Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 15-May-15 | |
Document And Entity Information | ||
Entity Registrant Name | China Liaoning Dingxu Ecological Agriculture Development, Inc. | |
Entity Central Index Key | 1501958 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | Yes | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 27,678,779 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current Assets | ||
Cash and cash equivalents | $717,447 | $82,776 |
Inventories | 237,093 | 307,260 |
Other receivables, net | 56,862 | |
Other current assets | 89,671 | 89,348 |
Total Current Assets | 1,044,211 | 536,246 |
Property and equipment, net | 10,945,850 | 11,089,999 |
Advances to suppliers, long-term | 1,871,071 | 1,864,416 |
Land use right | 5,398,637 | 5,436,351 |
Prepaid lease for land | 1,685,694 | 1,707,203 |
Total Assets | 20,945,463 | 20,634,215 |
Current Liabilities: | ||
Account payable | 105,579 | 105,211 |
Accrued expenses | 18,965 | 18,989 |
Due to related parties | 545,700 | 2,545,915 |
Total Current Liabilities | 670,244 | 2,670,115 |
Long term payable | 1,587,421 | 1,581,775 |
Total Liabilities | 2,257,665 | 4,251,890 |
Stockholders' Equity: | ||
Common stock ($0.001 par value; 75,000,000 shares authorized; 27,678,779 and 3,178,500 shares issued and outstanding at March 31, 2015 and December 31, 2014) | 27,678 | 3,178 |
Additional paid-in capital | 19,997,106 | 15,105,490 |
Retained earnings | -2,282,265 | 432,585 |
Accumulated other comprehensive income | 778,666 | 677,494 |
Non-controlling interests | 166,613 | 163,578 |
Total Stockholders' Equity | 18,687,798 | 16,382,325 |
Total Liabilities and Stockholders' Equity | $20,945,463 | $20,634,215 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $0.00 | $0.00 |
Common Stock, shares authorized | 75,000,000 | 75,000,000 |
Common Stock, shares issued | 27,678,779 | 3,178,500 |
Common Stock, shares outstanding | 27,678,779 | 3,178,500 |
CONSOLIDATED_STATEMENTS_OF_INC
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Statement [Abstract] | ||
NET REVENUES | $1,778,144 | $3,447,548 |
COST OF REVENUES | 1,248,183 | 1,235,343 |
GROSS PROFIT | 529,961 | 2,212,205 |
OPERATING EXPENSES: | ||
Depreciation and amortization | 227,624 | 187,469 |
Bad debt | 1,141,225 | |
General and administrative | 536,263 | 93,590 |
Total Operating Expenses | 763,887 | 1,422,284 |
INCOME (LOSS) FROM OPERATIONS | -233,926 | 789,921 |
OTHER INCOME (EXPENSE): | ||
Interest expense | -2,478,959 | -43,648 |
Other Income | 16,426 | |
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAX | -2,712,885 | 762,699 |
PROVISION FOR INCOME TAXES | ||
NET INCOME (LOSS) BEFORE NON-CONTROLLING INTERESTS | -2,712,885 | 762,669 |
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTERESTS | 1,965 | 8,300 |
NET INCOME (LOSS) | -2,714,850 | 754,399 |
OTHER COMPREHENSIVE INCOME (LOSS): | ||
Unrealized foreign currency translation gain (loss) | 102,194 | -209,899 |
LESS: OTHER COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTERESTS | 1,022 | -2,099 |
COMPREHENSIVE INCOME (LOSS) | ($2,613,678) | $546,599 |
NET INCOME (LOSS) PER COMMON SHARE: | ||
Basic | ($0.12) | $0.32 |
Diluted | ($0.12) | $0.32 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||
Basic | 23,595,167 | 2,322,500 |
Diluted | 23,595,167 | 2,322,500 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | ($2,714,850) | $754,399 |
Net income attributable to non-controlling interests | 1,965 | 8,300 |
Adjustments to reconcile net income to net cash Provide by operating activities: | ||
Bad debt | 1,141,225 | |
Depreciation and amortization | 250,688 | 228,486 |
Imputed interest | 16,163 | 43,596 |
Debt discount amortization | 2,450,000 | |
Changes in assets and liabilities: | ||
Inventories | 70,166 | -1,834 |
Other receivables | 56,862 | 166,310 |
Other current assets | -319 | 809 |
Prepaid expense | -6,655 | 41,634 |
Accounts payable and accrued liabilities | 408,457 | 173,058 |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 532,477 | 2,555,983 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Loan to related parties | -1,141,225 | |
NET CASH USED IN INVESTING ACTIVITIES | -1,141,225 | |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from related parties | 30,989 | |
Repayment to related parties | -27,238 | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 3,751 | |
EFFECT OF EXCHANGE RATE ON CASH | 102,194 | -209,899 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 634,671 | 1,208,610 |
CASH AND CASH EQUIVALENTS - beginning of period | 82,776 | 11,797 |
CASH AND CASH EQUIVALENTS - end of period | $717,447 | $1,220,407 |
1_ORGANIZATION_AND_DESCRIPTION
1. ORGANIZATION AND DESCRIPTION OF BUSINESS | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS |
China Liaoning Dingxu Ecological Agriculture Development Inc. (the "Company") was incorporated under the laws of State of Nevada on August 19, 2010. The Company is primarily engaged in the growing, marketing, producing and selling of agriculture products in People’s Republic of China (“PRC”). | |
On December 12, 2011, the Company entered a Share Exchange Agreement with DingXu BVI Shareholder (Chin Yung Kong) under which the Company issued 60,000,000 shares of common stock to Chin Yung Kong to acquire 100% of the issued and outstanding shares of DingXu BVI. | |
China Liaoning DingXu Ecological Agriculture Development Co, Ltd., a BVI company (“DingXu BVI”) was incorporated under the laws of British Virgin Islands on April 15, 2011. Chin Yung Kong was the sole shareholder and director of DingXu BVI. | |
On July 5, 2011, DingXu BVI formed Panjin Hengrun Biological Technology Development Co, Ltd., a limited liability company organized under the laws of the PRC (“Panjin Hengrun”). DingXu BVI owns 99% of the total ownership of Panjing Hengrun. | |
