| 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 Companys 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 $785,652
and $82,776 as of June 30, 2015 and December 31, 2014, respectively. The Company had no cash equivalent as of June
30, 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 six months ended June 30, 2015 and 2014, the Company recorded amortization
expense of $5,949 and $5,910, respectively. The Company recorded the land use right net value of $545,193 and $548,922 as of June
30, 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 six months ended June 30, 2015 and 2014, the Company recorded
amortization expense of $29,724 and $29,656, respectively. The Company recorded the land use right net value of $2,520,662 and
$2,540,116 as of June 30, 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 six months ended
June 30, 2015 and 2014, the Company recorded amortization expense of $78,436 and $78,257, respectively. The Company recorded the
land use right net value of 2,278,284 and $2,347,313 as of June 30, 2015 and December 31, 2014, respectively. As the
land use right was not yet fully paid for as of June 30, 2015, the Company recorded long term liabilities related to this land
use right in the amount of $1,588,199 and $1,581,775 as of June 30, 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 six months
ended June 30, 2015 and 2014, the Company recorded lease expense of $27,994 and $27,801, 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 six months ended June 30, 2015 and 2014, the Company recorded lease expense of
$27,150 and $27,088, 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 Companys 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 Companys 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 Companys 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 six months ended June 30, 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 Companys
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
Companys 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 Companys 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 Entitys Ability to Continue as a Going Concern.
The amendments require management to assess an entitys 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 managements plans, (4) require certain disclosures when substantial doubt is alleviated
as a result of consideration of managements 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. |
