x
|
Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.
|
o
|
Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.
|
Delaware
|
22-3137907
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employee Identification No.)
|
Jilin
Dongsheng Weiye Science and Technology Development Co., Ltd., Jifeng East
Road, Gaoxin District
Jilin,
Jilin Province, PRC
|
(Address
of principal executive offices)
|
c/o
American Union Securities 100 Wall Street 15th Floor New York, NY
10005
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(Address
of principal agent offices)
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86-432-4566702
(212)
232-0120
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(Issuer’s
telephone number)
|
PART I - FINANCIAL
INFORMATION
|
3
|
Item
1. Financial Statements
|
3
|
Item
2. Management’s Discussion and Analysis or Plan of
Operation
|
13
|
Item
3. Controls and Procedures
|
16
|
PART
II - OTHER INFORMATION
|
16
|
Item
1. Legal Proceedings
|
16
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
16
|
Item
3. Defaults Upon Senior Securities
|
16
|
Item
4. Submission of Matters to a Vote of Security Holders
|
16
|
Item
5. Other Information
|
17
|
Item
6. Exhibits
|
17
|
SIGNATURES
|
18
|
ASSETS
|
||||
December
31,
|
||||
2007
|
||||
(Unaudited)
|
||||
Current
assets:
|
||||
Cash
and cash equivalents
|
$ | 817,151 | ||
Accounts
receivable - net of allowance for doubtful accounts of
$40,000
|
230,435 | |||
Inventory
|
65,418 | |||
Prepaid
expenses
|
275 | |||
Advances
to suppliers
|
301,712 | |||
Other
receivable
|
8,506 | |||
Total
Current Assets
|
1,423,497 | |||
Property
and equipment, net of accumulated depreciation of $653,051
|
43,158,276 | |||
Other
assets:
|
||||
Deposit
on ginseng farm
|
7,328,708 | |||
Deposit
on land
|
2,878,842 | |||
Land
use right, net
|
2,792,952 | |||
Total
Other Assets
|
13,000,502 | |||
Total
Assets
|
$ | 57,582,275 | ||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||
Current
liabilities:
|
||||
Accounts
payable
|
$ | 730,872 | ||
Unearned
revenue
|
770,400 | |||
Taxes
payable
|
6,077,033 | |||
Accrued
expenses and other payables
|
558,461 | |||
Total
Current Liabilities
|
8,136,766 | |||
Notes
payable - related party
|
11,210 | |||
Total
Liabilities
|
8,147,976 | |||
Stockholders'
Equity
|
||||
Common
stock, $0.001 par value, 100,000,000 shares authorized; 31,546,134
shares
|
||||
issued
and outstanding at December 31, 2007
|
31,546 | |||
Additional
paid in capital
|
1,259,847 | |||
Accumulated
other comprehensive income
|
2,490,430 | |||
Retained
earnings - Appropriated
|
1,218,086 | |||
Retained
earnings -Unappropriated
|
44,434,390 | |||
Total
Stockholders' Equity
|
49,434,299 | |||
Total
Liabilities and Stockholders' Equity
|
$ | 57,582,275 |
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
(UNAUDITED)
|
Six-Month
Ended
|
Three-Month
Ended
|
|||||||||||||||
December
31,
|
December
31,
|
December
31,
|
December
31,
|
|||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Sales
|
$ | 18,389,721 | $ | 18,366,646 | $ | 10,005,710 | $ | 10,493,470 | ||||||||
Cost
of Sales
|
4,448,761 | 7,640,472 | 1,497,256 | 4,402,089 | ||||||||||||
Gross
Profit
|
13,940,960 | 10,726,174 | 8,508,454 | 6,091,381 | ||||||||||||
Operating
Expenses
|
||||||||||||||||
Selling,
general and administrative
|
2,818,527 | 485,248 | 2,281,877 | 403,606 | ||||||||||||
Operating
income
|
11,122,433 | 10,240,926 | 6,226,577 | 5,687,775 | ||||||||||||
Other
Income and Expenses
|
||||||||||||||||
Interest
income
|
5,795 | 35 | 2,539 | 23 | ||||||||||||
Other
income (expense)
|
- | 166,142 | 1,310 | 89,416 | ||||||||||||
Total
Other Income
|
5,795 | 166,177 | 3,849 | 89,439 | ||||||||||||
Income
Before Income Taxes
|
11,128,228 | 10,407,103 | 6,230,426 | 5,777,214 | ||||||||||||
(Benefit)
provision for Income Taxes
|
||||||||||||||||
Income
tax benefit
|
(19,392,018 | ) | - | - | - | |||||||||||
Provision
for income taxes
|
3,550,184 | 3,434,344 | 1,904,178 | 1,910,514 | ||||||||||||
Total
(benefit) provision for income taxes
|
(15,841,834 | ) | 3,434,344 | 1,904,178 | 1,910,514 | |||||||||||
Net
Income
|
26,970,062 | 6,972,759 | 4,326,248 | 3,866,700 | ||||||||||||
Other
Comprehensive Income:
|
||||||||||||||||
Foreign
currency translation adjustment
|
1,626,647 | 323,029 | 1,123,782 | 129,648 | ||||||||||||
Comprehensive
Income
|
$ | 28,596,709 | $ | 7,295,788 | $ | 5,450,030 | $ | 3,996,348 | ||||||||
Basic
and Diluted Income Per Common Share
|
||||||||||||||||
Basic
|
$ | 0.85 | $ | 0.64 | $ | 0.14 | $ | 0.36 | ||||||||
Diluted
|