On November 28, 2011, Panjin Hengrun entered into a set of contractual arrangements with Liaoning Dingxu Ecological Agriculture Development Co., Ltd., a limited liability company organized under the laws of the PRC and an affiliated entity of Panjin Hengrun through contractual arrangements (“Liaoning Dingxu”). The contractual arrangements are comprised of a series of agreements, including a Consulting Service Agreement and an Operating Agreement, through which Panjin Hengrun has the right to advise, consult, manage and operate Liaoning Dingxu and to collect and own all of Liaoning Dingxu’s net profits and net losses. Additionally, under a Proxy Agreement, the shareholders of Liaoning Dingxu have vested their voting control over Liaoning Dingxu to Panjin Hengrun. In order to further reinforce Panjin Hengrun’s rights to control and operate Liaoning Dingxu. Liaoning Dingxu and its shareholders have granted Panjin Hengrun, under an Option Agreement, the exclusive right and option to acquire all of their equity interests in Liaoning Dingxu, or, alternatively, all of the assets of Liaoning Dingxu. Further, the shareholders of Liaoning Dingxu agreed to pledge all of their rights, titles and interests in Liaoning Dingxu under an Equity Pledge Agreement. | |
Upon entry of these contractual arrangements, Liaoning Dingxu became the Variable Interest Entity (“VIE”) of Panjin Hengrun pursuant to ASC-810-10-05 and Panjin Hengrun was able to carry out business operations through Liaoning Dingxu. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | |
Mar. 31, 2015 | ||
Notes to Financial Statements | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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. The Company had cash balances of $717,447 and $82,776 as of March 31, 2015 and December 31, 2014, respectively. The Company had no cash equivalent as of March 31, 2015 and December 31, 2014. | ||
INVENTORIES | ||
Inventories are stated at the lower of cost or market value. Cost is determined using moving weighted average method. Inventories consist of raw materials, finished goods and growing crops. Cost of finished goods comprises direct material and direct production cost based on normal operating capacity. | ||
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: | ||
Building | 20 years | |
Plant equipment | 5-10 years | |
Office equipment | 3-5 years | |
Vehicles | 4 years | |
Maintenance and repair costs are expensed as incurred, whereas significant renewals and betterments are capitalized. | ||
Construction in progress represents capital assets under construction or being installed and is stated at cost. Cost comprises original cost of plant and equipment, installation, construction and other direct costs prior to the date of reaching the expected usable condition. Construction in progress is transferred to the property, plant and equipment and depreciation commences when the asset has been substantially completed and reaches the expected usable condition. | ||
LAND USE RIGHTS | ||
The Company states land use right at cost less accumulated amortization. The land use right is amortized on straight line method during the contract period. | ||
The Company has land use rights to 24,806 square meters of land. The term of the land use rights is 50 years, starting in March 2011. The land use right in the amount of $579,580 was fully paid during 2011. For the three months ended March 31, 2015 and 2014, the Company recorded amortization expense of $2,967 and $2,979, respectively. The Company recorded the land use right net value of $547,903 and $548,922 as of March 31, 2015 and December 31, 2014, respectively. | ||
The Company has land use rights to 56,139 square meters of land. The term of the land use rights is 46 years, starting in March 2011. The land use right in the amount of $2,698,027 was fully paid before March 31, 2013. For the three months ended March 31, 2015 and 2014, the Company recorded amortization expense of $14,826 and $14,913, respectively. The Company recorded the land use right net value of $2,534,304 and $ $2,540,116 as of March 31, 2015 and December 31, 2014, respectively. | ||
The Company has land use rights to 428,214 square meters of land. The term of the land use rights is 18 years, starting in January 2012. For the three months ended March 31, 2015 and 2014, the Company recorded amortization expense of $39,122 and $39,133 , respectively. The Company recorded the land use right net value of $2,316,429 and $2,347,313 as of March 31, 2015 and December 31, 2014, respectively. As the land use right was not yet fully paid for as of March 31, 2015, the Company recorded long term liabilities related to this land use right in the amount of $1,587,421 and $1,581,775 as of March 31, 2015 and December 31, 2014, respectively. | ||
LONG TERM PREPAID LEASE | ||
Leases where substantially all the risks and rewards of ownership of assets remain with the lessor are accounted for as operating leases. Payments made under operating leases net of any incentives received from the lessor are charged to the consolidated statements of operations on a straight-line basis over the terms of the underlying lease. | ||
The Company records lease payments at cost less accumulated rent. The Company entered into a long term agreement with certain unrelated parties to rent land in 2010. The lease payments are recorded as operating lease expenses using the straight line method during the contract period of 20 years beginning at January 1, 2010. The lease payments for the entire contract period of $1,030,000 were prepaid. For the three months ended March 31, 2015 and 2014, the Company recorded lease expense of $13,963 and $13,980, respectively. | ||
The Company entered into a long term agreement with certain unrelated parties to rent land in 2013. The lease payments are recorded as operating lease expenses using the straight line method during the contract period of 17 years beginning at December 25, 2013. The lease payments for the entire contract period $984,107 were prepaid. For the three months ended March 31, 2015 and 2014, the Company recorded lease expense of $13,542 and $13,621, respectively. | ||
REVENUE RECOGNITION | ||
The Company engages in the business of growing, producing, marketing and selling fresh mushrooms, dried mushrooms, and mushroom seeds through its affiliated VIE, LiaoNing DingXu. | ||
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”). | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, accounts payable and accrued expenses reported on the balance sheet are estimated by management to approximate fair value primarily due to the short term nature of the instruments. The Company had no other items that required fair value measurement on a recurring basis. | ||
