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As Of Filer Filing For·On·As Docs:Size Issuer Agent 9/14/10 L & L Energy, Inc. 10-Q/A 9/13/10 1:522K Century Pacific … Inc/FA |
Document/Exhibit Description Pages Size 1: 10-Q/A Amendment to Quarterly Report HTML 339K
llen10qav39-1310v2.htm - Generated by SEC Publisher for SEC Filing |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
——————————
FORM 10-Q/A
(Amendment No. 1)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934 FOR THE FIRST QUARTER ENDED ON JULY 31, 2010
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number: 000-32505
L & L ENERGY, INC.
(Exact name of small Business Issuer as specified in its charter)
NEVADA |
91-2103949 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
130 Andover Park East, Suite 200, Seattle, WA |
|
98188 |
(Address of Principal Executive Offices) |
|
(Zip Code) |
Registrant's telephone number, including area code: (206) 264-8065
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ X ] Non-accelerated filer [ ] Smaller reporting company []
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of September 8, 2010 there were 29,918,550 shares of common stock outstanding, with par value of $0.001.
EXPLANATORY NOTE
This Form 10-Q/A amends the Quarterly Report on Form 10-Q of L & L Energy, Inc. (the “Company”) for the quarter ended July 31, 2010 (the “Original Filing”), filed on September 9, 2010 to (a) clarify that salaries & wages under the line item "Operating Costs and Expenses" are related to selling, general and administrative expenses and (b) correct a clerical error in the Consolidated Statements of Income and Other Comprehensive Income. The clerical error was that foreign currency translation gain (loss) was incorrectly reported as a loss of $1,038,832 for the quarter ended July 31, 2010. In fact, foreign currency translation for the period was a gain of $1,038,832. The amendment has no change or impact on Total Assets, Liabilities, Equity, Net Revenues, Gross Profit, Net Income or Earnings Per Share.
This Form 10-Q/A amends Part 1, Item 1 (Financial Statements) and Part II, Item 6 (Exhibits) in the Company's Original Filing. Except to the extent required to reflect the above-referenced revisions, this Form 10-Q/A continues to describe the Company as of the date of the Original Filing, and does not update disclosures to reflect events that occurred after the date of the Original Filing. Accordingly, this Amendment should be read in conjunction with the Original Filing and with our other filings made with the Securities and Exchange Commission subsequent to the filing of the Original Filing, including any amendments to those filings.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
L & L ENERGY, INC. |
|||||
CONSOLIDATED BALANCE SHEETS |
|||||
AS OF July 31, 2010 and April 30, 2010 |
|||||
(Unaudited) |
|||||
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
Cash and cash equivalents |
$ |
9,476,634 |
$ |
7,327,369 |
|
Accounts receivable |
|
16,113,257 |
|
17,304,949 |
|
Prepaid and other current assets |
|
15,865,361 |
|
22,670,529 |
|
Other receivables |
|
7,893,019 |
|
7,956,069 |
|
Inventories |
|
11,758,019 |
|
9,605,103 |
|
Total current assets |
|
61,106,290 |
|
64,864,019 |
|
|
|
|
|
|
|
Property, plant, equipment, and mine development, net |
|
35,236,597 |
|
33,657,410 |
|
Construction-in-progress |
|
31,201,530 |
|
17,211,093 |
|
Intangible assets, net |
|
5,221,766 |
|
5,028,253 |
|
Long term receivable |
|
1,259,370 |
|
1,259,151 |
|
Related party notes receivable |
|
7,082,039 |
|
7,141,800 |
|
Total non-current assets |
|
80,001,302 |
|
64,297,707 |
|
|
|
|
|
|
TOTAL ASSETS |
$ |
141,107,592 |
$ |
129,161,726 |
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
Accounts payable |
$ |
5,234,722 |
$ |
1,995,513 |
|
Accrued and other liabilities |
|
755,330 |
|
1,225,294 |
|
Other payables |
|
6,966,193 |
|
15,344,920 |
|
Taxes payable |
|
11,822,698 |
|
10,387,265 |
|
Customer deposits |
|
4,770,432 |
|
3,937,770 |
|
Total current liabilities |
|
29,549,375 |
|
32,890,762 |
