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As Of Filer Filing For·On·As Docs:Size Issuer Agent 7/17/09 Sinocoking Coal & Coke Chemi… Inc PRE 14A 7/17/09 1:4.1M Ashton Financials LLC/FA |
Document/Exhibit Description Pages Size 1: PRE 14A Preliminary Proxy Statement HTML 2.26M
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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|
1. |
Approval of a plan of share exchange in the form of a Share Exchange Agreement, under which we will acquire SinoCoking by issuing up to 13.2 million shares of our common stock (constituting 97% of the total shares expected to be outstanding post-acquisition) to the shareholders of Top Favour Limited, a British Virgin Islands corporation and parent holding company of Pingdingshan Hongyuan Energy Science and Technology
Development Co., Ltd., which controls Henan Province Pingdingshan Hongli Coal & Coking Co., Ltd. and its subsidiaries (collectively “SinoCoking”); |
|
2. |
Approval of the terms of a plan of liquidation whereby the pre-acquisition business, assets and liabilities of Ableauctions.com, Inc. will be placed into a liquidating trust for the benefit of the Ableauctions.com, Inc. shareholders, as a condition to the closing of the acquisition; |
|
3. |
Approval of amendments to our Articles of Incorporation to effect a reverse stock split within a range of 1-for-20 to 1-for-50 as determined by the board of directors; |
|
4. |
Approval of a change of our name from “Ableauctions.com, Inc.” to “SinoCoking Coal & Coke Chemical Industries Inc.”; and |
|
5. |
Approval in connection with a debt or equity financing, of the sale, issuance or potential issuance of our common stock which may equal or exceed 20% or more of our outstanding stock immediately after giving effect to the foregoing share exchange. |
By Order of the Board of Directors | ||
July __, 2009 |
/s/ Abdul Ladha | |
Coquitlam, British Columbia |
Abdul Ladha, President |
|
· |
We will acquire and own 100% of the issued and outstanding shares of capital stock of SinoCoking from the shareholders of SinoCoking, making SinoCoking our wholly-owned subsidiary; |
|
· |
We will issue up to 13.2 million shares of our common stock to the former shareholders of SinoCoking; |
|
· |
The shareholders of Ableauctions.com immediately prior to the Acquisition will, after completion of the Acquisition, own approximately 3% of the outstanding shares of the Company; and |
|
· |
The former shareholders of SinoCoking will own approximately 97% of the outstanding shares of the Company. |
1. |
Approval of a plan of share exchange in the form of a Share Exchange Agreement, under which we will acquire SinoCoking by issuing up to 13.2 million shares of our common stock (constituting 97% of the total shares expected to be outstanding post-acquisition) to the shareholders of Top Favour Limited, a British Virgin Islands corporation and parent holding company of Pingdingshan Hongyuan Energy Science and Technology
Development Co., Ltd., which controls Henan Province Pingdingshan Hongli Coal & Coking Co., Ltd. and its subsidiaries (collectively “SinoCoking”); |
2. |
Approval of the terms of a plan of liquidation whereby the pre-acquisition business, assets and liabilities of Ableauctions.com, Inc. will be placed into a liquidating trust for the benefit of the Ableauctions.com, Inc. shareholders (“Liquidating Trust”), as a condition to the closing of the acquisition; |
3. |
Approval of amendments to our Articles of Incorporation to effect the Reverse Stock Split, which will be within a range of 1-for-20 to 1-for-50 as determined by the board of directors; |
4. |
Approval of a change of our name from “Ableauctions.com, Inc.” to “SinoCoking Coal & Coke Chemical Industries Inc.”; and |
5. |
Approval, in connection with a Financing, of the sale, issuance or potential issuance of our common stock which may equal or exceed 20% or more of our outstanding stock immediately after giving effect to the foregoing share exchange. |
|
(b) |
when the issuance or potential issuance of additional shares will result in a change of control of the issuer, including, but not limited to, those issuances that constitute a Reverse Merger as specified in §341. |
|
· |
We will acquire and own 100% of the issued and outstanding shares of capital stock of SinoCoking from the shareholders of SinoCoking, making SinoCoking our wholly-owned subsidiary; |
|
· |
We will issue up to 13.2 million shares of our common stock to the former shareholders of SinoCoking; |
|
· |
The shareholders of Ableauctions.com immediately prior to the Acquisition will, after completion of the Acquisition, own approximately 3% of the outstanding shares of the Company; and |
|
· |
The former shareholders of SinoCoking will own approximately 97% of the outstanding shares of the Company. |
Category of Holders |
Shares
(1-for-20 reverse stock split)(1) |
Shares
(1-for-50 reverse stock split)(1) |
Percentage Owned (2) | ||||||||||
SinoCoking Shareholders |
13,117,952 | 5,247,181 | 97 | % | |||||||||
Original Ableauctions.com Shareholders |
415,710 | 162,284 | 3 | % | |||||||||
TOTAL(2): |
13,523,662 | 5,409,465 | 100 | % | |||||||||
|
(1) |
Subject to adjustment to address fractional shares. Each of the Company’s shareholders entitled to a fractional share of the Company’s stock as a result of the reverse stock split will receive a whole share of the Company’s common stock in lieu of such fractional share. |
|
(ii) |
by either Ableauctions or the Top Favour Shareholders if the Acquisition shall not have been consummated for any reason by November 30, 2009; provided that the failure to consummate the transaction is not caused by the party that is terminating; |
|
(iii) |
by either Ableauctions or the Top Favour Shareholders if a governmental entity shall have issued an order, decree or ruling or taken any other action, in any case having the effect of permanently restraining, enjoining or otherwise prohibiting the Transactions, which order, decree, ruling or other action is final and non-appealable; |
|
(iv) |
by the Top Favour Shareholders, upon a material breach of any representation, warranty, covenant or agreement on the part of Ableauctions or the Ableauctions Shareholders provided in the Share Exchange Agreement, or if any representation or warranty of Ableauctions shall have become materially untrue, unless cured in accordance with the terms of the Share Exchange Agreement; |
|
(v) |
by Ableauctions, upon a material breach of any representation, warranty, covenant or agreement on the part of Top Favour or the Top Favour Shareholders in the Share Exchange Agreement, or if any representation or warranty of Top Favour or the Top Favour Shareholders shall have become materially untrue, unless cured in accordance with the terms of the Share Exchange Agreement; |
|
(vi) |
by Ableauctions, if the results of the due diligence investigation described in the Share Exchange Agreement by Ableauctions is unsatisfactory, and SinoCoking is not able to cure the unsatisfactory condition prior to closing; |
|
(vii) |
by Top Favour if Royal Bank of Canada (“RBC”), one of Ableauctions’ lenders, refuses to approve the assumption by the Liquidating Trust of the liabilities and guarantees arising from the Loan Agreements; or |
|
(viii) |
by Ableauctions if (i) RBC refuses to approve the assumption by the Liquidating Trust of the liabilities and guarantees arising from the Loan Agreements and (ii) Top Favour does not waive the failure to assign such liability and guarantees. |
Investment |
Amount |
|||
Loans |
$ |
2,315,968 |
||
Real Property |
$ |
2,088,379 |
||
Real Property held for development |
$ |
9,536,629 |
||
Investment in joint venture |
$ |
1,181,138 |
||
Investment in Surrey City Central Holdings Ltd. |
$ |
1,676,123 |
|
· |
The Rapidfusion POS (Point-of-Sale) 2007 Professional Single-User (Retail $3,000) is our full-featured product for medium to large stores needing a comprehensive, standalone point of sale product. This software may be upgraded to add other users, as necessary. |
|
· |
The Rapidfusion POS (Point-of-Sale) 2007 Professional Multi-User (Retail $3,750) is for medium to large stores requiring two or more terminals (for example, one terminal for inventory management and one terminal for sales) in one complete point of sale product. |
|
· |
The Rapidfusion POS (Point-of-Sale) 2007 Professional Head Office Solution (Retail $4,000) is designed to manage multiple store branches from one central terminal. This product includes functionality of warehouse or store split-purchase orders, full inventory control with inter-store transfers, customer database management, and the ability to consolidate and track all sales data for multiple store branches. |
Project costs of work completed to date: |
$ |
13,828,313 |
||
Project costs of remaining work: |
$ |
6,668,905 |
||
Estimated total project costs: |
$ |
21,257,869 |
||
Current outstanding principal balance of loan from the Royal Bank of Canada: |
$ |
9,752,095 |
Fiscal Year |
Annual Production
(Tons) |
|||
2006 |
131,148 | |||
2007 |
103,832 | |||
2008 |
200,188 | * |
|
* |
while production volume during fiscal 2008 exceeded the amount specified on SinoCoking’s coal production permit, such practice is common in Henan Province, and was accepted by the government because the mining right for the extracted coal and taxes from sales of such coal were paid. |
|
(1) |
“Medium” coal, a PRC coal industry classification, is coal that does not have sufficient thermal value for coking, and is mixed with raw coal and even coal slurries, and sold for home and industrial heating purposes; and |
|
(2) |
Coal slurries, sometimes called coal slime, are the castoffs and debris from the washing process. Coal slurries can be used as a fuel with low thermal value, and are sold “as is” or mixed with “medium” coal. |
Annual Production (Tons) |
||||||||||||
Fiscal Year |
Washed Coal * |
Medium Coal |
Coal Slurries |
|||||||||
2006 |
98,574.36 | 10,124 | 20,044 | |||||||||
2007 |
208,317 | 9,187 | 6,269 | |||||||||
2008 |
297,120 | 11,740 | 11,442 |
Annual Production (Tons) |
||||||||||||
Fiscal Year |
Metallurgical Coke |
Chemical Coke |
Total |
|||||||||
2006 |
48,321.31 | 23,698.89 | 72,020 | |||||||||
2007 |
88,364.04 | 61,799.60 | 150,164 | |||||||||
2008 |
147,776.95 | 78,144.78 | 225,922 |
Fiscal Year |
Annual Production (Tons) |
|||
2006 |
3,307 | |||
2007 |
7,330 | |||
2008 |
10,870 |
Coke Sales |
||||||||||
Fiscal Year |
Annual Sales *
(Tons) |
Weighted Average
Price Per Ton
(USD) |
||||||||
2006 |
71,159 | $ | 121 | |||||||
2007 |
152,049 | $ | 159 | |||||||
2008 |
225,779 | $ | 249 |
Raw Coal Sales | |||||||
Fiscal Year |
Annual Sales *
(Tons) |
Weighted Average
Price Per Ton
(USD) | |||||
2006 |
52,578 | $ | 26 | ||||
2007 |
44,626 | $ | 42 | ||||
2008 |
20,737 | $ | 18 |
|
* |
Includes coal extracted from Baofeng mine as well as coal purchased by SinoCoking as part of its coal trading activities, and includes raw coal and raw coal/medium coal/coal slurries mixtures. |
Washed Coal Sales | |||||||
Fiscal Year |
Annual Sales
(Tons) |
Weighted Average
Price Per Ton
(USD) | |||||
2006 |
6,645 | $ | 64 | ||||
2007 |
45,734 | $ | 64 | ||||
2008 |
1,860 | $ | 86 |
Coal Tar Sales | |||||||
Fiscal Year |
Annual Sales
(Tons) |
Weighted Average
Price Per Ton
(USD) | |||||
2006 |
3,307 | $ | 195 | ||||
2007 |
7,330 | $ | 200 | ||||
2008 |
10,756 | $ | 278 |
|
· |
Wuhan Zhengtong Industry & Trading Co., Ltd. accounted for approximately 17.36% of total sales; and |
Revenues |
||||||||||||
Coke Products |
Coal Products |
Total |
||||||||||
Revenues |
||||||||||||
Nine Months Ended March 31, 2008 |
$ | 42,799,944 | $ | 181,643 | $ | 42,981,587 | ||||||
Nine Months Ended March 31, 2009 |
26,048,820 | 9,829,140 | 35,877,960 | |||||||||
Increase (decrease) in US$ |
$ | (16,751,124 | ) | $ | 9,647,497 | $ | (7,103,627 | ) | ||||
% Increase (decrease) in US$ |
(39.14 | %) | 5,311.24 | % | (16.53 | %) | ||||||
Quantity Sold (metric tons) |
||||||||||||
Nine Months Ended March 31, 2008 |
178,534 | 10,683 | 189,217 | |||||||||
Nine Months Ended March 31, 2009 |
127,498 | 243,112 | 370,610 | |||||||||
Increase (decrease) |
(51,036 | ) | 232,429 | 181,393 | ||||||||
% Increase (decrease) |
(28.59 | %) | 2,175.69 | % | 95.87 | % |
Average Sale Prices |
Coke |
Coal Tar |
Raw Coal |
Washed Coal |
||||||||||||
Nine Months Ended March 31, 2008 |
$ | 238 | $ | 279 | $ | 15 | $ | 83 | ||||||||
Nine Months Ended March 31, 2009 |
207 | 149 | 37 | 135 | ||||||||||||
Increase (decrease) in US$ |
$ | (31 | ) | $ | (130 | ) | $ | 22 | $ | 52 | ||||||
% Increase (decrease) in US$ |
(13.03 | %) | (46.69 | %) | 149.81 | % | 63.04 | % |
Coke Products |
||||||||||||
Coke |
Coal Tar |
Total |
||||||||||
Revenues |
||||||||||||
Nine Months Ended March 31, 2008 |
$ | 40,563,387 | $ | 2,236,557 | $ | 42,799,944 | ||||||
Nine Months Ended March 31, 2009 |
25,180,329 | 868,491 | 26,048,820 | |||||||||
Increase (decrease) in US$ |
$ | (15,383,058 | ) | $ | (1,368,066 | ) | $ | (16,751,124 | ) | |||
% Increase (decrease) in US$ |
(37.92 | %) | (61.17 | %) | (39.14 | %) | ||||||
Quantity Sold (metric tons) |
||||||||||||
Nine Months Ended 3/31/2008 |
170,523 | 8,011 | 178,534 | |||||||||
Nine Months Ended 3/31/2009 |
121,663 | 5,835 | 127,498 | |||||||||
Increase (decrease) |
(48,860 | ) | (2,176 | ) | (51,036 | ) | ||||||
% Increase (decrease) |
(28.65 | %) | (27.16 | %) | (28.59 | %) |
Coal Products |
||||||||||||
Raw Coal |
Washed Coal |
Total |
||||||||||
Revenues |
||||||||||||
Nine Months Ended March 31, 2008 |
