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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 4/16/12 ForceField Energy Inc. 10-K 12/31/11 42:4.9M Issuer Direct/FA |
Document/Exhibit Description Pages Size 1: 10-K Annual Report HTML 1.02M 5: EX-99 Miscellaneous Exhibit HTML 533K 2: EX-31.1 Certification -- §302 - SOA'02 HTML 20K 3: EX-31.2 Certification -- §302 - SOA'02 HTML 20K 4: EX-32 Certification -- §906 - SOA'02 HTML 16K 24: R1 Document and Entity Information HTML 42K 17: R2 Consolidated Balance Sheets HTML 140K 22: R3 Consolidated Balance Sheets (Parenthetical) HTML 43K 26: R4 Consolidated Statements of Operations and HTML 63K Comprehensive Income 38: R5 Consolidated Statements of Equity (Deficit) HTML 82K 18: R6 Consolidated Statements of Cash Flows HTML 171K 21: R7 Nature of Operations HTML 18K 16: R8 Summary of Significant Accounting Policies HTML 57K 13: R9 The Effect of Recently Issued Accounting Standards HTML 28K 39: R10 Accounts Receivable HTML 23K 28: R11 Notes Receivable HTML 20K 27: R12 Inventory HTML 24K 32: R13 Prepaid and Other Current Assets HTML 23K 33: R14 Property, Plant and Equipment HTML 30K 31: R15 Business Combinations HTML 50K 34: R16 Goodwill and Intangible Assets, Net HTML 37K 23: R17 Related Party Receivable HTML 19K 25: R18 Other Assets HTML 21K 30: R19 Accounts Payable and Accrued Liabilities HTML 21K 42: R20 Advances Payable HTML 20K 36: R21 Related Party Payable HTML 22K 19: R22 Income Taxes Payable HTML 38K 29: R23 Debt HTML 29K 20: R24 Stockholders’ Equity HTML 33K 12: R25 Commitments HTML 20K 37: R26 Segment Information HTML 71K 40: R27 Defined Contribution Plan HTML 17K 15: R28 Subsequent Events HTML 17K 41: XML IDEA XML File -- Filing Summary XML 54K 14: EXCEL IDEA Workbook of Financial Reports (.xls) XLS 345K 6: EX-101.INS XBRL Instance -- ssie-20111231 XML 650K 8: EX-101.CAL XBRL Calculations -- ssie-20111231_cal XML 115K 9: EX-101.DEF XBRL Definitions -- ssie-20111231_def XML 144K 10: EX-101.LAB XBRL Labels -- ssie-20111231_lab XML 320K 11: EX-101.PRE XBRL Presentations -- ssie-20111231_pre XML 243K 7: EX-101.SCH XBRL Schema -- ssie-20111231 XSD 58K 35: ZIP XBRL Zipped Folder -- 0001354488-12-001890-xbrl Zip 62K
Report of Independent Registered Public Accounting Firm
|
F-2
|
|||
Consolidated Balance Sheets as of December 31, 2011 and 2010 (Unaudited)
|
F-3
|
|||
Consolidated Statements of Operations for the Years Ended December 31, 2011 and 2010 (Unaudited)
|
F-4
|
|||
Consolidated Statement of Equity (Deficit) for the Years Ended December 31, 2011 (Audited) and 2010 (Unaudited)
|
F-5
|
|||
Consolidated Statements of Cash Flows for the Years Ended December 31, 2011 (Audited) and 2010 (Unaudited)
|
F-6
|
|||
Notes to Consolidated Financial Statements
|
F-7
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Board of Directors and Stockholders of
Sunsi Energies Inc.