|
|
|
|
|
|
LONG-TERM LIABILITIES |
|
|
|
|
|
|
Bank loans |
|
3,407,080 |
|
4,146,950 |
|
Long-term payable |
|
800,000 |
|
800,000 |
|
Asset retirement obligation |
|
1,225,312 |
|
507,279 |
|
Total long-term liabilities |
|
5,432,392 |
|
5,454,229 |
|
|
|
|
|
|
|
Total Liabilities |
|
34,981,767 |
|
38,344,991 |
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
EQUITY: |
|
|
|
|
|
L&L ENERGY STOCKHOLDERS' EQUITY: |
|
|
|
|
|
|
Preferred stock, no par value, 2,500,000 shares authorized, none issued and outstanding |
|
- |
|
- |
|
Common stock, $0.001 par value, 120,000,000 shares authorized: 29,660,449 and 28,791,735 shares issued and outstanding at July 31, 2010 and April 30, 2010, respectively |
|
29,661 |
|
28,792 |
|
Additional paid-in capital |
|
34,718,042 |
|
32,781,365 |
|
Accumulated other comprehensive income |
|
1,738,587 |
|
699,755 |
|
Retained Earnings |
|
56,047,044 |
|
45,108,530 |
|
Treasury stock (400,000 shares) |
|
(396,000) |
|
(396,000) |
|
Total stockholders' equity |
|
92,137,334 |
|
78,222,442 |
|
Non-controlling interest |
|
13,988,491 |
|
12,594,293 |
|
Total equity |
|
106,125,825 |
|
90,816,735 |
TOTAL LIABILITIES AND EQUITY |
$ |
141,107,592 |
$ |
129,161,726 |
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements. |
L & L ENERGY, INC. |
| |||||||
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME |
| |||||||
FOR THE PERIODS ENDED JULY 31, 2010 and 2009 |
| |||||||
(Unaudited) |
|
| ||||||
|
For the Three Months Periods Ended July 31, |
| ||||||
|
|
|
2009 |
|
| |||
NET REVENUES |
$ |
55,329,939 |
$ |
11,185,753 |
|
| ||
COST OF REVENUES |
|
36,724,263 |
|
5,312,458 |
|
| ||
GROSS PROFIT |
|
18,605,676 |
|
5,873,295 |
|
| ||
|
|
|
|
|
|
| ||
OPERATING COSTS AND EXPENSES: |
|
|
|
|
|
| ||
Salaries & wages – selling, general and administrative |
|
780,672 |
|
325,237 |
|
| ||
Selling, general and administrative expenses, excluding salaries and wages |
|
3,225,609 |
|
815,475 |
|
| ||
Total operating expenses |
|
4,006,281 |
|
1,140,712 |
|
| ||
|
|
|
|
|
|
| ||
INCOME FROM OPERATIONS |
|
14,599,395 |
|
4,732,583 |
|
| ||
OTHER INCOME (EXPENSE): |
|
|
|
|
|
| ||
Interest expense |
|
(70,540) |
|
(3,600) |
|
| ||
Other (expense) income |
|
(12,843) |
|
(3,163) |
|
| ||
Total other (expense) income |
|
(83,383) |
|
(6,763) |
|
| ||
|
|
|
|
|
|
| ||
INCOME BEFORE PROVISON FOR INCOME TAXES |
|
14,516,012 |
|
4,725,820 |
|
| ||
LESS PROVISION FOR INCOME TAXES |
|
2,183,300 |
|
338,761 |
|
| ||
INCOME FROM CONTINUED OPERATIONS BEFORE NON-CONTROLLING INTEREST |
|
12,332,712 |
|
4,387,059 |
|
| ||
LESS: NONCONTROLLING INTEREST |
|
1,394,198 |
|
1,864,265 |
|
| ||
NET INCOME FROM CONTINUED OPERATIONS |
|
10,938,514 |
|
2,522,794 |
|
| ||
|
|
|
|
|
|
| ||
DISCONTINUED OPERATIONS |
|
|
|
|
|
| ||
GAIN/(LOSS) FROM SUBSIDIARY DISPOSED OF |
|
- |
|
171,335 |
|
| ||
TOTAL INCOME/(LOSS) FROM DISCOUNTED OPERATIONS |
|
- |
|
171,335 |
|
| ||
|
|
|
|
|
|
| ||
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS |
|
10,938,514 |
|
2,694,129 |
|
| ||
|
|
|
|
|
|
| ||
OTHER COMPREHENSIVE INCOME: |
|
|
|
|
|
| ||
Foreign currency translation gain( loss) |
|
1,038,832 |
|
(38,105) |
|
| ||
COMPREHENSIVE INCOME |
$ |
11,977,346 |
$ |
2,656,024 |
|
| ||
|
|
|
|
|
|
| ||
INCOME PER COMMON SHARE – basic from continued operation |
$ |
0.38 |
$ |
0.12 |
|
| ||
INCOME PER COMMON SHARE – basic from discontinued operation |
$ |
- |
$ |
0.01 |
|
| ||
INCOME PER COMMON SHARE – basic |
$ |
0.38 |
$ |
0.13 |
|
| ||
INCOME PER COMMON SHARE – diluted from continued operation |
$ |
0.36 |
$ |
0.12 |
|
| ||
INCOME PER COMMON SHARE – diluted from discontinued operation |
$ |
- |
$ |
0.01 |
|
| ||
INCOME PER COMMON SHARE – diluted |
$ |
0.36 |
$ |
0.13 |
|
| ||
|
|
|
|
|
|
| ||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – basic |
|
29,037,451 |
|
21,167,409 |
|
| ||
|
|
|
|
|
|
| ||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - diluted |
|
30,407,090 |
|
21,307,409 |
|
| ||
|
|
|
|
|
|
| ||
The accompanying notes are an integral part of these consolidated financial statements.