$ | 155,085 | $ | 26,558 | $ | 181,643 | ||||||
Nine Months Ended March 31, 2009 |
8,806,019 | 1,023,121 | 9,829,140 | |||||||||
Increase (decrease) in US$ |
$ | 8,650,934 | $ | 996,563 | $ | 9,647,497 | ||||||
% Increase (decrease) in US$ |
5,578.19 | % | 3,752.40 | % | 5,311.24 | % | ||||||
Quantity Sold (metric tons) |
||||||||||||
Nine Months Ended March 31, 2008 |
10,363 | 320 | 10,683 | |||||||||
Nine Months Ended March 31, 2009 |
235,544 | 7,568 | 243,112 | |||||||||
Increase (decrease) |
225,181 | 7,248 | 232,429 | |||||||||
% Increase (decrease) |
2,173.93 | % | 2,265.00 | % | 2,175.69 | % |
Revenues |
||||||||||||
Coke Products |
Coal Products |
Total |
||||||||||
Revenues |
||||||||||||
Fiscal 2007 (in US$) |
$ | 25,294,851 | $ | 4,783,850 | $ | 30,078,701 | ||||||
Fiscal 2008 (in US$) |
58,091,026 | 532,462 | 58,623,488 | |||||||||
Increase (decrease) in US$ |
$ | 32,796,175 | $ | (4,251,388 | ) | $ | 28,544,787 | |||||
% Increase (decrease) in US$ |
129.66 | % | (88.87 | %) | 94.90 | % | ||||||
Quantity Sold (metric tons) |
||||||||||||
Fiscal 2007 |
159,379 | 90,370 | 249,749 | |||||||||
Fiscal 2008 |
236,535 | 22,597 | 259,132 | |||||||||
Increase (decrease) |
77,156 | (67,773 | ) | 9,383 | ||||||||
% Increase (decrease) |
48.41 | % | (75.00 | %) | 3.76 | % |
Average Sale Prices |
Coke |
Coal Tar |
Raw Coal |
Washed Coal |
||||||||||||
Nine Months Ended 3/31/2007 (in US$) |
$ | 157 | $ | 200 | $ | 42 | $ | 64 | ||||||||
Nine Months Ended 3/31/2008 (in US$) |
244 | 278 | 18 | 86 | ||||||||||||
Increase (decrease) in US$ |
87 | 78 | (24 | ) | 22 | |||||||||||
% Increase (decrease) in US$ |
55.41 | % | 39.00 | % | (57.14 | %) | 34.38 | % |
Coke Products |
||||||||||||
Coke |
Coal Tar |
Total |
||||||||||
Revenues |
||||||||||||
Fiscal 2007 (in US$) |
$ | 23,831,668 | $ | 1,463,183 | $ | 25,294,851 | ||||||
Fiscal 2008 (in US$) |
55,103,692 | 2,987,334 | 58,091,026 | |||||||||
Increase (decrease) in US$ |
$ | 31,272,024 | $ | 1,524,151 | $ | 32,796,175 | ||||||
% Increase (decrease) in US$ |
131.22 | % | 104.17 | % | 129.66 | % | ||||||
Quantity Sold (metric tons) |
||||||||||||
Fiscal 2007 |
152,049 | 7,330 | 159,379 | |||||||||
Fiscal 2008 |
225,779 | 10,756 | 236,535 | |||||||||
Increase (decrease) |
73,730 | 3,426 | 77,156 | |||||||||
% Increase (decrease) |
48.49 | % | 46.74 | % | 48.41 | % |
Coal Products |
||||||||||||
Raw Coal |
Washed Coal |
Total |
||||||||||
Revenues |
||||||||||||
Fiscal 2007 (in US$) |
$ | 1,877,489 | $ | 2,906,361 | $ | 4,783,850 | ||||||
Fiscal 2008 (in US$) |
372,312 | 160,150 | 532,462 | |||||||||
Increase (decrease) in US$ |
$ | (1,505,177 | ) | $ | (2,746,211 | ) | $ | (4,251,388 | ) | |||
% Increase (decrease) in US$ |
(80.17 | %) | (94.49 | %) | (88.87 | %) | ||||||
Quantity Sold (metric tons) |
||||||||||||
Fiscal 2007 |
44,636 | 45,734 | 90,370 | |||||||||
Fiscal 2008 |
20,737 | 1,860 | 22,597 | |||||||||
Increase (decrease) |
(23,899 | ) | (43,874 | ) | (67,773 | ) | ||||||
% Increase (decrease) |
(53.54 | %) | (95.93 | %) | (75.00 | %) |
Revenues |
||||||||||||
Coke Products |
Coal Products |
Total |
||||||||||
Revenues |
||||||||||||
Fiscal 2006 (in US$) |
$ | 9,257,723 | $ | 1,781,480 | $ | 11,039,203 | ||||||
Fiscal 2007 (in US$) |
25,294,851 | 4,783,850 | 30,078,701 | |||||||||
Increase (decrease) in US$ |
$ | 16,037,128 | $ | 3,002,370 | $ | 19,039,498 | ||||||
% Increase (decrease) in US$ |
173.23 | % | 168.53 | % | 172.47 | % | ||||||
Quantity Sold (metric tons) |
||||||||||||
Fiscal 2006 |
74,466 | 59,223 | 133,689 | |||||||||
Fiscal 2007 |
159,379 | 90,370 | 249,749 | |||||||||
Increase (decrease) |
84,913 | 31,147 | 116,060 | |||||||||
% Increase (decrease) |
114.03 | % | 52.59 | % | 86.81 | % |
Average Sale Prices |
Coke |
Coal Tar |
Raw Coal |
Washed Coal |
||||||||||||
Nine Months Ended 3/31/2006 (in US$) |
$ | 121 | $ | 194 | $ | 26 | $ | 64 | ||||||||
Nine Months Ended 3/31/2007 (in US$) |
157 | 200 | 42 | 64 | ||||||||||||
Increase (decrease) in US$ |
$ | 36 | $ | 6 | $ | 16 | $ | 0 | ||||||||
% Increase (decrease) in US$ |
29.75 | % | 3.09 | % | 61.54 | % | 0.00 | % |
Coke Products |
||||||||||||
Coke |
Coal Tar |
Total |
||||||||||
Revenues |
||||||||||||
Fiscal 2006 (in US$) |
$ | 8,614,513 | $ | 643,210 | $ | 9,257,723 | ||||||
Fiscal 2007 (in US$) |
23,831,668 | 1,463,183 | 25,294,851 | |||||||||
Increase (decrease) in US$ |
$ | 15,217,155 | $ | 819,973 | $ | 16,037,128 | ||||||
% Increase (decrease) in US$ |
176.65 | % | 127.48 | % | 173.23 | % | ||||||
Quantity Sold (metric tons) |
||||||||||||
Fiscal 2006 |
71,159 | 3,307 | 74,466 | |||||||||
Fiscal 2007 |
152,049 | 7,330 | 159,379 | |||||||||
Increase (decrease) |
80,890 | 4,023 | 84,913 | |||||||||
% Increase (decrease) |
113.68 | % | 121.65 | % | 114.03 | % |
Coal Products |
||||||||||||
Raw Coal |
Washed Coal |
Total |
||||||||||
Revenues |
||||||||||||
Fiscal 2006 (in US$) |
$ | 1,353,376 | $ | 428,104 | $ | 1,781,480 | ||||||
Fiscal 2007 (in US$) |
1,877,489 | 2,906,361 | 4,783,850 | |||||||||
Increase (decrease) in US$ |
$ | 542,113 | $ | 2,478,257 | $ | 3,002,370 | ||||||
% Increase (decrease) in US$ |
38.73 | % | 578.89 | % | 168.53 | % | ||||||
Quantity Sold (metric tons) |
||||||||||||
Fiscal 2006 |
52,578 | 6,645 | 59,223 | |||||||||
Fiscal 2007 |
44,636 | 45,734 | 90,370 | |||||||||
Increase (decrease) |
(7,942 | ) | 39,089 | 31,147 | ||||||||
% Increase (decrease) |
(15.11 | %) | 588.25 | % | 52.59 | % |
Name |
Age |
Position | |||
47 |
President, Chief Executive Officer and Director | ||||
Barrett E.G. Sleeman |
68 |
Director | |||
52 |
Director | ||||
Michael Boyling |
50 |
Director |
Name |
Age |
Position | |||
Jianhua Lv |
41 |
President, Chief Executive Officer and Chairman of the Board of Directors | |||
Liuchang Yang |
54 |
Vice-President, Secretary and Director | |||
Zan (“Sam”) Wu |
32 |
Chief Financial Officer | |||
Hui Zheng |
37 |
Vice President of Operations and Director | |||
Hui Huang |
42 |
Independent Director | |||
Yushan Jiang |
55 |
Independent Director | |||
Jin Yao |
61 |
Independent Director |
· |
Any bankruptcy petition filed by or against any business of which a director or executive officer was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; |
· |
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
· |
Being subject to any order, judgment or decree not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and |
· |
Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. |
Summary Compensation Table |
||||||||||||||||||||||||||||||||||||||||||||
Name and principal position |
Year(1) |
Salary
($) |
Bonus or Commissions
($) |
Stock Awards
($) |
Option Awards
($) |
Non-Equity Incentive Plan Compensation
($) |
Nonqualified Deferred Compensation Earnings
($) |
All Other
Compensation(2)
($) |
Total ($) |
|||||||||||||||||||||||||||||||||||
President and CEO |
2008 |
156,000 |
0 |
0 |
0 |
0 |
0 |
0 |
156,000 |
|||||||||||||||||||||||||||||||||||
President and CEO |
2007 |
156,000 |
0 |
0 |
0 |
0 |
0 |
0 |
156,000 |
· |
base salary; |
· |
bonuses; and |
· |
awards of options to purchase common stock from our 1999 Stock Option Plan. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | ||||||||||||||||||||||||||||||||
OPTION AWARDS |
STOCK AWARDS | |||||||||||||||||||||||||||||||
Name |
Number of securities underlying unexercised options (#) Exercisable |
Number of securities underlying unexercised options (#)
Unexercis-able |
Equity Incentive Plan Awards: Number of Securities underlying unexercised unearned options (#) |
Option exercise price ($) |
Option expiration date |
Number of shares or units of stock that have not vested (#) |
Market value of shares or units of stock that have not vested ($) |
Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) |
Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested (#) | |||||||||||||||||||||||
121,186 |
0 |
0 |
$ |
4.80 |
11/16/2014 |
0 |
0 |
0 |
0 |
Name and Address(1) |
Amount and Nature of Beneficial Ownership of Securities |
Percent of Class(2) |
||||||
Abdul Ladha, Director and Executive Officer |
4,835,787 |
(3)(4)(5) |
49.4 |
% | ||||
Barrett Sleeman, Director |
37,500 |
(4) |
* |
|||||
Dr. David Vogt, Director |
20,833 |
(4) |
* |
|||||
Michael Boyling |
37,500 |
(4) |
* |
|||||
Renaissance Technologies LLC (6) |
364,600 |
(7) |
6.2 |
% | ||||
James H. Simons (6) |
364,600 |
(7) |
6.2 |
% | ||||
All current directors and executive officers as a group
(4 persons) |
4,931,620 |
51.32 |
% |
|
(1) |
The address of each of our officers and directors is c/o Ableauctions.com, Inc., 1963 Lougheed Highway, Coquitlam, British Columbia V3K 3T8. |
|
(2) |
Based on aggregate shares outstanding as of March 16, 2009. Beneficial ownership is determined under the rules of the Securities and Exchange Commission. The number of shares shown as beneficially owned in the tables below are calculated pursuant to Rule 13d-3(d)(1) of the Securities Exchange Act of 1934. Under Rule 13d-3(d)(1), shares not outstanding that are subject to options, warrants, rights or conversion
privileges exercisable within 60 days are deemed outstanding for the purpose of calculating the number and percentage owned by such person, but not deemed outstanding for the purpose of calculating the percentage owned by each other person listed. Except in cases where community property laws apply or as indicated in the footnotes to this table, we believe that each stockholder identified in the table possesses sole voting and investment power over all of the shares of common stock. |
|
(3) |
Abdul Ladha, President of the Company, is a beneficiary of the Ladha (1999) Family Trust. Hamilton Trust Company Limited is the trustee of the Ladha (1999) Family Trust. Mr. Ladha disclaims beneficial ownership of the 250,572 shares held by the Ladha (1999) Family Trust. |
|
(5) |
Includes shares which may be acquired through the exercise of a convertible loan held by Abdul and Hanifa Ladha. |
|
(7) |
Information regarding the holdings of Renaissance Technologies LLC and James H. Simons was obtained from a Schedule 13G filed with the Securities and Exchange Commission on February 12, 2009. We have not verified this information. Mr. Simons controls Renaissance Technologies LLC and is deemed to be the beneficial owner of securities owned by Renaissance Technologies LLC. |
Beginning US Balance |
US$ |
Days |
5%
Interest |
End Balance |
|||||||||||||||||||||
0 |
$ |
100,190.00 |
4 |
$ |
54.90 |
$ |
100,244.90 |
||||||||||||||||||
$ |
100,244.90 |
$ |
100,190.00 |
23 |
$ |
315.84 |
$ |
200,750.74 |
|||||||||||||||||
$ |
200,750.74 |
$ |
(100,190.00) |
5 |
$ |
137.50 |
$ |
100,698.24 |
|||||||||||||||||
$ |
100,698.24 |
$ |
(100,190.00) |
21 |
$ |
289.68 |
$ |
797.92 |
|||||||||||||||||
$ |
797.92 |
$ |
125,237.50 |
9 |
$ |
0.98 |
$ |
126,036.40 |
|||||||||||||||||
$ |
126,036.40 |
$ |
375,712.50 |
26 |
$ |
448.90 |
$ |
502,197.80 |
|||||||||||||||||
Payment of Loans with Common Stock |
$ |
502,197.80 |
$ |
(384,000.00) |
23 |
$ |
1,582.27 |
$ |
119,780.07 |
||||||||||||||||
$ |
119,780.07 |
$ |
409,222.48 |
21 |
$ |
344.57 |
$ |
529,347.12 |
|||||||||||||||||
$ |
529,347.12 |
$ |
(529,347.12) |
0 |
$ |
- |
$ |
(0.00) |
|
|
(i) |
the expiry of the option term specified by the Plan Administrator at the date of grant (generally 10 years; or, with respect to incentive stock options granted to greater-than 10% shareholders, a maximum of five years); |
|
(ii) |
the date an employee optionee’s employment or contractual relationship with the Company or any subsidiary is terminated for cause; |
|
(iii) |
the expiry of three months from the date an optionee’s employment or contractual relationship with the Company or any subsidiary is terminated for any reason, other than cause, death or disability; or |
|
(iv) |
the expiry of one year from the date of death of an optionee or cessation of an optionee’s employment or contractual relationship by death or disability. |
Proposed
Reverse
Split Ratio |
Percentage
Reduction |
Approximate Shares
of Common Stock
to be Outstanding
After the Reverse Split (1) |
||||||
1-for-20 reverse split |
95.0 | % | 405,710 | |||||
1-for-50 reverse split |
98.0 | % | 162,284 |
Number of
Shares
Outstanding |
Number of Shares
Authorized | ||||
8,114,197 | 100,000,000 | ||||
Reverse Stock Split Ratio |
Number of
Shares
Outstanding |
Number of Shares
Authorized and
Reserved for Issuance | ||
1-for-20 |
405,710 |
100,000,000 | ||
1-for-50 |
162,284 |
100,000,000 |
2007 |
||||||||
Quarter Ended |
High |
Low |
||||||
March 31 |
$ | 2.28 | $ | 2.16 | ||||
June 30 |
$ | 2.28 | $ | 2.04 | ||||
September 30 |
$ | 2.52 | $ | 2.40 | ||||
December 31 |
$ | 1.80 | $ | 1.56 |
2008 |
||||||||
Quarter Ended |
High |
Low |
||||||
March 31 |
$ | 1.80 | $ | 1.56 | ||||
June 30 |
$ | 0.96 | $ | 0.96 | ||||
September 30 |
$ | 0.72 | $ | 0.48 | ||||
December 31 |
$ | 0.36 | $ | 0.24 |
2009 |
||||||||
Quarter Ended |
High |
Low |
||||||
March 31 |
$ | 0.45 | $ | 0.17 | ||||
June 30 |
$ | 0.81 | $ | 0.21 | ||||
September 30 |
- | - | ||||||
December 31 |
- | - |
|
(a) |
if any individual director, officer or substantial shareholder of the listed company has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the company or assets to be acquired or in the consideration to be paid in the transaction and the present or potential issuance of common stock, or securities convertible into common stock, could result in an increase
in outstanding common shares of 5% or more; or |
|
(b) |
where the present or potential issuance of common stock, or securities convertible into common stock, could result in an increase in outstanding common shares of 20% or more. |
