NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011
NOTE 1- NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES
Nature of operations
American Jianye Greentech Holdings, Ltd. (the ‘Company” or “American Jianye”) was originally incorporated on August 30, 2006, in the State of Nevada as Gateway Certifications, Inc.
On November 13, 2009, the Company entered into and completed the transactions contemplated under a Share Exchange Agreement (the “Exchange Agreement”) with each of the shareholders (the “Shareholders”) of Jianye Greentech Holdings, Ltd., a British Virgin Islands corporation (”Jianye”), pursuant to which the Company acquired from the Shareholders all issued and outstanding shares of Jianye’ common stock in consideration for the issuance of an aggregate of 3,548,796 shares of the Company common stock (the "Share Exchange") (the “Merger”).
The Share Exchange resulted in a change in control of the Company with the Shareholders owning 3,548,796 shares of common stock of the Company out of a total of 3,941,796 issued and outstanding shares after giving effect to the Share Exchange. As a result of the Exchange Agreement, (i) Jianye became a wholly-owned subsidiary of the Company and (ii) the Company succeeded to the business of Jianye as its sole business. Accordingly, the Company changed its name to American Jianye Greentech Holdings, Ltd. The Company also effectuated a forward-split of its common stock on a 7.89-for-1 basis. The Merger will be accounted for as a reverse merger to be reflected as a recapitalization with Jianye as the accounting acquirer.
Jianye Greentech Holdings Ltd (“Jianye BVI”) was incorporated on April 17, 2008 under the laws of British Virgin Islands. Jianye BVI is a holding company that owns 100% of Hong Kong Jianye Greentech Holdings Limited (“Jianye Hong Kong”), a corporation incorporated on May 2, 2008 under the laws of Hong Kong. Jianye BVI and Jianye Hong Kong currently have no operations and operate as investment holding companies.
On September 28, 2009, Jianye Hong Kong established Heilongjian New Jianye New Clean Fuel Marketing Ltd. (“Jianye China”), a wholly owned subsidiary in China, with registered capital of US$50,000. As a result, Jianye BVI owns 100% of the equity of Jianye China through Jianye Hong Kong. Jianye China’s primary business is to distribute ethanol and methanol as alternative fuel for automobile use.
On November 2009, the Company changed its name to American Jianye Greentech Holdings, Ltd. to more accurately reflect the business it intends to enter subsequent to the merger with Gateway and will focus its efforts for growth in the area of ethanol and methanol fuel.
Basis of presentation
The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America.
On September 30, 2009, the Company adopted changes issued by the Financial Accounting Standards Board (“FASB”) to the authoritative hierarchy of GAAP. These changes establish the FASB Accounting Standards Codification (“ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The FASB will no longer issue new standards in the form of Statements, FASB Staff Positions (“FSP”), or Emerging Issues Task Force Abstracts; instead the FASB will issue Accounting Standards Updates (“ASUs”). ASUs will not be authoritative in their own right as they will only serve to update the ASC. These changes and the ASC itself do not change GAAP. Other than the manner in which new accounting guidance is referenced, the adoption of these changes had no impact on the Company’s consolidated financial statements.
AMERICAN JIANYE GREENTECH HOLDINGS, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011
Basis of Consolidation
The consolidated financial statements include the accounts of American Jianye Greentech Holdings, Ltd and its wholly owned subsidiaries. All significant intercompany accounts and transactions are eliminated.
Name of Company
|
|
Place of
incorporation
|
|
Attributable
interest
|
|
|
|
|
|
|
|
Jianye Greentech Holdings, Ltd.
|
|
British Virgin Islands
|
|
|
100
|
%
|
|
|
|
|
|
|
|
Hong Kong Jianye Greentech Holding Limited
|
|
Hong Kong
|
|
|
100
|
%
|
|
|
|
|
|
|
|
Heilongjian Jianye New Clean Fuel Marketing Co. Ltd.
|
|
PRC
|
|
|
100
|
%
|
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America, 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.