L & L ENERGY, INC. |
|||||
CONSOLIDATED STATEMENT OF CASH FLOWS |
|||||
FOR THE PERIODS ENDED JULY 31, 2010 and 2009 |
|||||
(Unaudited)
|
|||||
|
|
|
For the Three Months Periods Ended July 31, |
||
|
|
|
2009 |
||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
Net income including non-controlling interest |
$ |
10,938,514 |
$ |
2,522,794 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
Income from non-controlling interest |
|
1,394,198 |
|
1,864,265 |
|
Depreciation and amortization |
|
3,111,736 |
|
768,114 |
|
Amortization for deferred compensation |
|
- |
|
10,500 |
|
Issuance of common stock for services |
|
430,546 |
|
619,262 |
Changes in assets and liabilities, net of businesses acquisitions: |
|
|
|
|
|
|
Accounts receivable |
|
1,191,692 |
|
1,090,178 |
|
Prepaid and other current assets |
|
6,945,169 |
|
1,169,610 |
|
Inventories |
|
(2,152,916) |
|
(1,176,975) |
|
Deferred tax asset |
|
- |
|
154 |
|
Other receivable |
|
63,050 |
|
0 |
|
Accounts payable |
|
3,239,209 |
|
24,347 |
|
Accrued and other liabilities |
|
(469,964) |
|
278,106 |
|
Customer deposit |
|
832,662 |
|
194,271 |
|
Loan to associate |
|
- |
|
(204,660) |
|
Taxes payable |
|
1,435,432 |
|
(569,906) |
|
Other payable |
|
(8,378,727) |
|
0 |
|
Net cash provided by(used in) discontinued operation |
|
- |
|
485,608 |
Net cash provided by operating activities |
|
18,580,601 |
|
7,075,668 |
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
Acquisition of property and equipment |
|
(3,582,067) |
|
(2,909,227) |
|
Acquisition of intangible assets |
|
(429,298) |
|
- |
|
Change in intangible assets |
|
- |
|
3,671 |
|
Change in fixed assets |
|
- |
|
(20,018) |
|
Construction-in-progress |
|
(13,990,438) |
|
(4,200,333) |
|
Change in non-controlling interest due to acquisition and disposal |
|
- |
|
760,906 |
|
Loan to related party |
|
(80,239) |
|
- |
|
Increase in investments |
|
- |
|
(12,437) |
Net cash (used in) provided by investing activities |
|
(18,082,042) |
|
(6,377,438) |
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
Payment on bank loans |
|
(739,870) |
|
- |
|
Proceeds from issuance of common stock |
|
- |
|
201,313 |
|
Proceeds from warrant extension |
|
50,000 |
|
- |
|
Warrants converted to common stock |
|
1,457,000 |
|
475,000 |
Net cash provided by financing activities |
|
767,130 |
|
676,313 |
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
883,576 |
|
(38,105) |
|
|
|
|
|
|
|
INCREASE IN CASH AND CASH EQUIVALENTS |
|
2,149,265 |
|
1,336,438 |
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
|
7,327,369 |
|
5,098,711 |
|
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ |
9,476,634 |
$ |
6,435,149 |
|
|
|
|
|
|
|
SUPPLEMENTAL NON CASH FLOW INFORMATION: |
|
|
|
|
|
INTEREST PAID |
$ |
59,200 |
$ |
3,598 |
|
INCOME TAX PAID |
$ |
747,848 |
$ |
352,634 |
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements. |
L & L ENERGY, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED JULY 31, 2010 AND 2009
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
L & L ENERGY, INC. (“L&L” and/or the “Company”) was incorporated in Nevada, and is headquartered in Seattle, Washington. Effective on January 4, 2010, the State of Nevada approved the Company’s name change from L&L International Holdings, Inc. to L & L Energy, Inc. The Company is a coal (energy) company, and started its operations in 1995. Coal sales are generated entirely in China, from coal mining, clean coal washing, coking and coal wholesales operations. At the present time, the Company conducts its coal (energy) operations in Yunnan and Guizhou provinces, southwest China. As of July 31, 2010, the Company has three operating subsidiaries; KMC, which has coal wholesale operations and Ping Yi Coal Mine (mining operations “PYC”); two coal mining operations (DaPuAn Mine and SuTsong Mine) including DaPuAn’s coal washing operations (the “2 Mines” or “LLC”); and L&L Yunnan Tianneng Industry Co. Ltd. (including Hong Xing coal washing and ZoneLin coking operations) (“TNI”). On August 1, 2009, the Company increased its ownership of the two coal mining operations (the “2 Mines”), from 60% to 80%.
KMC acquired 100% equity of PYC on January 18, 2010 with an effective acquisition date of November 1, 2009. L&L formed a new subsidiary TNI in the Yunnan province, China, which owns 98% of controlling interest of TNI. Through TNI, L&L acquired 100% equity of ZoneLin Coal Coking Factory in China (“ZoneLin”) on February 3, 2010 with an effective acquisition date of November 1, 2009; and acquired 100% equity of SeZone County Hong Xing Coal Washing Factory (“Hong Xing”) on January 1, 2010 with an effective acquisition date of November 30, 2009.
The Company acquired 93% equity interest in Hon Shen Coal Co., Ltd. (“HSC”) in July 2009 and October 2009, then disposed of HSC to Guangxi Luzhou Lifu Machinery Co. Limited in April 2010.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim financial information - The consolidated interim financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The results of operations for the three months ended July 31, 2010 may not necessarily indicative of the results of operations which might be expected for the entire year.
These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained herein. These financial statements should be read in conjunction with the Company's financial statements and notes thereto included in the Company's audited financial statements on Form 10-K for the fiscal year ended April 30, 2010.
Principles of Consolidation - The fully consolidated financial statements include the accounts of the Company, and its 100% ownership of KMC subsidiary including coal wholesale and PYC coal mine, 80% of operations of LLC “2 Mines” including both coal mining and coal washing, and 98% of TNI (coal washing and coking operations). All significant inter-company accounts and transactions were eliminated in consolidation.
Cash and Cash Equivalents - Cash and cash equivalent consist of cash on deposit with banks and cash on hand. The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents, for cash flow statement purposes. Cash includes cash on hand and demand deposits in accounts maintained with state owned banks within the People’s Republic of China (“PRC”) and with banks in the United States. The Company maintains balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits for the banks located in the United States.
Balances at financial institutions or state owned banks within the PRC are not insured and amounted to $7,647,587 and $2,428,509 at July 31, 2010 and April 30, 2010, respectively. As of July 31, 2010 and April 30, 2010, the Company had deposits in excess of federally insured limits totaling $1,166,956 and $2,529,565, respectively, in the U.S. Banks. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.
Revenue Recognition - In accordance with the Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin (“SAB”) Topic 13, “Revenue Recognition,” the Company recognizes revenue when it is realized or realizable and earned. The Company must meet all of the following four criteria under SAB 104 to recognize revenue:
Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advances from customers.
Accounts receivable - The Company’s policy is to maintain reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. As of July 31, 2010 and April 30, 2010, the Company determined that no reserve for accounts receivable was necessary.
Inventories - Inventories are stated at the lower of cost and net realizable value, as determined on moving average basis.
