bigg8-k.htm



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported) May 20, 2014

BIG TREE GROUP, INC.
(Exact name of registrant as specified in its charter)
 
Colorado
(State or other jurisdiction of incorporation)
0-27845
(Commission File Number)
90-0287423
(IRS Employer Identification No.)


South Part 1-101, Nanshe Area, Pengnan Industrial Park, North Yingbinbei Road, Waisha Town, Longhu District, Shantou, Guangdong, China
515023
(Address of principal executive offices)
(Zip Code)


Registrant's telephone number, including area code
(86) 754 83238888

not applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


 
 

 


 
Item 4.02
Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Report.

On May 20, 2014, the Board of Directors of Big Tree Group, Inc. determined that certain of our consolidated financial statements could no longer be relied upon as a result of an error in these financial statements, including:

• our unaudited condensed consolidated balance sheet as of June 30, 2013 and the related condensed consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2013; and

• our unaudited condensed consolidated balance sheet as of September 30, 2013 and the related condensed consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2013.
.
Based upon analysis of our current tax research and interpretations of China tax regulations, we have determined that our subsidiary, Big Tree International Co., Ltd., a Brunei company, may be considered a non-resident PRC company and may be subject to China income taxes and other payroll benefit taxes. Accordingly, we have decided to accrue China income taxes and payroll benefit taxes pursuant to China tax regulations. Currently, we are reviewing our corporate tax structure and plan on restructuring our tax structure to ensure that Big Tree International Co., Ltd. is not subject to such taxes in China.  We have previously restated our audited consolidated financial statements as of December 31, 2012 and for the year then ended, as well as our unaudited consolidated financial statements at March 31, 2013 and for the three months then ended, to reflect errors in those financial statements based upon this analysis.

Our Quarterly Report on Form 10-Q for the three and six months ended June 30, 2014, when filed, will reflect the following restatements in our unaudited consolidated financial statements at June 30, 2013 and for the three and six months then ended:

Ÿ           an increase in our current liabilities by $1,544,401,
Ÿ           a reduction in our net income by $199,400 or $0.02 per common share (basic and diluted), and $299,329 or $0.03 per common share (basic and diluted) for the three and six months ended June 30, 2013, respectively, to reflect the accrual of income taxes, payroll benefit taxes and all related estimated penalties and interest,
Ÿ           a reduction in the beginning retained earnings by $1,208,543 to reflect the accrual of such taxes and penalties for the 2012 and 2011 periods, and
Ÿ           a decrease in accumulated other comprehensive income by $36,529.

 
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The effect of this restatement in our unaudited consolidated financial statements at June 30, 2013 and for the three and six months ended June 30, 2013 are shown in the table as follows: 

                   
Consolidated balance sheet data
 
June 30, 2013
 
   
As previously filed
 
Adjustments to Restate
     
As Restated
 
Total Assets
 
$
13,351,392
 
$
-
     
$
13,351,392
 
                         
Salaries and related benefits payable
   
68,134
   
260,897
 
(a)
   
329,031
 
Other payables
   
13,292
   
304,484
 
(a)
   
317,776
 
Taxes payable
   
-
   
979,020
 
(a)
   
979,020
 
Total Current Liabilities
   
11,795,070
   
1,544,401
       
13,339,471
 
Total Liabilities
   
11,795,070
   
1,544,401
       
13,339,471
 
                         
Stockholders’ Equity (Deficit):
                       
Common stock ($0.00001 par value; 100,000,000 shares authorized; 10,350,192 shares issued and outstanding at June 30, 2013)
   
104
   
-
       
104
 
Additional paid-in capital
   
302,399
   
-
       
302,399
 
Retained earnings
   
3,061,883
   
(1,507,872
)
(a)
   
1,544,011
 
Accumulated other comprehensive income (loss)
   
67,633
   
(36,529
)
(a)
   
31,104
 
Advance due from related party
   
(1,875,697
)
 
-
       
(1,875,697
)
Total Stockholders’ Equity (Deficit)
   
1,556,322
   
(1,544,401
)
     
11,921
 
Total Liabilities and Stockholders’ Equity (Deficit)
 
$
13,351,392
 
$
-
     
$
13,351,392
 

(a)
To increase current liabilities by $1,544,401, to reduce net income by $199,400 and $299,329 for the three and six months ended June 30, 2013 to reflect the accrual of income taxes, payroll benefit taxes and all related estimated penalties and interest, to reduce beginning retained earnings by $1,208,543 to reflect the accrual of such taxes and penalties for the 2012 and 2011 period, and to decrease accumulated other comprehensive income by $36,529.