Brooklyn, New York
We have audited the accompanying consolidated balance sheet of Sunsi Energies Inc. (the Company) as of December 31, 2011, and the related consolidated statement of operations and comprehensive income (loss), statement of equity (deficit), and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we
express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Sunsi Energies Inc. as of December 31, 2011, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. [Missing Graphic Reference]
Child, Van Wagoner & Bradshaw, PLLC
Salt Lake City, Utah
|
2011
|
2010
|
|||||||
(unaudited) | ||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
674,291
|
$
|
576,286
|
||||
Accounts receivable, net
|
3,773,556
|
1,198,972
|
||||||
Notes receivable
|
559,325
|
—
|
||||||
Inventory, net
|
657,287
|
—
|
||||||
Prepaid expenses and other current assets
|
207,837
|
—
|
||||||
Total current assets
|
5,872,296
|
1,775,258
|
||||||
Property, plant and equipment
|
7,890,132
|
—
|
||||||
Goodwill
|
608,953
|
303,439
|
||||||
Intangible assets, net
|
3,142,997
|
—
|
||||||
Related party receivables
|
489,595
|
—
|
||||||
Other assets
|
21,737
|
—
|
||||||
Total assets
|
$
|
18,025,710
|
$
|
2,078,697
|
||||
LIABILITIES AND EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
3,333,500
|
$
|
1,352,564
|
||||
Accrued liabilities
|
373,802
|
18,432
|
||||||
Related party payables
|
5,665,245
|
263,647
|
||||||
Income taxes payable
|
886,050
|
5,958
|
||||||
Total current liabilities
|
10,258,597
|
1,640,601
|
||||||
Convertible debenture
|
100,000
|
—
|
||||||
Total liabilities
|
10,358,597
|
1,640,601
|
||||||
Commitments and contingencies
|
—
|
—
|
||||||
Equity:
|
||||||||
SunSi Energies Inc. stockholders' equity:
|
||||||||
Preferred stock, $0.001 par value. 25,000,000 shares authorized; zero shares
|
||||||||
issued and outstanding
|
—
|
—
|
||||||
Common stock, $0.001 par value. 75,000,000 shares authorized; 30,005,628 and 27,653,500 shares
|
||||||||
issued and outstanding as of November 30, 2011 and May 31, 2011, respectively
|
30,006
|
27,654
|
||||||
Additional paid-in capital
|
8,855,271
|
1,632,222
|
||||||
Accumulated deficit
|
(3,701,526
|
)
|
(1,263,493
|
)
|
||||
Accumulated other comprehensive income
|
280,024
|
9,582
|
||||||
Total SunSi Energies Inc. stockholders' equity
|
5,463,775
|
405,965
|
||||||
Noncontrolling interests
|
2,203,338
|
32,131
|
||||||
Total equity
|
7,667,113
|
438,096
|
||||||
Total liabilities and equity
|
$
|
18,025,710
|
$
|
2,078,697
|
|
2011
|
2010
|
||||||
|
(Unaudited)
|
|||||||
Sales
|
$
|
28,338,389
|
$
|
1,165,239
|
||||
Cost of goods sold
|
24,115,531
|
1,141,605
|
||||||
Gross margin
|
4,222,858
|
23,634
|
||||||
Operating expenses:
|
||||||||
Professional fees
|
772,868
|
478,518
|
||||||
General and administrative
|
3,795,974
|
186,288
|
||||||
Goodwill impairment | 2,800,000 |
—
|
||||||
Total operating expenses
|
7,368,842
|
664,806
|
||||||
Loss from operations before income taxes
|
(3,145,984)
|
))
|
(641,172
|
)
|
||||
Provision for income taxes (benefit)
|
168,746
|
5,909
|
||||||
Net loss
|
(3,314,730)
|
)
|
(647,081
|
)
|
||||
Less: Net income (loss) attributable to noncontrolling interests
|
(876,697)
|
1,773
|
||||||
Net loss attributable to SunSi Energies Inc. common shareholders
|
$
|
(2,438,033)
|
)
|
$
|
(648,854
|
)
|
||
|
||||||||
Basic and diluted loss per share
|
$
|
(0.08
|
)
|
$
|
(0.02
|
)
|
||
|
||||||||
Weighted-average number of common shares outstanding:
|
||||||||
Basic and diluted
|
29,271,281
|
27,321,154
|
||||||
|
Accumulated
Other
Comprehensive
Income
|
||||||||||||||||||||||||||||||||||||||||
Additional
Paid-in
Capital
|
Total
Stockholders'
Equity
|
|||||||||||||||||||||||||||||||||||||||
Preferred Stock
|
Common Stock
|
Retained
Earnings
|
Noncontrolling
Interests
|
Total Equity
|
||||||||||||||||||||||||||||||||||||
Shares
|
Value
|
Shares
|
Value
|
|||||||||||||||||||||||||||||||||||||
Balance, December 31, 2009
|
—
|
$
|
—
|
27,072,500
|
$
|
27,073
|
$
|
587,003