|
e. |
the appointment of Jianhua Lv as Chairman of the board of directors to serve on Ableauctions board of directors, effective on the Closing Date, and the appointment of designees of Mr. Lv as additional directors to serve on Ableauctions’ board of directors on the date the resignation of Ableauctions’ current directors except Abdul Ladha becomes effective; and |
|
f. |
the appointment of the following persons as officers of Ableauctions, effective on the Closing Date, with the titles set forth opposite his name (the “Top Favour Officers”): |
Name
|
Address, Telephone, and Facsimile Number for Notice: |
Signature: |
Hanifa Ladha
|
1963 Lougheed Highway, Coquitlam
Suite 200
British Columbia, Canada V3K 3T8
Tel: (604) 521-3369
Fax: (604) 521-4911
1963 Lougheed Highway, Coquitlam
Suite 200
British Columbia, Canada V3K 3T8
Tel: (604) 521-3369
Fax: (604) 521-4911
|
Print SSN or Taxpayer ID of Top Favour Shareholder (if U.S. entity or person):
|
Print Name of Top Favour Shareholder:
|
Shareholder is a(n):
____ individual
____ corporation (an officer must sign)
____ partnership (all general partners must sign)
____ trust
____ limited liability company |
Signature:
(Please sign here) |
State or country of Shareholder’s Organization
(if entity): | |
State of Shareholder’s Residence
| |
Print name and title of Signing Person:
(if signatory is a corporation, partnership or other similar entity)
Name:
Title:
| |
Address of Shareholder:
Facsimile No.: |
____ |
an “Accredited Investor” under Regulation D of the Securities Act (see Section 3.4 and Annex II of this Agreement); or |
____ |
a Non-U.S. Person, that hereby confirms that the representations and warranties in Section 3.4(b) of this Agreement are true and correct as to such Top Favour Shareholder, and hereby accepts and agrees to comply with the covenants in Section 3.4(b). |
(I)
Name of
Top Favour Shareholders |
(II)
Top Favour Equity
Interests Transferred to Ableauctions |
(III)
Percentage of Ableauctions
Common Shares (on a fully-diluted basis) to be
Held by
Top Favour Shareholders after Closing |
Honour Express Limited, a BVI Company |
5,103 |
49.499% |
Liuchang Yang |
438 |
4.249% |
Ruiyun Li |
696 |
6.751% |
Shusen Feng |
155 |
1.499% |
Chang Zhaozhen |
155 |
1.499% |
Zhao Qun |
103 |
1.000% |
Wu Dongfang |
20 |
0.196% |
Liu Yongchun |
10 |
0.098% |
Liang Xiao |
20 |
0.196% |
Li Ping |
392 |
3.802% |
Wang Shuo |
402 |
3.900% |
Xu Binzhi |
461 |
4.468% |
Wang Yeming |
495 |
4.802% |
Portswealth Holdings Ltd. |
485 |
4.704% |
Cawston Enterprises Ltd. |
494 |
4.802% |
Suzhou Capital Advisors, LLC d/b/a Morgan Cate Capital |
261 |
2.528% |
Causeway Bay Capital, LLC |
310 |
3.007% |
Total |
10,000 |
97% |
Category A |
The undersigned is an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with his or her spouse, presently exceeds $1,000,000. |
Category B |
The undersigned is an individual (not a partnership, corporation, etc.) who had an income in excess of $200,000 in each of the two most recent years, or joint income with his or her spouse in excess of $300,000 in each of those years (in each case including foreign income, tax exempt income and full amount of capital gains and losses but excluding
any income of other family members and any unrealized capital appreciation) and has a reasonable expectation of reaching the same income level in the current year. |
Category C |
The undersigned is a director or executive officer of Ableauctions which is issuing and selling the securities. |
Category D |
The undersigned is a bank; a savings and loan association; insurance company; registered investment company; registered business development company; licensed small business investment company (“SBIC”); or employee benefit plan within the meaning of Title 1 of ERISA and (a) the investment decision is made by a plan fiduciary which
is either a bank, savings and loan association, insurance company or registered investment advisor, or (b) the plan has total assets in excess of $5,000,000 or (c) is a self directed plan with investment decisions made solely by persons that are accredited investors. |
Category E |
The undersigned is a private business development company as defined in section 202(a)(22) of the Investment Advisors Act of 1940. |
Category F |
The undersigned is either a corporation, partnership, Massachusetts business trust, or non-profit organization within the meaning of Section 501(c)(3) of the Internal Revenue Code, in each case not formed for the specific purpose of acquiring the Securities and with total assets in excess of $5,000,000. |
Category G |
The undersigned is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, where the purchase is directed by a “sophisticated investor“ as defined in Regulation 506(b)(2)(ii) under the Act. |
Category H |
The undersigned is an entity (other than a trust) in which all of the equity owners are “accredited investors” within one or more of the above categories. If relying upon this Category alone, each equity owner must complete a separate copy of this Agreement. |
Schedule 2.3 |
SinoCoking Subsidiaries |
||
Schedule 2.11 |
SinoCoking Contracts |
||
Schedule 2.12 |
Material Changes |
||
Schedule 2.15 |
Certain Fees |
||
Schedule 4.3 |
Ableauctions Conflicts |
||
Schedule 4.4 |
Required Approvals of Ableauctions | ||
Schedule 4.6 |
Capitalization of Ableauctions |
||
Schedule 4.8 |
Material Changes |
||
Schedule 4.13 |
Real Property of Ableauctions |
||
Schedule 4.20 |
Listing and Maintenance Requirements | ||
Schedule 4.26 |
Accountants |
MARCH 31 |
DECEMBER 31 |
|||||||
2009 |
2008 |
|||||||
ASSETS |
||||||||
Current |
||||||||
Cash and cash equivalents |
$ | 364,947 | $ | 223,592 | ||||
Accounts receivable – trade, net of allowance |
634,321 | 545,740 | ||||||
Employee receivable |
278,072 | 248,072 | ||||||
Mortgages and loans receivable |
2,315,968 | 2,294,745 | ||||||
Inventory |
486,077 | 666,138 | ||||||
Prepaid expenses |
55,665 | 63,841 | ||||||
4,135,050 | 4,042,128 | |||||||
Deposits |
309,802 | 320,558 | ||||||
Property and Equipment |
2,198,172 | 2,312,187 | ||||||
Property Held for Development |
9,536,629 | 8,520,055 | ||||||
Investment in Joint Venture |
1,181,138 | 1,223,728 | ||||||
Investment in Surrey City Central |
1,676,123 | 1,671,638 | ||||||
$ | 19,036,914 | $ | 18,090,294 | |||||
LIABILITIES |
||||||||
Current |
||||||||
Accounts payable and accrued liabilities |
$ | 265,995 | $ | 519,043 | ||||
Due to related party |
1,363,765 | 1,363,765 | ||||||
Bank loan |
8,069,889 | 6,367,756 | ||||||
9,699,649 | 8,250,564 | |||||||
STOCKHOLDERS’ EQUITY |
||||||||
Capital Stock |
||||||||
Authorized: |
||||||||
100,000,000 common shares with a par value of $0.001 |
||||||||
Issued and outstanding: |
||||||||
5,907,281 common shares at March 31, 2009 |
||||||||
5,906,957 common shares at December 31, 2008 |
5,907 | 5,907 | ||||||
Additional paid-in capital |
37,903,221 | 37,903,221 | ||||||
Deficit |
(28,320,471 | ) | (28,152,681 | ) | ||||
Accumulated Other Comprehensive Income (Loss) |
(224,471 | ) | 83,283 - | |||||
Treasury Stock, at cost | (26,921) | |||||||
9,337,265 | 9,839,730 | |||||||
$ | 19,036,914 | $ | 18,090,294 |
THREE MONTHS ENDED |
||||||||
MARCH 31 |
||||||||
2009 |
2008 |
|||||||
Net Revenues |
||||||||
Sales and commissions |
$ | 641,347 | $ | 797,888 | ||||
Cost Of Revenues |
406,678 | 414,510 | ||||||
Gross Profit |
234,669 | 383,378 | ||||||
Investment Income |
81,024 | 35,002 | ||||||
315,693 | 418,380 | |||||||
Expenses |
||||||||
Operating expenses |
468,002 | 507,701 | ||||||
Depreciation and amortization |
16,408 | 45,358 | ||||||
484,410 | 553,059 | |||||||
Loss from Operations |
(168,717 | ) | (134,679 | ) | ||||
Other Items |
||||||||
Share of net income (loss) of joint venture |
(587 | ) | 712 | |||||
Provision for legal claim |
- | (65,035 | ) | |||||
Foreign exchange gain |
1,514 | 4,951 | ||||||
927 | (59,372 | ) | ||||||
Loss for the Period |
(167,790 | ) | $ | (194,051 | ) | |||
Basic Loss per Share |
$ | (0.03 | ) | $ | (0.04 | ) | ||
Diluted Loss per Share |
$ | (0.03 | ) | $ | (0.04 | ) | ||
Weighted Average Number of Shares Outstanding: |
||||||||
Basic |
5,852,673 | 5,072,026 | ||||||
Diluted |
5,852,673 | 5,072,026 |
THREE MONTHS ENDED |
||||||||
MARCH 31 |
||||||||
2009 |
2009 |
|||||||
Loss for the Period |
$ | (167,790 | ) | $ | (194,051 | ) | ||
Other Comprehensive Loss, net of tax |
||||||||
Foreign currency translation adjustments |
(307,754 | ) | (410,664 | ) | ||||
Consolidated Comprehensive Loss |
$ | (475,544 | ) | $ | (604,715 | ) | ||
Basic and Diluted Comprehensive Loss per Share |
$ | (0.08 | ) | $ | (0.12 | ) |
THREE MONTHS ENDED |
||||||||
MARCH 31 |
||||||||
2009 |
2008 |
|||||||
Cash Flows From Operating Activities |
||||||||
Loss for the year from continuing operations |
$ | (167,790 | ) | $ | (194,051 | ) | ||
Non-cash items included in net income (loss): |
||||||||
Depreciation and amortization |
16,408 | 45,358 | ||||||
Stock-based compensation |
- | 8,000 | ||||||
Joint Venture Share of Income |
587 | (712 | ) | |||||
(150,795 | ) | (141,405 | ) | |||||
Changes in operating working capital items: |
||||||||
(Increase) Decrease in accounts receivable |
(99,432 | ) | 63,914 | |||||
(Increase) Decrease in inventory |
179,116 | (147,142 | ) | |||||
(Increase) Decrease in prepaid expenses |
7,870 | 17,977 | ||||||
(Increase) Decrease in employee receivable |
(30,000 | ) | (30,389 | ) | ||||
Increase (Decrease) accounts payable and accrued liabilities |
(250,442 | ) | (113,546 | ) | ||||
Increase in deferred revenue |
- | (6,630 | ) | |||||
Net cash used in operating activities |
(343,683 | ) | (357,221 | ) | ||||
Cash Flows From Investing Activities |
||||||||
Purchase of property and equipment, net |
- | (19,058 | ) | |||||
Purchase of property held for development |
(1,363,474 | ) | (122,071 | ) | ||||
Loan advances |
(100,000 | ) | (450,775 | ) | ||||
Investment in surrey city Central |
(4,485 | ) | - | |||||
Other receivables | - - | 94,013 | ||||||
Deposits | (4,001) | |||||||
Net cash from (used in) investing activities |
(1,467,959 | ) | (501,892 | ) | ||||
Cash Flows From Financing Activities |
||||||||
Advances from Bank Loan |
1,989,018 | - | ||||||
Repayment of Bank Loan |
- | - | ||||||
Purchase of treasury stock |
(26,921 | ) | (224,678 | ) | ||||
Net cash (used in) from financing activities |
1,962,097 | (224,678 | ) | |||||
Effect Of Exchange Rates On Cash |
(9,100 | ) | (25,485 | ) | ||||
Change in Cash and Cash Equivalents For The Period |
150,455 | (1,083,791 | ) | |||||
Cash And Cash Equivalents, Beginning Of Period |
223,592 | 1,594,657 | ||||||
Cash And Cash Equivalents, End Of Period |
$ | 364,947 | $ | 485,381 |
i) Loan advanced originally in the amount of $115,000 CAD and increased to $125,000 CAD, bears interest at 10.9% per annum (receivable at $1,064 ($1,135 CAD) per month), with the principal due for repayment on January 31, 2009, and secured by a mortgage on the property of the borrower. The loan has been extended month-to-month
pending renewal. |
99,104 | 102,627 | ||||||
ii) Loan advanced in the amount of $230,000 CAD, bears interest at 10% per annum (receivable at $1,797 ($1,917 CAD) per month), with the principal due for repayment on April 4, 2007. The loan was subsequently renewed under the same terms and is due for repayment on February 9, 2010. The loan is secured by a mortgage
on the property of the borrower and a General Security Agreement.
|
182,351 | 188,834 | ||||||
iii) Loan advanced to an employee in the amount of $55,000 CAD, bears interest at 10% per annum (receivable at $429 ($458 CAD) per month), with the principal due for repayment on February 9, 2009, and secured by a mortgage on the property of the borrower and a personal guarantee of the borrower. The loan has been extended
month-to-month pending renewal. |
43,606 | 45,156 | ||||||
iv) Loan advanced in the amount of $140,000 CAD, bears interest at 15% per annum (receivable at $1,640 ($1,750 CAD) per month), with the principal due for repayment on March 31, 2008, and secured by a mortgage on the property of the borrower. The loan is in default and is currently under negotiation.
|
110,997 | 114,943 | ||||||
v) Loan advanced on August 7, 2007 in the amount of $45,000 CAD, bears interest at 9.75% per annum (receivable at $312 ($333 CAD) per month), with the principal due for repayment on August 8, 2008, and secured by a mortgage on the property of the borrower and personal guarantees. The loan is extended month-to-month pending
renewal.
|
35,678 | 36,946 | ||||||
viii) Loan advanced in the amount of $450,000 CAD, bears interest at 9.5% per annum (receivable at $3,685 ($3,932 CAD) per month), with the principal due for repayment on January 27, 2009, and secured by a mortgage on the property of the borrower. The loan has been extended month-to-month pending renewal. |
356,775 | 369,458 | ||||||
ix) Loan advanced in the amount of $1,750,000 CAD, bears interest at 12% per annum (receivable at $16,400 ($17,500 CAD) per month), with the principal due for repayment on July 17, 2009, and secured by a mortgage on the property of the borrower. |
1,387,457 | 1,436,781 | ||||||
ix) Loan advanced in the amount of $100,000 pursuant to the Bridge Investment Agreement entered with other investors as of March 5, 2009, to provide bridge financing in connection with an acquisition by a US public company. The loan is repayable upon closing of the acquisition transaction, and the Company will receive shares
of the public company equal to 0.75% of the total shares of common stock outstanding after the acquisition transaction.
