x
|
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF
1934
|
o
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF
1934
|
Delaware
|
22-3137907
|
||
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
||
|
|
||
Jilin
Dongsheng Weiye Science and Technology Development Co., Ltd., Jifeng
East
Road, Gaoxin District
Jilin,
Jilin Province, PRC
|
132012
|
||
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code:
|
86-432-4566702
|
c/o
American Union Securities 100 Wall Street 15th Floor New York,
NY
|
10005
|
(Address
of principal agent offices)
|
(Zip
Code)
|
Agent’s
telephone number, including area code:
|
(212)
232-0120
|
Securities
registered under Section 12(b) of the Exchange Act:
|
|
|
|
Title
of each class
|
Name
of each exchange on which registered
|
None
|
None
|
|
|
Securities
registered under Section 12(g) of the Exchange Act:
|
|
Common
Stock, par value $.001
|
|
(Title
of class)
|
Part
I
|
|
|
|
|
|
Item
1.
|
Description
of Business.
|
4
|
|
|
|
Item
2.
|
Description
of Property.
|
7
|
|
|
|
Item
3.
|
Legal
Proceedings.
|
7
|
|
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders.
|
7
|
|
|
|
Part
II
|
|
|
|
|
|
Item
5.
|
Market
for Common Equity and Related Stockholder Matters.
|
8
|
|
|
|
Item
6.
|
Management’s
Discussion and Analysis or Plan of Operations.
|
9
|
|
|
|
Item
7.
|
Financial
Statements.
|
14
|
|
|
|
Item
8.
|
Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure.
|
14
|
|
|
|
Item
8A.
|
Controls
and Procedures.
|
14
|
|
|
|
Item
8B.
|
Other
Information.
|
14
|
|
|
|
Part
III
|
|
|
|
|
|
Item
9.
|
Directors,
Executive Officers, Promoters and Control Persons; Compliance with
Section
16(a) of the Exchange Act.
|
15
|
|
|
|
Item
10.
|
Executive
Compensation.
|
17
|
|
|
|
Item
11.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
|
18
|
|
|
|
Item
12.
|
Certain
Relationships and Related Transactions.
|
18
|
|
|
|
Item
13.
|
Exhibits.
|
19
|
|
|
|
Item
14.
|
Principal
Accountant Fees and Services.
|
19
|
|
|
|
Signatures
|
|
Item
5.
|
Market
for Common Equity and Related Stockholder
Matters.
|
|
Closing
Bid
|
|
Y FISCAL
YEAR 2006
|
High
Bid
|
Low
Bid
|
1st
Quarter
Ended September 30, 2005
|
$0.08
|
$0.04
|
2nd
Quarter
Ended December 31, 2005
|
$0.06
|
$0.03
|
3rd
Quarter
Ended March 31, 2006
|
$1.85
|
$0.962
|
4th
Quarter
Ended June 30, 2006
|
$1.85
|
$1.332
|
FISCAL
YEAR 2007
|
High
Bid
|
Low
Bid
|
1st
Quarter
Ended September 30, 2006
|
$1.85
|
$0.962
|
2nd
Quarter
Ended December 31, 2006
|
$10.36
|
$0.74
|
3rd
Quarter
Ended March 31, 2007
|
$35.15
|
$3.33
|
4th
Quarter
Ended June 30, 2007
|
$10.02
|
$3.50
|
FISCAL
YEAR 2008
|
High
Bid
|
Low
Bid
|
Period
Ended October 12, 2007
|
$5.25
|
$1.40
|
Item
6.
|
Management’s
Discussion and Analysis or Plan of
Operations.