|
$
|
(614,639
|
)
|
$
|
—
|
$
|
(563
|
)
|
$
|
—
|
$
|
(563
|
)
|
|||||||||||||||||||
Components of comprehensive loss:
|
||||||||||||||||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
(648,854
|
)
|
—
|
(648,854
|
)
|
1,773
|
(647,081
|
)
|
|||||||||||||||||||||||||||
Change in foreign currency translation
|
—
|
—
|
—
|
—
|
—
|
—
|
9,582
|
9,582
|
1,064
|
10,646
|
||||||||||||||||||||||||||||||
Total comprehensive loss
|
—
|
—
|
—
|
—
|
—
|
(648,854
|
)
|
9,582
|
(639,272
|
)
|
2,837
|
(636,435
|
)
|
|||||||||||||||||||||||||||
Issuance of common stock in connection with sales made under private offerings
|
—
|
—
|
581,000
|
581
|
1,161,419
|
—
|
—
|
1,162,000
|
—
|
1,162,000
|
||||||||||||||||||||||||||||||
Cost of common stock issuances in connection with sales made under private offerings
|
—
|
—
|
—
|
—
|
(116,200
|
)
|
—
|
—
|
(116,200
|
)
|
—
|
(116,200
|
)
|
|||||||||||||||||||||||||||
Acquisition of equity interests in subsidiaries
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
29,294
|
29,294
|
||||||||||||||||||||||||||||||
Balance, December 31, 2010
|
—
|
—
|
27,635,500
|
27,654
|
1,632,222
|
(1,263,493
|
)
|
9,582
|
405,965
|
32,131
|
438,096
|
|||||||||||||||||||||||||||||
Components of comprehensive income (loss):
|
||||||||||||||||||||||||||||||||||||||||
Net income (loss)
|
—
|
—
|
—
|
—
|
—
|
(2,438,033
|
)
|
—
|
(2,438,033
|
)
|
(876,697
|
) |
(3,314,730
|
)
|
||||||||||||||||||||||||||
Change in foreign currency translation
|
—
|
—
|
—
|
—
|
—
|
—
|
270,442
|
270,442
|
120,904
|
391,346
|
||||||||||||||||||||||||||||||
Total comprehensive income (loss)
|
—
|
—
|
—
|
—
|
—
|
(2,438,033
|
)
|
270,442
|
(2,167,591
|
)
|
(755,793
|
) |
(2,923,384
|
)
|
||||||||||||||||||||||||||
Issuance of common stock in connection with sales made under private offerings
|
—
|
—
|
917,500
|
917
|
1,874,083
|
—
|
—
|
1,875,000
|
—
|
1,875,000
|
||||||||||||||||||||||||||||||
Cost of common stock issuances in connection with sales made under private offerings
|
—
|
—
|
—
|
—
|
(187,500
|
)
|
—
|
—
|
(187,500
|
)
|
—
|
(187,500
|
)
|
|||||||||||||||||||||||||||
Issuance of common stock in exchange for consulting, professional and other services
|
—
|
—
|
85,000
|
85
|
183,707
|
—
|
—
|
183,792
|
—
|
183,792
|
||||||||||||||||||||||||||||||
Acquisition of equity interests in subsidiaries
|
—
|
—
|
1,349,628
|
1,350
|
5,352,759
|
—
|
—
|
5,354,109
|
2,927,000
|
8,281,109
|
||||||||||||||||||||||||||||||
Balance, December 31, 2011
|
—
|
$
|
—
|
30,005,628
|
$
|
30,006
|
$
|
8,855,271
|
$
|
(3,701,526
|
)
|
$
|
280,024
|
$
|
5,463,775
|
$
|
2,203,338
|
$
|
7,667,113
|
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
(Unaudited)
|
|||||||
Net loss
|
$
|
(3,314,730
|
)
|
$
|
(647,081
|
)
|
||
Adjustments to reconcile net loss to cash used in operating activities:
|
||||||||
Depreciation and amortization
|
928,566
|
—
|
||||||
Goodwill impairment | 2,800,000 |
—
|
||||||
Provision for doubtful accounts
|
34,741
|
—
|
||||||
Provision for excess or obsolete inventory
|
82,706
|
—
|
||||||
Common stock issued in exchange for services
|
183,792
|
—
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(463,935)
|
(1,189,039
|
)
|
|||||
Notes receivable
|
150,004
|
—
|
||||||
Inventory
|
(241,420
|
)
|
—
|
|||||
Prepaid expenses and other current assets
|
(50,501
|
)
|
—
|
|||||
Related party receivables
|
680,826
|
—
|
||||||
Other assets
|
138,565
|
—
|
||||||
Accounts payable
|
(1,104,097
|
)
|
1,146,331
|
|||||
Accrued liabilities
|
(207,591
|
)
|
(266,002
|
)
|
||||
Income taxes payable
|
(431,322
|
)
|
5,909
|
|||||
Related party payables
|
(5,671
|
)
|
—
|
|||||
Net cash used in operating activities
|
(820,067
|
)
|
(949,882
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Cash consideration for acquisition of a business
|
(231,428
|
)
|
(263,647
|
)
|
||||
Cash acquired in the acquisition of a business
|
967,626
|
—
|
||||||
Purchase of property, plant and equipment
|
(655,035
|
)
|
—
|
|||||
Purchase of intangible assets
