NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE A- BUSINESS DESCRIPTION
Hyperera, Inc. (the “Company”), incorporated under the laws of Nevada on February 19, 2008, with registered address at 1955 Baring Blvd, Sparks, NV 89434. Hyperera, Inc. operates its business in the U.S. as Hyperera USA, Inc. the Company’ s wholly owned branch located in the State of Illinois and has principal office at 2316 South Wentworth Avenue, Chicago, IL 60616.
In addition to our U.S. operation, we have one representative office in China. Hyperera Beijing Representative Office (“Hyperera Beijing”) was established on April 2, 2008. It is a representative office on behalf of Hyperera, Inc. The office was closed effective on July 1, 2009; in order to developing and operating more efficiently, at the mean time, Hyperera, Inc established a subsidiary Hyperera Technology (Beijing) Co, Ltd in China in July 3, 2009 to replace the office to conduct and operate the business of trading services, distribution, and marketing of the surgery anesthesia clinic management software and ICU management system software and hardware system in Asia.
Hyperera Technology (Beijing) Co, Ltd, as the wholly owned subsidiary, is registered on July 3, 2008 in China. Hyperera Technology (Beijing), Ltd is located at Room 11A, Block B, Kingwing Hotel, No. 17 Dongsanhuan South Road, Chaoyang District, Beijing, China 100021.
Hyperera, Inc. is headquartered in 2316 South Wentworth Avenue, Chicago, IL 60616, USA. The telephone number is 312-842-2288.
Hyperera Inc is a high-tech enterprise specialized in the surgery anesthesia clinic management software and intensive care unit (ICU) management system, control software research, development, software maintenance, upgrade and services. Our business is the sale of the surgery anesthesia clinic management software and ICU management system in Asia, and North America.
The surgery anesthesia clinic management software and ICU management system software is developed in China by Beijing Chaoran Chuangshi Technology Co., Ltd (“Beijing Chaoran”). It was established in 2002 specializing in technology developed and service, sales of computer hardware and software, machine and electric equipment. Beijing Chaoran Chuangshi Technology Co. is located in No.28 Mujiu Road, Mujiayu Town, Miyun, Beijing, China. On March 1
st
, 2008, Hyperera, Inc. signed a long-term distribution agreement with Beijing Chaoran Chuangshi Technology Co. Beijing Chaoran Chuangshi Technology Co is a Chinese Technology company owned 100% by Mr.Liancheng Li, a Chinese national, the founder of the company.
HYPERERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE B – SIGNIFICANT ACCOUNTING POLICIES
At March 31, 2013 for the three months then ended, the financial statements reflect the assets, revenues and expenditures of the Company on the accrued basis of accounting.
The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect certain amounts reported in the financial statements and disclosures. Accordingly, actual results could differ from those estimates.
The Company has determined the United States dollars to be its functional currency for Hyperera; People’s Republic of China Chinese Yuan Renminbi to be its functional currency in Hyperera Beijing subsidiary. Assets and liabilities were translated to U.S. dollars at the period-end exchange rate. Statement of operations amounts were translated to U.S. dollars using the first date of each month during the year. Gains and losses resulting from translating foreign currency financial statements are accumulated in other comprehensive income (loss), a separate component of shareholders’ equity.
Cash and Cash Equivalents
The Company considers all highly-liquid investments with an original maturity of three months or less when purchased to be cash equivalents. As of March 31, 2013, there was $26,774 cash and cash equivalents.
Property, Plant, and Equipment Depreciation
Property, plant, and equipment are stated at cost. Depreciation is being provided principally by straight line methods with mid-month convention over the estimated useful lives of the assets. As of March 31, 2013, total fixed assets were $ 50,621, and accumulated depreciation was $25,506. The net fixed assets were $25,115 in the Company’s balance sheets as of March 31, 2013. The straight line depreciation methods over 7 years for furniture and 5 years for computers were used to calculate depreciations.
Comprehensive Income (Loss)
The company’s comprehensive income (loss) is comprised of net income (loss), unrealized gains and losses on marketable securities classified foreign currency translation adjustments, and unrealized gains and losses on derivative financial instruments related to foreign currency hedging. For the three months period ended March 31, 2013, the company has $ 823 comprehensive income.
HYPERERA, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Stock-Based Compensation
The Company accounts for stock issued for services using the fair value method. In accordance with FASB ASC 505, the measurement date of shares issued for services is the date at which the counterparty’s performance is complete.
Net Loss Per Common Share
Basic EPS is computed by dividing the income (loss) available to Common Shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock and common stock equivalents outstanding during the periods.