|
100,000 | - | ||||||
$ | 2,315,968 | $ | 2,294,745 |
|
a) |
During the three month period ended March 31, 2009, the Company incurred $39,000 (2008: $39,000) in management fees to a director of the Company. |
|
b) |
At March 31, 2009, a balance of $278,072 (December 31, 2008: $248,072) is owing from employees to the Company as a result of overpayments in commissions, which will be offset by commissions to be paid in the following quarters. |
|
c) |
During the periods ended March 31, 2009 and 2008, the Company marketed condominium units being developed in Surrey using the brand name “Overture LivingTM”. The mark, “Overture Living™” belongs to Abdul Ladha, the Company’s President. Mr. Ladha did not receive compensation for the
use of this mark. |
|
d) |
On August 19, 2008, the president entered into an Agreement to Convert Debt with the Company. Pursuant to the Agreement, the president agreed to accept units consisting of 1 share of the common stock and a warrant to purchase 1.5 shares of the common stock as partial payment of loans made to the Company. Pursuant to the Agreement, the president accepted units consisting of 400,000 shares of
common stock and warrants for the purchase of 600,000 shares of common stock as full payment of $384,000 in principal amount of the loans. The number of units to be issued was computed by using the last sale price of the Company’s common stock on August 19, 2008, which was $0.96. The warrant exercise price is $1.08 and the warrant term is 5 years. The agreement was subject to the approval of the NYSE Amex (formerly the American Stock Exchange), which was received on October 2, 2008. On
October 6, 2008, the shares were issued and all the warrants were exercised by the president, resulting in the issuance of 1,000,000 common shares. |
|
e) |
As described in Note 9, the Company acquired a 50% interest in Surrey Central City Holdings Ltd. (referred to as “Surrey”), resulting in a balance of $1,363,765 owing to the director as of March 31, 2009. |
|
The Company’s subsidiary Axion Investment Corp, intends to develop this property which consists of approximately 1.46 acres that is zoned for mixed commercial and residential use. Axion intends to develop the Property through the Company’s wholly owned subsidiary, Gruv Development Corporation, by improving it with a retail facility of approximately 4,326 square feet and with a residential complex of approximately
91,132 square feet which will consist of 111 condominiums (the “Development”). |
|
a) |
On July 14, 2006 Axion Investment Corp. (“Axion”), a wholly-owned subsidiary of the Company, entered into a Joint Venture Agreement (the “Agreement”) with two unrelated parties, Canitalia Industries (“Canitalia”) and 449991 B.C. Ltd. (“449991”), to form a joint venture for the purpose of purchasing two vacant lots located in Langley, B.C. for development (the “Project”). On
July 28, 2006, Axion entered into a supplemental agreement with these two parties in respect to an arrangement for a bank loan to fund the purchase price and pay expenses related to acquiring the properties. |
|
c) |
On March 13, 2007, Axion authorized Envision Credit Union (“ECU”) to make a demand loan to THL in the amount of $1.30 million ($1.4 million CAD) for the benefit of the other two parties, Canitalia and 449991 (the “Loan”). The parties have acknowledged that the Loan is for the sole benefit of 449991 and Canitalia and have agreed that none of THL, Axion or Abdul Ladha,
the Company’s president, will have responsibility for payments of the Loan (see the discussion below) and that THL, Axion and the president will be fully indemnified for any expenses or payments they become liable for thereunder. |
|
d) |
The Company has originally estimated a value of $40,535 for the above guarantee, and has provided a provision of $40,535 for the guarantee liability, which is included in accounts payable and accrued liabilities at March 31, 2009. The Company decided to leave the guarantee at its original amount until expiration of the guarantee in the year 2012, as the change in value is not significant. The
maximum potential amount of future payments under this guarantee as of March 31, 2009 is $367,367. |
|
e) |
The Company considered the limited exception contained in FIN 46R exempting from consideration as a Variable Interest Entity a joint venture that is a business, under certain conditions. In the Company’s view, this joint venture meets these conditions. |
Dec 31, 2008 |
||||||||
Balance Sheet |
||||||||
Assets |
$ | 2,750,824 | $ | 2,850,416 | ||||
Liabilities |
- | - | ||||||
Equity |
2,750,824 | 2,850,416 | ||||||
|
3 months ended March 31, 2009 |
3 months ended March 31, 2008 |
||||||
Statement of Operations |
||||||||
Revenue |
$ | - | $ | 2,191 | ||||
Expenses |
1,761 | 55 | ||||||
Net Income (loss) |
(1,761 | ) | 2,136 |
|
The total investment of $1,676,123 has been recorded as “Investment in Surrey City Central” on the balance sheet as of March 31, 2009, with an amount of $1,363,765 owing to Bullion as of March 31, 2009. |
Real Property
& Property Development |
Mortgages
& Loans |
Auction,
Liquidation & Technology Businesses |
Other |
Total |
||||||||||||||||
External revenue by market |
||||||||||||||||||||
US |
- | - | 503,523 | - | 503,523 | |||||||||||||||
Canada |
31,894 | - | 102,380 | - | 134,274 | |||||||||||||||
Other |
- | - | 3,550 | - | 3,550 | |||||||||||||||
Total Revenue From External Customer |
31,894 | - | 609,453 | - | 641,347 | |||||||||||||||
Investment income |
- | 81,024 | - | - | 81,024 | |||||||||||||||
Interest expense |
16,010 | 47,391 | - | - | 63,401 | |||||||||||||||
Depreciation and amortization |
7,948 | - | 8,460 | - | 16,408 | |||||||||||||||
Segment profit |
(26,891 | ) | 6,249 | (55,221 | ) | (91,927 | ) | (167,790 | ) | |||||||||||
Segment assets |
15,147,012 | 931,295 | 1,402,385 | 1,556,222 | 19,036,914 | |||||||||||||||
Expenditures on long-lived assets |
1,363,474 | - | - | 1,363,474 | ||||||||||||||||
Investment in joint venture |
1,181,138 | 1,181,138 | ||||||||||||||||||
Investment in Surrey City Central |
1,676,123 | - | - | - | 1,676,123 |
|
Real Property
& Property Development |
Mortgages
& Loans |
Auction,
Liquidation & Technology Businesses |
Other |
Total |
|||||||||||||||
External revenue by market |
||||||||||||||||||||
US |
- | - | 605,026 | - | 605,026 | |||||||||||||||
Canada |
39,574 | - | 143,189 | - | 182,763 | |||||||||||||||
Other |
- | - | 10,099 | - | 10,099 | |||||||||||||||
Total Revenue From External Customer |
39,574 | - | 758,314 | - | 797,888 | |||||||||||||||
Investment income |
- | 35,002 | - | - | 35,002 | |||||||||||||||
Interest expense |
- | - | - | - | - | |||||||||||||||
Depreciation and amortization |
10,269 | - | 35,089 | - | 45,358 | |||||||||||||||
Segment profit |
33,828 | 36,368 | (127,622 | ) | (136,625 | ) | (194,051 | ) | ||||||||||||
Segment assets |
8,681,360 | 1,809,157 | 2,900,451 | 83,407 | 13,474,375 | |||||||||||||||
Expenditures on long-lived assets |
122,071 | - | 19,058 | - | 141,129 | |||||||||||||||
Investment in joint venture |
1,456,408 | - | - | - | 1,456,408 |
THREE MONTHS ENDED MARCH 31 |
||||||||
2009 |
2008 |
|||||||
Operating Expenses |
||||||||
Accounting and legal |
$ | 5,197 | $ | 1,866 | ||||
Advertising and promotion |
4,999 | 6,586 | ||||||
Automobile |
7,684 | 3,028 | ||||||
Commission |
- | 40,413 | ||||||
Interest |
63,401 | - | ||||||
Insurance |
6,476 | 7,412 | ||||||
Investor relations and shareholder information |
30,447 | 23,670 | ||||||
Management fees |
39,000 | 39,000 | ||||||
Office and administration |
44,376 | 10,428 | ||||||
Rent and utilities |
19,542 | 15,801 | ||||||
Repairs and maintenance |
4,097 | 3,640 | ||||||
Salaries and benefits |
205,679 | 317,321 | ||||||
Telephone |
11,785 | 7,779 | ||||||
Travel |
7,944 | 14,610 | ||||||
Website maintenance |
17,375 | 16,147 | ||||||
Total Operating Expenses |
$ | 468,002 | $ | 507,701 |
|
(i) |
In April 2009, the FASB issued FSP FAS 157-4, “Determining Fair Value When Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (FSP 157-4). FSP 157-4 provides guidance on how to determine the fair value of assets and liabilities when the volume and level of activity for the asset/liability has significantly decreased.
FSP 157-4 also provides guidance on identifying circumstances that indicate a transaction is not orderly. In addition, FSP 157-4 requires disclosure in interim and annual periods of the inputs and valuation techniques used to measure fair value and a discussion of changes in valuation techniques. FSP 157-4 is effective for us beginning in the second quarter of fiscal year 2009. The adoption of FSP 157-4 is not expected to have a significant impact on our consolidated financial statements. |
|
(ii) |
In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairment” (FSP 115-2/124-2). FSP 115-2/124-2 amends the requirements for the recognition and measurement of other-than-temporary impairments for debt securities by modifying the pre-existing “intent and ability” indicator. Under FSP 115-2/124-2, an other-than-temporary impairment
is triggered when there is an intent to sell the security, it is more likely than not that the security will be required to be sold before recovery, or the security is not expected to recover the entire amortized cost basis of the security. Additionally, FSP 115-2/124-2 changes the presentation of an other-than-temporary impairment in the income statement for those impairments involving credit losses. The credit loss component will be recognized in earnings and the remainder of the impairment will be recorded
in other comprehensive income. FSP 115-2/124-2 is effective for us beginning in the second quarter of fiscal year 2009. Upon implementation at the beginning of the second quarter of 2009, FSP 115-2/124-2 is not expected to have a significant impact on our consolidated financial statements. |
|
(iii) |
In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosure about Fair Value of Financial Instruments” (FSP 107-1/APB 28-1). FSP 107-1/APB 28-1 requires interim disclosures regarding the fair values of financial instruments that are within the scope of FAS 107, “Disclosures about the Fair Value of Financial Instruments.” Additionally, FSP 107-1/APB 28-1 requires disclosure
of the methods and significant assumptions used to estimate the fair value of financial instruments on an interim basis as well as changes of the methods and significant assumptions from prior periods. FSP 107-1/APB 28-1 does not change the accounting treatment for these financial instruments and is effective for us beginning in the second quarter of fiscal year 2009. |
DECEMBER 31 |
||||||||
2008 |
2007 | |||||||
ASSETS |
||||||||
Current |
||||||||
Cash and cash equivalents |
$ | 223,592 | $ | 1,594,657 | ||||
Accounts receivable – trade, net of allowance |
545,740 | 888,199 | ||||||
Employee receivable |
248,072 | 298,464 | ||||||
Mortgages and loans receivable |
2,294,745 | 1,009,846 | ||||||
Inventory |
666,138 | 817,448 | ||||||
Prepaid expenses |
63,841 | 37,055 | ||||||
4,042,128 | 4,645,669 | |||||||
Other receivable |
- | 215,067 | ||||||
Deposits |
320,558 | 388,212 | ||||||
Intangible Assets |
- | 355,759 | ||||||
Property and Equipment |
2,312,187 | 3,183,055 | ||||||
Property Held for Development |
8,520,055 | 4,124,221 | ||||||
Investment in Joint Venture |
1,223,728 | 1,507,403 | ||||||
Investment in Surrey City Central |
1,671,638 | - | ||||||
$ | 18,090,294 | $ | 14,419,386 | |||||
LIABILITIES |
||||||||
Current |
||||||||
Accounts payable and accrued liabilities |
$ | 519,043 | $ | 398,629 | ||||
Deferred revenue |
- | 8,450 | ||||||
Due to Director |
1,363,765 | - | ||||||
Bank loan |
6,367,756 | - | ||||||
8,250,564 | 407,079 | |||||||
STOCKHOLDERS’ EQUITY |
||||||||
Capital Stock |
||||||||
Authorized: |
||||||||
100,000,000 common shares with a par value of $0.001 |
||||||||
Issued and outstanding: |
||||||||
5,906,957 common shares at December 31, 2008 |
||||||||
5,445,668 common shares at December 31, 2007 |
5,907 | 5,446 | ||||||
Additional paid-in capital |
37,903,221 | 37,941,538 | ||||||
Deficit |
(28,152,681 | ) | (25,380,855 | ) | ||||
Accumulated Other Comprehensive Income |
83,283 | 2,115,740 | ||||||
Treasury Stock, at cost (2007: 298,781 shares) |
- | (669,562 | ) | |||||
9,839,730 | 14,012,307 | |||||||
Contingent Liabilities |
||||||||
Commitments |
$ | 18,090,294 | $ | 14,419,386 |
YEAR ENDED DECEMBER 31 |
||||||||
2008 |
2007 |
|||||||
Net Revenues |
||||||||
Sales & Commissions |
$ | 2,806,136 | $ | 4,938,918 | ||||
Cost of Revenues |
2,065,759 | 2,980,221 | ||||||
Gross Profit |
740,377 | 1,958,697 | ||||||
Investment Income |
207,781 | 397,977 | ||||||
948,158 | 2,356,674 | |||||||
Operating Expenses |
||||||||
Accounting and legal |
266,878 | 124,973 | ||||||
Advertising and promotion |
29,181 | 60,990 | ||||||
Automobile and travel |
110,094 | 77,056 | ||||||
Bad debts |
86,143 | 225,111 | ||||||
Commission |
195,049 | 423,564 | ||||||
Depreciation and amortization of fixed assets |
135,664 | 194,737 | ||||||
Insurance |
28,250 | 37,615 | ||||||
Interest and penalties |
206,244 | 52,012 | ||||||
Investor relations and shareholder information |
149,821 | 111,906 | ||||||
Management fees, salaries and benefits |
1,364,465 | 1,243,207 | ||||||
Office and administration |
102,787 | 112,821 | ||||||
Rent, utilities and maintenance |
148,209 | 170,070 | ||||||
Telephone and internet |
119,353 | 160,002 | ||||||
2,942,138 | 2,994,064 | |||||||
Loss from Operations |
(1,993,980 | ) | (637,390 | ) | ||||
Other Items |
||||||||
Foreign exchange loss |
(96,411 | ) | (67,221 | ) | ||||
Share of net income (Loss) of joint venture |
(21,356 | ) | 11,353 | |||||
Impairment of intangible assets |
(321,612 | ) | ||||||
Impairment of property and equipment |
(273,432 | ) | - | |||||
Settlement of legal claim |
(65,035 | ) | - | |||||
(777,846 | ) | (55,868 | ) | |||||
Loss for the Year |
$ | (2,771,826 | ) | $ | (693,258 | ) | ||
Basic loss per Share |
$ | (0.53 | ) | $ | (0.13 | ) | ||
Diluted loss per Share |
$ | (0.53 | ) | $ | (0.13 | ) | ||
Weighted Average Number of Shares Outstanding: |
||||||||
Basic |
5,194,037 | 5,314,628 | ||||||
Diluted |
5,194,037 | 5,314,628 | ||||||
YEAR ENDED DECEMBER 31 |
||||||||
2008 |
2007 |
|||||||
Loss for the Year |
$ | (2,771,826 | ) | $ | (693,258 | ) | ||
Other Comprehensive Income (Loss), net of tax |
||||||||
Foreign currency translation adjustments |
(2,032,457 | ) | 1,919,436 | |||||
Consolidated Comprehensive Income (Loss) |
$ | (4,804,283 | ) | $ | 1,226,178 | |||
YEAR ENDED DECEMBER 31 |
||||||||
2008 |
2007 |
|||||||
Cash Flows from Operating Activities |
||||||||
Loss for the year from continuing operations |
$ | (2,771,826 | ) | $ | (693,258 | ) | ||
Non-cash items included in net loss: |
||||||||
Depreciation and amortization |
135,664 | 194,737 | ||||||
Bad debt expense |
86,741 | - | ||||||
Stock-based compensation |
20,625 | 37,224 | ||||||
Inventory write down |
553,731 | - | ||||||
Impairment of assets |
595,044 | - | ||||||
Joint Venture Income |
21,356 | (11,353 | ) | |||||
(1,358,665 | ) | (472,650 | ) | |||||
Changes in operating working capital items: |
||||||||
(Increase) Decrease in accounts receivable |
255,718 | 599,478 | ||||||
(Increase) Decrease in inventory |
(408,606 | ) | 126,418 | |||||
(Increase)Decrease in prepaid expenses |
(26,332 | ) | 13,256 | |||||
(Increase) Decrease in employee receivable |
50,392 | (256,902 | ) | |||||
Increase (Decrease) in accounts payable and accrued liabilities |
125,559 | 221,939 | ||||||
Increase (Decrease) in deferred revenue |
(8,450 | ) | 7,188 | |||||
Net cash from (used in) operating activities |
(1,370,384 | ) | 238,727 | |||||
Cash Flows from Investing Activities |
||||||||
Purchase of property and equipment, net |
(21,014 | ) | (34,267 | ) | ||||
Purchase of property held for development |
(6,206,805 | ) | (1,816,545 | ) | ||||
Loan advances |
(2,173,130 | ) | (186,464 | ) | ||||
Loan repayments |
394,596 | 3,420,332 | ||||||
Investment in Surrey |
(1,671,638 | ) | - | |||||
Investment in joint venture |
(17,806 | ) | - | |||||
Other receivables |
215,067 | (82,977 | ) | |||||
Deposits |
- | (361,435 | ) | |||||
Note receivable |
- | 1,931 | ||||||
Net cash from (used in) Investing Activities |
(9,480,730 | ) | 940,575 | |||||
Cash Flows from Financing Activities |
||||||||
Proceed from bank loan |
7,606,086 | - | ||||||
Repayment of Bank Loan |
- | (548,694 | ) | |||||
Advances from Director |
1,747,765 | - | ||||||
Proceeds from issuance of capital stock, net |
601,385 | 528,235 | ||||||
Purchase of treasury stock |
(374,304 | ) | (669,562 | ) | ||||
9,580,932 | (690,021 | ) | ||||||
Change in Cash and Cash Equivalents for the Year |
(1,270,182 | ) | 489,281 | |||||
Cash and Cash Equivalents, Beginning Of Year |
1,594,657 | 1,004,558 | ||||||
Effect of Exchange Rates on Cash |
(100,883 | ) | 100,818 | |||||
Cash and Cash Equivalents, End of Year |
$ | 223,592 | $ | 1,594,657 |
COMMON STOCK |
ADDITIONAL
PAID-IN
CAPITAL |
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME |
TREASURY
STOCK,
AT
COST |
DEFICIT |
TOTAL
STOCKHOLDERS’
EQUITY |
|||||||||||||||||||||||
Balance, December 31, 2006 |
5,200,570 | $ | 5,201 | $ | 37,376,324 | $ | 196,304 | $ | - | $ | (24,687,597 | ) | $ | 12,890,232 | ||||||||||||||
Issuance of capital stock |
245,098 | 245 | 527,990 | 528,235 | ||||||||||||||||||||||||
Repurchase of treasury stock |
(669,562 | ) | (669,562 | ) | ||||||||||||||||||||||||
Stock-based compensation |
37,224 | 37,224 | ||||||||||||||||||||||||||
Translation adjustment |
1,919,436 | 1,919,436 | ||||||||||||||||||||||||||
Income (loss) for the year |
(693,258 | ) | (693,258 | ) | ||||||||||||||||||||||||
Balance, December 31, 2007 |
5,445,668 | $ | 5,446 | $ | 37,941,538 | $ | 2,115,740 | $ | (669,562 | ) | $ | (25,380,855 | ) | $ | 14,012,307 | |||||||||||||
Issuance of capital stock |
1,000,000 | 1,000 | 984,385 | 985,385 | ||||||||||||||||||||||||
Fractional share adjustment | 591 | |||||||||||||||||||||||||||
Repurchase of treasury stock |
(374,304 | ) | (374,304 | ) | ||||||||||||||||||||||||
Cancellation of treasury stock |
(539,302 | ) | (539 | ) | (1,043,327 | ) | 1,043,866 | - | ||||||||||||||||||||
Stock-based compensation |
20,625 | 20,625 | ||||||||||||||||||||||||||
Translation adjustment |
(2,032,457 | ) | (2,032,457 | ) | ||||||||||||||||||||||||
Income (loss) for the year |
(2,771,826 | ) | (2,681,826 | ) | ||||||||||||||||||||||||
Balance, December 31, 2008 |
5,906,957 | $ | 5,907 | $ | 37,903,221 | $ | 83,283 | $ | - | $ | (28,152,681 | ) | $ | 9,839,730 | ||||||||||||||
2008 |
2007 |
|||||||
Balance, beginning of period |
$ | (57,680 | ) | $ | 167,431 | |||
Written off during the year |
143,823 | - | ||||||
Charge to costs and expenses |
(86,143 | ) | (225,111 | ) | ||||
Balance, end of period |
$ | - | $ | (57,680 | ) |
Level 1 – Quoted prices in active markets for identical assets or liabilities. |
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
Building |
4% |
Furniture and fixtures |
20% |
Server equipment |
10% |
Computer equipment |
30% |
Computer software |
10% |
Vehicles |
30% |
(a) |
Mortgages are stated at cost which includes amounts advanced and applicable charges, less repayments. |
(b) |
Interest is accounted for on the accrual basis for amounts advanced unless a mortgage is identified as impaired. For amounts committed but unadvanced, |
(c) |
A mortgage is classified as impaired when, in the opinion of management, there is reasonable doubt as to the ultimate collectibility of principal and interest. |
(d) |
When a mortgage is identified as impaired, the accrual of interest is discontinued. A provision for estimated losses is recorded when the principal and accrued interest exceed the estimated net underlying value of the security or if management otherwise feels a provision would be prudent. |
iii. |
Sufficient units have already been sold to assure that the entire property will not revert to rental property. |
iv. |
Sales prices are collectible. Pursuant to EITF 06-8, the collectibility of the sales price is assessed by the Company primarily based on the adequacy of the buyer’s continuing investment in the form of non-refundable deposits, and the age and location of the property. The credit standing of the buyer is taken into
account if known. |
|
Certain reclassifications of prior year’s balances have been made to conform to the current format on the consolidated financial statement. |
|
Direct costs incurred in connection with the issuance of debt measured under the fair value option and revolving credit facilities are expensed as incurred. Direct costs incurred in connection with the issuance of debt not measured under the fair value option are presented as a deferred charge on the balance sheet and are amortized over the term of the debt. |
i) Loan advanced originally in the amount of $115,000 CAD and increased to $125,000 CAD, bears interest at 10.9% per annum (receivable at $1,064 ($1,135 CAD) per month), with the principal due for repayment on January 31, 2009, and secured by a mortgage on the property of the borrower. The loan has been extended month-to-month
pending renewal. |
102,627 | 116,010 | ||||||
ii) Loan advanced in the amount of $230,000 CAD, bears interest at 10% per annum (receivable at $1,797 ($1,917 CAD) per month), with the principal due for repayment on April 4, 2007. The loan was subsequently renewed under the same terms and is due for repayment on February 9, 2010. The loan is secured by a mortgage
on the property of the borrower and a General Security Agreement.