BASIC AND DILUTED LOSS PER SHARE | ||
The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the periods presented, there were no outstanding potential common stock equivalents and therefore basic and diluted earnings per share result in the same figure. | ||
STOCK-BASED COMPENSATION | ||
The Company adopted FASB guidance on stock based compensation upon inception on September 9, 2010. Under FASB ASC 718-10-30-2, all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. The Company did not issue any share-based payments for services or compensation to employees, or otherwise for the periods presented. | ||
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 account 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 operating subsidiary is organized and located in the PRC and does 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 operating subsidiary is exempted from enterprise income tax from 2010 to 2016. Accordingly, the Company statutory rate was 0% and 0% for the three months ended March 31, 2015 and 2014, respectively. | ||
Value added tax | ||
The Provisional Regulations of The PRC 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 from 2010 to 2016. | ||
FOREIGN CURRENCY TRANSLATION | ||
The reporting currency of the Company is the U.S. dollar. The functional currency of the parent company is the U.S. dollar and the functional currency of the Company’s operating subsidiaries and variable interest entities is the RMB. For the subsidiaries and variable interest entities whose functional currencies are the RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. All of the Company’s revenue transactions are transacted in the functional currency. The Company does not enter any material transaction in foreign currencies and accordingly, transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company. | ||
In accordance with ASC Topic 230, cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets. | ||
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. | ||
NEW ACCOUNTING PRONOUNCEMENTS | ||
On August 2014, The Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2014-15, Presentation of Financial Statements – Going Concerns (Subtopic 205-40): Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The adoption of ASU 2014-15 is not expected to have a material impact on our financial position or results of operations. | ||
In June 2014, the FASB issued ASU No. 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The new guidance requires that share-based compensation that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards and that could be achieved after an employee completes the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation costs should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a material impact on our financial position or results of operations. |
3_INVENTORIES
3. INVENTORIES | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
INVENTORIES | NOTE 3. INVENTORIES | ||||||||
Inventories consist of raw materials, finished goods, growing crops and others. | |||||||||
Raw materials that were not put into production as of fiscal year end were stated at the lower of cost or market. | |||||||||
Finished goods consist of dried mushrooms. | |||||||||
Growing crops consist of expenditures valued at the lower of cost or market and are deferred and charged to cost of goods sold when the related crop is harvested and sold. The deferred growing costs included in inventories in the consolidated balance sheets consist primarily of raw material of the crops, direct labor, depreciation of fixed assets used directly in growing, land lease payment for the field used to grow crops, and utilities used in the production site. Costs included in growing crops related to the current crop year. | |||||||||
Inventories at March 31, 2015 and December 31, 2014 consisted of the following: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Raw materials and supplies | $ | 56,728 | $ | 14,005 | |||||
Finished goods | 38,739 | — | |||||||
Growing crops | 141,626 | 254,248 | |||||||
Others | — | 39,007 | |||||||
Total Inventories | $ | 237,093 | $ | 307,260 |
4_ADVANCE_TO_SUPPLIER
4. ADVANCE TO SUPPLIER | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
ADVANCE TO SUPPLIER | NOTE 4. ADVANCES TO SUPPLIER | ||||||||
Advances to suppliers were mainly used to record the advances paid as deposits on raw materials, equipment, or other fixed assets being purchased. Advances to suppliers at March 31, 2015 and December 31, 2014 consist of the following: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Advances to suppliers – long-term | |||||||||
PanJin XingHua Real Estate Development Co., Ltd | $ | 1,871,071 | $ | 1,864,416 | |||||
Total advances to suppliers – long-term | $ | 1,871,071 | $ | 1,864,416 | |||||
On September 20, 2014, the Company signed a contract to purchase an apartment building which has six floors to be used as a dormitory for the Company’s workers. The Company paid $1,864,416 to PanJin XingHua Real Estate Development Co., Ltd for the purchase of this building. The building is scheduled to be completed during April 2015 at which time it will be transferred into fixed assets and put into use by the Company. |
5_RECEIVABLES
5. RECEIVABLES | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Receivables [Abstract] | |||||||||
RECEIVABLES | NOTE 5. RECEIVABLES | ||||||||
Receivables consisted of account receivables due from the sales of mushroom products and advances made to Company employees for future business related expenses. The balances as of March 31, 2015 and December 31, 2014 are as follows: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Account receivable | $ | — | $ | 56,862 | |||||
Employee advances | — | — | |||||||
Total receivables | $ | — | $ | 56,862 |
6_PROPERTY_PLANT_AND_EQUIPMENT
6. PROPERTY, PLANT AND EQUIPMENT | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
Property, Plant and Equipment | NOTE 6. PROPERTY, PLANT AND EQUIPMENT | ||||||||
Property, Plant and Equipment at March 31, 2015 and December 31,2014 consists of the following: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Building | $ | 12,318,380 | $ | 12,276,999 | |||||
Plant | 777,470 | 774,705 | |||||||