$ | 0.85 | $ | 0.43 | $ | 0.14 | $ | 0.24 | ||||||||
Weighted
Average Number Common Shares
|
||||||||||||||||
Oustanding
|
||||||||||||||||
Basic
|
31,546,134 | 10,832,572 | 31,546,134 | 10,832,572 | ||||||||||||
Diluted
|
31,546,134 | 16,244,587 | 31,546,134 | 16,244,587 |
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
2007
|
2006
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Cash
Flows From Operating Activities:
|
||||||||
Net
income
|
$ | 26,970,062 | 6,972,759 | |||||
Adjustments
to reconcile net income to net cash
|
||||||||
provided
by operating activities:
|
||||||||
Depreciation
and amortization
|
355,062 | 84,262 | ||||||
Income
Tax Benefit
|
(19,392,018 | ) | - | |||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(98,391 | ) | 135,399 | |||||
Inventory
|
8,970 | 34,057 | ||||||
Advances
to suppliers
|
315,202 | 3,369,714 | ||||||
Prepaid
expenses
|
(275 | ) | - | |||||
Accounts
payable
|
48,650 | (346,368 | ) | |||||
Unearned
revenue
|
276,734 | 124,036 | ||||||
Taxes
payable
|
6,400,766 | 6,953,609 | ||||||
Accrued
expenses and other payables
|
238,100 | (13,831 | ) | |||||
Cash
provided by operating activities
|
15,122,863 | 17,313,637 | ||||||
Cash
Flows From Investing Activities:
|
||||||||
Purchase
of land use right
|
- | (1,754,734 | ) | |||||
Deposit
on ginseng farm
|
(7,328,709 | ) | - | |||||
Purchase
of property and equipment
|
(616,276 | ) | (112,584 | ) | ||||
(Additions)
reductions to construction in process
|
(7,131,026 | ) | (15,662,736 | ) | ||||
|
||||||||
Cash
used in investing activities
|
(15,076,011 | ) | (17,530,054 | ) | ||||
Cash
Flows From Financing Activities:
|
||||||||
Payment
of notes payable
|
(51,935 | ) | (93,819 | ) | ||||
Proceeds
received upon recapitalization
|
50,000 | - | ||||||
Cash
used in financing activities
|
(1,935 | ) | (93,819 | ) | ||||
Effect
of exchange rate changes on cash and cash equivalents
|
187,107 | 408,083 | ||||||
Increase
in cash and cash equivalents
|
232,025 | 97,847 | ||||||
Cash
and Cash Equivalents - Beginning of period
|
585,126 | 505,869 | ||||||
Cash
and Cash Equivalents - Ending of period
|
$ | 817,151 | $ | 603,716 | ||||
Supplemental
disclosures of cash flow information:
|
||||||||
Interest
paid
|
$ | - | $ | - | ||||
|
||||||||
Income
Taxes paid
|
$ | 207,643 | $ | - |
Purchase
of land use right
|
||
|
Machinery
and Equipment
|
$ | 1,048,687 | ||
Vehicle
|
4.003 | |||
Building
and Plant
|
35,506,771 | |||
Subtotal
|
36,559,461 | |||
Less:
Accumulated Depreciation
|
(653,051 | ) | ||
Construction
in progress
|
7,251,866 | |||
Total
property and equipment, net
|
$ | 43,158,276 |
Item
2. Management’s Discussion and Analysis or Plan of
Operation.
|
Six-Month
Ended
|
Three-Month
Ended
|
|||||||||||||||
December
31,
|
December
31,
|
December
31,
|
December
31,
|
|||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Sales
|
$ | 18,389,721 | $ | 18,366,646 | $ | 10,005,710 | $ | 10,493,470 | ||||||||
Cost
of Sales
|
4,448,761 | 7,640,472 | 1,497,256 | 4,402,089 | ||||||||||||
Gross
Profit
|
13,940,960 | 10,726,174 | 8,508,454 | 6,091,381 | ||||||||||||
Operating
Expenses
|
||||||||||||||||
Selling,
general and administrative
|
2,818,527 | 485,248 | 2,281,877 | 403,606 | ||||||||||||
Operating
income
|
11,122,433 | 10,240,926 | 6,226,577 | 5,687,775 | ||||||||||||
Other
Income and Expenses
|
||||||||||||||||
Interest
income
|
5,795 | 35 | 2,539 | 23 | ||||||||||||
Other
income (expense)
|
- | 166,142 | 1,310 | 89,416 | ||||||||||||
Total
Other Income
|
5,795 | 166,177 | 3,849 | 89,439 | ||||||||||||
Income
Before Income Taxes
|
11,128,228 | 10,407,103 | 6,230,426 | 5,777,214 | ||||||||||||
(Benefit)
provision for Income Taxes
|
||||||||||||||||
Income
tax benefit
|
(19,392,018 | ) | - | - | - | |||||||||||
Provision for income taxes
|
3,550,184 | 3,434,344 | 1,904,178 | 1,910,514 | ||||||||||||
Total
(benefit) provision for income taxes
|
(15,841,834 | ) | 3,434,344 | 1,904,178 | 1,910,514 | |||||||||||
Net
Income
|
26,970,062 | 6,972,759 | 4,326,248 | 3,866,700 |
Item
3. Controls and Procedures
|
Item
1. Legal Proceedings.
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds.
|
Item
3. Defaults Upon Senior
Securities.
|
Item
4. Submission of Matters to a Vote of Security
Holders.
|
Item
5. Other Information.
|
Item
6.
|
Exhibits
|
31.1 Certification pursuant to Section 302
of Sarbanes Oxley Act of 2002
|
32.1 Certification pursuant to Section 906
of Sarbanes Oxley Act of 2002
|
CHINA
DONGSHENG INTERNATIONAL, INC.
|
|||
February
19, 2008
|
By:
|
/s/ Aidong Yu | |
AIDONG
YU
|
|||
Chief Executive Officer, Chief Financial Officer |