Use of Estimates - The preparation of financial statements, in conformity with accounting principles generally accepted 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 revenues and expenses during the reporting period. In regards to Asset Retirement Obligations (AROs,) the revisions to estimated cash flows pertain to revisions in the estimated amount and timing of required reclamation activities throughout the lives of the respective mines and reflect changes in estimates of closure volumes, disturbed acreages and third-party unit costs as of July 31, 2010. We base these estimates on historical and anticipated results and trends and on various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may differ from management’s estimates.
Noncontrolling Interest - In 2009, the Company purchased 60% interests in 2 Mines and subsequently increased the ownership to 80% during 2010. Certain amounts presented for prior periods previously designated as minority interest have been reclassified to conform to the current year presentation. Effective January 1, 2009, the Company adopted Financial Accounting Standards (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation, which established new standards governing the accounting for and reporting of noncontrolling interests (“NCI”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCI (previously referred to as minority interests) be treated as a separate component of equity, not as a liability (as was previously the case), that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance. This standard also required changes to certain presentation and disclosure requirements. The provisions of the standard were applied to all NCI prospectively, except for the presentation and disclosure requirements, which were applied retrospectively to all periods presented. As a result, upon adoption, the Company retroactively reclassified the “Minority interest” balance previously included in the “Other liabilities” section of the consolidated balance sheets to a new component of equity with respect to NCI in consolidated subsidiaries. The adoption also impacted certain captions previously used on the consolidated statements of income and other comprehensive income, largely identifying net income including NCI and net income attributable to the Company.
The net income (loss) attributed to the NCI has been separately designated in the accompanying statements of income and other comprehensive income. Losses attributable to the NCI in a subsidiary may exceed the NCI’s interests in the subsidiary’s equity. The excess attributable to the NCI is attributed to those interests. The NCI shall continue to be attributed its share of losses even if that attribution results in a deficit NCI balance.
Foreign Currency Translation - The accounts of the Company’s Chinese subsidiaries are maintained in the RMB and the accounts of the U.S. parent company are maintained in the USD. The accounts of the Chinese subsidiaries were translated into USD in accordance with ASC Topic 830, Foreign Currency Matters, with the RMB as the functional currency for the Chinese subsidiaries. According to ASC 830, all assets and liabilities were translated at the exchange rate on the balance sheet date, stockholders’ equity is translated at historical rates and statement of income items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC Topic 220, Comprehensive Income. Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statements of income.
Asset Retirement Cost and Obligation - Asset retirement costs are accounted for in accordance with ASC Topic 410-20, Asset Retirement Obligations. Pursuant to ASC 410-20, the Company recognizes the fair value of the liability for an asset retirement obligation, which is recorded in the period in which it is incurred and the corresponding cost capitalized by increasing the carrying amount of the related long-lived asset. The fair value of the liability is estimated using projected discounted cash flows. In subsequent periods, the retirement obligation is accreted to its future value, which is the estimate of the obligation at the asset retirement date. The liability is accreted to its present value each period, and the capitalized cost is depreciated or depleted over the useful lives of the respective assets. If the liability is settled for an amount other than the recorded amount, a gain or loss would be recognized at such time.
Property, Plant, Equipment, and Mine Development - Property, plant equipment and mine development are stated at cost, less accumulated depreciation. Costs of mine development, expansion of the capacity of or extending the life of the Company’s mine are capitalized and principally amortized using the units-of-production method over the actual tons of coals produced directly. Mobile mining equipment and other fixed assets are stated at cost and depreciated on a straight-line basis over their estimated useful lives. Leasehold improvements are amortized over their estimated useful lives or the term of the lease, whichever is shorter. Major repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the period benefited. Maintenance and repairs are generally expensed as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Building, mining structure, and plant are related to our coal mining related operations. The mining structure includes the main and auxiliary mine shafts, underground tunnels, and other integrant mining infrastructure. Depreciation for the mine shafts is provided to write off the cost of the mining structure using the units of production method based on salable reserves.
The estimated useful lives for each category of the fixed assets are as follows:
Building, Mining Structure and Plant |
20 to 25 Years |
Motor Vehicles and Equipment |
5 Years |
Machinery |
10 to 12.5 Years |
Construction-in-progress - Construction-in-progress consists of amounts expended for mine construction. Once building construction is completed, the cost accumulated in construction-in-progress is transferred to property, plant, equipment and mine development.
Impairment of Long-Lived Assets - The Company applies the provisions of ASC Topic 360, “Property, Plant, and Equipment,” which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Company evaluates the recoverability of its long-lived assets if circumstances indicate impairment may have occurred. This analysis is performed by comparing the respective carrying values of the assets to the current and expected future cash flows, on an undiscounted basis, to be generated from such assets. ASC 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal. Based on its review, the Company believes that as of July 31, 2010 and April 30, 2010, there was no impairment of its long-lived assets.
Intangibles - The Company applies Accounting Standards Codification (“ASC”) Topic 350, Intangibles - Goodwill and Other Intangible Assets, to record goodwill and intangible assets. In accordance with ASC 350, certain intangible assets are to be assessed periodically for impairment using fair value measurement techniques. Goodwill is tested for impairment on an annual basis as of the end of the Company's fiscal year, or more frequently when impairment indicators arise. The Company evaluates the recoverability of intangible assets periodically and takes into account events and circumstances which indicate that impairment exists. The Company believes that as of July 31, 2010 and April 30, 2010, there was no impairment of its goodwill.
Income Taxes - The Company utilizes the asset and liability method of accounting for income taxes, under which deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. GAAP also 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. As of July 31, 2010, income tax positions must meet a more-likely-than-not recognition threshold to be recognized. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.
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. No material deferred tax amounts were recorded at July 31, 2010 and April 30, 2010, respectively. GAAP also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transition.
The charge for taxation is based on the results for the reporting period as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
The Company’s operating subsidiaries located in PRC are subject to PRC income tax. The new Chinese Enterprise Income Tax (“EIT”) law was effective on January 1, 2008. Under the new Income Tax Laws of PRC, a company is generally subject to income tax at an effective rate of 25% on income reported in the statutory financial statements after appropriated tax adjustments.