Vehicles | 34,208 | 34,087 | |||||||
Office equipment | 75,423 | 75,154 | |||||||
Total fixed assets | 13,205,481 | 13,160,945 | |||||||
Less: Accumulated depreciation | 2,259,631 | 2,070,946 | |||||||
Property, plant and equipment, net | $ | 10,945,850 | $ | 11,089,999 | |||||
For the three months ended March 31, 2015 and 2014, the Company recorded depreciation expense of $188,685 and $171,461, respectively. |
7_RELATED_PARTY_TRANSACTION
7. RELATED PARTY TRANSACTION | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
7. RELATED PARTY TRANSACTIONS | NOTE 7. RELATED PARTY TRANSACTIONS |
Due to related parties | |
The total amount due to related parties consisted of the borrowing from shareholders to purchase land use rights and building greenhouses and planting structures. The balance was $545,700 and $2,545,915 as of March 31, 2015 and December 31, 2014, respectively. | |
During the three months ended March 31, 2014, the Company advanced a loan in the amount of $1,141,225 to the director of the Company’s operating VIE, Liaoning Dingxu. This loan has no stated term of repayment or interest rate. The Company conservatively recorded a full allowance for the loan and recorded bad debt expenses of $1,141,225 as of March 31, 2014. | |
Convertible Debt | |
On January 10, 2015, the Company converted $2,000,000 of related party payables due to Chin Yung Kong into a convertible note. The note has a maturity date of June 10, 2015, and is convertible into Company common stock at the fixed rate of $0.10 per share. The note does not bear any interest. | |
The Company evaluated the convertible note to Chin Yung Kong and determined that the shares issuable pursuant to the conversion option were determinate due to the fixed conversion price and, as such, does not constitute a derivative liability as the Company has the appropriate number of shares available to be issuable if settlemen were to occur. The beneficial conversion feature discount resulting from the conversion price of $5.15 below the market price on January 10, 2015 of $5.25 provided a value of $2,000,000. On January 15, 2015, Chin Yung Kong exercised the convertible note and converted it into 20,000,000 shares of common stock, in accordance with the note agreement. As a result, no gain or loss was recognized on the conversion as it was made within the terms of the agreement. In addition, as a result of the full conversion, the debt discount recorded of $2,000,000 as of January 10, 2015 was completely amortized into interest expense in the same amount. | |
Imputed Interest | |
Certain stockholders advanced funds to the Company with no stated interest rate. The interest is imputed at 8% annually. The Company recorded imputed interest in the amount of $16,163 and $43,596 for the three months ended March 31, 2015 and 2014, respectively. |
8_STOCKHOLDERS_EQUITY
8. STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
STOCKHOLDERS' EQUITY | NOTE 8. STOCKHOLDERS’ EQUITY |
The Company’s capitalization is 75,000,000 common shares with a par value of $0.001 per share. There are a total of 27,678,779 common shares issued and outstanding at March 31, 2015. No preferred shares have been authorized or issued. | |
During the three months ended March 31, 2015 and 2014, the Company recorded imputed interest on outstanding due to related parties balance as a contribution of paid-in capital in the amount of $16,163 and $43,596, respectively. | |
On October 9, 2014, we completed a 1-for-20 reverse stock split of our outstanding common stock. The accompanying financial statements and notes to the financial statements give retroactive effect to the reverse stock split for all periods presented. | |
On October 31, 2014, the Company issued 856,000 common shares to a consultant in consideration for providing business development services. The total fair value of the common stock was $6,334,400 based on the closing price of the Company’s common stock on the date of grant. | |
On January 10, 2015, the Company converted $2,000,000 of related party payables due to Chin Yung Kong (a related party) into a convertible note. The note has a maturity date of June 10, 2015, and is convertible into Company common stock at the fixed rate of $0.10 per share. The note does not bear any interest. On January 15, 2015, Chin Yung Kong exercised the convertible note and converted it into 20,000,000 shares of common stock, in accordance with the note agreement. As a result, no gain or loss was recognized on the conversion as it was made within the terms of the agreement. In addition, as a result of the full conversion, the debt discount recorded of $2,000,000 as of January 10, 2015 was completely amortized into interest expense in the same amount. | |
On January 10, 2015, the Company converted $450,000 of account payables due to five consultants into five separate convertible notes. Each note has a maturity date of January 10, 2016, and is convertible into Company common stock at the fixed rate of $0.10 per share. The notes also bear interest at the rate of 10% per year. On January 15, 2015, the five consultants exercised each of the five convertible notes and converted them into at total of 4,500,000 shares of common stock, in accordance with the note agreements. As a result, no gain or loss was recognized on the conversions as they were made within the terms of the agreements. In addition, as a result of the full conversions, the debt discounts recorded of $450,000 as of January 10, 2015 were completely amortized into interest expense in the same amount. | |
The Company has not granted any stock options and has not recorded any stock-based compensation since inception. |
9_FAIR_VALUE_OF_FINANCIAL_INST
9. FAIR VALUE OF FINANCIAL INSTRUMENTS | 3 Months Ended | ||||||||||||||
Mar. 31, 2015 | |||||||||||||||
Notes to Financial Statements | |||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 9. FAIR VALUE OF FINANCIAL INSTRUMENTS | ||||||||||||||
Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, accounts payable and accrued expenses reported on the balance sheet are estimated by management to approximate fair value primarily due to the short term nature of the instruments. The Company had no other items that required fair value measurement on a recurring basis. | |||||||||||||||