|
(356,725
|
)
|
—
|
|||||
Net cash used in investing activities
|
(275,562
|
)
|
(263,647
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of common stock
|
1,687,500
|
1,045,800
|
||||||
Proceeds from issuance of long term debt - convertible debenture
|
100,000
|
—
|
||||||
Proceeds from related party payables
|
(246,345
|
)
|
263,647
|
|||||
Repayments of related party payables
|
(142,851
|
)
|
(20,836
|
)
|
||||
Proceeds from advances payable
|
42,700
|
—
|
||||||
Repayments of advances payable
|
(273,681
|
)
|
—
|
|||||
Net cash provided by financing activities
|
1,167,323
|
1,288,611
|
||||||
Effect of exchange rates on cash and cash equivalents
|
26,311
|
—
|
||||||
Net increase (decrease) in cash and cash equivalents
|
98,005
|
75,082
|
||||||
Cash and cash equivalents at beginning of period
|
576,286
|
501,204
|
||||||
Cash and cash equivalents at end of period
|
$
|
674,291
|
$
|
576,286
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for interest
|
$
|
—
|
$
|
—
|
||||
Cash paid for income taxes
|
$
|
—
|
$
|
—
|
||||
Supplemental disclosure of non-cash investing and financing activities:
|
||||||||
Accrued share issuance costs
|
$
|
—
|
$
|
—
|
1.
|
NATURE OF OPERATIONS
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Service life (year)
|
Estimated
residual rate
%
|
Annual
depreciation rate
%
|
||||||||||
Building
|
20
|
5
|
2.05
|
|||||||||
Furniture and equipment
|
5
|
5
|
3.17
|
|||||||||
Machines and equipment
|
10
|
5
|
7.34
|
|||||||||
Automotive equipment
|
5
|
5
|
10.93
|
|||||||||
Office equipment
|
5
|
5
|
8.64
|
3.
|
THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS
|
Pronouncement
|
Issued
|
Title
|
||
ASU No. 2010-25
|
September 2010
|
Plan Accounting—Defined Contribution Pension Plans (Topic 962) Reporting Loans to Participants by Defined Contribution Pension Plans EITF consensus
|
||
ASU No. 2010-26
|
October 2010
|
Financial Services—Insurance (Topic 944) Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts EITF consensus
|
||
ASU No. 2010-27
|
December 2010
|
Other Expenses (Topic 720) Fees Paid to the Federal Government by Pharmaceutical Manufacturers EITF consensus
|
||
ASU No. 2010-28
|
December 2010
|
Intangibles—Goodwill and Other (Topic 350) When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts EITF consensus
|
||
ASU No. 2010-29
|
December 2010
|
Business Combinations (Topic 805) Disclosure of Supplementary Pro Forma Information for Business Combinations EITF consensus
|
||
ASU No. 2011-01
|
January 2011
|
Receivables (Topic 310) Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20
|
||
ASU No. 2011-02
|
April 2011
|
Receivables (Topic 310) A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring
|
||
ASU No. 2011-03
|
April 2011
|
Transfers and Servicing (Topic 860) Reconsideration of Effective Control for Repurchase Agreements
|
||
ASU No. 2011-04
|
May 2011
|
Fair Value Measurement (Topic 820) Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs
|
||
ASU No. 2011-05
|
June 2011
|
Comprehensive Income (Topic 220): Presentation of Comprehensive Income
|
||
ASU No. 2011-06
|
July 2011
|
Other Expenses (Topic 720): Fees Paid to the Federal Government by Health Insurers
|
||
ASU No. 2011-07
|
July 2011
|
Health Care Entities (Topic 954): Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care Entities
|
||
ASU No. 2011-08
|
September 2011
|
Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment
|
||
ASU No. 2011-09
|
September 2011
|
Compensation – Retirement Benefits – Multiemployer Plans (Subtopic 715-80): Disclosures about an Employer’s Participation in a Multiemployer Plan
|
||
ASU No. 2011-10
|
December 2011
|
Property, Plant, and Equipment (Topic 360): Derecognition of in Substance Real Estate – a Scope Clarification (a consensus of the FASB Emerging Issues Task Force)
|
||
ASU No. 2011-11
|
December 2011
|
Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities
|
||
ASU No. 2011-12
|
December 2011
|
Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05
|
4.