The Company only issued one type of shares, i.e., common shares only. There is no other type of securities issued. Accordingly, the diluted net loss and basic net loss per common share are the same.
Concentration of credit risk
The Company maintains its cash in bank accounts which, at times, may exceed the federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.
Loans to Greensaver Corporation
On April 15, 2011, the Company signed a loan agreement with un-related party Greensaver Corporation to advance loan amount of $1,538,462 at annual interest rate of 10%. As of March 31, 2013, the Company has $233,618 accrued interest receivable. Greensaver Corporation is a silicon battery manufacturer located in 8 North Yangzijinag Rd, Ningbo, Zhejiang, China. The Company is in reorganization under the local Chinese laws. And the status of the relationship with Greensaver Corporation as of March 31, 2013 is as follows:
|
(1)
|
The loan agreement was amended and extended to July 31, 2015;
|
|
(2)
|
Hyperera is no longer pursuing the joint venture with Greensaver Corporation;
|
|
(3)
|
Because Greensaver is incapable to repay the loan, the loan amount plus interest was paid only once at January 2013 for total RMB 500,000 by Greensaver as of today. The loan agreement was amended on March 2013 to provide for a monthly payment of $80,645 starting July 1, 2013 and continuing until the loan is paid off by July 2015.
|
HYPERERA, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition
In accordance with the FASB ASC
985-605-25-3 Software Revenue Recognition
if the arrangement does not require significant production, modification, or
Customization of software, revenue shall be recognized when all of the following criteria are
a. Persuasive evidence of an arrangement exists (paragraphs 985-605-25-15 through 25-17).
b. Delivery has occurred (paragraphs 985-605-25-18 through 25-29).
c. The vendor’s fee is fixed or determinable (see paragraphs 985-605-25-30 through 25-40).
d. Collectability is probable (paragraphs 985-605-25-13 through 25-14 and 985-605-
25-30 through 25-40).
The Company recognizes sales revenue for hardware, software and customized clinical information systems sales when it is realized or realizable and earned.
For most of the Company’s hardware product sales, these criteria are met at the time the product is shipped. The Company recognizes revenue from the sale of hardware products, and software bundled with hardware that is essential to the functionality of the hardware sold by the Company in accordance with general revenue recognition accounting guidance
based on guidance in FASB ASC 605-25.
For March 31, 2013 and 2012, there were no hardware sales.
In accordance with FASB ASC 605-25 and FASB ASC 985-605-25, “Revenue Recognition,” the Company recognizes software sales revenue when it is realized or realizable and earned. Revenue is realized or realizable when the product is exchanged for cash or for claim to cash or other assets that are readily convertible into known amount of Cash.
HYPERERA, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition (Continued)
The Company must meet all of the following four criteria under FASB ASC 605-25 and FASB ASC 985-605-25 to recognize software revenue.
|
·
|
Persuasive evidence of an arrangement exists
|
|
·
|
The vendor’s fee is fixed or determinable
|
|
·
|
Collectability is probable.
|
The Company recognizes revenue in accordance with industry specific software accounting guidance for the following types of sales transactions: (i) standalone sales of software products, (ii) sales of software upgrades and (iii) sales of software bundled with hardware not essential to the functionality of the hardware.
The Company’s CIS software is standalone, and for the period of three months ended March 31, 2013 and 2012, there were no software sales revenue.
|
(3)
|
Multiple-element Arrangement for Sales of Hardware, Software and CIS:
|
We currently recognize multiple-element sales revenue pursuant to FASB ASC Topic 985-605 Software, Revenue Recognition, or ASC 985-605. We generate revenue from the sale of our software products sold directly to end-users. We also generate revenue from sales of hardware and third party software, implementation, training, software
customization, post-contract support (maintenance). A typical system contract contains multiple elements of the above items. FASB ASC Topic 985-605-25, Software, Revenue Recognition, Multiple Elements, or ASC 985-605-25, as amended, requires revenue earned on software arrangements involving multiple elements to be allocated to each element based on the relative fair values of those elements. The fair value of an element must be based on vendor specific objective evidence ("VSOE"). We limit our assessment of VSOE for each element to either the price charged when the same element is sold separately or the price established by management having the relevant authority to do so, for an element not yet sold separately. VSOE calculations are updated and reviewed at the end of each quarter or annually depending on the nature of the product or service.