Stock-Based Compensation - The Company records stock-based compensation in accordance with ASC Topic 718, Compensation – Stock Compensation. ASC 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. Under ASC 718, the Company’s volatility is based on the historical volatility of the Company’s stock or the expected volatility of similar companies. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.
The Company uses the Black-Scholes option-pricing model which was developed for use in estimating the fair value of options. Option-pricing models require the input of highly complex and subjective variables including the expected life of warrants granted and the Company’s expected stock price volatility over a period equal to or greater than the expected life of the warrants. Because changes in the subjective assumptions can materially affect the estimated value of the Company’s employee warrants, it is management’s opinion that the Black-Scholes option-pricing model may not provide an accurate measure of the fair value of the Company’s employee warrants. Although the fair value of employee warrants is determined in accordance with ASC 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction.
Fair Value Measurements - For certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, other receivable, accounts payable and other payables, the carrying amounts approximate their fair values due to their short maturities. In addition, the Company has long-term debt with financial institutions. The carrying amounts of the line of credit and other long-term liabilities approximate their fair values based on current rates of interest for instruments with similar characteristics.
ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables, certain other current assets and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the consolidated balance sheets at fair value in accordance with ASC 825.
Earnings Per Common Share - Earnings per share is calculated in accordance with the ASC Topic 260, Earnings Per Share. Basic earnings per share is calculated dividing income available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share is based on the assumption that all dilutive convertible shares and stock options and warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, warrants and options are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
Concentration of Risk - For the three months ended July 31, 2010, we had one major customer who purchased 13% of the Company’s total sales and represented $6,923,993 or 42% of accounts receivable. In addition, we had one major supplier provided 11% of our total purchases. This supplier represents $733, 342 or 14% of the accounts payable.
For the period ended July 31, 2009, we had five major customers who purchased over 10% of the Company’s total sales. They collectively accounted for approximately 83% (approximate $12.7 million) of our total sales and approximately 74% (approximate $9.2 million) of accountant receivables. In addition, there are three major suppliers each provided over 10% of our total purchases. These suppliers collectively supplied approximately 48% (approximately $3.8 million) of the Company’s purchases and 35% (approximate $0.8 million) of total accounts payable.
Advertising Costs - The Company expenses the cost of advertising as incurred or, as appropriate, the first time the advertising takes place. Advertising costs for the three months ended July 31, 2010, 2009 were not significant.
Statement of Cash Flows - In accordance with ASC Topic 230, “Statement of Cash Flows,” cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rates. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.
Reclassification - Certain reclassifications have been made to the 2009 and 2008 consolidated financial statements to conform to the 2010 consolidated financial statement presentation. These reclassifications had no effect on net loss or cash flows as previously reported.
New accounting pronouncements
In October 2009, the FASB issued Accounting Standards Update 2009-15 ("ASU 2009-15") regarding accounting for own-share lending arrangements in contemplation of convertible debt issuance or other financing. This ASU requires that at the date of issuance of the shares in a share-lending arrangement entered into in contemplation of a convertible debt offering or other financing, the shares issued shall be measured at fair value and be recognized as an issuance cost, with an offset to additional paid-in capital. Further, loaned shares are excluded from basic and diluted earnings per share unless default of the share-lending arrangement occurs, at which time the loaned shares would be included in the basic and diluted earnings-per-share calculation. This ASU is effective for fiscal years beginning on or after December 15, 2009, and interim periods within those fiscal years for arrangements outstanding as of the beginning of those fiscal years. The adoption of this ASU did not have a significant impact on the Company’s consolidated financial statements.
In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2010-06, Improving Disclosures about Fair Value Measurements (“ASU No. 2010-06”). The new standard addresses, among other things, guidance regarding activity in Level 3 fair value measurements. Portions of ASU No. 2010-06 that relate to the Level 3 activity disclosures are effective for the annual reporting period beginning after December 15, 2010. The Company will provide the required disclosures beginning with the Company’s Annual Report on Form 10-K for the year ending April 30, 2011. Based on the initial evaluation, the Company does not anticipate a material impact to the Company’s financial position, results of operations or cash flows as a result of this change.
On February 25, 2010, the FASB issued ASU 2010-09 Subsequent Events Topic 855 “Amendments to Certain Recognition and Disclosure Requirements,” effective immediately. The amendments in the ASU remove the requirement for an SEC filer to disclose a date through which subsequent events have been evaluated in both issued and revised financial statements. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of U.S. GAAP. The FASB believes these amendments remove potential conflicts with the SEC’s literature. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
On March 5, 2010, the FASB issued ASU No. 2010-11 Derivatives and Hedging Topic 815 “Scope Exception Related to Embedded Credit Derivatives.” This ASU clarifies the guidance within the derivative literature that exempts certain credit related features from analysis as potential embedded derivatives requiring separate accounting. The ASU specifies that an embedded credit derivative feature related to the transfer of credit risk that is only in the form of subordination of one financial instrument to another is not subject to bifurcation from a host contract under ASC 815-15-25, Derivatives and Hedging — Embedded Derivatives — Recognition. All other embedded credit derivative features should be analyzed to determine whether their economic characteristics and risks are “clearly and closely related” to the economic characteristics and risks of the host contract and whether bifurcation is required. The ASU is effective for the Company on August 1, 2010. Early adoption is permitted. The adoption of this ASU will not have a material impact on the Company’s consolidated financial statements.
In April 2010, the FASB codified the consensus reached in Emerging Issues Task Force Issue No. 08-09, “Milestone Method of Revenue Recognition.” FASB ASU No. 2010-17 provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research and development transactions. FASB ASU No. 2010-17 is effective for fiscal years beginning on or after June 15, 2010, and is effective on a prospective basis for milestones achieved after the adoption date. The Company does not expect this ASU will have a material impact on its financial position or results of operations when it adopts this update on May 1, 2011.