Consolidated statement of operations and comprehensive income
 
For the Three Months Ended
June 30, 2013
   
As previously filed
 
Adjustments to Restate
   
As Restated
Gross profit
 
$
889,136
 
$
-
     
$
889,136
 
Operating expenses
   
453,334
   
41,983
 
(a)
   
495,317
 
Operating income
   
435,802
   
(41,983
)
     
393,819
 
Other income (expenses)
   
(102,329
)
 
(53,988
)
(a)
   
(156,317
)
Income before income taxes
   
333,473
   
(95,971
)
     
237,502
 
Income taxes
   
-
   
(103,429
)
(a)
   
(103,429
)
Net income (loss)
   
333,473
   
(199,400
)
     
134,073
 
Foreign currency translation income
   
53,392
   
(21,559
)
(a)
   
31,833
 
Comprehensive Income (loss):
 
$
386,865
 
$
(220,959
)
   
$
165,906
 
Net Income (Loss) Per Common Share
                       
     Basic
 
$
0.03
 
$
(0.02
)
   
$
0.01
 
     Diluted
 
$
0.03
 
$
(0.02
)
   
$
0.01
 


 
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Consolidated statement of operations and comprehensive income
 
For the Six Months Ended
June 30, 2013
   
As previously filed
 
Adjustments to Restate
   
As Restated
Gross profit
 
$
1,583,786
 
$
-
     
$
1,583,786
 
Operating expenses
   
999,928
   
78,710
 
(a)
   
1,078,638
 
Operating income
   
583,858
   
(78,710
)
     
505,148
 
Other expenses
   
(185,004
)
 
(59,866
)
(a)
   
(244,870
)
Income before income taxes
   
398,854
   
(138,576
)
     
260,278
 
Income taxes
   
-
   
(160,753
)
(a)
   
(160,753
)
Net income (loss)
   
398,854
   
(299,329
)
     
99,525
 
Foreign currency translation income
   
70,930
   
(28,423
)
(a)
   
42,507
 
Comprehensive income (loss):
 
$
469,784
 
$
(327,752
)
   
$
142,032
 
Net Income (Loss) Per Common Share
                       
     Basic
 
$
0.04
 
$
(0.03
)
   
$
0.01
 
     Diluted
 
$
0.04
 
$
(0.03
)
   
$
0.01
 

(a)
To reduce net income by $199,400 and $299,329 for the three and six months ended June 30, 2013 to reflect the accrual of income taxes, payroll benefit taxes and all related estimated penalties and interest and to decrease foreign currency translation income by $21,559 and $28,423 for the three and six months ended June 30, 2013, respectively.

There was no change to the components of our previous reported consolidated statement of cash flows for the six months ended June 30, 2013.

In addition, our Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2014, when filed, will reflect the following restatements in our unaudited consolidated financial statements at September 30, 2013 and for the three and nine months then ended:

Ÿ           an increase our current liabilities by $1,798,559,
Ÿ           a reduction in our net income by $243,136 or $0.03 per common share (basic and diluted), and $542,465  or $0.07 per common share (basic and diluted) for the three and nine months ended September 30, 2013, to reflect the accrual of income taxes, payroll benefit taxes and all related estimated penalties and interest,
Ÿ           a reduction in the beginning retained earnings by $1,208,543 to reflect the accrual of such taxes and penalties for the 2012 and 2011 periods, and
Ÿ           a decrease in our accumulated other comprehensive income by $47,551.

 
- 3 -

 

The effect of this restatement in our unaudited consolidated financial statements at September 30, 2013 and for the three and nine months ended September 30, 2013 are shown in the table as follows:

                 
 
Consolidated balance sheet data
 
September 30, 2013
 
   
As previously filed
 
Adjustments to Restate
   
As Restated
 
Total Assets
 
$
12,750,012
 
$
-
   
$
12,750,012
 
                       
Salaries and related benefits payable
   
71,872
   
305,005
 
(a)
 
376,877
 
Other payables
   
9,112
   
355,289
 
(a)
 
364,401
 
Taxes payable
   
5,218
   
1,138,265
 
(a)
 
1,143,483
 
Total Current Liabilities
   
10,135,200
   
1,798,559
     
11,933,759
 
Total Liabilities
   
10,135,200
   
1,798,559
     
11,933,759
 
                       
Stockholders’ Equity (Deficit):
                     