|
2007
|
2006
|
|||||||
Revenues
|
$ |
31,320,831
|
$ |
19,783,912
|
||||
Cost
of Goods Sold
|
12,672,386
|
8,891,958
|
||||||
Gross
Profit
|
18,648,445
|
10,891,954
|
||||||
Operating
Expenses
|
||||||||
Selling,
general and administrative
|
2,357,762
|
1,083,029
|
||||||
Income
before other Income and (Expenses)
|
16,290,683
|
9,808,925
|
||||||
Other
Income and (Expenses)
|
||||||||
Interest
income
|
7,539
|
-
|
||||||
Settlement
of loans and notes payable
|
51,379
|
-
|
||||||
Other
income
|
303,890
|
300,645
|
||||||
Interest
expense
|
(73,492 | ) |
-
|
|||||
Other
expense
|
(18,392 | ) | (16,662 | ) | ||||
Total
other income and (expenses)
|
270,924
|
283,983
|
||||||
Income
Before Income Taxes
|
16,561,609
|
10,092,908
|
||||||
Provision
for Income Taxes
|
5,587,615
|
3,331,405
|
||||||
Net
Income
|
$ |
10,973,994
|
$ |
6,761,503
|
||||
Item
9.
|
Directors,
Executive Officers, Promoters and Control Persons; Compliance with
Section
16(a) of the Exchange Act.
|
Name
|
|
Age
|
|
Position
|
|
Date
Appointed Director
|
|
|
|
|
|
|
|
Aidong
Yu
|
|
54
|
|
President,
Chief Executive Officer, Chief Financial Officer and
Chairman
|
|
November
9, 2006
|
|
|
|
|
|
|
|
Huizhu
Xie
|
|
60
|
|
Director
|
|
November
9, 2006
|
|
|
|
|
|
|
|
Dekui
Wang
|
|
51
|
|
Director
|
|
November
9, 2006
|
•
|
the
subject of any bankruptcy petition filed by or against any business
of
which such person was a general partner or executive officer either
at the
time of the bankruptcy or within two years prior to that
time;
|
|
•
|
convicted
in a criminal proceeding or is subject to a pending criminal proceeding
(excluding traffic violations and other minor
offenses);
|
|
•
|
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;
or
|
|
•
|
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.
|
Name
and Principal Position
|
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan Compensation ($)
|
|
|
Non-Qualified
Deferred Compensation Earnings
($)
|
|
|
All
Other Compensation
($)
|
Totals
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aidong
Yu,(1)
|
|
|
2007
|
|
12,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
12,000
|
Chief
Executive Officer,
|
|
|
2006
|
|
10,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
10,000
|
Chief
Financial Officer,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
Weiss,(2)
|
|
|
2006
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
0
|
Chief
Executive Officer,
|
|
|
2005
|
|
118,958
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
118,958
|
Chief
Financial Officer,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Mr.
Yu was appointed as our President, Chief Executive Officer and
Chief
Financial Officer on November 9, 2006 pursuant to the Reverse Merger.
Prior to the Reverse Merger, he earned $10,000 as an officer of
Jilin
Dongsheng Weiye Science and Technology Development Co.,
Ltd.
|
|
|
(2)
|
Mr.
Weiss resigned as President, Chief Executive Officer and Chief
Financial
Officer on November 9, 2006 pursuant to the Reverse
Merger.
|
|
|
|
|
|
|
|
|
Title
of Class
|
|
Name
and Address of Beneficial Owner
|
|
Amount
and Nature of Beneficial Ownership
|
|
Percent
of Class (2)
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Aidong
Yu(1)
|
|
16,880,683
|
|
53.5%
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Huizhu
Xie(1)
|
|
30,000
|
|
0.09%
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Dekui
Wang(1)
|
|
20,000
|
|
0.06%
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Dandan
Yu(3)
|
|
1,577,549
|
|
5.00%
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Chunxiao
Zou(4)
|
|
1,577,549
|
|
5.00%
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
All
officers and directors as a group (3 in number)
|
|
16,930,683
|
|
53.66%
|
|
Exhibit No.
|
|
Title
of Document
|
|
Location
|
|
|
|
||
2.1
|
|
Stock
Purchase and Share Exchange Agreement by and among Paperclip Software,
Inc., American Sunrise Internataional, Inc., the shareholders of
American
Sunrise International, Inc., and Jilin Dongsheng Weiye Science
and
Technology Co., Ltd.