NOTE 3. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current as of July 31, 2010 and April 30, 2010 consist of:
Description |
||
Advances to suppliers |
$ 12,946,847 |
$ 11,327,289 |
Bill receivable |
- |
8,713,763 |
Advanced to employees |
2,897,863 |
2,580,222 |
Other |
20,651 |
49,255 |
Total |
$ 15,865,361 |
$ 22,670,529 |
|
|
|
NOTE 4. OTHER RECEIVABLES
Other receivables consist of the following:
Description |
July 31, 201010 |
||
Short term loans to business associates |
$ 6,633,868 |
$ 6,608,247 |
|
HSC receivable |
1,259,151 |
1,259,151 |
|
Other |
- |
88,671 |
|
Total |
$ 7,893,019 |
$ 7,956,069 |
|
NOTE 5. INVENTORIES
Inventories are primarily related to coal located at KMC, 2 Mines, PYC and TNI. Inventories consist of the following:
Description |
||
Raw Coal |
$ 6,713,700 |
$ 9,054,714 |
Washed Coal |
3,182,513 |
155,156 |
Coke Coal |
1,861,806 |
395,233 |
Total |
$ 11,758,019 |
$ 9,605,103 |
NOTE 6. PROPERTY, PLANT, EQUIPMENT AND MINE DEVELOPMENT
Property, plant, equipment and mine development consist of the following:
|
|
|
|
||||
|
Description |
|
|
||||
|
Mine development |
$ 21,453,640 |
|
|
$ 21,098,410 |
||
|
Building and improvements |
4,703,190 |
|
|
2,025,661 |
||
|
Machinery and equipment |
14,219,368 |
|
|
12,872,896 |
||
|
Total |
40,376,198 |
|
|
35,996,967 |
||
|
Accumulated depreciation |
(5,139,601) |
|
|
(2,339,557) |
||
|
Property, Plant and Equipment, net |
$ 35,236,597 |
|
|
$ 33,657,41 |
||
Depreciation expense was $2,800,044, and $768,114 for the three months ended July 31, 2010 and 2009, respectively.
NOTE 7. CONSTRUCTION IN PROGRESS
Construction in progress includes mine development, ventilation and electrical system improvements for the PYC mine, building of staff quarters, and beginning construction of a sewage treatment system and road expansion for the washing facilities. During the quarter ended July 31, 2010, HongXing washing facility construction took place for its capacity expansion. Construction in progress was $ 31,201,530 and $ 17,211,093 as of July 31, 2010 and April 30, 2010, respectively.
NOTE 8. INTANGIBLE ASSETS
Mineral rights represent the exclusive right, granted by the Chinese government, to operate the 2 Mines and PYC. The rights were acquired in the first quarter of 2008 as a result of the acquisition of the “2 Mines” on May 1, 2008 and on November 1, 2009, respectively. The Company has elected to use units of production method to amortize its mineral rights.
Amortization expense was $235,785 and zero for the three months ended July 31, 2010 and 2009, respectively.
Intangible assets consist of the following:
Description |
|
|
|
|
||
Mining rights |
$ |
4,251,707 |
$ |
3,832,288 |
|
|
Customer relationship |
|
837,560 |
|
831,428 |
|
|
Technology |
|
261,919 |
|
260,002 |
|
|
Goodwill |
|
250,077 |
|
248,247 |
|
|
|
|
5,601,263 |
|
5,171,965 |
|
|
Accumulated amortization |
|
(379,497) |
|
(143,712) |
|
|
|
$ |
5,221,766 |
$ |
5,028,253 |
|
|
NOTE 9. ASSET RETIREMENT OBLIGATION
The Company accounts for asset retirement obligations in accordance with, ASC 410-20-25, Accounting for Asset Retirement Obligations. This statement generally requires that the Company’s legal obligations associated with the retirement of long-lived assets are recognized at fair value at the time the obligations are incurred. Obligations normally are incurred at the time development of a mine commences for underground mines or construction begins for support facilities and refuses areas. The obligation’s fair value is determined using discounted cash flow techniques and is accreted over time to its expected settlement value. Upon initial recognition of a liability, a corresponding amount is capitalized as part of the carrying amount of the related long-lived asset. Amortization of the related asset is calculated on a unit-of-production method. The Company reviews the asset retirement obligation at least annually and makes necessary adjustments for permitted changes as granted by government authorities and for revisions of estimates of the amount and timing of costs. For ongoing operations, adjustments to the liability result in an adjustment to the corresponding asset.
With respect to the 2 mines, Yunnan Province government authority established 3 RMB per extracted ton for natural resource surcharge for mine clean up. The Company expects to extract approximately ten million tons of coal over the remaining forty years of mining rights. The interest rate used in the net present value calculation is 8%. As for the Ping Yi Mine, Gui Zhou Province government established 2 RMB per extracted ton for natural resource surcharge for mine clean up. The Company expects to extract approximately 13.5 million tons of coal over the remaining fifty years of mining rights. The interest rate used in the net present value calculation is 8%.