|
ACCOUNTS RECEIVABLE
|
(Unaudited) | ||||||||
Accounts receivable
|
$
|
3,799,420
|
$
|
1,198,972
|
||||
Allowance for doubtful accounts
|
(25,864
|
)
|
—
|
|||||
Total
|
$
|
3,773,556
|
$
|
1,198,972
|
5.
|
NOTES RECEIVABLE
|
(Unaudited) | ||||||||
Notes receivable
|
$
|
559,325
|
$
|
—
|
6.
|
INVENTORY
|
(Unaudited) | ||||||||
Raw materials
|
$
|
187,224
|
$
|
—
|
||||
Finished goods
|
554,189
|
—
|
||||||
Allowance for excess or obsolete inventory
|
(84,126
|
)
|
—
|
|||||
Total
|
$
|
657,287
|
$
|
—
|
7.
|
PREPAID EXPENSES AND OTHER CURRENT ASSETS
|
(Unaudited) | ||||||||
Advances to suppliers, net of allowance
|
$
|
46,632
|
$
|
—
|
||||
Prepaid expenses
|
157,222
|
—
|
||||||
Other
|
3,983
|
—
|
||||||
Total
|
$
|
207,837
|
$
|
—
|
8.
|
PROPERTY, PLANT AND EQUIPMENT
|
Accumulated
|
Net book
|
Accumulated
|
Net book
|
|||||||||||||||||||||
Cost
|
Depreciation
|
Value
|
Cost
|
Depreciation
|
Value
|
|||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Building
|
$
|
3,745,873
|
$
|
(145,042
|
)
|
$
|
3,600,831
|
$
|
—
|
$
|
—
|
$
|
—
|
|||||||||||
Furniture and equipment
|
9,733
|
(773
|
)
|
8,960
|
—
|
—
|
—
|
|||||||||||||||||
Machinery and equipment
|
3,875,396
|
(318,543
|
)
|
3,556,853
|
—
|
—
|
—
|
|||||||||||||||||
Automotive equipment
|
172,375
|
(33,685
|
)
|
138,690
|
—
|
—
|
—
|
|||||||||||||||||
Office equipment
|
11,558
|
(1,287
|
)
|
10,271
|
—
|
—
|
—
|
|||||||||||||||||
Construction in Progress
|
574,527
|
—
|
574,527
|
—
|
—
|
—
|
||||||||||||||||||
Total
|
$
|
8,389,462
|
$
|
(499,330
|
)
|
$
|
7,890,132
|
$
|
—
|
$
|
—
|
$
|
—
|
9.
|
BUSINESS COMBINATIONS
|
Consideration:
|
||||
Cash and cash equivalents
|
$
|
263,647
|
||
Fair value of total consideration transferred
|
263,647
|
|||
Recognized amount of identifiable assets acquired and liabilities assumed:
|
||||
Total identifiable net assets
|
$
|
—
|
||
Noncontrolling interest in Baokai
|
(29,294
|
)
|
||
Goodwill
|
292,941
|
|||
$
|
263,647
|
(Unaudited) | ||||||||
Purchase consideration related to the Baokai acquisition, unpaid and accrued
|
$
|
163,647
|
$
|
263,647
|
(1)
|
$445,075 of cash consideration;
|
(2)
|
1,349,628 restricted shares of SunSi common stock, such shares carry an optional right of redemption whereby the Company shall buy such shares back from shareholder if shareholder exercises the option within six months at a price equivalent to RMB 18,000,000 on the transfer date; and
|
(3)
|
1,574,566 restricted shares of SunSi common stock, transferred by an affiliate of SunSi.