|
|
Incorporated
by reference as Exhibit 2.1 to Form 8-K filed November 9,
2006
|
|
|
|
||
3.1.4
|
|
Certificate
of Designation of Class B Preferred Stock
|
Incorporated
by reference as Exhibit 3.1 to Form 8-K filed November 9,
2006
|
|
|
|
|
||
4.0 |
Code
of Ethics
|
Filed
herewith.
|
||
31.1
|
|
Certification
of Chief Executive Officer Pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934, as adopted pursuant to Section
302 of the
Sarbanes-Oxley Act of 2002
|
|
Filed
herewith
|
|
|
|
||
31.2
|
|
Certification
of Chief Executive Officer Pursuant to Rule 13a-14(b) of the
Securities Exchange Act of 1934, as adopted pursuant to Section
302 of the
Sarbanes-Oxley Act of 2002
|
|
Filed
herewith
|
32.1
|
|
Certification
of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes Oxley Act of
2002.
|
|
Filed
herewith
|
|
|
|
||
32.2
|
|
Certification
of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes Oxley Act of
2002.
|
|
Filed
herewith
|
ASSETS
|
||||
Current
assets:
|
||||
Cash
and cash equivalents
|
$ |
585,126
|
||
Accounts
receivable
|
69,884
|
|||
Inventory
|
74,388
|
|||
Prepaid
expense
|
57,500
|
|||
Other
receivable
|
4,660
|
|||
Advances
to suppliers
|
616,914
|
|||
Total
Current Assets
|
1,408,472
|
|||
Property
and equipment, net of accumulated depreciation of $308,382
|
34,390,372
|
|||
Other
assets:
|
||||
Deposit
on land
|
2,758,802
|
|||
Land
use right
|
2,706,374
|
|||
Other
assets
|
8,506
|
|||
Total
Other Assets
|
5,473,682
|
|||
Total
Assets
|
$ |
41,272,526
|
||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||
Current
liabilities:
|
||||
Accounts
payable
|
$ |
682,223
|
||
Unearned
revenue
|
493,666
|
|||
Taxes
payable
|
18,925,542
|
|||
Accrued
expenses and other payables
|
295,361
|
|||
Total
Current Liabilities
|
20,396,792
|
|||
Notes
payable - related party
|
88,145
|
|||
Total
Liabilities
|
20,484,937
|
|||
Commitments
and Contingencies
|
||||
Stockholders'
Equity
|
||||
Common
stock, $0.001 par value, 100,000,000 shares authorized;
|
||||
31,546,134
shares issued and outstanding at June 30, 2007
|
31,546
|
|||
Additional
paid-in capital
|
1,034,546
|
|||
Accumulated
other comprehensive income
|
863,783
|
|||
Retained
earnings - appropriated
|
1,218,086
|
|||
Retained
earnings - unappropriated
|
17,639,628
|
|||
Total
Stockholders' Equity
|
20,787,589
|
|||
Total
Liabilities and Stockholders' Equity
|
$ |
41,272,526
|
2007
|
2006
|
|||||||
Revenues
|
$ |
31,320,831
|
$ |
19,783,912
|
||||
Cost
of Goods Sold
|
12,672,386
|
8,891,958
|
||||||
Gross
Profit
|
18,648,445
|
10,891,954
|
||||||
Operating
Expenses
|
||||||||
Selling,
general and administrative
|
2,357,762
|
1,083,029
|
||||||
Income
before other Income and (Expenses)
|
16,290,683
|
9,808,925
|
||||||
Other
Income and (Expenses)
|
||||||||
Interest
income
|
7,539
|
-
|
||||||
Settlement
of loans and notes payable
|
51,379
|
-
|
||||||
Other
income
|
303,890
|
300,645
|
||||||
Interest
expense
|
(73,492 | ) |
-
|
|||||
Other
expense
|
(18,392 | ) | (16,662 | ) | ||||