Foreign Currency Translation
The Company’s financial statements are presented in the U.S. dollar ($), which is the Company’s reporting currency, while its functional currency is Chinese Renminbi (RMB). Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of income. Monetary assets and liabilities denominated in foreign currency are translated at the functional currency rate of exchange ruling at the balance sheet date. Any differences are taken to profit or loss as a gain or loss on foreign currency translation in the statements of income.
In accordance with ASC 830, Foreign Currency Matters, the Company translated the assets and liabilities into US $ using the rate of exchange prevailing at the applicable balance sheet date and the statements of income and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation are recorded in shareholders’ equity as part of accumulated other comprehensive income.
Below is a table with foreign exchange rates used for translation:
|
|
June 30,
2011
|
|
Six months end RMB : USD exchange rate
|
|
|
6.4640
|
|
Average Six months RMB : USD exchange rate
|
|
|
6.5482
|
|
Average Three months RMB : USD exchange rate
|
|
|
6.5074
|
|
AMERICAN JIANYE GREENTECH HOLDINGS, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011
Segment Reporting
The Company determines and discloses its segments in accordance with ASC 280, Segment Reporting. The Company’s management reporting structure provided for only one segment in 2011 and 2010 and accordingly, no separate segment information is presented.
Revenue Recognition
Revenues represent the invoiced value of goods sold recognized upon the shipment of goods to customers. Revenues are recognized when all of the following criteria are met:
|
o
|
persuasive evidence of an arrangement exists;
|
|
o
|
delivery has occurred or services have been rendered;
|
|
o
|
the seller’s price to the buyer is fixed or determinable; and
|
|
o
|
collectability is reasonably assured.
|
The majority of the Company’s revenue results from sales contracts with distributors and revenue are recorded upon the shipment of goods. Management conducts credit background checks for new customers as a means to reduce the subjectivity of assuring collectability.
Cash and Cash Equivalents
Cash and cash equivalents include cash and all highly liquid instruments with original maturities of three months or less.
Accounts Receivable
Accounts receivable are carried at original invoice amount less estimates made for doubtful receivables. Management determines the allowance for doubtful accounts at the end of the period based on a review of the current status of existing receivables, account aging, historical collection experience, subsequent collections, management's evaluation of the effect of existing economic conditions, and other known factors. The provision is provided for the above estimates made for all doubtful receivables. Account balances are charged off against the allowance only when the Company considers it is probable that a receivable will not be recovered. Recoveries of trade receivables previously written off are recorded when received. The allowance of doubtful accounts at June 30, 2011and December 31, 2010 was $19,138 and $696, respectively.
Property and Equipment
Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is computed on the straight-line method over the estimated useful lives of the related assets as follows:
Expenditures for major renewals and betterment that extend the useful lives of property and equipment are capitalized. Expenditures for repairs and maintenance are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the asset and accumulated depreciation are removed from the accounts and the resulting profit or loss is reflected in the statement of income for the period.
Construction in progress represents direct costs of construction or the acquisition cost of buildings or machinery and design fees. Capitalization of these costs ceases and the construction in progress is transferred to plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided until the assets are completed and ready for their intended use.
Income Taxes
The Company follows ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
AMERICAN JIANYE GREENTECH HOLDINGS, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
The Company adopted ASC 740-10-25 on January 1, 2007, which provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company did not recognize any additional liabilities for uncertain tax positions as a result of the implementation of ASC 740-10-25.
Fair Value Measurements
ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.
ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value:
Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company holds. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 – Valuation based on quoted prices in markets that are not active for which all significant inputs are observable, either directly or indirectly.
Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
The Company adopted ASC 820, Fair Value Measurements and Disclosures, on January 1, 2008 for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The Company has also adopted ASC 820, on January 1, 2009 for non financial assets and non financial liabilities, as these items are not recognized at fair value on a recurring basis. The adoption of ASC 820 for all financial assets and liabilities and non-financial assets and non-financial liabilities did not have any impact on the Company’s consolidated financial statements.
Financial instruments include cash, accounts receivable, prepayments and other receivables, short-term borrowings from banks, accounts payable and accrued expenses and other payables. The carrying amounts of cash, accounts receivable, prepayments and other receivables, short-term loans, accounts payable and accrued expenses approximate their fair value due to the short term maturities of these instruments.