The following is a summary of the change in the carrying amount of the asset retirement obligation during the three months ended July, 31, 2010 and the year ended April 30, 2010.
|
|
|
||
|
|
|
|
|
Beginning balance at May 1 |
$ |
507,279 |
$ |
- |
Liabilities incurred during the period |
|
- |
|
285,380 |
Increase in estimated costs |
|
693,982 |
|
- |
Liabilities settled during the period |
|
- |
|
- |
Accretion of interest |
|
24,051 |
|
221,899 |
|
$ |
1,225,312 |
$ |
507,279 |
NOTE 10 – OTHER PAYABLES
Other Payables consist of the following:
Description |
||
Payable to previous owners of ZoneLin (less non-current) |
$ 200,000 |
$ 200,000 |
Payable to previous owners of Ping Ying Coal Mine |
433,670 |
433,670 |
Payable to business associates (1) |
3,505,129 |
9,098,023 |
Others (1) |
2,027,394 |
5,613,227 |
Total current other payables |
6,166,193 |
15,344,920 |
Payable to previous owners of ZoneLin (non-current) (2) |
800,000 |
800,000 |
Other non-current |
- |
- |
|
$ 6,966,193 |
$ 16,144,920 |
(1) Payments are short-term, it will be settled before 12/2010.
(2) Four annual installments will be paid.
NOTE 11 – TAXES PAYABLE
Taxes payable consist of the following:
Description |
|
|
||
VAT payable |
$ |
4,224,574 |
$ |
5,109,967 |
Income tax payable |
|
6,282,877 |
|
3,878,426 |
Other taxes payable |
|
1,315,247 |
|
1,398,872 |
|
$ |
11,822,698 |
$ |
10,387,265 |
NOTE 12. BANK LOANS
During the third quarter of 2009, as part of the acquisitions of TNI and PYC, the Company assumed two loan agreements with banks in China. The first loan with TNI was for RMB 14,300,000 or approximately $1,951,000. This loan carried an interest rate of 5.4% per annum and matures on December 23, 2011. The second loan with PYC was for RMB 15,000,000 or approximately $2,196,000. The loan carries an interest rate of 9.7% per annum and matures on February 26, 2011. Both loans are unsecured.
Total bank loan balance is $3,407,080 and $4,146,950 as of July 31, 2010 and April 30,2010 respectively. Interest expense recognized on the loan was $ 59,200 and $ 0 for the three months ended July 31, 2010 and 2009, respectively.
NOTE 13. RELATED PARTY TRANSACTIONS
The Company loaned money to various entities who have non-controlling interests with the Company. Those loans are notes receivables, secured by assets and machinery of the various mines or businesses indicated below. Because the borrowers under the notes have business in which the Company has an interest, the Company believes the borrowers are considered as related parties.
Total amount of the relation party transaction is approximately $7 million as of July 31, 2010 which is tabled below. While in the prior year, as of July 31, 2009, total related party transaction amounts to approximately $6.0 million including approximately $4.3 million is a loan to a non controlling interest shareholders of 2 Mines, approximately $1.9 million for an advance to a KMC manager for the development of the Tian-Ri Coal Mine, and approximately $911,000 owed to CEO of the Company.
Borrowers |
|
USD |
Maturity |
Collateralized by |
Associates to DaPuAn Coal Mine |
|
$ 924,877 |
Mine Assets |
|
Lieurkong Machinery |
|
460,393 |
Machinery |
|
Kunming Kemandi Technology Dev. Co LTD |
|
254,517 |
Machinery |
|
Associates to Tian Ri Coal Mine |
|
1,474,926 |
Machinery |
|
Associates to SuTsong Coal Mine |
|
2,492,400 |
Mining Equipment |
|
Yunnan Tinnan Co. Ltd. |
|
1,474,926 |
Mine Assets |
|
|
|
$ 7,082,039 |
|
|
NOTE 14. STOCKHOLDERS’ EQUITY
During the quarter ended July 31, 2010, the Company issue 44,813 shares of common stock for services with a value of $430,546
During the quarter ended July 31, 2010, 650,000 warrants were exercised at an average exercise price of $2.26 for cash proceeds of $1,456,350.
During the quarter ended July 31, 2010, 359,555 warrants were exercised in accordance with the cashless exercise provisions resulting in the issuance of 173,901 shares.
|
|
|
|
|
|
NOTE 15. NON-CONTROLLING INTEREST
As described in Note 1, to the consolidated financial statements, the Company has the majority controlling interest of L&L Coal Partners (2 coal mining operations) and TNI. During the fiscal year 2010, the Company increased its ownership interest in L&L Coal Partners to 80% from 60% at April 30, 2009. The equity related to non-controlling interest as of July 31, 2010 represent 20% third party interest in L&L Coal Partners and 2% third party interests in TNI.
Included below is a schedule of changes in ownerships interest as of July 31, 2010 and April 30, 2010:
|
|
|
||
|
|
|
|
|
Beginning balance |
$ |
12,594,293 |
$ |
12,731,987 |
Non-controlling interest related to acquisitions |
|
- |
|
995,305 |
Net income related to non-controlling interest |
|
1,394,198 |
|
7,040,555 |
Increase in controlling interest |
|
- |
|
(7,760,824) |
Non-controlling interest related to disposal |
|
- |
|
(412,730) |
Ending balance |
$ |
13,988,491 |
$ |
12,594,293 |
NOTE 16. EARNINGS PER SHARE
The Company only has common shares and warrants issued and outstanding as of July 31, 2010. Under the treasury stock method of earnings per share, the Company computed the diluted earnings per share, as if all issued warrants were converted to common stock, and cash proceeds were used to buy back common stock.
For the Three Months Ended July 31, |
||
2009 |
||
Net income |
$10,938,514 |
$2,694,129 |
Number of Shares |
29,037,451 |
21,167,409 |
Per Share - Basic |
$0.38 |
$0.13 |
Effect of dilutive shares |
1,369,639 |
140,000 |
Number of dilutive shares |
30,407,090 |
21,307,409 |
Per Share - Diluted |
$0.36 |
$0.46 |
NOTE 17. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company has two operating leases for the Seattle office and GuangZhou office. Both are non-cancelable leases, expiring in September of 2010 and November 2011, respectively. The Company entered into a six-month lease agreement effective August 2010 in leasing office space in the Seattle office building. The non-cancelable operating lease agreements require that the Company pays certain operating expenses, including management fees to the leased premises. The future minimum rental payments in less than a year and in greater than a year are $132,244 and $19,558, respectively.