The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows: | |||||||||||||||
Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. | |||||||||||||||
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). | |||||||||||||||
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability. | |||||||||||||||
The following table provides a summary of the fair values of assets and liabilities as of March 31, 2015: | |||||||||||||||
Fair Value Measurements at | |||||||||||||||
Balance as of March 31, 2015 | Level 1 | Level 2 | Level 3 | ||||||||||||
$ | — | $ | — | $ | — | $ | — | ||||||||
The following table provides a summary of the fair values of assets and liabilities as of December 31, 2014: | |||||||||||||||
Fair Value Measurements at | |||||||||||||||
Balance as of December 31, 2014 | Level 1 | Level 2 | Level 3 | ||||||||||||
$ | — | $ | — | $ | — | $ | — |
10_NONCONTROLLING_INTEREST
10. NON-CONTROLLING INTEREST | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
NON-CONTROLLING INTEREST | NOTE 10. NON-CONTROLLING INTEREST |
Non-controlling interest represents the 1% interest in the subsidiaries. The net income, unrealized foreign currency translation gain and imputed interest attributable to the non-controlling interest total $3,035 and $6,204 for the three months ended March 31, 2015 and 2014, respectively. The Company recorded $166,613 and $163,578 of non-controlling interest as of March 31, 2015 and December 31, 2014, respectively. |
11_COMMITMENT_AND_CONTINGENCIE
11. COMMITMENT AND CONTINGENCIES | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Notes to Financial Statements | |||||
COMMITMENT AND CONTINGENCIES | NOTE 11. COMMITMENT AND CONTINGENCIES | ||||
The Company had a long term payable for the acquisition of a land use right. Based on the contract agreement, the future minimum rental payments required for the coming years are as follows: | |||||
Years ending December 31: | |||||
2015 | — | ||||
2016 | — | ||||
2017 | — | ||||
2018 | — | ||||
2019 | 16,960 | ||||
Remaining payments | 1,570,461 | ||||
Total future minimum payments | $ | 1,587,421 | |||
Besides the long term payable for land use right, the Company will make payment to shareholders time to time. | |||||
The Company did not have other significant capital commitments, or significant guarantees as of March 31, 2015 and December 31, 2014, respectively. |
12_CONVERTIBLE_DEBT
12. CONVERTIBLE DEBT | 3 Months Ended |
Mar. 31, 2015 | |
Debt Disclosure [Abstract] | |
12. CONVERTIBLE DEBT | NOTE 12. CONVERTIBLE DEBT |
On January 10, 2015, the Company converted $2,000,000 of related party payables due to Chin Yung Kong (a related party) into a convertible note. The note has a maturity date of June 10, 2015, and is convertible into Company common stock at the fixed rate of $0.10 per share. The note does not bear any interest. | |
The Company evaluated the convertible note to Chin Yung Kong and determined that the shares issuable pursuant to the conversion option were determinate due to the fixed conversion price and, as such, does not constitute a derivative liability as the Company has the appropriate number of shares available to be issuable if settlemen were to occur. The beneficial conversion feature discount resulting from the conversion price of $5.15 below the market price on January 10, 2015 of $5.25 provided a value of $2,000,000. On January 15, 2015, Chin Yung Kong exercised the convertible note and converted it into 20,000,000 shares of common stock, in accordance with the note agreement. As a result, no gain or loss was recognized on the conversion as it was made within the terms of the agreement. In addition, as a result of the full conversion, the debt discount recorded of $2,000,000 as of January 10, 2015 was completely amortized into interest expense in the same amount. | |
On January 10, 2015, the Company converted $450,000 of account payables due to five consultants into five separate convertible notes. Each note has a maturity date of January 10, 2016, and is convertible into Company common stock at the fixed rate of $0.10 per share. The notes also bear interest at the rate of 10% per year. | |
The Company evaluated the convertible notes to the five consultants and determined that the shares issuable pursuant to the conversion option were determinate due to the fixed conversion price and, as such, does not constitute a derivative liability as the Company has the appropriate number of shares available to be issuable if settlemen were to occur. The beneficial conversion feature discount resulting from the conversion price of $5.15 below the market price on January 10, 2015 of $5.25 provided a value of $450,000. On January 15, 2015, the five consultants exercised each of the five convertible notes and converted them into at total of 4,500,000 shares of common stock, in accordance with the note agreements. As a result, no gain or loss was recognized on the conversions as they were made within the terms of the agreements. In addition, as a result of the full conversions, the debt discounts recorded of $450,000 as of January 10, 2015 were completely amortized into interest expense in the same amount. |
13_SUBSEQUENT_EVENTS
13. SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
SUBSEQUENT EVENTS | NOTE 13. SUBSEQUENT EVENTS |
The Company has performed an evaluation of subsequent events in accordance with ASC Topic 855 and the Company is not aware of any other subsequent events which would require recognition or disclosure in the financial statements. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU1
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | |
Mar. 31, 2015 | ||
Summary Of Significant Accounting Policies Policies | ||
BASIS OF PRESENTATION | 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 | 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 | 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 | CASH AND CASH EQUIVALENTS | |
The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. The Company had cash balances of $717,447 and $82,776 as of March 31, 2015 and December 31, 2014, respectively. The Company had no cash equivalent as of March 31, 2015 and December 31, 2014. | ||
INVENTORIES | INVENTORIES | |