|
188,834 | 232,018 | ||||||
iii) Loan advanced to an employee in the amount of $55,000 CAD, bears interest at 10% per annum (receivable at $429 ($458 CAD) per month), with the principal due for repayment on February 9, 2009, and secured by a mortgage on the property of the borrower and a personal guarantee of the borrower. The loan has been extended
month-to-month pending renewal.
|
45,156 | 55,482 | ||||||
iv) Loan advanced in the amount of $237,000 CAD, bears interest at 10% per annum (receivable at $1,851 ($1,975 CAD) per month), with the principal due for repayment on May 27, 2007, and secured by a mortgage on the property of the borrower. The loan is extended month-to-month pending renewal. The loan was repaid
on August 13, 2008. |
- | 239,080 | ||||||
v) Loan advanced in the amount of $179,060 CAD, bears interest at 10% per annum (receivable at $1,398 ($1,492 CAD) per month), with the principal due for repayment on May 1, 2008, and secured by a mortgage on the property of the borrower. The loan was subsequently renewed under the same terms and is due for repayment on May
1, 2009.
On August 1, 2008, the loan was repaid in full. |
- | 180,632 | ||||||
3. MORTGAGES & LOANS RECEIVABLE (Continued)
|
||||||||
vi) Loan advanced in the amount of $140,000 CAD, bears interest at 15% per annum (receivable at $1,640 ($1,750 CAD) per month), with the principal due for repayment on March 31, 2008, and secured by a mortgage on the property of the borrower. The loan is in default and is currently under negotiation.
|
114,943 | 141,229 | ||||||
vii) Loan advanced on August 7, 2007 in the amount of $45,000 CAD, bears interest at 9.75% per annum (receivable at $ 312 ($333 CAD) per month), with the principal due for repayment on August 8, 2008, and secured by a mortgage on the property of the borrower and personal guarantees. The loan is extended month-to-month
pending renewal. .
|
36,946 | 45,395 | ||||||
viii) Loan advanced in the amount of $450,000 CAD, bears interest at 9.5% per annum (receivable at $3,685 ($3,932 CAD) per month), with the principal due for repayment on January 27, 2009, and secured by a mortgage on the property of the borrower. The loan has been extended month-to-month pending renewal. |
369,458 | - | ||||||
ix) Loan advanced in the amount of $1,750,000 CAD, bears interest at 12% per annum (receivable at $16,400 ($17,500 CAD) per month), with the principal due for repayment on July 17, 2009, and secured by a mortgage on the property of the borrower.
|
1,436,781 | - | ||||||
$ | 2,294,745 | $ | 1,009,846 |
i) |
Included in Other receivable at December 31, 2007 is a balance of $121,053 ($120,000 CAD) owing from Charan Singh, a director of THL and the project coordinator for the Gruv Development. The loan balance, which is unsecured and interest free, was due on May 1, 2008. This was deemed to be paid in full as it was offset against amounts
owing to Charan Singh for services related to the Gruv Development that were provided in accordance with the terms of a consulting agreement. |
|
ii) Included in Other receivable at December 31, 2007 is a balance of $94,014 ($93,196 CAD) outstanding from a third party related to a prior licensing agreement. As per the agreement, the Company has agreed to accept inventory goods from the party for an equivalent value in settlement of the balance. |
|
2008 |
||||||||||||||
|
ACCUMULATED |
IMPAIRMENT |
|||||||||||||
COST |
AMORTIZATION |
NET | |||||||||||||
Affiliate related relationship |
100,000 | 30,833 | 69,167 | - | |||||||||||
Intellectual property |
338,034 | 85,589 | 252,445 | - | |||||||||||
$ | 438,034 | $ | 116,422 | $ | 321,612 | $ | - |
2007 |
|||||||||||
ACCUMULATED |
|||||||||||
COST |
AMORTIZATION |
NET | |||||||||
Non-competition agreement |
$ | 150,000 | $ | 150,000 | $ | - | |||||
Affiliate related relationship |
100,000 | 25,833 | 74,167 | ||||||||
Intellectual property |
338,034 | 56,442 | 281,592 | ||||||||
$ | 588,034 | $ | 232,275 | $ | 355,759 |
2008 |
||||||||||||||||
ACCUMULATED |
NET BOOK |
|||||||||||||||
COST |
DEPRECIATION |
IMPAIRMENT |
VALUE |
|||||||||||||
Land |
1,380,788 | - | 1,380,788 | |||||||||||||
Building |
936,975 | 124,288 | 812,687 | |||||||||||||
Leasehold improvements |
107,175 | 80,746 | 26,429 | |||||||||||||
Furniture and fixtures |
124,502 | 79,618 | 44,884 | |||||||||||||
Server equipment |
1,162,532 | 930,021 | 232,511 | - | ||||||||||||
Computer equipment |
104,670 | 59,687 | 44,983 | |||||||||||||
Computer software |
189,865 | 155,313 | 34,552 | - | ||||||||||||
Vehicles |
22,163 | 13,378 | 6,369 | 2,416 | ||||||||||||
$ | 4,028,670 | 1,443,051 | 273,432 | 2,312,187 |
2007 |
||||||||||||
ACCUMULATED |
NET BOOK |
|||||||||||
COST |
DEPRECIATION |
VALUE |
||||||||||
Land |
1,696,560 | - | 1,696,560 | |||||||||
Building |
1,151,205 | 106,172 | 1,045,033 | |||||||||
Leasehold improvements |
107,175 | 70,028 | 37,147 | |||||||||
Furniture and fixtures |
116,121 | 69,445 | 46,676 | |||||||||
Server equipment |
1,162,532 | 911,169 | 251,363 | |||||||||
Computer equipment |
99,082 | 42,836 | 56,246 | |||||||||
Computer software |
189,865 | 152,512 | 37,353 | |||||||||
Vehicles |
27,232 | 14,555 | 12,677 | |||||||||
$ | 4,549,772 | 1,366,717 | $ | 3,183,055 |
|
The Company’s subsidiary Axion Investment Corp, intends to develop this property which consists of approximately 1.46 acres that is zoned for mixed commercial and residential use. Axion intends to develop the Property through the Company’s wholly owned subsidiary, Gruv Development Corporation, by improving it with a retail facility of approximately 4,326 square feet and with a residential complex of approximately
91,132 square feet which will consist of 111 condominiums (the “Development”). |
a) |
On July 14, 2006 Axion Investment Corp. (“Axion”), a wholly-owned subsidiary of the Company, entered into a Joint Venture Agreement (the “Agreement”) with two unrelated parties, Canitalia Industries (“Canitalia”) and 449991 B.C. Ltd. (“449991”), to form a joint venture for the purpose of purchasing two vacant
lots located in Langley, B.C. for development (the “Project”). On July 28, 2006, Axion entered into a supplemental agreement with these two parties in respect to an arrangement for a bank loan to fund the purchase price and pay expenses related to acquiring the properties. |
c) |
On March 13, 2007, Axion authorized Envision Credit Union (“ECU”) to make a demand loan to THL in the amount of $1.30 million ($1.4 million CAD) for the benefit of the other two shareholders, Canitalia and 449991 (the “Loan”). The parties have acknowledged that the Loan is for the sole benefit of 449991 and
Canitalia and have agreed that none of THL, Axion or the president of the Company will have responsibility for payments of the Loan and that THL, Axion and the president will be fully indemnified for any expenses or payments they become liable for thereunder. |
d) |
The Company has originally estimated a value of $40,535 for the above guarantee, and has provided a provision of $40,535 for the guarantee liability, which is included in accounts payable and accrued liabilities at December 31, 2008. The Company decided to leave the guarantee at its original amount until expiration of the guarantee in the year
2012, as the change in value is not significant. The maximum potential amount of future payments under this guarantee as of December 31, 2008 is $367,367. |
e) |
The Company considered the limited exception contained in FIN 46R exempting from consideration as a Variable Interest Entity a joint venture that is a business, under certain conditions. In the Company’s view, this joint venture meets these conditions. |
2008 |
2007 |
|||||||
Balance Sheet |
||||||||
Assets |
$ | 2,850,416 | $ | 3,256,580 | ||||
Liabilities |
- | - | ||||||
Equity |
2,850,416 | 3,256,580 | ||||||
Statement of Operations |
||||||||
Revenue |
$ | 5,937 | 36,887 | |||||
Expenses |
70,005 | 2,924 | ||||||
Net Income(Loss) |
(64,068 | ) | 33,963 | |||||
Warrants @$6.48
(1) |
Warrants @$9.60
(2) |
Warrants @$2.40
(3) |
Warrants @$1.08
(4) |
Total |
||||||||||||||||
Outstanding, Dec 31, 2006 |
8,333 | 74,615 | - | - | 82,948 | |||||||||||||||
Expired during year |
(8,333 | ) | (8,333 | ) | - | - | (16,666 | ) | ||||||||||||
Granted during year |
- | - | 735,294 | - | 735,294 | |||||||||||||||
Outstanding, Dec 31, 2006 |
- | 66,282 | 801,576 | |||||||||||||||||
Expired during year |
- | (66,282 | ) | (66,282 | ) | |||||||||||||||
Granted during year |
- | - | 600,000 | 600,000 | ||||||||||||||||
Excersied during year |
- | - | (600,000 | ) | (600,000 | ) | ||||||||||||||
Outstanding, Dec 31, 2008 |
- | - | 735,294 | - | 735,294 |
2008 |
2007 |
|||||||
Cash paid for income taxes |
$ | - | $ | - | ||||
Cash paid for arrangement of construction financing |
10,000 | 38,000 | ||||||
Cash paid for interest |
$ | 116,244 | $ | 52,012 |
b) |
On August 19, 2008, the president entered into an Agreement to Convert Debt with the Company. Pursuant to the Agreement, the president accepted units consisting of 400,000 shares of common stock and warrants for the purchase of 600,000 shares of common stock as full payment of $384,000 in principal amount of loans. |
d) |
The Company recorded a balance of $40,535 in “Investment in joint venture” related to the estimate of guarantee liability as described in Note 8, with the offsetting balance included in “Accounts payable and accrued liabilities”. |
2008 |
2007 |
|||||||
$ | $ | |||||||
Income tax recovery computed at statutory rates |
(942,422 | ) | (235,708 | ) | ||||
Effect of reduction in tax rates |
88,940 | - | ||||||
Non capital losses expiring in the year |
(65,282 | ) | - | |||||
Losses carried forward for which tax benefits were recognized |
- | 223,052 | ||||||
Stock based compensation not deductible for tax purposes |
7,013 | 12,656 | ||||||
Tax benefit from share issuance costs not recognized |
(15,849 | ) | - | |||||
Increase (decrease) in valuation allowance |
927,600 | - | ||||||
Income tax (recovery) expense |
— | — | ||||||
Significant components of the Company’s deferred tax assets are as follows: |
||||||||
2008 | 2007 | |||||||
$ | $ | |||||||
Operating losses carried forward |
2,442,932 | 2,006,000 | ||||||
Tax value of share issuance costs in excess of book value |
12,680 | |||||||
Tax value of property and equipment in excess of book value |
217,153 | (140,000) | ||||||
Tax value of intangible assets in excess of book value |
98,835 | (22,000 | ) | |||||
Total deferred tax assets |
2,771,600 | 1,844,000 | ||||||
Less: Valuation allowance |
(2,771,600) | (1,844,000) | ||||||
Net deferred tax assets (liabilities) |
— | — | ||||||
Of the net operating tax losses carried forward, approximately $3,200,000 (deferred tax asset of $1,000,000) are available for Canadian tax purposes. |
a) |
During the year ended December 31, 2008, the Company incurred $156,000 (2007: $156,000) in management fees to a director of the Company. |
b) |
At December 31, 2008, a balance of $248,072 (December 31, 2007: $298,464) is owing from employees to the Company as a result of overpayments in commissions, which will be offset by commissions to be paid in the following quarters. |
c) |
During the years ended December 31, 2008 and 2007, the Company marketed condominium units being developed in Surrey using the brand name “Overture LivingTM”. The mark, “Overture Living™” belongs to Abdul Ladha, the Company’s President. Mr.
