Details Of The Company Subsidiaries And VIE (Details) | Sep. 30, 2014 |
Note 2 - Organization And Background - Details Of Company Subsidiaries And Vie Details | |
Effective interest of Bei Sheng Limited ("BSL") British Virgin Islands, a limited liability company Investment holding in GWIL and provision of mining technical advice 50,000 issued shares of US$1 each | 100 |
Effective interest of Golden Wide International Limited ("GWIL") Hong Kong, a limited liability company 100%-investment holding in SBCL 10,000 issued shares of HK$1 each | 100 |
Effective interest of Shoujin Business Consulting (Shenzhen) Limited ("SBCL") The PRC, a limited liability company Provision of consulting service in the PRC RMB100,000 | 100 |
Effective interest of Shenzhen Shouguan Investment Co., Ltd ("SSIC") The PRC, a limited liability company 99%-investment holding in JinGuan and DYM, respectively, RMB18,100,000 | |
Effective interest of Yantai Jinguan Investment Limited ("JinGuan") The PRC, a limited liability company 100%-investment holding in XinGuan RMB5,000,000 |
NOTE_3_GOING_CONCERN_UNCERTAIN1
NOTE 3 - GOING CONCERN UNCERTAINTIES - Loss And Working Capital Deficit Information (Details Narrative) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest [Abstract] | |
Generated continuous loss for the period end | $7,052,688 |
Working capital deficit | $4,460,955 |
NOTE_4_SUMMARY_OF_SIGNIFICANT_3
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Prepaid Mining Rights (Details) (USD $) | 12 Months Ended | 72 Months Ended | |||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2020 | |
Note 4 - Summary Of Significant Accounting Policies - Prepaid Mining Rights Details | |||||||
Estimated annual amortization of the prepaid mining rights | $73,142 | $32,507 | $69,355 | $2,145,469 | $2,145,469 | $2,145,469 | $6,611,411 |
NOTE_4_SUMMARY_OF_SIGNIFICANT_4
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant, and Equipment Estimated Useful Life (Details) | 9 Months Ended |
Sep. 30, 2014 | |
Estimated Useful Life | |
Plant and machinery, min | 5 years |
Plant and machinery, max | 10 years |
Motor vehicles | 5 years |
Office equipment, min | 3 years |
Office equipment, max | 5 years |
Residual Value | |
Plant and machinery | 5.00% |
Motor vehicles | 5.00% |
Office equipment | 5.00% |
NOTE_4_SUMMARY_OF_SIGNIFICANT_5
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Foreign Currencies Translation (Details) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Summary Of Significant Accounting Policies Resource Compensation Fees Details | ||
Period-end RMB:US$1 exchange rate | 6.1525 | 6.148 |
Period average RMB:US$1 exchange rate | 6.1523 | 6.211 |
NOTE_4_SUMMARY_OF_SIGNIFICANT_6
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Accounting Policies [Abstract] | ||||
Rent expense on prepaid mining rights | $534,954 | $528,227 | $1,609,154 | $1,593,946 |
Depreciation expense | $102,469 | $106,639 | $285,445 | $375,874 |
NOTE_5_DISPOSAL_OF_A_SUBSIDIAR1
NOTE 5 - DISPOSAL OF A SUBSIDIARY (Details) (USD $) | Sep. 30, 2014 |
Disposal Of Subsidiary Details | |
Sale of Cunliji Mine Project - Purchase Price | $7,300,000 |
Gain on sale os subsidiary | 454,200 |
Consideration receivable | $1,462,820 |
NOTE_7_LOANS_PAYABLE_UNSECURED1
NOTE 7 - LOANS PAYABLE, UNSECURED - Minimum Future Payments Of The Aggregate Long-Term Loans Payable (Details) (USD $) | 12 Months Ended | 36 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2017 | |
Non-deductible items | ||||
Loans payable, minimum future payments | $49,736 | $112,175 | $7,070,981 | $7,232,892 |
NOTE_8_NOTES_PAYABLE_RELATED_P2
NOTE 8 - NOTES PAYABLE, RELATED PARTY (Details Narrative) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Mining assets {1} | ||
Interest due on loan | $66,479 | $40,605 |
NOTE_9_INCOME_TAXES_Foreign_Co
NOTE 9 - INCOME TAXES - Foreign Components Of Loss Before Income Taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Tax jurisdictions from: | ||||
- Local | $0 | $0 | ||
- Foreign | -1,705,629 | -1,061,169 | ||
Loss before income taxes | ($762,457) | ($329,038) | ($1,705,629) | ($1,061,169) |
NOTE_9_INCOME_TAXES_The_Provis
NOTE 9 - INCOME TAXES - The Provision For Income Taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Current: | ||||
- Local | $0 | $0 | ||