Total
other income and (expenses)
|
270,924
|
283,983
|
||||||
Income
Before Income Taxes
|
16,561,609
|
10,092,908
|
||||||
Provision
for Income Taxes
|
5,587,615
|
3,331,405
|
||||||
Net
Income
|
$ |
10,973,994
|
$ |
6,761,503
|
||||
Basic
and diluted income per common share
|
$ |
0.98
|
$ |
30.52
|
||||
Weighted
average number of common shares
|
11,209,317
|
221,528
|
Preferred
Stock
|
Preferred
Stock
|
|
Additional
|
Accumulated
Other
|
Retained
|
Retained
|
|
|||||||||||||||||||||||||||||||||||||||||
Series
A
|
Series
B
|
Common
Stock
|
Paid-in
|
Comprehensive
|
Earnings
|
Earnings
|
Comprehensive
|
|||||||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Income
|
(Appropriated)
|
(Unappropriated)
|
Income
|
Total
|
|||||||||||||||||||||||||||||||||||||
Balance
- July 1, 2005
|
3,649,543
|
$ |
3,650
|
-
|
$ |
-
|
8,196,521
|
$ |
8,196
|
$ |
48,559
|
$ |
15
|
159,069
|
$ |
963,148
|
$ |
1,182,637
|
||||||||||||||||||||||||||||||
Additional
paid-in
capital contributed
|
1,185,055
|
1,185,055
|
||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive
income
|
||||||||||||||||||||||||||||||||||||||||||||||||
Net
income for the year
|
1,030,037
|
5,731,466
|
6,761,503
|
6,761,503
|
||||||||||||||||||||||||||||||||||||||||||||
Other
Comprehensive
income,
net of tax
|
||||||||||||||||||||||||||||||||||||||||||||||||
Foreign
currency
translation
adjustment
|
110,731
|
110,731
|
110,731
|
|||||||||||||||||||||||||||||||||||||||||||||
Comprehensive
income
|
6,872,234
|
|||||||||||||||||||||||||||||||||||||||||||||||
Balance
- June 30, 2006
|
3,649,543
|
3,650
|
-
|
-
|
8,196,521
|
8,196
|
1,233,614
|
110,746
|
1,189,106
|
6,694,614
|
9,239,926
|
|||||||||||||||||||||||||||||||||||||
Recapitalization
on reverse acquisition
|
(3,649,543 | ) | (3,650 | ) |
1,762,472
|
17,625
|
21,803,479
|
21,804
|
(215,147 | ) |
-
|
-
|
-
|
(179,368 | ) | |||||||||||||||||||||||||||||||||
-
|
||||||||||||||||||||||||||||||||||||||||||||||||
Reserve
split 1:37
|
-
|
-
|
(1,703,756 | ) | (17,038 | ) | (29,000,000 | ) | (29,000 | ) |
46,038
|
-
|
||||||||||||||||||||||||||||||||||||
-
|
||||||||||||||||||||||||||||||||||||||||||||||||
Conversion
of preferred stock
|
-
|
-
|
(58,716 | ) | (587 | ) |
30,546,134
|
30,546
|
(29,959 | ) |
-
|
|||||||||||||||||||||||||||||||||||||
Comprehensive
income
|
||||||||||||||||||||||||||||||||||||||||||||||||
Net
income for the year
|
28,980
|
10,945,014
|
10,973,994
|
10,973,994
|
||||||||||||||||||||||||||||||||||||||||||||
Other
Comprehensive
income,
net of tax
|
||||||||||||||||||||||||||||||||||||||||||||||||
Foreign
currency
translation
adjustment
|
753,037
|
753,037
|
753,037
|
|||||||||||||||||||||||||||||||||||||||||||||
Comprehensive
income
|
11,727,031
|
|||||||||||||||||||||||||||||||||||||||||||||||
Balance
- June 30, 2007
|
-
|
$ |
-
|
-
|
$ |
-
|
31,546,134
|
$ |
31,546
|
$ |
1,034,546
|
$ |
863,783
|
$ |
1,218,086
|
$ |
17,639,628
|
$ |
20,787,589
|
2007
|
2006
|
|||||||
Cash
Flows From Operating Activities:
|
||||||||
Net
income
|
$ |
10,973,994
|
$ |
6,761,503
|
||||
Adjustments
to reconcile net income to net cash
|
||||||||
provided
by operating activities:
|
||||||||
Depreciation
and amortization
|
192,857
|
90,037
|
||||||
Settlement
of loans and notes payable
|
(51,379 | ) |
-
|
|||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
74,258
|
(211 | ) | |||||
Inventory
|
(17,209 | ) |
7,285
|
|||||
Advances
to suppliers
|
3,280,649
|
(3,853,160 | ) | |||||
Prepaid
expenses
|
(57,500 | ) |
-
|
|||||
Other
accounts receivable
|
(632 | ) |
-
|
|||||
Accounts
payable
|
346,553
|
-
|
||||||
Taxes
payable
|
11,155,583
|
6,838,637
|
||||||
Unearned
revenue
|
105,070
|
(981 | ) | |||||
Accrued
expenses and other payables
|
(2,483 | ) | (27,884 | ) | ||||
Cash
provided by operating activities
|
25,999,761
|
9,815,226
|
||||||
Cash
Flows From Investing Activities:
|
||||||||
Payment
made for the land use right
|
(2,729,117 | ) | (1,176,984 | ) | ||||
Purchase
of property and equipment
|
(33,461 | ) | (4,098,120 | ) | ||||
(Additions)
to construction in process
|
(23,614,652 | ) | (6,397,558 | ) | ||||
Cash
(used in) investing activities
|
(26,377,230 | ) | (11,672,662 | ) | ||||
Cash
Flows From Financing Activities
|
||||||||
Proceeds
from issuance of stock
|
-
|
1,185,056
|
||||||
Proceeds
from notes payable
|
63,145
|
-
|
||||||
Payment
of loans and notes payable
|
(21,702 | ) |
-
|
|||||
Cash
provided by financing activities
|
41,443
|
1,185,056
|
||||||
Effect
of exchange rate changes on cash and cash equivalents
|
431,569
|
101,524
|
||||||
Increase
(decrease) in cash and cash equivalents
|
95,542
|
(570,856 | ) | |||||
Cash
and Cash Equivalents - Beginning of year
|
489,584
|
601,657
|
||||||
Cash
and Cash Equivalents - Ending of year
|
$ |
585,126
|
$ |
30,801
|
||||
Supplemental
disclosures of cash flow information:
|
||||||||
Interest
paid
|
$ |
61,162
|
$ |
16,662
|
||||
Income
taxes paid
|
$ |
95,500
|
$ |
-
|
||||
Non-cash
investing and financing activities:
|
||||||||
Conversion
of notes payable to common stock
|
$ |
14,170
|
$ |
-
|
||||
Conversion
of accrued compensation to common stock
|
$ |
75,814
|
$ |
-
|
Buildings and improvements | 40 years |
Machinery, equipment and automobiles | 5-10 years |
Machinery
and Equipment
|
$ |
408,040
|
||
Building
and Plant
|
4,278,504
|
|||
Subtotal
|
4,686,544
|
|||
Less:
Accumulated Depreciation
|
(308,382 | ) | ||
Construction
in progress
|
30,012,210
|
|||
Total
property and equipment, net
|
$ |
34,390,372
|
|
|
|
|
CHINA
DONGSHENG INTERNATIONAL, INC.
|
|
|
|
|
Date: October
12, 2007
|
By:
|
/s/ Aidong
Yu
|
|
AIDONG
YU
|
|
|
President,
Chief Executive Officer,
Chief
Financial Officer
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Aidong Yu
AIDONG
YU
|
|
President,
Chief Executive Officer,
Chief
Financial Officer and Chairman
|
|
October
12, 2007
|
|
|
|
|
|
/s/
Huizhu Xie
HUIZHU XIE |
|
Director
|
|
October
12, 2007
|
|
|
|
|
|
/s/
Dekui Wang
DEKUI WANG |
|
Director
|
|
October
12, 2007
|
|
|
|
|