Common stock ($0.00001 par value; 100,000,000 shares authorized; 10,350,192 shares issued and outstanding at September 30, 2013)
   
104
   
-
     
104
 
Additional paid-in capital
   
302,399
   
-
     
302,399
 
Retained earnings
   
3,653,677
   
(1,751,008
)
(a)
 
1,902,669
 
Accumulated other comprehensive income (loss)
   
95,477
   
(47,551
)
(a)
 
47,926
 
Advance due from related party
   
(1,436,845
)
 
-
     
(1,436,845
)
Total Stockholders’ Equity (Deficit)
   
2,614,812
   
(1,798,559
)
   
816,253
 
Total Liabilities and Stockholders’ Equity (Deficit)
 
$
12,750,012
 
$
-
   
$
12,750,012
 
 
(a)
To increase current liabilities by $1,798,559, to reduce net income by $243,136 and $542,465 for the three and nine months ended September 30, 2013 to reflect the accrual of income taxes, payroll benefit taxes and all related estimated penalties and interest, to reduce beginning retained earnings by $1,208,543 to reflect the accrual of such taxes and penalties for the 2012 and 2011 period, and to decrease accumulated other comprehensive income by $47,551.
 

Consolidated statement of operations and comprehensive income
 
For the Three Months Ended
September 30, 2013
   
As previously filed
 
Adjustments to Restate
   
As Restated
Gross profit
 
$
1,172,794
 
$
-
     
$
1,172,794
 
Operating expenses
   
470,685
   
42,350
 
(a)
   
513,035
 
Operating income
   
702,109
   
(42,350
)
     
695,759
 
Other expenses
   
(110,315
)
 
(48,627
)
(a)
   
(158,942
)
Income before income taxes
   
591,794
   
(90,977
)
     
500,817
 
Income taxes
   
-
   
(152,159
)
(a)
   
(152,159
)
Net income (loss)
   
591,794
   
(243,136
)
     
348,658
 
Foreign currency translation income
   
27,844
   
(11,022
)
(a)
   
16,822
 
Comprehensive income (loss):
 
$
619,638
 
$
(254,158
)
   
$
365,480
 
Net Income (Loss) Per Common Share
                       
     Basic
 
$
0.06
 
$
(0.03
)
   
$
0.03
 
     Diluted
 
$
0.06
 
$
(0.03
)
   
$
0.03
 


 
- 4 -

 

 
Consolidated statement of operations and comprehensive income
 
For the Nine Months Ended
September 30, 2013
   
As previously filed
 
Adjustments to Restate
   
As Restated
Gross profit
 
$
2,756,580
 
$
-
     
$
2,756,580
 
Operating expenses
   
1,470,613
   
121,060
 
(a)
   
1,591,673
 
Operating income
   
1,285,967
   
(121,060
)
     
1,164,907
 
Other expenses
   
(295,319
)
 
(108,493
)
(a)
   
(403,812
)
Income before income taxes
   
990,648
   
(229,553
)
     
761,095
 
Income taxes
   
-
   
(312,392
)
(a)
   
(312,392
)
Net income (loss)
   
990,648
   
(542,465
)
     
448,183
 
Foreign currency translation income
   
98,774
   
(39,445
)
(a)
   
59,329
 
Comprehensive income (loss):
 
$
1,089,422
 
$
(581,910
)
   
$
507,512
 
Net Income (Loss) Per Common Share
                       
     Basic
 
$
0.11
 
$
(0.07
)
   
$
0.04
 
     Diluted
 
$
0.11
 
$
(0.07
)
   
$
0.04
 

(a)
To reduce net income by $243,136 and $542,465 for the three and nine months ended September 30, 2013 to reflect the accrual of income taxes, payroll benefit taxes and all related estimated penalties and interest and to decrease foreign currency translation income by $11,022 and $39,445 for the three and nine months ended September 30, 2013.

When filed, our Quarterly Reports on Form 10-Q for the period ended June 30, 2014 and September 30, 2014 will reflect the restatement of our unaudited condensed consolidated financial statements as of June 30, 2013 and for the three and six months ended June 30, 2013, and as of September 30, 2013 and for the three and nine months ended September 30, 2013, respectively.  Our Chief Financial Officer has discussed the matters disclosed in this report with RBSM LLP, our independent registered public accounting firm, which issued the audit report on our December 31, 2013 consolidated financial statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 
Big Tree Group, Inc.
   
Date: June 5, 2014
By: /s/ Wei Lin
 
Wei Lin, Chief Executive Officer and Chairman of the Board of Directors

 
 
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