|
Consideration:
|
||||
Cash and cash equivalents
|
$
|
445,075
|
||
Common stock, 1,574,566 shares of SunSi common stock (1)
|
2,645,271
|
|||
Redeemable common stock, 1,349,628 shares of SunSi common stock (2)
|
2,708,838
|
|||
Fair value of total consideration transferred
|
$
|
5,799,184
|
||
Recognized amount of identifiable assets acquired and liabilities assumed:
|
||||
Financial assets
|
$
|
3,613,721
|
||
Inventory
|
473,354
|
|||
Other current assets
|
309,329
|
|||
Related party receivables
|
1,131,548
|
|||
Property, plant and equipment
|
7,392,976
|
|||
Identifiable intangible assets:
|
||||
Land use leasehold
|
1,559,070
|
|||
Customer relationships
|
1,534,000
|
|||
Financial liabilities
|
(10,294,200
|
)
|
||
Total identifiable net assets
|
5,719,798
|
|||
Noncontrolling interest in Wendeng
|
(2,927,000
|
)
|
||
Goodwill
|
3,006,386
|
|||
$
|
5,799,184
|
(1)
|
The $1.68 per share price was determined by reference to recent private placement shares issued, less a discount for marketability. This fair value measurement is based on significant inputs that are not observable in the market and thus represents a Level 3 measurement as defined in ASC Topic 820.
|
(2)
|
Represents the redeemable option price granted by SunSi to the shareholder.
|
●
|
Intangible assets — The fair value of the acquired intangible assets was determined using a variety of valuation approaches. In estimating the fair value of the acquired intangible assets, the Company utilized the valuation methodology determined to be most appropriate for the individual intangible asset being valued as described below. The acquired intangible assets include the following:
|
Valuation
Method (2)
|
Estimated
Fair Value
|
Estimated
Useful Lives (1)
|
|||||||
(in years)
|
|||||||||
Cu Customer relationships
|
Multi-Period Excess Earnings
|
$
|
1,534,000
|
3
|
(1)
|
Determination of the estimated useful lives of the individual categories of intangible assets was based on the nature of the applicable intangible asset and the expected future cash flows to be derived from the intangible asset. Amortization of intangible assets with definite lives is recognized over the shorter of the respective lives of the agreement or the period of time the assets are expected to contribute to future cash flows.
|
(2)
|
The multi-period excess earnings method estimates an intangible asset’s value based on the present value of the prospective net cash flows (or excess earnings) attributable to it. The value attributed to these intangibles was based on projected net cash inflows from existing contracts or customer relationships. This fair value measurement is based on significant inputs that are not observable in the market and thus represents a Level 3 measurement as defined in ASC Topic 820.
|
●
|
Noncontrolling interests — The fair value of the noncontrolling interests of $2.9 million was estimated by applying the income approach. This fair value measurement is based on significant inputs that are not observable in the market and thus represents a Level 3 measurement as defined in ASC Topic 820. Key assumptions include (i) a compound annual sales growth rate of 33% for the five year period after the measurement date, (ii) a weighted average cost of capital of 19%, (iii) a terminal value based on a long-term sustainable growth rate of 3.5% and (iv) adjustments for lack of control and lack of marketability that market participants would consider when estimating the fair value of the noncontrolling interest in Wendeng.
|
10.