Commitments
The PRC adopted extensive environmental laws and regulations that affect the operations of the coal mining industry. The outcome of environmental liabilities under proposed or future environmental legislation cannot be reasonably estimated at present, and could be material. Under existing legislation, however, Company management believes that there are no probable liabilities that will have a material adverse effect on the financial position of the Company.
The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in the governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversions and remittance abroad, and rates and methods of taxation, among other things.
The majority of the Company sales, purchases and expense transactions are denominated in RMB and most of the Company’s assets and liabilities are also denominated in RMB. The RMB is not freely convertible into foreign currencies under the current law. In China, foreign exchange transactions are required by law to be transacted only by authorized financial institutions. Remittances in currencies other than RMB may require certain supporting documentation in order to affect the remittance.
NOTE 18. SEGMENT INFORMATION
The Company reports its operations primarily through the following reportable operating segments: coal mining, coal wholesaling, coking coal washing revenue. The Company’s chief operating decision maker uses operating income as the primary measure of segment profit and loss.
For the three months ended July 31, | |||
Total Revenues (including intersegment sales) |
2010 |
2009 | |
Coal mining revenue |
$18,625,582 |
$6,846,517 | |
Coal wholesale revenue |
5,051,603 |
4,339,235 | |
Coking revenue |
7,018,405 |
- | |
Coal washing revenue |
28,962,725 |
- | |
$59,658,315 |
$11,185,752 | ||
Intersegment revenues |
2010 |
2009 | |
Coal mining revenue |
$4,328,376 |
- | |
Coal wholesale revenue |
- |
- | |
Coking revenue |
- |
- | |
Coal washing revenue |
- |
- | |
$4,328,376 |
- | ||
Net revenues |
2010 |
2009 | |
Coal mining revenue |
$18,625,582 |
$6,846,517 | |
Coal wholesale revenue |
5,051,603 |
4,339,235 | |
Coking revenue |
7,018,405 |
- | |
Coal washing revenue |
28,962,725 |
- | |
Less intersegment revenues |
(4,328,376) |
- | |
$55,329,939 |
$11,185,752 | ||
Net income |
2010 |
2009 | |
Coal mining |
$9,267,909 |
$2,796,395 | |
Coal wholesale |
540,456 |
280,389 | |
Coking |
806,181 |
- | |
Coal washing |
2,423,525 |
171,335 | |
Parent Company |
(2,099,557) |
(553,990) | |
$10,938,514 |
$2,694,129 | ||
Depreciation expense |
2010 |
2009 | |
Coal mining |
$1,752,775 |
$476,455 | |
Coal wholesale |
93,982 |
5,802 | |
Coking |
548,867 |
- | |
Coal washing |
228,750 |
240,989 | |
Parent Company |
175,670 |
44,868 | |
$2,800,044 |
$768,114 | ||
2010 |
2009 | ||
Total assets |
|||
Coal mining |
$121,103,475 |
$41,727,782 | |
Coal wholesale |
1,595,425 |
10,488,519 | |
Coal coking |
8,958,749 |
- | |
Coal washing |
23,084,615 |
2,523,944 | |
Parent company (intercompany) |
(13,634,672) |
6,155,347 | |
$141,107,592 |
$60,895,592 |
PART II – OTHER INFORMATION
Item 6. Exhibits
Exhibit number |
Description |
|||
31.1* |
Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) |
|||
31.2* |
Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) |
|||
|
* |
|
||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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L & L ENERGY, INC. |
|
|
|
|
Date: September 13, 2010 |
By: |
/S/ Dickson V. Lee |
|
Name: |
Dickson V. Lee, CPA |
|
Title: |
CEO |
|
|
|
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER EXHIBIT 31.1
I, Dickson V. Lee, certify that:
1. I have reviewed this Amendment No. 1 to Quarterly Report on Form 10-Q of L&L Energy, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
L&L ENERGY, INC. |
|
Date: September 13, 2010 |
By: |
/S/ Dickson V. Lee |
|
Name: |
Dickson V. Lee, CPA |
|
Title: |
CEO |
EXHIBIT 31.2
CERTIFICATIONS OF ACTING CHIEF FINANCIAL OFFICER
I, Jung Mei (Rosemary) Wang certify that:
1. I have reviewed this Amendment No.1 to Quarterly Report on Form 10-Q of L&L Energy, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
L&L ENERGY, INC. |
|
Date: September 13, 2010 |
By: |
/S/ Jung Mei Wang |
|
Name: |
Jung Mei (Rosemary) Wang, CPA |
|
Title: |
Acting CFO |
This ‘10-Q/A’ Filing | Date | Other Filings | ||
---|---|---|---|---|
5/1/15 | ||||
12/23/11 | ||||
5/1/11 | ||||
4/30/11 | ||||
2/26/11 | ||||
12/15/10 | ||||
Filed as of: | 9/14/10 | 8-K | ||
Filed on / For Period End: | 9/13/10 | |||
9/9/10 | 10-Q | |||
9/8/10 | 10-Q, 4, 5 | |||
8/1/10 | ||||
7/31/10 | ||||
7/30/10 | 4 | |||
6/15/10 | ||||
4/30/10 | 10-K, 4, 5, NT 10-K | |||
3/5/10 | ||||
2/25/10 | ||||
2/3/10 | ||||
1/18/10 | ||||
1/4/10 | ||||
1/1/10 | ||||
12/15/09 | NT 10-Q | |||
11/30/09 | ||||
11/1/09 | ||||
8/1/09 | ||||
7/31/09 | 10-Q | |||
4/30/09 | 10-K | |||
1/1/09 | ||||
5/1/08 | ||||
1/1/08 | ||||
List all Filings |