Concentrations
Customers:
The Company distributes ethanol and methanol as alternative fuel for automobile use in China. The Company performs ongoing credit evaluations of its customers’ financial condition and generally, requires no collateral. For the six months ended June 30, 2011, four customers accounted for 98.34% of the Company’s total revenues. Four customers represented 98.06% of accounts receivable in aggregate at June 30, 2011:
Customer
|
|
|
Sales for the Six-Month Period
Ended June 30, 2011
|
|
|
Sales for the Six-Month Period
Ended June 30, 2010
|
|
A
|
|
|
$
|
10,554,638
|
|
|
|
31.32
|
%
|
|
$
|
23,573,324
|
|
|
|
72.37
|
%
|
B
|
|
|
$
|
7,800,565
|
|
|
|
23.15
|
%
|
|
$
|
6,921,729
|
|
|
|
21.25
|
%
|
C
|
|
|
$
|
7,951,274
|
|
|
|
23.60
|
%
|
|
$
|
-
|
|
|
|
-
|
|
D
|
|
|
$
|
6,868,087
|
|
|
|
20.38
|
%
|
|
$
|
-
|
|
|
|
-
|
|
|
|
|
$
|
33,174,564
|
|
|
|
98.45
|
%
|
|
$
|
30,495,053
|
|
|
|
93.62
|
%
|
AMERICAN JIANYE GREENTECH HOLDINGS, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
Accounts Receivable
:
Customer
|
|
|
Accounts Receivable at
June 30, 2011
|
|
|
Accounts Receivable at
December 31, 2010
|
|
A
|
|
|
$
|
1,551,795
|
|
|
|
31.90
|
%
|
|
$
|
119,053
|
|
|
|
76.99
|
%
|
B
|
|
|
$
|
603,342
|
|
|
|
12.40
|
%
|
|
$
|
26,275
|
|
|
|
16.99
|
%
|
C
|
|
|
$
|
1,408,199
|
|
|
|
28.95
|
%
|
|
$
|
-
|
|
|
|
-
|
|
D
|
|
|
$
|
1,206,683
|
|
|
|
24.81
|
%
|
|
$
|
-
|
|
|
|
-
|
|
|
|
|
$
|
4,770,019
|
|
|
|
98.06
|
%
|
|
$
|
145,328
|
|
|
|
93.98
|
%
|
Suppliers:
For the six months ended June 30, 2011, five suppliers accounted for 100.00% of the Company’s total purchase. Management believes other vendors could supply similar products, but their terms may not be as favorable as currently being offered by this vendor.
Accounts Payable
:
Supplier
|
|
|
Accounts Payable at
June 30, 2011
|
|
|
Accounts Payable at
December 31, 2010
|
|
A
|
|
|
|
12,245,816
|
|
|
|
83.08
|
%
|
|
$
|
10,341,098
|
|
|
|
91.91
|
%
|
B
|
|
|
|
-
|
|
|
|
-
|
|
|
|
792,457
|
|
|
|
7.04
|
%
|
C
|
|
|
|
1,955,086
|
|
|
|
13.26
|
%
|
|
|
75,184
|
|
|
|
0.67
|
%
|
D
|
|
|
|
17,017
|
|
|
|
0.12
|
%
|
|
|
42,501
|
|
|
|
0.38
|
%
|
E
|
|
|
|
273,824
|
|
|
|
1.86
|
%
|
|
|
-
|
|
|
|
-
|
|
F
|
|
|
|
247,525
|
|
|
|
1.68
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
14,739,268
|
|
|
|
100.00
|
%
|
|
$
|
11,251,240
|
|
|
|
100.00
|
%
|
Recent accounting pronouncements
In April 2011, the FASB issued ASU 2011-02, Receivable (Topic 310) “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”, which clarifies when creditors should classify loan modifications as troubled debt restructurings. The guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructurings occurring on or after the beginning of the year. The guidance on measuring the impairment of a receivable restructured in a troubled debt restructuring is effective on a prospective basis. A provision in ASU 2011-02 also supersedes the FASB’s deferral of the additional disclosures about troubled debt restructurings as required by ASU 2010-20. The adoption of ASU 2011-02 is not expected to have a material impact on the Company’s financial condition or results of operations.