|
GOODWILL AND INTANGIBLE ASSETS, NET
|
(Unaudited) | ||||||||
Goodwill – Zibo Baokai Commerce and Trade Co., Ltd
|
$
|
292,941
|
$
|
292,941
|
||||
Goodwill – Wendeng He Xie Silicon Industry Co., Ltd
|
3,006,386
|
—
|
||||||
Impairment charge | (2,800,000 | ) |
—
|
|||||
Foreign currency translation adjustments
|
57,675
|
10,498
|
||||||
Goodwill, net at December 31, 2011
|
$
|
608,953
|
$
|
303,439
|
December 31, 2010
(Unaudited) |
|||||||||||||||||||||||||
Amortization
|
Gross
|
Net
|
Gross
|
Net
|
|||||||||||||||||||||
Period
|
Carrying
|
Accumulated
|
Book
|
Carrying
|
Accumulated
|
Book
|
|||||||||||||||||||
(Years)
|
Amount
|
Amortization
|
Value
|
Amount
|
Amortization
|
Value
|
|||||||||||||||||||
Intangible assets subject to amortization:
|
|||||||||||||||||||||||||
Customer relationships
|
3.0
|
$
|
1,601,787
|
$
|
(419,105
|
)
|
$
|
1,182,682
|
$
|
—
|
$
|
—
|
$
|
—
|
|||||||||||
Land lease
|
50.0
|
1,990,816
|
(30,501
|
)
|
1,960,315
|
—
|
—
|
—
|
|||||||||||||||||
Total
|
$
|
3,592,603
|
$
|
(449,606
|
)
|
$
|
3,142,997
|
$
|
—
|
$
|
—
|
$
|
—
|
2012
|
$
|
564,996
|
||
2013
|
564,996
|
|||
2014
|
152,966
|
|||
2015
|
40,081
|
|||
2016
|
40,081
|
|||
Thereafter
|
1,779,877
|
|||
$
|
3,142,997
|
11.
|
RELATED PARTY RECEIVABLES
|
(Unaudited) | ||||||||
Wendeng Huahai Chemical Co., Ltd.
|
$
|
489,595
|
$
|
—
|
12.
|
OTHER ASSETS
|
(Unaudited) | ||||||||
Deposit – Department of Extrabudgetary Fund (Wendeng)
|
$
|
21,737
|
$
|
—
|
||||
Deposit – TCS Management Association (Wendeng)
|
—
|
—
|
||||||
Deposit – Intangible assets (Wendeng)
|
—
|
—
|
||||||
Total, net
|
$
|
21,737
|
$
|
—
|
13.
|
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
(Unaudited) | ||||||||
Accounts payable
|
$
|
3,333,500
|
$
|
1,352,564
|
||||
Accrued liabilities
|
373,802
|
18,432
|
||||||
Total
|
$
|
3,707,302
|
$
|
1,370,996
|
14.
|
RELATED PARTY PAYABLES
|
(Unaudited) | ||||||||
Advances from minority shareholder of noncontrolling interest (Wendeng)
|
$
|
5,501,598
|
$
|
—
|
||||
Purchase consideration due minority shareholder of noncontrolling interest (Baokai)
|
163,647
|
263,647
|
||||||
Total
|
$
|
5,665,245
|
$
|
263,647
|
15.
|
INCOME TAXES
|
Federal taxes at statutory rate - current
|
$
|
(357,340
|
)
|
35.0
|
%
|
$
|
(232,682
|
)
|
35.0
|
%
|
||||||
Foreign taxes at statutory rate - current
|
168,746
|
25.0
|
%
|
5,909
|
25.0
|
%
|
||||||||||
Change in valuation allowance
|
357,340
|
(103.3
|
) %
|
232,682
|
(36.3 )
|
%
|
||||||||||
Total
|
$
|
168,746
|
(48.8
|
) %
|
$
|
5,909
|
(0.9 )
|
%
|
Deferred tax asset:
|
(Unaudited) | |||||||
Net operating loss carry-forward - United States
|
$
|
793,358
|
$
|
436,019
|
||||
Less: Valuation allowance
|
(793,358
|
)
|
(436,019)
|
|||||
Net deferred tax asset
|
$
|
—
|
$
|
—
|
(Unaudited) | ||||||||
United States income taxes payable
|
$
|
—
|
$
|
—
|
||||
Foreign income taxes payable
|
886,050
|
5,958
|
||||||
Total
|
$
|
886,050
|
$
|
5,958
|
16.
|
DEBT
|
(Unaudited) | ||||||||
9% Unsecured, convertible debenture
|
$
|
100,000
|
$
|
—
|
||||
Loan discount on unsecured, convertible debenture
|
—
|
—
|
||||||
Total long term debt
|
100,000
|
—
|
||||||
Less: Current portion
|
—
|
—
|
||||||
Long term debt
|
$
|
100,000
|
$
|
—
|
Issue Date
|
Interest Rate
|
Face Value
|
Maturity Date
|
Conversion Rate of
Face Value to Common Shares
|
|||||
10/15/2011
|
9%
|
$
|
100,000
|
10/15/2014
|
0.25
|
||||
Total
|
$
|
100,000
|
17.