Ladha did not receive compensation for the use of this mark. |
d) |
On August 19, 2008, the president entered into an Agreement to Convert Debt with the Company. Pursuant to the Agreement, the president agreed to accept units consisting of 1 share of the common stock and a warrant to purchase 1.5 shares of the common stock as partial payment of the loans made to the Company. Pursuant to the Agreement,
the president accepted units consisting of 400,000 shares of common stock and warrants for the purchase of 600,000 shares of common stock as full payment of $384,000 in principal amount of the loans. The number of units to be issued was computed by using the last sale price of the Company’s common stock on August 19, 2008, which was $0.96. The warrant exercise price is $1.08 and the warrant term is 5 years. The agreement was subject to the approval of the NYSE Alternext US (formerly
the American Stock Exchange), which was received on October 2, 2008. On October 6, 2008, the shares were issued and all the warrants were exercised by the President, resulting in the issuance of 1,000,000 common shares. |
e) |
As described in Note 9, the Company acquired a 50% interest in Surrey, resulting in a balance of $1,363,765 owing to the director as of December 31, 2008. |
f) |
During the year ended December 31, 2007, the Company incurred rent expense of $27,715 to a private company owned by a trust the beneficiaries of which are members of the family of the Company’s president. |
g) |
At December 31, 2007, included in “other receivable” is a balance of $121,053 ($120,000 CAD) owing from Charan Singh, a director of Township Holdings Ltd, and the project coordinator for the Gruv Development (see Note 4). The Company’s wholly-owned subsidiary, Axion Investment Corp. is a shareholder of Township Holdings Ltd. The
loan balance that was due on May 1, 2008 was deemed to be paid in full as it was offset against amounts owing to Charan Singh for services related to the Gruv Development. |
h) |
During the year ended December 31, 2007, the Company incurred rent expense related to office space of $4,655 to a private company owned by Bullion Reef Holding, a company controlled by Abdul Ladha. |
i) |
On April 9, 2007, the Company completed a private placement of 245,098 units consisting of one common share and three share purchase warrants (the "Warrants") priced at $2.40 per Unit, with the President and director of the Company, as described in Note 19. |
j) |
During the year ended December 31, 2007, the Company received a payment of $12,661 from Bullion Reef Holdings Ltd., a private company wholly-owned by a trust created for the family of Abdul Ladha, as reimbursement of office and personnel expenses. |
|
All option prices and numbers presented below have been adjusted to give effect to the 1 for 12 common share consolidation as described in Note 19. |
2008 |
2007 |
|||||||||||||||
WEIGHTED |
WEIGHTED |
|||||||||||||||
NUMBER |
AVERAGE |
NUMBER |
AVERAGE |
|||||||||||||
OF |
EXERCISE |
OF |
EXERCISE |
|||||||||||||
SHARES |
PRICE |
SHARES |
PRICE |
|||||||||||||
Outstanding, beginning of year |
911,352 | $ | 4.66 | 890,519 | $ | 4.68 | ||||||||||
Granted |
- | 20,833 | 3.60 | |||||||||||||
Exercised |
- | - | ||||||||||||||
Expired |
(276,833 | ) | 4.06 | - | ||||||||||||
Outstanding, end of year |
634,519 | 4.91 | 911,352 | 4.66 | ||||||||||||
Weighted average fair value of options granted during the year |
$ | 0.48 |
AVERAGE |
|||||||||||
RANGE OF |
WEIGHTED |
REMAINING |
|||||||||
EXERCISE |
NUMBER |
CONTRACTUAL |
NUMBER |
||||||||
PRICE |
OUTSTANDING |
LIFE |
EXERCISABLE |
||||||||
$ | 1.8 | 33,333 |
4 years |
33,333 | |||||||
3.00 – 3.60 | 26,250 |
1 year |
26,250 | ||||||||
4.32 4.80 | 29,167 183,686 |
1 year |
29,167 183,686 | ||||||||
6 years |
|||||||||||
5.04 – 6.00 | 362,083 |
1 year |
362,083 | ||||||||
634,519 | 634,519 |
a) |
The Company is committed to payments with respect to an agreement to lease office premises. Future minimum payments required under the lease are as follows: |
2009 |
23,756 |
|||
2010 |
20,556 |
|||
2011 |
5,139 |
|||
$ |
49,451 |
b) |
The Company is committed to additional commissions and bonuses to be paid in the amount of $600,082 ($689,750 CAD) upon the successful completion of the sales and transfer of strata lots related to the development of its condominium project in Surrey as described in Note 7. |
c) |
The Company is committed to a payment of $103,342 ($111,000 CAD) for 2/5/10 year home warranty insurance coverage related to its condominium development project in Surrey as described in Note 7. |
d) |
The Company has unconditionally guaranteed the interest and repayment of a demand loan to Envision Credit Union (“ECU”) related to its Township Holdings Joint Venture. The guarantee continues until the loans, including accrued interest and fees, have been paid in full, with the final loan amount due upon demand. The Company estimated
a value of $40,535 for this guarantee, and has provided a provision of $40,535 for the guarantee liability, which is included in Accounts payable and accrued liabilities at December 31, 2008. |
Real Property
& Property Development |
Mortgages
& Loans |
Auction,
Liquidation & Technology Businesses |
Other |
Total |
||||||||||||||||
External revenue by market |
||||||||||||||||||||
US |
- | - | 2,256,264 | - | 2,256,264 | |||||||||||||||
Canada |
150,653 | - | 364,269 | - | 514,922 | |||||||||||||||
Other |
- | - | 34,950 | - | 34,950 | |||||||||||||||
Total Revenue From External Customer |
150,653 | - | 2,655,483 | - | 2,806,136 | |||||||||||||||
Investment income |
- | 207,781 | - | - | 207,781 | |||||||||||||||
Interest expense |
46,560 | 65,498 | 1,011 | 3,175 | 116,244 | |||||||||||||||
Depreciation and amortization
|
38,650 | - | 97,014 | - | 135,664 | |||||||||||||||
Impairment of asset |
595,044 | 595,044 | ||||||||||||||||||
Segment profit(loss) |
(129,781 | ) | 181,664 | (1,810,678 | ) | (1,013,031 | ) | (2,771,826 | ) | |||||||||||
Segment assets |
14,342,434 | 931,942 | 1,347,418 | 1,468,500 | 18,090,294 | |||||||||||||||
Expenditures on long-lived assets |
6,206,805 | 21,014 | 6,227,819 | |||||||||||||||||
Investment in joint venture | 1,223,728 | 1,223,728 | ||||||||||||||||||
Investment in Surrey City Central |
1,671,638 | - | - | 1,671,638 |
Real Property
& Property Development |
Mortgages
& Loans |
Auction,
Liquidation & Technology Businesses |
Other |
Total |
||||||||||||||||
External revenue by market |
||||||||||||||||||||
US |
- | - | 4,329,617 | - | 4,329,617 | |||||||||||||||
Canada |
143,050 | - | 417,504 | - | 560,554 | |||||||||||||||
Other |
- | - | 48,747 | - | 48,747 | |||||||||||||||
Total Revenue From External Customer |
143,050 | - | 4,795,868 | - | 4,938,918 | |||||||||||||||
Investment income |
- | 397,977 | - | - | 397,977 | |||||||||||||||
Interest expense |
52,012 | - | - | - | 52,012 | |||||||||||||||
Depreciation and amortization |
39,765 | - | 154,972 | - | 194,737 | |||||||||||||||
Segment profit |
(132,378 | ) | 511,253 | (425,807 | ) | (646,326 | ) | (693,258 | ) | |||||||||||
Segment assets |
8,951,031 | 2,172,035 | 2,955,711 | 340,609 | 14,419,386 | |||||||||||||||
Expenditures on long-lived assets |
1,816,545 | 34,267 | 1,850,812 | |||||||||||||||||
Investment in joint venture |
1,507,403 | - | - | - | 1,507,403 |
2008 |
2007 |
|||||||
External Sales |
||||||||
United States |
$ | 2,256,264 | $ | 4,329,617 | ||||
Canada |
514,922 | 560,554 | ||||||
Other |
34,950 | 48,747 | ||||||
$ | 2,806,136 | $ | 4,938,918 | |||||
Long-Lived Assets |
||||||||
United States |
$ | 8,845 | $ | 12,752 | ||||
Canada |
10,823,397 | 7,650,283 | ||||||
$ | 10,832,242 | $ | 7,663,035 |
|
Subsequent to December 31, 2008, the Company repurchased additional 78,276 shares of its common stock for a cost of $18,867. |
|
(i) In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“FAS”) No. 141 (Revised 2007), “Business Combinations” (“FAS 141(R)”). FAS 141(R) establishes principles and requirements for how an acquirer in a business combination recognizes and
measures in its financial statements the identifiable assets acquired, liabilities assumed, and any noncontrolling interests in the acquiree, as well as the goodwill acquired. Significant changes from current practice resulting from FAS 141(R) include the expansion of the definitions of a “business” and a “business combination.” For all business combinations (whether partial, full or step acquisitions), the acquirer will record 100% of all assets and liabilities of the acquired business,
including goodwill, generally at their fair values; contingent consideration will be recognized at its fair value on the acquisition date and, for certain arrangements, changes in fair value will be recognized in earnings until settlement; and acquisition-related transaction and restructuring costs will be expensed rather than treated as part of the cost of the acquisition. FAS 141(R) also establishes disclosure requirements to enable users to evaluate the nature and financial effects of the business combination.
FAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Earlier adoption is not permitted. We are currently evaluating the potential impact of this statement. |
TOP FAVOUR LIMITED AND SUBSIDIARIES |
||||||||
CONSOLIDATED BALANCE SHEETS |
||||||||
AS OF MARCH 31, 2009 AND JUNE 30, 2008 |
||||||||
A S S E T S |
||||||||
(Unaudited) |
||||||||
CURRENT ASSETS |
||||||||
Cash |
$ | 192,093 | $ | 4,705,129 | ||||
Notes receivable |
1,488,084 | - | ||||||
Accounts receivable, trade, net of allowance for doubtful accounts of $213,754 |
||||||||
and $0 as of March 31, 2009 and June 30, 2008, respectively |
17,162,783 | 3,552,733 | ||||||
Other receivables |
851,529 | 996,190 | ||||||
Inventories |
79,019 | 206,690 | ||||||
Advances to suppliers |
6,664,571 | 1,646,714 | ||||||
Total current assets |
26,438,079 | 11,107,456 | ||||||
PROPERTY, PLANT AND EQUIPMENT, net |
15,100,562 | 13,468,704 | ||||||
CONSTRUCTION-IN-PROGRESS |
- | 2,740,204 | ||||||
OTHER ASSETS |
||||||||
Intangible - Land use rights, net |
1,961,761 | 2,001,379 | ||||||
Intangible - Mineral rights, net |
6,418,823 | 8,014,599 | ||||||
Other assets |
102,550 | 102,130 | ||||||
Total other assets |
8,483,134 | 10,118,108 | ||||||
Total assets |
$ | 50,021,775 | $ | 37,434,472 | ||||
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y |
||||||||
CURRENT LIABILITIES |
||||||||
Accounts payable, trade |
$ | 1,344,919 | $ | 3,576,790 | ||||
Short term loans |
3,950,099 | 3,896,989 | ||||||
Other payables - related parties |
6,602,692 | 6,760,388 | ||||||
Other payables and accrued liabilities |
1,217,722 | 2,076,990 | ||||||
Customer deposits |
2,504,381 | 511,628 | ||||||
Taxes payable |
5,531,400 | 2,947,118 | ||||||
Total liabilities |
21,151,213 | 19,769,903 | ||||||
COMMITMENTS AND CONTINGENCIES |
||||||||
SHAREHOLDERS' EQUITY |
||||||||
Common share, $1.00 par value, 50,000 authorized, 1,000 issued and |
||||||||
outstanding as of March 31, 2009 |
1,000 | 1,000 | ||||||
Paid-in capital |
3,504,595 | 3,044,803 | ||||||
Contribution receivables |
(1,000 | ) | (1,000 | ) | ||||
Statutory reserves |
573,412 | 573,412 | ||||||
Retained earnings |
24,008,951 | 13,340,814 | ||||||
Accumulated other comprehensive income |
783,604 | 705,540 | ||||||
Total shareholders' equity |
28,870,562 | 17,664,569 | ||||||
Total liabilities and shareholders' equity |
$ | 50,021,775 | $ | 37,434,472 |
TOP FAVOUR LIMITED AND SUBSIDIARIES |
||||||||
CONSOLIDATED STATEMENTS OF OPERATION AND OTHER COMPREHENSIVE INCOME | ||||||||
FOR THE NINE MONTHS ENDED MARCH 31, 2009 and 2008 |
||||||||
(Unaudited) |
||||||||
Nine months ended March 31, |
||||||||
2008 |
||||||||
REVENUES |
$ | 35,877,960 | $ | 42,981,587 | ||||
COST OF REVENUES |
19,632,301 | 20,800,088 | ||||||
GROSS PROFIT |
16,245,659 | 22,181,499 | ||||||
OPERATING EXPENSES: |
||||||||
Selling expenses |
371,879 | 1,187,794 | ||||||
General and administrative expenses |
931,784 | 1,299,797 | ||||||
Total operating expenses |
1,303,663 | 2,487,591 | ||||||
INCOME FROM OPERATIONS |
14,941,996 | 19,693,908 | ||||||
OTHER EXPENSE, net |
||||||||
Interest expenses, net |
(739,781 | ) | (605,116 | ) | ||||
Other income (expenses), net |
140,351 | (132,532 | ) | |||||
Other expense, net |
(599,430 | ) | (737,648 | ) | ||||
INCOME BEFORE INCOME TAXES |
14,342,566 | 18,956,260 | ||||||
PROVISION FOR INCOME TAXES |
3,674,429 | 6,061,751 | ||||||
NET INCOME |
10,668,137 | 12,894,509 | ||||||
OTHER COMPREHENSIVE INCOME |
||||||||
Foreign currency translation adjustment |
78,064 | 555,803 | ||||||
COMPREHENSIVE INCOME |
$ | 10,746,201 | $ | 13,450,312 |
TOP FAVOUR LIMITED AND SUBSIDIARIES |
||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY |
||||||||||||||||||||||||||||||||
(Accumulated deficit) / Retained Earnings |
Accumulated other |
|||||||||||||||||||||||||||||||
Common Stock |
Paid-in |
Contribution |
Statutory |
comprehensive |
||||||||||||||||||||||||||||
Shares |
Par Value |
capital |
Receivable |
reserves |
Unrestricted |
(loss) income |
Total |
|||||||||||||||||||||||||
BALANCE, June 30, 2007 |
1,000 | $ | 1,000 | $ | 1,555,906 | $ | (1,000 | ) | $ | 107,596 | $ | (3,858,035 | ) | $ | (203,778 | ) | $ | (2,398,311 | ) | |||||||||||||
Net income |
12,894,509 | 12,894,509 | ||||||||||||||||||||||||||||||
Adjustment of statutory reserves |
434,048 | (434,048 | ) | - | ||||||||||||||||||||||||||||
Shareholder contribution |
851,968 | 851,968 | ||||||||||||||||||||||||||||||
Imputed interests on loans from
related parties waived |
355,898 | 355,898 | ||||||||||||||||||||||||||||||
Foreign currency translation adjustments |
555,803 | 555,803 | ||||||||||||||||||||||||||||||