In April 2011, the FASB issued ASU 2011-03, Transfers and Servicing (Topic 860), Consideration of Effective Control on Repurchase Agreements, which deals with the accounting for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. ASU 2011-03 changes the rules for determining when these transactions should be accounted for as financings, as opposed to sales. The guidance in ASU 2011-03 is effective for the first interim or annual period beginning on or after December 15, 2011. The guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early adoption is not permitted. The adoption of ASU 2011-03 is not expected to have a material impact on the Company’s financial condition or results of operation.
AMERICAN JIANYE GREENTECH HOLDINGS, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”). ASU 2011-04 clarifies some existing concepts, eliminates wording differences between U.S. GAAP and IFRS, and in some limited cases, changes some principles to achieve convergence between U.S. GAAP and IFRS. ASU 2011-04 results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU 2011-04 also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. ASU 2011-04 will be effective for the Company beginning after December 15, 2011. The Company does not expect the adoption of ASU 2011-04 to have a material effect on its operating results or financial position.
In June 2011, the Financial Accounting Standard Board (“FASB”) issued Accounting Standard Update (“ASU”) 2011-05, Comprehensive Income (Topic 220) Presentation of Comprehensive Income, which requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income, or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of equity. ASU 2011-05 will be effective for the Company beginning after December 15, 2011. The Company does not expect the adoption of ASU 2011-05 to have a material effect on its operating results or financial position but is evaluating the format revision on the presentation of comprehensive income.
NOTE 2 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of following:
|
|
June 30, 2011
|
|
|
December 31, 2010
|
|
|
|
|
|
|
|
|
Equipment
|
|
$
|
1,617
|
|
|
$
|
1,585
|
|
|
|
|
1,617
|
|
|
|
1,585
|
|
Less: Accumulated depreciation
|
|
|
(586
|
)
|
|
|
(323
|
)
|
|
|
|
1,031
|
|
|
|
1,262
|
|
Constriction in progress
|
|
|
4,951,778
|
|
|
|
4,855,774
|
|
|
|
$
|
4,952,809
|
|
|
$
|
4,857,036
|
|
Depreciation expense was approximately $253 and $4,784 for the six months ended June 30, 2011 and 2010.
NOTE 3 – PREPAID CONSTRUCTION COSTS
Prepaid construction costs are paid for the construction of plants in the production bases in Tieling City in Liaoning Province of the PRC.
NOTE 4 – DEPOSITS FOR ACQUISITION OF A LAND USE RIGHT
Deposits are paid for acquisition of the land use right of the production bases in Tieling City in Liaoning Province of the PRC.
The total acquisition costs of the land use right is amounting to $9,328,589 (RMB 60,300,000). The unpaid balance, amounting to $7,626,856 (RMB 49,300,000) will be paid on or before January 25, 2012.
NOTE 5 – NOTES RECEIVABLE FOR STOCK SUBSCRIPTION
The Notes receivable are the proceeds of the stock issued but the subscribers have not been paid before the year ended December 31, 2010.
AMERICAN JIANYE GREENTECH HOLDINGS, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
NOTE 6 – DUE FROM/TO A SHAREHOLDER
The amount due from a shareholder is receivable from Mr. Haipeng Wang, the Chairman of the Company. This amount is unsecured, interest-free and repayable on demand.
The amount due to a shareholders is payable to Mr. Haipeng Wang, the Chairman of the Company. This amount is unsecured, interest-free and repayable on demand.
NOTE 7 – DUE FROM RELATED COMPANIES
Names of related companies:
|
|
|
Note:
|
|
|
June 30, 2011
|
|
|
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Heilongjiang Jianye Real Estate Co., Ltd
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
|
|
$
|
344,036
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Heilongjiang Jianye Building Mgt Co., Ltd
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(ii)
|
|
|
|
28,063
|
|
|
|
|
|
|
|
|
|
|
|
$
|
372,099
|
|
|
$
|
-
|
|
These advances bear no interest and are payable on demand.