Inventories are stated at the lower of cost or market value. Cost is determined using moving weighted average method. Inventories consist of raw materials, finished goods and growing crops. Cost of finished goods comprises direct material and direct production cost based on normal operating capacity. | ||
PROPERTY, PLANT AND EQUIPMENT | 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: | ||
Building | 20 years | |
Plant equipment | 5-10 years | |
Office equipment | 3-5 years | |
Vehicles | 4 years | |
Maintenance and repair costs are expensed as incurred, whereas significant renewals and betterments are capitalized. | ||
Construction in progress represents capital assets under construction or being installed and is stated at cost. Cost comprises original cost of plant and equipment, installation, construction and other direct costs prior to the date of reaching the expected usable condition. Construction in progress is transferred to the property, plant and equipment and depreciation commences when the asset has been substantially completed and reaches the expected usable condition. | ||
LAND USE RIGHTS | LAND USE RIGHTS | |
The Company states land use right at cost less accumulated amortization. The land use right is amortized on straight line method during the contract period. | ||
The Company has land use rights to 24,806 square meters of land. The term of the land use rights is 50 years, starting in March 2011. The land use right in the amount of $579,580 was fully paid during 2011. For the three months ended March 31, 2015 and 2014, the Company recorded amortization expense of $2,967 and $2,979, respectively. The Company recorded the land use right net value of $547,903 and $548,922 as of March 31, 2015 and December 31, 2014, respectively. | ||
The Company has land use rights to 56,139 square meters of land. The term of the land use rights is 46 years, starting in March 2011. The land use right in the amount of $2,698,027 was fully paid before March 31, 2013. For the three months ended March 31, 2015 and 2014, the Company recorded amortization expense of $14,826 and $14,913, respectively. The Company recorded the land use right net value of $2,534,304 and $ $2,540,116 as of March 31, 2015 and December 31, 2014, respectively. | ||
The Company has land use rights to 428,214 square meters of land. The term of the land use rights is 18 years, starting in January 2012. For the three months ended March 31, 2015 and 2014, the Company recorded amortization expense of $39,122 and $39,133 , respectively. The Company recorded the land use right net value of $2,316,429 and $2,347,313 as of March 31, 2015 and December 31, 2014, respectively. As the land use right was not yet fully paid for as of March 31, 2015, the Company recorded long term liabilities related to this land use right in the amount of $1,587,421 and $1,581,775 as of March 31, 2015 and December 31, 2014, respectively. | ||
LONG TERM PREPAID LEASE | LONG TERM PREPAID LEASE | |
Leases where substantially all the risks and rewards of ownership of assets remain with the lessor are accounted for as operating leases. Payments made under operating leases net of any incentives received from the lessor are charged to the consolidated statements of operations on a straight-line basis over the terms of the underlying lease. | ||
The Company records lease payments at cost less accumulated rent. The Company entered into a long term agreement with certain unrelated parties to rent land in 2010. The lease payments are recorded as operating lease expenses using the straight line method during the contract period of 20 years beginning at January 1, 2010. The lease payments for the entire contract period of $1,030,000 were prepaid. For the three months ended March 31, 2015 and 2014, the Company recorded lease expense of $13,963 and $13,980, respectively. | ||
The Company entered into a long term agreement with certain unrelated parties to rent land in 2013. The lease payments are recorded as operating lease expenses using the straight line method during the contract period of 17 years beginning at December 25, 2013. The lease payments for the entire contract period $984,107 were prepaid. For the three months ended March 31, 2015 and 2014, the Company recorded lease expense of $13,542 and $13,621, respectively. | ||
REVENUE RECOGNITION | REVENUE RECOGNITION | |
The Company engages in the business of growing, producing, marketing and selling fresh mushrooms, dried mushrooms, and mushroom seeds through its affiliated VIE, LiaoNing DingXu. | ||
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”). | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS | |
Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, accounts payable and accrued expenses reported on the balance sheet are estimated by management to approximate fair value primarily due to the short term nature of the instruments. The Company had no other items that required fair value measurement on a recurring basis. | ||
BASIC AND DILUTED LOSS PER SHARE | BASIC AND DILUTED LOSS PER SHARE | |
The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the periods presented, there were no outstanding potential common stock equivalents and therefore basic and diluted earnings per share result in the same figure. | ||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION | |
The Company adopted FASB guidance on stock based compensation upon inception on September 9, 2010. Under FASB ASC 718-10-30-2, all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. The Company did not issue any share-based payments for services or compensation to employees, or otherwise for the periods presented. | ||
TAXATION | 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 account 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 operating subsidiary is organized and located in the PRC and does 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 operating subsidiary is exempted from enterprise income tax from 2010 to 2016. Accordingly, the Company statutory rate was 0% and 0% for the three months ended March 31, 2015 and 2014, respectively. | ||
Value added tax | ||
The Provisional Regulations of The PRC 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 from 2010 to 2016. | ||
FOREIGN CURRENCY TRANSLATION | FOREIGN CURRENCY TRANSLATION | |