BALANCE, March 31, 2008 (Unaudited) |
1,000 | $ | 1,000 | $ | 2,763,772 | $ | (1,000 | ) | $ | 541,644 | $ | 8,602,426 | $ | 352,025 | $ | 12,259,867 | ||||||||||||||||
Net income |
4,770,156 | 4,770,156 | ||||||||||||||||||||||||||||||
Adjustment of statutory reserves |
31,768 | (31,768 | ) | - | ||||||||||||||||||||||||||||
Imputed interests on loans from
related parties waived |
281,031 | 281,031 | ||||||||||||||||||||||||||||||
Foreign currency translation adjustments |
353,515 | 353,515 | ||||||||||||||||||||||||||||||
BALANCE, June 30, 2008 |
1,000 | $ | 1,000 | $ | 3,044,803 | $ | (1,000 | ) | $ | 573,412 | $ | 13,340,814 | $ | 705,540 | $ | 17,664,569 | ||||||||||||||||
Net income |
10,668,137 | 10,668,137 | ||||||||||||||||||||||||||||||
Imputed interests on loans from
related parties waived |
459,792 | 459,792 | ||||||||||||||||||||||||||||||
Foreign currency translation adjustments |
78,064 | 78,064 | ||||||||||||||||||||||||||||||
BALANCE, March 31, 2009 (Unaudited) |
1,000 | $ | 1,000 | $ | 3,504,595 | $ | (1,000 | ) | $ | 573,412 | $ | 24,008,951 | $ | 783,604 | $ | 28,870,562 |
TOP FAVOUR LIMITED AND SUBSIDIARIES |
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
FOR THE NINE MONTHS ENDED MARCH 31, 2009 AND 2008 |
||||||||
(Unaudited) |
||||||||
Nine months ended March 31, |
||||||||
2008 |
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net income |
$ | 10,668,137 | $ | 12,894,509 | ||||
Adjustments to reconcile net income to cash (used in) |
||||||||
provided by operating activities: |
||||||||
Depreciation |
1,322,840 | 868,506 | ||||||
Amortization and depletion |
1,676,011 | 1,494,666 | ||||||
Bad debt expense |
213,681 | - | ||||||
Additional capital increased by forfeited imputed interest |
459,792 | 355,898 | ||||||
Change in operating assets and liabilities |
||||||||
Accounts receivable, trade |
(15,292,057 | ) | (1,675,075 | ) | ||||
Other receivables |
148,835 | 311,655 | ||||||
Inventories |
128,477 | 52,058 | ||||||
Advances to suppliers |
(4,716,475 | ) | (2,181,670 | ) | ||||
Other current assets |
- | 138,018 | ||||||
Accounts payable, trade |
(2,245,812 | ) | (1,285,555 | ) | ||||
Other payables and accrued liabilities |
101,626 | (2,421,978 | ) | |||||
Customer deposits |
1,989,969 | (1,755,354 | ) | |||||
Taxes payable |
2,571,284 | 2,276,429 | ||||||
Net cash (used in) provided by operating activities |
(2,973,692 | ) | 9,072,107 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Purchase of equipment |
(148,238 | ) | (97,978 | ) | ||||
Purchase of intangible asset |
- | (612,482 | ) | |||||
Payment on purchase of HongChang |
(967,520 | ) | (3,925,027 | ) | ||||
Payments on acquisition of Baofeng |
- | (1,861,472 | ) | |||||
Prepayments on construction-in-progress |
(292,900 | ) | (112,635 | ) | ||||
Net cash used in investing activities |
(1,408,658 | ) | (6,609,594 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Shareholder contributions |
- | 851,968 | ||||||
Repayments to short-term loans |
(726,392 | ) | (1,085,120 | ) | ||||
Proceeds from short-term loans |
2,389,059 | 2,021,036 | ||||||
Payments to related parties |
(1,811,156 | ) | (1,611,617 | ) | ||||
Net cash (used in) provided by financing activities |
(148,489 | ) | 176,267 | |||||
EFFECT OF EXCHANGE RATE ON CASH |
17,803 | 218,585 | ||||||
(DECREASE) INCREASE IN CASH |
(4,513,036 | ) | 2,857,365 | |||||
CASH, beginning of period |
4,705,129 | 725,166 | ||||||
CASH, end of period |
$ | 192,093 | $ | 3,582,531 | ||||
0 | (1 | ) | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
||||||||
Cash paid for interest expense |
$ | 131,744 | $ | 199,736 | ||||
Cash paid for income taxes |
$ | 2,924,628 | $ | 4,310,559 | ||||
NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES |
||||||||
Construction-in-progress transferred to fixed assets |
$ | 2,750,534 | $ | - | ||||
Bank loan paid off by shareholder |
$ | 1,625,595 | $ | - |
Level 1 |
Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
Level 2 |
Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
|
Level 3 |
Inputs to the valuation methodology are unobservable and significant to the fair value. |
Estimated Useful Life | |
Building and plant |
30-40 years |
Machinery and equipment |
10-20 years |
Other equipment |
5 years |
Transportation equipment |
5-7 years |
Nine months ended March 31, |
||||||||
2008 |
||||||||
(Unaudited) |
||||||||
Coke |
$ | 25,180,329 | $ | 40,563,387 | ||||
Coal tar |
868,491 | 2,236,557 | ||||||
Raw coal |
8,806,019 | 155,085 | ||||||
Washed Coal |
1,023,121 | 26,558 | ||||||
Total |
$ | 35,877,960 | $ | 42,981,587 |
(Unaudited) |
||||||||
Wuhan Tieying Steel Co. Ltd. |
$ | 128,339 | $ | 441,498 | ||||
Pingdingshan Coal Group Railroad Transportation Service |
304,448 | 54,445 | ||||||
Hongfeng Coal Washing Plant |
- | 350,160 | ||||||
Employee advance |
277,121 | 150,087 | ||||||
Other miscellaneous deposits and advances |
141,621 | - | ||||||
Total |
$ | 851,529 | $ | 996,190 |
(Unaudited) |
||||||||
Buildings and improvements |
$ | 12,764,002 | $ | 9,971,523 | ||||
Machinery and equipment |
7,810,878 | 7,636,298 | ||||||
Other Equipment |
370,131 | 363,524 | ||||||
Total |
20,945,011 | 17,971,345 | ||||||
Less accumulated depreciation |
(5,844,449 | ) | (4,502,641 | ) | ||||
Total, net |
$ | 15,100,562 | $ | 13,468,704 |
(Unaudited) |
||||||||
Land use rights |
$ | 2,296,695 | $ | 2,287,289 | ||||
Accumulated amortization |
(334,934 | ) | (285,910 | ) | ||||
Total, net |
$ | 1,961,761 | $ | 2,001,379 |
Year ended March 31, |
Amount |
|||
2010 |
$ | 63,775 | ||
2011 |
63,775 | |||
2012 |
63,775 | |||
2013 |
63,775 | |||
2014 |
63,775 | |||
2015 and thereafter |
1,642,886 | |||
Total |
$ | 1,961,761 |
(Unaudited) |
||||||||
Mineral rights |
$ | 13,101,831 | 13,048,171 | |||||
Accumulated depletion |
(6,683,008 | ) | (5,033,572 | ) | ||||
Total, net |
$ | 6,418,823 | 8,014,599 |
(Unaudited) |
||||||||
Advances for raw coals procurement |
$ | 6,371,571 | $ | 1,634,056 | ||||
Advances for construction |
293,000 | - | ||||||
Others |
- | 12,658 | ||||||
Total |
$ | 6,664,571 | $ | 1,646,714 |
(Unaudited) |
||||||||
Accrued expense |
$ | 200,976 | $ | 8,798 | ||||
Construction payables |
385,019 | 383,442 | ||||||
Salary payable |
213,698 | 217,426 | ||||||
Benefit payable |
15,429 | 22,240 | ||||||
Balance of mine purchase price |
- | 963,886 | ||||||
Payable to employees |
127,227 | 87,125 | ||||||
Other payable |
275,373 | 394,073 | ||||||
Total |
$ | 1,217,722 | $ | 2,076,990 |
Nine months ended March 31, |
||||||||
2008 |
||||||||
(Unaudited) |
||||||||
BVI current income tax expense |
$ | - | $ | - | ||||
PRC current income tax expense |
3,674,429 | 6,061,751 | ||||||
Total provision for income taxes |
$ | 3,674,429 | $ | 6,061,751 |
Nine months ended March 31, |
||||||||
2008 |
||||||||
(Unaudited) |
||||||||
BVI income tax |
0.0 | % | 0.0 | % | ||||
PRC income tax |
25.0 | % | 30.3 | % (1) | ||||
Other item (2) |
0.6 | % | 1.7 | % | ||||
Effective tax rate |
25.6 | % | 32.0 | % |
(Unaudited) |
||||||||
VAT |
$ | 2,271,085 | $ | 760,459 | ||||
Income tax |
3,108,287 | 1,990,387 | ||||||
Others |
152,028 | 196,272 | ||||||
Total taxes payable |
$ | 5,531,400 | $ | 2,947,118 |
Statutory surplus reserve |
50% of registered share capital |
Future contributions required as of March 31, 2009 | |||||||||||||
(Unaudited) |
|||||||||||||||
Hongli |
$ | 548,204 | $ | 548,204 | $ | 548,204 | $ | - | |||||||
Hongguang |
- | - | 1,514,590 | 1,514,590 | |||||||||||
Hongchang |
25,208 | 25,208 | 206,535 | 181,327 | |||||||||||
Total |
$ | 573,412 | $ | 573,412 | $ | 2,269,329 | $ | 1,695,917 | |||||||
Due to |
Term |
Manner of Settlement | ||||||||
(Unaudited) |
||||||||||
Mr. Jianhua Lv |
$ | 6,456,192 | $ | 4,667,405 |
Short term |
Cash | ||||
Mr. Liuchang Yang |
146,500 | 2,092,983 |
Short term |
Cash | ||||||
Total |
$ | 6,602,692 | $ | 6,760,388 |
|
(1) |
the Company’s shareholders will transfer 100% of the issued and outstanding capital stock of Top Favour (BVI) to Ableauctions; |
|
(2) |
as consideration for the acquisition of the Top Favour (BVI) equity interests, Ableauctions will issue common stock to Top Favour’s shareholders; immediately after the closing of the Share Exchange Agreement, the former shareholders of Top Favour (BVI) and the former shareholders of Ableauctions will own approximately 97% and 3% of the outstanding shares of Ableauctions, respectively. |
|
(3) |
Ableauctions will adopt a plan of liquidation reasonably acceptable to Top Favour (BVI), under which it shall establish a liquidating trust for purposes of discharging outstanding liabilities and distributing remaining assets of Ableauctions to its shareholders as of a certain record date prior to the closing; at the closing, Ableauctions will have no material liabilities, contingent or otherwise, and no material assets. |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Shareholders of Top Favour Limited
We have audited the accompanying consolidated balance sheets of Top Favour Limited and Subsidiaries as of June 30, 2008 and 2007, and the related consolidated statements of operations and comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended June 30, 2008. Top Favour
Limited and Subsidiaries’ management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Top Favour Limited and Subsidiaries as of June 30, 2008 and 2007, and the results of its operations and its cash flows for each of the years in the three-year period ended June 30, 2008 in conformity with accounting
principles generally accepted in the United States of America.
Walnut, California
TOP FAVOUR LIMITED AND SUBSIDIARIES |
||||||||
CONSOLIDATED BALANCE SHEETS |
||||||||
AS OF JUNE 30, 2008 AND 2007 |
||||||||
ASSETS |
||||||||
2008 |
2007 |
|||||||
CURRENT ASSETS |
||||||||
Cash |
$ | 4,705,129 | $ | 725,166 | ||||
Accounts receivable, trade |
3,552,733 | 1,655,206 | ||||||
Other receivables |
996,190 | 1,552,832 | ||||||
Inventories |
206,690 | 250,858 | ||||||
Advances to suppliers |
1,646,714 | 149,980 | ||||||
Other current assets |
- | 75,675 | ||||||
Total current assets |
11,107,456 | 4,409,717 | ||||||
PROPERTY, PLANT AND EQUIPMENT, net |
13,468,704 | 13,262,237 | ||||||
CONSTRUCTION-IN-PROGRESS |
2,740,204 | 2,308,349 | ||||||
OTHER ASSETS |
||||||||
Intangible - Land use rights, net |
2,001,379 | 1,861,111 | ||||||
Intangible - Mineral rights, net |
8,014,599 | 8,610,193 | ||||||
Other assets |
102,130 | - | ||||||
Total other assets |
10,118,108 | 10,471,304 | ||||||
Total assets |
$ | 37,434,472 | $ | 30,451,607 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||
CURRENT LIABILITIES |
||||||||
Accounts payable, trade |
$ | 3,576,790 | $ | 4,616,994 | ||||
Short-term loans |
3,896,989 | 3,236,215 | ||||||
Other payables - related parties |
6,760,388 | 8,078,251 | ||||||
Other payables and accrued liabilities |
1,693,548 | 12,692,186 | ||||||
Customer deposits |
511,628 | 2,587,013 | ||||||
Taxes payable |
2,947,118 | 661,874 | ||||||
Construction payable |
383,442 | 977,385 | ||||||
Total liabilities |
19,769,903 | 32,849,918 | ||||||
COMMITMENTS AND CONTINGENCIES |
||||||||
SHAREHOLDERS' EQUITY |
||||||||
Common share, $1.00 par value, 50,000 authorized, 1,000 issued and |
||||||||
outstanding as of June 30, 2008 |
1,000 | 1,000 | ||||||
Paid-in capital |
3,044,803 | 1,555,906 | ||||||
Contribution receivables |
(1,000 | ) | (1,000 | ) | ||||
Statutory reserves |
573,412 | 107,596 | ||||||
Retained earnings (accumulated deficit) |
13,340,814 | (3,858,035 | ) | |||||
Accumulated other comprehensive income (loss) |
705,540 | (203,778 | ) | |||||
Total shareholders' equity |
17,664,569 | (2,398,311 | ) | |||||
Total liabilities and shareholders' equity |
$ | 37,434,472 | $ | 30,451,607 |
TOP FAVOUR LIMITED AND SUBSIDIARIES
|
||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||
2008 |
2007 |
2006 |
||||||||||
REVENUE |
$ | 58,623,488 | $ | 30,078,701 | $ | 11,039,203 | ||||||
COST OF GOOD SOLD |
27,751,480 | 22,179,203 | 8,554,842 | |||||||||
GROSS PROFIT |
30,872,008 | 7,899,498 | 2,484,361 | |||||||||
OPERATING EXPENSES: |
||||||||||||
Selling |
1,631,856 | 1,613,496 | 1,663,328 | |||||||||
General and administrative |
2,269,540 | 2,717,161 | 2,857,729 | |||||||||
Total operating expenses |
3,901,396 | 4,330,657 | 4,521,057 | |||||||||
INCOME (LOSS) FROM OPERATIONS |
26,970,612 | 3,568,841 | (2,036,696 | ) | ||||||||
OTHER INCOME (EXPENSE), NET |
||||||||||||
Finance expense, net |
(1,122,569 | ) | (750,950 | ) | (477,986 | ) | ||||||
Other expense, net |
(137,063 | ) | (49,375 | ) | (55,284 | ) | ||||||
Total other income (expense), net |
(1,259,632 | ) | (800,325 | ) | (533,270 | ) | ||||||
INCOME BEFORE INCOME TAXES |
25,710,980 | 2,768,516 | (2,569,966 | ) | ||||||||
PROVISION FOR INCOME TAXES |
8,046,315 | 2,165,766 | 325,470 | |||||||||
NET INCOME (LOSS) |
17,664,665 | 602,750 | (2,895,436 | ) | ||||||||
OTHER COMPREHENSIVE INCOME (LOSS) |
||||||||||||
Foreign currency translation adjustment |
909,318 | (144,792 | ) | (58,986 | ) | |||||||
COMPREHENSIVE INCOME (LOSS) |
$ | 18,573,983 | $ | 457,958 | $ | (2,954,422 | ) | |||||
TOP FAVOUR LIMITED AND SUBSIDIARIES |
||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY |
||||||||||||||||||||||||||||||||
Accumulated |
||||||||||||||||||||||||||||||||
Retained Earnings |
other |
|||||||||||||||||||||||||||||||
Common Stock |
Paid-in |
Contribution |
Statutory |
comprehensive |
||||||||||||||||||||||||||||
Shares |
Par Value |
capital |
Receivable |
reserves |
Unrestricted |
(loss) income |
Total |
|||||||||||||||||||||||||
BALANCE, July 1, 2005 |
1,000 | $ | 1,000 | $ | 440,691 | $ | (1,000 | ) | $ | - | $ | (1,457,753 | ) | $ | - | $ | (1,017,062 | ) | ||||||||||||||
Net Loss |