(i)
|
Heilongjiang Jianye Real Estate Co., Ltd
|
Harbin Dayang Trading Co., Ltd, another related company of the Company, holds 97.72% interest, and Mr. Haipeng Wang has 1.14% interest, in this company.
(ii)
|
Heilongjiang Jianye Building Mgt Co., Ltd
|
Mr. Jianye Wang holds 25% interest, and Mr. Haipeng Wang, the Chairman of the Company holds 8.33% interest, in this company.
NOTE 8 – EARNINGS PER SHARE
The Company calculates earnings per share in accordance with ASC 260, Earnings Per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the fiscal year. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding stock options. Potentially dilutive common shares consist of convertible preferred stock (using the if-converted method) and exercisable warrants outstanding.
The following table sets forth the computation of basic and diluted net income per common share:
Six months Ended, June 30,
|
|
2011
|
|
|
2010
|
|
Net income
|
|
$
|
3,872,251
|
|
|
$
|
3,208,448
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
|
33,110,148
|
|
|
|
31,100,770
|
|
Dilutive shares:
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
33,110,148
|
|
|
|
31,100,770
|
|
|
|
|
|
|
|
|
|
|
Basic and dilutive earnings per share
|
|
$
|
0.12
|
|
|
$
|
0.10
|
|
AMERICAN JIANYE GREENTECH HOLDINGS, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
NOTE 9 - INCOME TAXES
Jianye Greentech Holdings Ltd was incorporated in British Virgin Islands and is not subject to any income tax.
Hong Kong Jianye Greentech Holdings Limited was incorporated in Hong Kong and has not yet realized income as of June 30,2011 and no provision for income taxes has been made.
Heilongjian New Jianye New Clean Fuel Marketing Ltd. was incorporated in the People’s Republic of China and is subject to PRC Enterprise Income Tax on net income at a rate of 25%.
Deferred tax assets and liabilities are measured based on the difference between the financial statement and tax bases of assets and liabilities at the applicable tax rates. There were no significant components of the deferred tax for the period ended June 30, 2011 and 2010.
NOTE 10 - STOCKHOLDERS’ EQUITY
On November 24, 2009, the Company filed an Amended and Restated Articles of Incorporation with the Secretary of State of Nevada, to effect a 7.89 for 1 forward split of the issued and outstanding common shares of the Company whereby every one share of common stock held were exchanged for 7.89 shares of common stock. As a result, the issued and outstanding shares of common stock were increased from 3,941,796 prior to the forward split to approximately 31,100,770 following the forward stock split. The authorized capital were changed at 394,500,000 shares of common stock and any shareholder who beneficially owned a fractional share of common stock after the forward stock split had their fractional share rounded up to the nearest whole share. All references in the accompanying financial statements to the number of shares outstanding, per share amounts of the Company’s common stock have been adjusted to reflect the effect of the stock forward split. Shareholders’ equity reflects the stock forward split by reclassifying from “Common Stock” to “Additional Paid-in Capital” an amount equal to the par value of the increased shares arising from the forward split.
In November 2009, the Company’s Board of Directors approved an additional Amended and Restated Articles of Incorporation with the Secretary of State of Nevada, to amend the Company’s Articles of Incorporation to: (i) change the name of the Company to “American Jianye Greentech Holdings Ltd.” (ii) increase the number of the Company’s authorized shares of capital stock from 394,500,000 shares to 400,000,000 of which 394,500,000 shares will be common stock par value $0.001 per share and 5,500,000 shares will be preferred stock par value $0.001 per share; and (iii) authorize the Board of Directors to provide for the issuance of shares of preferred stock in series and, by filing a certificate pursuant to the Nevada Revised Statutes, to establish from time to time the number of shares to be included in each such series, and to fix the designation, power, preferences and rights of the shares of each such series and the qualifications, limitations and restrictions.
NOTE 11- CAPITALIZATION
The common stock was $33,110 with paid-in capital $926,890 as of December 31, 2010. 1,710,000 shares of common stock at par value of $0.001 each share were issued for the year ended December 31, 2010. 1,100,000 of these issued common stocks were not yet paid as at December 31, 2010.
10,000 shares were issued in the second quarter of 2010 for the engagement of a financial consultant. The market price was valued at $1 per share on the issue date of these shares.