- Foreign, representing by: | ||||
Hong Kong | 0 | 0 | ||
The PRC | 0 | 13,664 | ||
Deferred | ||||
- Local | 0 | 0 | ||
- Foreign | 0 | 0 | ||
Income tax expense (credit) | $0 | $0 | $0 | $13,664 |
NOTE_9_INCOME_TAXES_Reconcilia
NOTE 9 - INCOME TAXES - Reconciliation Of the PRC Income Tax Rate To The Effective Income Tax Rate (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
The PRC statutory tax reconciliation | ||
Loss before income taxes | ($1,667,008) | ($1,022,977) |
Statutory income tax rate | 25.00% | 25.00% |
Income tax expense at the statutory tax rate | -416,752 | -255,744 |
Net operating loss not recognized as deferred tax asset | 310,012 | -306,906 |
Non-taxable items | -296,469 | 0 |
Non-deductible items | 403,209 | 576,314 |
Income tax expense | $0 | $13,664 |
NOTE_9_INCOME_TAXES_Details_Na
NOTE 9 - INCOME TAXES (Details Narrative) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
– Local Deferred | ||
Hong Kong statutory tax rate | 16.50% | |
Operating loss of Golden Wide | $1,235 | $2,898 |
Aggretate net operating loss carryforwards | 4,113,504 | |
Deferred tax assets | $1,028,376 |
NOTE_10_CONCENTRATIONS_OF_RISK2
NOTE 10 - CONCENTRATIONS OF RISK - Customer Revenue and Account Receivable (Details) (USD $) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2014 | |
Customer A | |||
Revenue | $691,351 | $2,885,628 | |
Percent of Revenue | 54.00% | 77.00% | |
Accounts receivable, trade | 0 | 0 | |
Customer D | |||
Revenue | 600,784 | 885,809 | |
Percent of Revenue | 46.00% | 23.00% | |
Accounts receivable, trade | 0 | 0 | |
Customer Total | |||
Revenue | 1,292,135 | 3,771,437 | |
Percent of Revenue | 100.00% | 100.00% | |
Accounts receivable, trade | $0 | $0 | $555,957 |
NOTE_10_CONCENTRATIONS_OF_RISK3
NOTE 10 - CONCENTRATIONS OF RISK - Vendor Purchases and Accounts Payable (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Vendor A | ||||
Purchases | $343,644 | $632,259 | $959,076 | $1,749,701 |
Percentage of purchases | 10000.00% | 65.00% | 79.00% | 60.00% |
Accounts payable, trade | 170,743 | 271,881 | 170,743 | 271,881 |
Vendor B | ||||
Purchases | 252,228 | |||
Percentage of purchases | 21.00% | |||
Accounts payable, trade | 89,684 | 89,684 | ||
Vendor Total | ||||
Purchases | 820,612 | 1,211,304 | 2,667,164 | |
Percentage of purchases | 84.00% | 100.00% | 91.00% | |
Accounts payable, trade | 260,427 | 394,316 | 260,427 | 394,316 |
Vendor D | ||||
Purchases | 188,353 | 637,400 | ||
Percentage of purchases | 19.00% | 21.00% | ||
Accounts payable, trade | 122,435 | 122,435 | ||
Vendor C | ||||
Purchases | 280,063 | |||
Percentage of purchases | 10.00% | |||
Accounts payable, trade | $0 | $0 |
NOTE_10_CONCENTRATIONS_OF_RISK4
NOTE 10 - CONCENTRATIONS OF RISK - (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2014 | |
Customer A | |||
Revenue | $691,351 | $2,885,628 | |
Percent of Revenue | 54.00% | 77.00% | |
Accounts receivable, trade | 0 | 0 | |
Customer D | |||
Revenue | 600,784 | 885,809 | |
Percent of Revenue | 46.00% | 23.00% | |
Accounts receivable, trade | 0 | 0 | |
Customer Total | |||
Revenue | 1,292,135 | 3,771,437 | |
Percent of Revenue | 100.00% | 100.00% | |
Accounts receivable, trade | $0 | $0 | $555,957 |
NOTE_11_RELATED_PARTY_TRANSACT1
NOTE 11 - RELATED PARTY TRANSACTIONS (Details Narrative) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Related Party Transactions [Abstract] | ||
interest expense | $66,479 | $40,605 |
NOTE_12_COMMITMENTS_AND_CONTIN2
NOTE 12 - COMMITMENTS AND CONTINGENCIES - Information Of Non Cancelable Operating Leases (Details) (USD $) | 12 Months Ended | 48 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2018 | |
Aggregate future minimum rental payments due under these non-cancelable operating leases | |||||
Office premises | $0 | $0 | $42,489 | $107,357 | $149,846 |
Mine operating rights | 7,151,564 | 0 | 0 | 0 | 7,151,564 |
Total operating lease commitments | $7,151,564 | $0 | $42,489 | $107,956 | $7,301,410 |
NOTE_12_COMMITMENTS_AND_CONTIN3
NOTE 12 - COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Deferred tax assets valuation allowance | ||
Minimum lease term of operating leases | 1 | |
Maximum lease term of operating leases | 10 | |
Total rent expenses excluding amortization of prepaid mining rights and office premises | $88,173 | $85,985 |