(2,895,436 | ) | (2,895,436 | ) | ||||||||||||||||||||||||||||
Adjustment of statutory reserve |
2,295 | (2,295 | ) | - | ||||||||||||||||||||||||||||
Shareholder contribution by forfeited imputed interest |
412,331 | 412,331 | ||||||||||||||||||||||||||||||
Foreign currency translation adjustments |
(58,986 | ) | (58,986 | ) | ||||||||||||||||||||||||||||
BALANCE, June 30, 2006 |
1,000 | $ | 1,000 | $ | 853,022 | $ | (1,000 | ) | $ | 2,295 | $ | (4,355,484 | ) | $ | (58,986 | ) | $ | (3,559,153 | ) | |||||||||||||
Net income |
602,750 | 602,750 | ||||||||||||||||||||||||||||||
Adjustment of statutory reserve |
105,301 | (105,301 | ) | - | ||||||||||||||||||||||||||||
Shareholder contribution by forfeited imputed interest |
702,884 | 702,884 | ||||||||||||||||||||||||||||||
Foreign currency translation adjustments |
(144,792 | ) | (144,792 | ) | ||||||||||||||||||||||||||||
BALANCE, June 30, 2007 |
1,000 | $ | 1,000 | $ | 1,555,906 | $ | (1,000 | ) | $ | 107,596 | $ | (3,858,035 | ) | $ | (203,778 | ) | $ | (2,398,311 | ) | |||||||||||||
Net income |
17,664,665 | 17,664,665 | ||||||||||||||||||||||||||||||
Adjustment of statutory reserve |
465,816 | (465,816 | ) | - | ||||||||||||||||||||||||||||
Shareholder contribution |
851,968 | 851,968 | ||||||||||||||||||||||||||||||
Shareholder contribution by forfeited imputed interest |
636,929 | 636,929 | ||||||||||||||||||||||||||||||
Foreign currency translation adjustments |
909,318 | 909,318 | ||||||||||||||||||||||||||||||
BALANCE, June 30, 2008 |
1,000 | $ | 1,000 | $ | 3,044,803 | $ | (1,000 | ) | $ | 573,412 | $ | 13,340,814 | $ | 705,540 | $ | 17,664,569 |
TOP FAVOUR LIMITED AND SUBSIDIARIES |
||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||||
2008 |
2007 |
2006 |
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||||||
Net income (loss) |
$ | 17,664,665 | $ | 602,750 | $ | (2,895,436 | ) | |||||
Adjustments to reconcile net income (loss) to cash |
||||||||||||
provided by operating activities: |
||||||||||||
Depreciation |
1,259,811 | 1,031,563 | 928,314 | |||||||||
Amortization and depletion |
2,133,587 | 1,260,992 | 1,298,044 | |||||||||
Bad debt expense |
200,356 | 535,345 | 407,599 | |||||||||
Imputed interest on shareholder and related party loans |
636,929 | 702,884 | 412,331 | |||||||||
Capitalized interest |
(156,121 | ) | (158,890 | ) | (114,380 | ) | ||||||
Change in operating assets and liabilities |
||||||||||||
Accounts receivable, trade |
(1,820,052 | ) | (1,412,025 | ) | (156,930 | ) | ||||||
Other receivables |
589,411 | (645,240 | ) | (622,511 | ) | |||||||
Inventories |
67,607 | 363,935 | (505,543 | ) | ||||||||
Advances to suppliers |
(1,397,012 | ) | 1,526,323 | (1,619,273 | ) | |||||||
Other current assets |
79,236 | 158,233 | (52,202 | ) | ||||||||
Accounts payable, trade |
(1,458,808 | ) | 2,545,876 | 1,292,995 | ||||||||
Other payables and accrued liabilities |
(4,601,657 | ) | (2,437,311 | ) | 3,234,346 | |||||||
Customer deposits |
(2,225,952 | ) | 747,481 | 683,476 | ||||||||
Taxes payable |
2,088,249 | (175,421 | ) | 812,398 | ||||||||
Net cash provided by operating activities |
13,060,249 | 4,646,495 | 3,103,228 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||||||
Purchase of property, plant and equipment and construction-in-progress |
(2,648,102 | ) | (2,988,978 | ) | (6,887,749 | ) | ||||||
Purchase of land use rights and mineral rights |
(5,822,908 | ) | (3,549,834 | ) | (1,590,213 | ) | ||||||
Net cash used in investing activities |
(8,471,010 | ) | (6,538,812 | ) | (8,477,962 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||||||
Shareholder contribution |
851,968 | - | - | |||||||||
Payments on short-term loans |
(4,943,071 | ) | (1,525,552 | ) | (753,544 | ) | ||||||
Cash proceeds from short-term loans |
5,232,220 | 3,568,587 | 1,815,157 | |||||||||
(Payment) proceeds of loans from related parties |
(2,078,542 | ) | 136,855 | 4,065,884 | ||||||||
Net cash (used in) provided by financing activities |
(937,425 | ) | 2,179,890 | 5,127,497 | ||||||||
EFFECT OF EXCHANGE RATE ON CASH |
328,149 | 28,074 | 19,758 | |||||||||
INCREASE (DECREASE) IN CASH |
3,979,963 | 315,647 | (227,479 | ) | ||||||||
CASH, beginning of year |
725,166 | 409,519 | 636,998 | |||||||||
CASH, end of year |
$ | 4,705,129 | $ | 725,166 | $ | 409,519 | ||||||
SUPPLEMENTAL CASH FLOW INFORMATION: |
||||||||||||
Cash paid for income tax |
$ | 6,634,443 | $ | 1,902,383 | $ | 132,367 | ||||||
Cash paid for interest expense |
$ | 575,206 | $ | 278,909 | $ | 101,677 | ||||||
Level 1 |
Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
| |
Level 2 |
Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
| |
Level 3 |
Inputs to the valuation methodology are unobservable and significant to the fair value. |
Estimated Useful Life | |
Building and plant |
30-40 years |
Machinery and equipment |
10-20 years |
Other equipment |
5 years |
Transportation equipment |
5-7 years |
2008 |
2007 |
2006 |
||||||||||
Coke |
$ | 55,103,692 | $ | 23,831,668 | $ | 8,614,513 | ||||||
Coal tar |
2,987,334 | 1,463,183 | 643,210 | |||||||||
Raw coal |
372,312 | 1,877,489 | 1,353,376 | |||||||||
Washed coal |
160,150 | 2,906,361 | 428,104 | |||||||||
Total |
$ | 58,623,488 | $ | 30,078,701 | $ | 11,039,203 |
2008 |
2007 |
|||||||
Wuhan Tieying Steel Co. Ltd. |
$ | 441,498 | $ | - | ||||
Pingdingshan Coal Group Railroad Transportation Service |
54,445 | 52,351 | ||||||
Hongfeng Coal Washing Plant |
350,160 | 447,100 | ||||||
Wuhan Steel Co. Ltd. |
- | 131,500 | ||||||
Guoxing Ge, employee |
- | 394,502 | ||||||
Hui, Zheng, employee |
150,087 | 516,125 | ||||||
Other miscellaneous deposits and advances |
11,254 | |||||||
Total |
$ | 996,190 | $ | 1,552,832 |
2008 |
2007 |
|||||||
Raw material |
$ | 161,819 | $ | 230,989 | ||||
Finished goods |
44,871 | 19,869 | ||||||
Total |
$ | 206,690 | $ | 250,858 |
2008 |
2007 |
|||||||
Buildings and improvements |
$ | 9,971,523 | $ | 8,934,398 | ||||
Machinery and equipment |
7,636,298 | 6,860,644 | ||||||
Other equipment |
363,524 | 322,259 | ||||||
Total |
17,971,345 | 16,117,301 | ||||||
Less accumulated depreciation |
(4,502,641 | ) | (2,855,064 | ) | ||||
Total, net |
$ | 13,468,704 | $ | 13,262,237 |
2008 |
2007 |
|||||||
Land use rights |
$ | 2,287,289 | $ | 2,061,539 | ||||
Accumulated amortization |
(285,910 | ) | (200,428 | ) | ||||
Total, net |
$ | 2,001,379 | $ | 1,861,111 |
Year ended June 30, |
Amount |
|||
2009 |
$ | 59,961 | ||
2010 |
59,961 | |||
2011 |
59,961 | |||
2012 |
59,961 | |||
2013 |
59,961 | |||
2014, and thereafter |
1,701,574 | |||
Total |
$ | 2,001,379 |
2008 |
2007 |
|||||||
Mineral rights |
$ | 13,048,171 | $ | 11,166,558 | ||||
Accumulated depletion |
(5,033,572 | ) | (2,556,365 | ) | ||||
Total, net |
$ | 8,014,599 | $ | 8,610,193 |
2008 |
2007 |
|||||||
Pingdingshan Coal Group Xianbao Mine |
$ | 159,862 | $ | - | ||||
Pingdingshan Coal Group Mine #9 |
795,126 | - | ||||||
Pingdingshan Coal Group Mine #10 |
684,328 | - | ||||||
Pingdingshan Coal Group Xiangshan Mine |
- | 145,944 | ||||||
Others |
7,398 | 4,036 | ||||||
Total |
$ | 1,646,714 | $ | 149,980 |
2008 |
2007 |
|||||||
Accrued expense |
$ | 8,798 | $ | 8,718 | ||||
Salary payable |
217,426 | 82,673 | ||||||
Benefit payable |
22,240 | 43,750 | ||||||
Payable to prior owners of HongChang |
963,886 | 5,836,098 | ||||||
Payable for acquisition of Baofeng |
- | 4,611,892 | ||||||
Payables to employees |
- | 959,575 | ||||||
Advance from a third party |
87,125 | 802,150 | ||||||
Other payables |
394,073 | 347,330 | ||||||
Total |
$ | 1,693,548 | $ | 12,692,186 |
Name of lender |
2008 |
2007 |
||||||
Henan Leihe Construction Co. Ltd. |
$ | 264,437 | $ | 207,405 | ||||
Honghai Lv Contractor |
90,646 | 81,699 | ||||||
Yangzhou Yangzi Industrial Engineering Co. Ltd. |
- | 525,353 | ||||||
Henan Jianhe Machinery Co. Ltd. |
8,287 | 107,150 | ||||||
Others |
20,072 | 55,778 | ||||||
Total |
$ | 383,442 | $ | 977,385 |
2008 |
2007 |
2006 |
||||||||||
Income (loss) Before Provision for PRC Income Tax |
$ | 25,710,980 | $ | 2,768,516 | $ | (2,569,966 | ) | |||||
Group subsidiary operating losses that are not consolidated for PRC income tax purposes |
1,851,788 | 2,620,226 | 3,121,110 | |||||||||
Post-tax filing accounting adjustments not taken into account for PRC income tax purposes |
183,146 | 1,174,185 | 435,129 | |||||||||
Group PRC taxable income |
27,745,914 | 6,562,927 | 986,273 | |||||||||
PRC statutory corporate tax rate (for the year ended June 30, 2008, the effective rate is calculated by using 33% for the period from July 2007 to December 2007 and 25% for the period from January 2008 to June 2008) |
29.0 | % | 33.0 | % | 33.0 | % | ||||||
Total Provision for PRC Income Taxes |
$ | 8,046,315 | $ | 2,165,766 | $ | 325,470 |
2008 |
2007 |
2006 |
||||||||||
PRC statutory corporate tax rate (for the year ended June 30, 2008, the effective rate is calculated by using 33% for the period from July 2007 to December 2007 and 25% for the period from January 2008 to June 2008) |
29.0 | % | 33.0 | % | 33.0 | % | ||||||
Permanent differences between PRC taxable income and consolidated net income before income tax is due to the differences in PRC’s separate reporting entity restrictions and the non-retroactive accounting adjustment after the PRC corporate tax filing |
2.3 | % | 45.2 | % | (45.7 | %) | ||||||
Effective tax rate |
31.3 | % | 78.2 | % | (12.7 | %) |
2008 |
2007 |
|||||||
VAT |
$ | 760,459 | $ | 205,449 | ||||
Income tax |
1,990,387 | 446,473 | ||||||
Others |
196,272 | 9,952 | ||||||
Total taxes payable |
$ | 2,947,118 | $ | 661,874 |
2008 |
2007 |
2006 | ||||
Henan Hengyang Guanxiang Trading Co. Ltd. |
37.61% |
11.67% |
- |
Wuhan Yunjietong Industrial Trading Co. Ltd. |
19.56% |
30.51% |
33.11% | |||
Wuhan Zhengtong Industrial Trading Co. Ltd. |
17.36% |
12.51% |
14.87% | |||
Hunan Haobo Industrial Trading Co. Ltd. |
13.90% |
9.26% |
- | |||
Total |
88.43% |
63.95% |
47.98% |
2008 |
2007 |
2006 | ||||
Pingdingshan Coal Group Mine #10 |
15.15% |
18.11% |
6.40% | |||
Pingdingshan Coal Group Mine #9 |
12.68% |
12.16% |
- | |||
Total |
27.83% |
30.27% |
6.40% |
Due to |
Balance at
June 30,2008 |
Balance at
|
Term |
Manner of Settlement | ||||||
Mr. Jianhua Lv |
$ | 4,667,405 | $ | 5,466,862 |
Short term |
Cash | ||||
Mr. Liuchang Yang |
2,092,983 | 2,611,389 |
Short term |
Cash | ||||||
Total |
$ | 6,760,388 | $ | 8,078,251 |
|
(1) |
the Company’s shareholders will transfer 100% of the issued and outstanding capital stock of Top Favour (BVI) to Ableauctions; |
|
(2) |
as consideration for the acquisition of the Top Favour (BVI) equity interests, Ableauctions will issue common stock to Top Favour’s shareholders; immediately after the closing of the Share Exchange Agreement, the former shareholders of Top Favour (BVI) and the former shareholders of Ableauctions will own approximately 97% and 3% of the outstanding shares of Ableauctions, respectively. |
|
(3) |
Ableauctions will adopt a plan of liquidation reasonably acceptable to Top Favour (BVI), under which it shall establish a liquidating trust for purposes of discharging outstanding liabilities and distributing remaining assets of Ableauctions to its shareholders as of a certain record date prior to the closing; at the closing, Ableauctions will have no material liabilities, contingent or otherwise, and no material assets. |
This ‘PRE 14A’ Filing | Date | Other Filings | ||
---|---|---|---|---|
4/9/17 | ||||
10/2/13 | ||||
3/16/11 | ||||
6/30/10 | 10-K, NT 10-K | |||
2/9/10 | ||||
12/31/09 | 10-K, 8-K | |||
11/30/09 | 8-K | |||
11/2/09 | ||||
10/6/09 | ||||
9/30/09 | 10-Q | |||
9/15/09 | PRER14A | |||
7/31/09 | ||||
Filed on / For Period End: | 7/17/09 | 8-K | ||
7/6/09 | ||||
6/30/09 | 10-Q, 10-Q/A | |||
6/15/09 | ||||
6/8/09 | 8-K | |||
6/1/09 | ||||
5/29/09 | ||||
5/21/09 | 8-K | |||
5/15/09 | 10-Q | |||
5/6/09 | ||||
5/1/09 | ||||
4/30/09 | ||||
4/6/09 | ||||
3/31/09 | 10-Q, 10-Q/A | |||
3/25/09 | 10-K | |||
3/18/09 | ||||
3/16/09 | ||||
3/15/09 | ||||
3/13/09 | 8-K | |||
3/5/09 | ||||
2/26/09 | ||||
2/14/09 | ||||
2/12/09 | SC 13G | |||
2/9/09 | ||||
1/31/09 | ||||
1/27/09 | ||||
1/15/09 | 8-K | |||
1/12/09 | ||||
1/1/09 | ||||
12/31/08 | 10-K, 10-K/A | |||
12/15/08 | ||||
12/9/08 | ||||
11/15/08 | ||||
11/10/08 | ||||
10/23/08 | 8-K | |||
10/22/08 | ||||
10/20/08 | ||||
10/6/08 | 8-K/A, SC 13D | |||
10/2/08 | 4 | |||
9/18/08 | 8-K | |||
9/11/08 | ||||
8/19/08 | ||||
8/13/08 | ||||
8/8/08 | ||||
8/1/08 | ||||
7/24/08 | ||||
7/15/08 | ||||
7/3/08 | ||||
7/2/08 | ||||
7/1/08 | ||||
6/30/08 | 10-Q | |||
6/24/08 | ||||
6/20/08 | ||||
6/19/08 | 8-K | |||
5/27/08 | ||||
5/23/08 | ||||
5/2/08 | ||||
5/1/08 | ||||
4/28/08 | ||||
4/15/08 | 8-K | |||
4/2/08 | ||||
3/31/08 | 10-K, 10-Q, 8-K | |||
3/24/08 | ||||
3/12/08 | ||||
3/7/08 | ||||
2/15/08 | ||||
1/4/08 | ||||
1/1/08 | ||||
12/31/07 | 10-K | |||
12/30/07 | ||||
12/15/07 | ||||
11/15/07 | ||||
9/23/07 | ||||
8/7/07 | ||||
7/31/07 | ||||
7/23/07 | 8-K, DEFA14A | |||
7/19/07 | ||||
6/30/07 | 10QSB, 10QSB/A | |||
5/27/07 | ||||
5/9/07 | ||||
4/29/07 | ||||
4/24/07 | ||||
4/9/07 | 4, 8-K | |||
4/5/07 | ||||
4/4/07 | ||||
3/26/07 | ||||
3/16/07 | ||||
3/13/07 | ||||
1/1/07 | ||||
12/31/06 | 10KSB, 10KSB/A | |||
10/11/06 | ||||
8/14/06 | ||||
8/3/06 | ||||
8/1/06 | ||||
7/28/06 | ||||
7/14/06 | ||||
6/30/06 | 10-Q | |||
5/26/06 | ||||
1/1/06 | ||||
8/15/05 | 10QSB, 8-K | |||
8/9/05 | 8-K | |||
8/3/05 | ||||
7/1/05 | ||||
6/1/05 | ||||
5/31/02 | ||||
4/1/02 | ||||
6/29/00 | ||||
4/17/00 | ||||
10/14/99 | ||||
8/24/99 | ||||
7/19/99 | ||||
9/30/96 | ||||
7/5/96 | ||||
6/5/96 | ||||
List all Filings |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 7/31/09 SEC UPLOAD¶ 10/18/17 1:61K Hongli Clean Energy Techs Corp. |