600,000 shares were issued and fully paid in the last quarter of 2010.
700,000 shares were issued and the subscription proceeds are expected to be settled in the third quarter of 2011.
Subscription agreements were entered for issuance of 1,000,000 shares at a price of $0.15 per share. $60,000 as proceeds for 400,000 shares were settled in the first quarter of 2011. The remaining proceeds of $90,000 for 600,000 shares are expected to be settled in the second and third quarters of 2011. The issue of these 600,000 shares is reported as reduction in stockholders’ equity as the proceeds have not been received prior to the issuance of the financial statements.
7,950,000 shares held by the former shareholders were retired on November 17, 2009, according to Share Exchange Agreement dated November 12, 2009, but 299,378 of these retired shares were later restored and reported as issued and fully paid common stock in April, 2010.
AMERICAN JIANYE GREENTECH HOLDINGS, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
NOTE 12- RELATED PARTY TRANSACTIONS
Transactions with Harbin Dayang Trading Co., Ltd
Mr. Haipeng Wang, the Chairman of the Company, holds 15% interest, and his father, Mr. Jianye Wang holds 70% interest in this company.
As of June 30, 2011, no advances were received from or paid to this related company.
Transactions with Heilongjiang Jianye Real Estate Co., Ltd
Harbin Dayang Trading Co., Ltd, another related company of the Company, holds 97.72% interest, and Mr. Haipeng Wang has 1.14% interest, in this company.
As of June 30, 2011, we had a balance of advance paid to this related company totaling $344,036.
Transactions with Heilongjiang Jianye Fuel Co., Ltd
Mr. Haipeng Wang, Mr. Haipeng Wang; and Heilongjiang Jianye Real Estate Co., Ltd, another related company of the Company, are the majority shareholders of Heilongjiang Jianye Fuel Co., Ltd, hold in total of 97.83% interests.
As of June 30, 2011, we had a balance of receivable from this related company totaling $2,320, and an advance paid to this related company totaling $901. This advance bears no interest and is payable on demand.
Transactions with Zhaodong City Jianye Fuel Co., Ltd
China Jianye Fuel, Inc., of which the majority shareholder is Mr. Jianye Wang, holds 100% interests in this company.
As of June 30, 2011, we had a balance of advance received from this related company totaling $190,341.
For the six months ended June 30, 2011, no inventories had been purchased from this related company.
Transactions with Heilongjiang Jianye Buidling Mgt Co., Ltd
Mr. Jianye Wang holds 25% interest, and Mr. Haipeng Wang holds 8.33% interest, in this company.
As of June 30, 2011, we had a balance of advance received from this related company totaling $28,063. This advance bears no interest and is payable on demand.
Transactions with Harbin Jianye Construction Engineering Co., Ltd
Harbin Dayang Trading Co., Ltd , Heilongjiang Jianye Real Estate Co., Ltd, related companies of the Company, holds 49% and 40% of interests respectively, and Mr. Haipeng Wang holds 11% interest of this company.
Harbin Jianye Construction Engineering Co., Ltd is the main contractor of the construction project for production bases in Tieling City of the Liaoning Province in the PRC.
As of June 30, 2011, we had balances of prepaid construction costs to this related company totaling $19,109,552.
Due from a shareholder –
At June 30, 2010, the Company had advances from the Company’s Chairman and major shareholder in the amount of $654,913. The advances to this shareholder are non-interest bearing and without fixed terms of repayment.
AMERICAN JIANYE GREENTECH HOLDINGS, LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
NOTE 13 - COMMITMENTS
The Company has entered into an agreement for the acquisition of land use right. The total acquisition costs of the land use right is amounting to $9,328,589 (RMB 60,300,000). The unpaid balance, amounting to $7,626,856 (RMB 49,300,000) will be paid on or before January 25, 2012.
NOTE 14 - SUBSEQUENT EVENTS
In preparing these financial statements, the Company evaluated the events and transactions that occurred from January 1, 2011 through August 18, 2011, the date these financial statements were issued. The Company has made the required additional disclosures in reporting periods in which subsequent events occur.