The reporting currency of the Company is the U.S. dollar. The functional currency of the parent company is the U.S. dollar and the functional currency of the Company’s operating subsidiaries and variable interest entities is the RMB. For the subsidiaries and variable interest entities whose functional currencies are the RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. All of the Company’s revenue transactions are transacted in the functional currency. The Company does not enter any material transaction in foreign currencies and accordingly, transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company. | ||
In accordance with ASC Topic 230, cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets. | ||
ACCUMULATED OTHER COMPREHENSIVE INCOME | 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. | ||
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS | |
On August 2014, The Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2014-15, Presentation of Financial Statements – Going Concerns (Subtopic 205-40): Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The adoption of ASU 2014-15 is not expected to have a material impact on our financial position or results of operations. | ||
In June 2014, the FASB issued ASU No. 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The new guidance requires that share-based compensation that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards and that could be achieved after an employee completes the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation costs should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a material impact on our financial position or results of operations. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended | |
Mar. 31, 2015 | ||
Summary Of Significant Accounting Policies Tables | ||
Useful lives of assets | Building | 20 years |
Plant equipment | 5-10 years | |
Office equipment | 3-5 years | |
Vehicles | 4 years |
3_INVENTORIES_Tables
3. INVENTORIES (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Inventories Tables | |||||||||
Inventories | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Raw materials and supplies | $ | 56,728 | $ | 14,005 | |||||
Finished goods | 38,739 | — | |||||||
Growing crops | 141,626 | 254,248 | |||||||
Others | — | 39,007 | |||||||
Total Inventories | $ | 237,093 | $ | 307,260 |
3_ADVANCE_TO_SUPPLIER_Tables
3. ADVANCE TO SUPPLIER (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Advance To Supplier Tables | |||||||||
Advances to suppliers | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Advances to suppliers – long-term | |||||||||
PanJin XingHua Real Estate Development Co., Ltd | $ | 1,871,071 | $ | 1,864,416 | |||||
Total advances to suppliers – long-term | $ | 1,871,071 | $ | 1,864,416 |
5_RECEIVABLES_Tables
5. RECEIVABLES (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Receivables Tables | |||||||||
Receivables balance | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Account receivable | $ | — | $ | 56,862 | |||||
Employee advances | — | — | |||||||
Total receivables | $ | — | $ | 56,862 |
6_PROPERTY_PLANT_AND_EQUIPMENT1
6. PROPERTY, PLANT AND EQUIPMENT (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Property Plant And Equipment Tables | |||||||||
Property, Plant and Equipment | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
Building | $ | 12,318,380 | $ | 12,276,999 | |||||
Plant | 777,470 | 774,705 | |||||||
Vehicles | 34,208 | 34,087 | |||||||
Office equipment | 75,423 | 75,154 | |||||||
Total fixed assets | 13,205,481 | 13,160,945 | |||||||
Less: Accumulated depreciation | 2,259,631 | 2,070,946 | |||||||
Property, plant and equipment, net | $ | 10,945,850 | $ | 11,089,999 |
9_FAIR_VALUE_OF_FINANCIAL_INST1
9. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended | ||||||||||||||
Mar. 31, 2015 | |||||||||||||||
Fair Value Of Financial Instruments Tables | |||||||||||||||
Fair values of assets and liabilities | Fair Value Measurements at | ||||||||||||||
Balance as of March 31, 2015 | Level 1 | Level 2 | Level 3 | ||||||||||||
$ | — | $ | — | $ | — | $ | — | ||||||||
Fair Value Measurements at | |||||||||||||||
Balance as of December 31, 2014 | Level 1 | Level 2 | Level 3 | ||||||||||||
$ | — | $ | — | $ | — | $ | — |
11_COMMITMENT_AND_CONTINGENCIE1
11. COMMITMENT AND CONTINGENCIES (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Commitment And Contingencies Tables | |||||
Future minimum rental payments required for the coming years | Years ending December 31: | ||||
2015 | — | ||||
2016 | — | ||||
2017 | — | ||||
2018 | — | ||||
2019 | 16,960 | ||||
Remaining payments | 1,570,461 | ||||
Total future minimum payments | $ | 1,587,421 |
1_ORGANIZATION_AND_DESCRIPTION1
1. ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) | 0 Months Ended |
Dec. 12, 2011 | |
Organization And Description Of Business Details Narrative | |
Shares of Company stock issued to acquire all issued and outstanding shares of DingXu BVI | 60,000,000 |
2_SUMMARY_OF_SIGNIFICANT_ACCOU3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Useful lives of assets (Details) | 3 Months Ended |
Mar. 31, 2015 | |
Building | |
Property, Plant and Equipment [Line Items] | |
Useful lives of assets | 20 years |
Plant Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful lives of assets | 5 years |
Plant Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful lives of assets | 10 years |
Office Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful lives of assets | 3 years |
Office Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful lives of assets | 5 years |
Vehicles | |
Property, Plant and Equipment [Line Items] | |
Useful lives of assets | 4 years |
2_SUMMARY_OF_SIGNIFICANT_ACCOU4
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | 1 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2011 | Mar. 30, 2013 | Dec. 31, 2014 | |
Cash | $717,447 | $82,776 | |||
Cash equivalent | |||||
Statutory rate | 0.00% | 0.00% | |||
Land Use Right - 50 Year term from March 2011 | |||||
Land available for use | 24,806 | 24,806 | |||
Land use right amount paid | 579,580 | ||||
Amortization expense | 2,967 | 2,979 | |||
Land use right value | 547,903 | 548,922 | |||
Land Use Right - 46 Year term from March 2011 | |||||
Land available for use | 56,139 | 56,139 | |||