|
STOCKHOLDERS’ EQUITY
|
18.
|
COMMITMENTS
|
19.
|
SEGMENT INFORMATION
|
(Unaudited)
|
||||||||
Sales:
|
||||||||
Baokai
|
$
|
14,546,790
|
$
|
1,165,239
|
||||
Wendeng
|
13,791,599
|
—
|
||||||
Corporate
|
—
|
—
|
||||||
Total
|
$
|
28,338,389
|
$
|
1,165,239
|
||||
Cost of goods sold:
|
||||||||
Baokai
|
$
|
14,234,315
|
$
|
1,141,605
|
||||
Wendeng
|
9,881,216
|
—
|
||||||
Corporate
|
—
|
—
|
||||||
Total
|
$
|
24,115,531
|
$
|
1,141,605
|
||||
Gross margin:
|
||||||||
Baokai
|
$
|
312,475
|
$
|
23,634
|
||||
Wendeng
|
3,910,383
|
—
|
||||||
Corporate
|
—
|
—
|
||||||
Total
|
$
|
4,222,858
|
$
|
23,634
|
||||
Operating expenses:
|
||||||||
Baokai (1)
|
$
|
389,697
|
$
|
—
|
||||
Wendeng (2)
|
5,958,175
|
—
|
||||||
Corporate
|
1,020,970
|
664,806
|
||||||
Total
|
$
|
7,368,842
|
$
|
664,806
|
||||
Provision for income taxes:
|
||||||||
Baokai
|
$
|
58,802
|
$
|
5,909
|
||||
Wendeng
|
109,944
|
—
|
||||||
Corporate
|
—
|
—
|
||||||
Total
|
$
|
168,746
|
$
|
5,909
|
||||
Net income (loss):
|
||||||||
Baokai
|
$
|
(136,024
|
) |
$
|
17,725
|
|||
Wendeng
|
(2,157,736
|
) |
—
|
|||||
Corporate
|
(1,020,970
|
)
|
(664,806
|
)
|
||||
Total
|
$
|
(3,314,730)
|
))
|
$
|
(647,081
|
)
|
(Unaudited) | ||||||||
Baokai
|
$
|
840,280
|
$
|
1,502,411
|
||||
Wendeng
|
16,986,030
|
—
|
||||||
Corporate
|
199,400
|
576,286
|
||||||
Total
|
$
|
18,025,710
|
$
|
2,078,697
|
(Unaudited) | ||||||||
Baokai
|
$
|
—
|
$
|
303,439
|
||||
Wendeng
|
608,953
|
—
|
||||||
Corporate
|
—
|
—
|
||||||
Total
|
$
|
608,953
|
$
|
303,439
|
(Unaudited) | ||||||||
Baokai
|
$
|
—
|
$
|
—
|
||||
Wendeng
|
3,142,997
|
—
|
||||||
Corporate
|
—
|
—
|
||||||
Total
|
$
|
3,142,997
|
$
|
—
|
(Unaudited) | ||||||||
Baokai
|
$
|
—
|
$
|
—
|
||||
Wendeng
|
7,890,132
|
—
|
||||||
Corporate
|
—
|
—
|
||||||
Total
|
$
|
7,890,132
|
$
|
—
|
20.
|
DEFINED CONTRIBUTION PLAN
|
21.
|
SUBSEQUENT EVENTS
|
This ‘10-K’ Filing | Date | Other Filings | ||
---|---|---|---|---|
Filed on: | 4/16/12 | 4 | ||
4/13/12 | ||||
For Period end: | 12/31/11 | NT 10-K | ||
12/30/11 | ||||
12/8/11 | 4, 8-K | |||
12/7/11 | ||||
11/30/11 | 10-Q | |||
10/18/11 | 8-K | |||
10/15/11 | ||||
9/5/11 | ||||
6/13/11 | 8-K | |||
5/31/11 | 10-K, NT 10-K | |||
3/18/11 | 4, 8-K/A | |||
12/31/10 | 4 | |||
12/30/10 | 4 | |||
12/15/10 | ||||
12/9/10 | ||||
12/8/10 | 3 | |||
11/22/10 | ||||
6/1/10 | ||||
2/9/10 | 8-K | |||
12/31/09 | ||||
11/10/09 | ||||
9/10/09 | ||||
5/15/09 | ||||
1/30/07 | ||||
List all Filings |