Land use right amount paid | 2,698,027 | ||||
Amortization expense | 14,826 | 14,913 | |||
Land use right value | 2,534,304 | 2,540,116 | |||
Land Use Right - 18 Year term from January 2012 | |||||
Land available for use | 428,214 | 428,214 | |||
Amortization expense | 39,122 | 39,133 | |||
Land use right value | 2,316,429 | 2,347,313 | |||
Long term liabilities related to this land use right | 1,587,421 | 1,581,775 | |||
Long term prepaid lease agreement - 2010 | |||||
Lease payments prepaid | 1,030,000 | ||||
Lease expense | 13,963 | 13,980 | |||
Long term prepaid lease agreement - 2013 | |||||
Lease expense | 13,542 | 13,621 | |||
Prepaid lease expenses | $984,107 |
3_INVENTORIES_Inventories_Deta
3. INVENTORIES - Inventories (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Inventories Details | ||
Raw materials and supplies | $56,728 | $14,005 |
Finished goods | 38,739 | |
Growing crops | 141,626 | 254,248 |
Others | 39,007 | |
Total | $237,093 | $307,260 |
4_ADVANCE_TO_SUPPLIER_Advances
4. ADVANCE TO SUPPLIER - Advances to suppliers (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Advances to suppliers | $1,871,071 | $1,864,416 |
PanJin Xinghua Real Estate Development Co., Ltd | ||
Advances to suppliers | 1,871,071 | |
PanJin Xinghua Real Estate Development Co., Ltd | ||
Advances to suppliers | 1,864,416 | |
Total | ||
Advances to suppliers | $1,871,071 | $1,864,416 |
4_ADVANCES_TO_SUPPLIER_Details
4. ADVANCES TO SUPPLIER (Details Narrative) (USD $) | 0 Months Ended |
Sep. 20, 2014 | |
Advances To Supplier Details Narrative | |
Purchase of building from PanJin XingHua Real Estate Development Co., Ltd | $1,864,416 |
5_RECEIVABLES_Receivables_bala
5. RECEIVABLES - Receivables balance (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Receivables Details | ||
Account receivable | $56,862 | |
Employee advances | ||
Total receivables | $56,862 |
6_PROPERTY_PLANT_AND_EQUIPMENT2
6. PROPERTY, PLANT AND EQUIPMENT - Property, Plant and Equipment (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Property Plant And Equipment Details | ||
Building | $12,318,380 | $12,276,999 |
Plant | 777,470 | 774,705 |
Vehicles | 34,208 | 34,087 |
Office equipment | 75,423 | 75,154 |
Total fixed assets | 13,205,481 | 13,160,945 |
Less: Accumulated depreciation | 2,259,631 | 2,070,946 |
Property, plant and equipment, net | $10,945,850 | $11,089,999 |
6_PROPERTY_PLANT_AND_EQUIPMENT3
6. PROPERTY, PLANT AND EQUIPMENT (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Property Plant And Equipment Details Narrative | ||
Depreciation expense | $188,685 | $171,461 |
7_RELATED_PARTY_TRANSACTIONS_D
7. RELATED PARTY TRANSACTIONS (Details Narative) (USD $) | 3 Months Ended | 0 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Jan. 15, 2015 | Dec. 31, 2014 | |
Amount of due to related parties | $545,700 | $2,545,915 | ||
Loan advanced to the director of the Company's operating VIE, Liaoning Dingxu | 1,141,225 | |||
Bad debt expense recorded as result of full allowance for the loan | 1,141,225 | |||
Related party interest rate percentage | 8.00% | |||
Imputed interest | 16,163 | 43,596 | ||
Chin Yung Kong | ||||
Conversion of related party payables into convertible note | 2,000,000 | |||
Convertible note, maturity date | 10-Jun-15 | |||
Convertible note, conversion price | $0.10 | |||
Beneficial conversion feature discount | 2,000,000 | |||
Convertible note, shares converted | 20,000,000 | |||
Debt discount amortized into interest expense | $2,000,000 |
8_STOCKHOLDERS_EQUITY_Details_
8. STOCKHOLDERS' EQUITY (Details Narrative) (USD $) | 0 Months Ended | 3 Months Ended | |||
Oct. 31, 2014 | Oct. 09, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Common Stock Details Narrative | |||||
Company's capitalization | 75,000,000 | 75,000,000 | |||
Par value | $0.00 | $0.00 | |||
Imputed interest outstanding due to related party | $16,163 | $43,596 | |||
Reverse split of common stock | 1-for-20 | ||||
Stock issued to consultant for services, shares | 856,000 | ||||
Stock issued to consultant for services, amount | $6,334,400 |
9_FAIR_VALUE_OF_FINANCIAL_INST2
9. FAIR VALUE OF FINANCIAL INSTRUMENTS - Fair values of assets and liabilities (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Fair value of assets | $0 | $0 |
Fair value of liabilities | 0 | 0 |
Level 1 | ||
Fair value of assets | 0 | 0 |
Fair value of liabilities | 0 | 0 |
Level 2 | ||
Fair value of assets | 0 | 0 |
Fair value of liabilities | 0 | 0 |
Level 3 | ||
Fair value of assets | 0 | 0 |
Fair value of liabilities | $0 | $0 |
10_NON_CONTROLLING_INTEREST_De
10. NON CONTROLLING INTEREST (Details Narative) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Non Controlling Interest Details Narative | |||
Unrealized foreign currency translation gain attributable | $3,035 | $6,204 | |
Non-controlling interest | $166,613 | $163,578 |
11_COMMITMENT_AND_CONTINGENCIE2
11. COMMITMENT AND CONTINGENCIES - Future minimum rental payments (Details) (USD $) | Mar. 31, 2015 |
Year ending December 31, 2015 | |
Future minimum payments | |
Year ending December 31, 2016 | |
Future minimum payments | |
Year ending December 31, 2017 | |
Future minimum payments | |
Year ending December 31, 2018 | |
Future minimum payments | |
Year ending December 31, 2019 | |
Future minimum payments | 16,960 |
Remaining payments | |
Future minimum payments | 1,570,461 |
Total future minimum payments | |
Future minimum payments | $1,587,421 |
12_CONVERTIBLE_DEBT_Details_Na
12. CONVERTIBLE DEBT (Details Narrative) (USD $) | 0 Months Ended |
Jan. 15, 2015 | |
Chin Yung Kong | |
Conversion of related party payables into convertible note | $2,000,000 |
Convertible note, maturity date | 10-Jun-15 |
Convertible note, conversion price | $0.10 |
Beneficial conversion feature discount | 2,000,000 |
Convertible note, shares converted | 20,000,000 |
Debt discount amortized into interest expense | 2,000,000 |
Accounts payable due to five consultants | |
Conversion of related party payables into convertible note | 450,000 |
Convertible note, maturity date | 10-Jan-16 |
Convertible note, conversion price | $0.10 |
Beneficial conversion feature discount | 450,000 |
Convertible note, shares converted | 4,500,000 |
Debt discount amortized into interest expense | $450,000 |