HYPERERA, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition (Continued)
In accordance with paragraph 4-14 of FASB ASC 605-45, "Reporting Revenues Gross as a Principal versus Net as an Agent", the Company will recognize revenues on a gross basis. ASC 605-45 discusses whether revenues and cost of goods sold to arrive at gross profit and their corresponding assets and liabilities should be recorded at gross or net.
The following indicators of gross revenue recognition are applicable in the Company:
|
·
|
Acts as principal in the transaction.
|
|
·
|
Has risk and rewards of ownership, such as risk of loss for collection, delivery and returns, and
|
|
·
|
Takes title to the products,
|
|
·
|
The company can change the products or perform part of the service, and the Company customizes the supplier’s software based on customer’s needs.
|
All the indicators of net revenue reporting (ASC 605-45, paragraph 16-23) are not applicable in the Company.
Operating Expenses
Operation expenses include selling, general & administrative expenses and depreciation & amortization expenses.
For the three months period of January 1 to March 31, 2013, and 2012, there’s total of $50,733 and $60,442, operating expenses respectively; and $ 956,726 for the cumulative period February 19, 2008 to March 31, 2013. The selling, general and administrative expenses and depreciation details were showed in the Exhibit A.
Professional Fee
Professional fees are included accounting and auditing fee, consulting fee, legal fee, SEC filing expenses, and other professional fees. For the three months ended March 2013 and 2012, the Company incurred $300 and $11,868 professional fee respectively; and $ 334,365 for the cumulative period February 19, 2008 to March 31, 2013.
HYPERERA, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Tax
The Company filed extension for corporate tax return Form 1120 to Internal Revenue Service and IL 1120 to the State of Illinois for the year 2012. There is no income tax for the State of Nevada.
Hyperera Technology (Beijing) Co, Ltd, filed annual report to Beijing local tax bureau, and no income tax dues were paid to Chinese government.
Operating Leases
The Company entered into two leases for its corporate offices under terms of non-cancelable operating leases. The first lease term is from March 1, 2008 through February 28, 2014 and requires a $600 monthly lease payment. This office space is the corporate office of US, and is leased from a related party, which is the Company’s officer Simon Bai. For the three months ended March 31, 2013 and 2012, there were $1,800 rent expenses incurred for both periods.
The second lease is the office space for China’s subsidiary in Beijing. The lease term runs from July 1, 2009 through March 25, 2013 and required a RMB 17,552 monthly lease payment. For the three months ended March31, 2013 and 2012, there was USD $ 9,574 and $ 8,101 rent expenses incurred correspondingly.
Therefore, there was total of $ 11,374 and $9,901 rent expenses for the three months end March 31, 2013 and 2012.
NOTE C – RELATED PARTY TRANSACTIONS
Common Shares Issued to Executive and Non-Executive Officers and Directors
As of March 31, 2013, total 20,400,000 shares were issued to officers and directors were not changed. And the total outstanding shares were 38,204,000; the percentage of common shares issued to executive and non-executive officers and directors have been changed accordingly. Please see the Table below for details:
HYPERERA, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE C – RELATED PARTY TRANSACTIONS (Continued)
Common Shares Issued to Executive and Non-Executive Officers and Directors (Continued)
|
Name
|
|
Title
|
|
|
Share QTY
|
|
|
Amount
|
|
|
Date
|
|
|
% of Common Share*
|
|
|
Zhi Yong Li
|
|
Chairman
|
|
|
|
10,000,000
|
|
|
$
|
10,000.00
|
|
|
2/19/2008
|
|
|
|
26.18
|
%
|
|
Wei Wu
|
|
President
|
|
|
|
5,000,000
|
|
|
$
|
5,000.00
|
|
|
2/19/2008
|
|
|
|
13.09
|
%
|
|
Hui Tao Zhou
|
|
Director
|
|
|
|
5,000,000
|
|
|
$
|
5,000.00
|
|
|
2/19/2008
|
|
|
|
13.09
|
%
|
|
Jian Wu Zhang
|
|
Director
|
|
|
|
100,000
|
|
|
$
|
3,000.00
|
|
|
3/31/2008
|
|
|
|
0.26
|
%
|
|
Ming Liu
|
|
Director
|
|
|
|
100,000
|
|
|
$
|
3,000.00
|
|
|
3/31/2008
|
|
|
|
0.26
|
%
|
|
Hong Tao Bai
|
|
Vice-President
|
|
|
|
100,000
|
|
|
$
|
3,000.00
|
|
|
3/31/2008
|
|
|
|
0.26
|
%
|
|
Nan Su
|
|
CTO
|
|
|
|
100,000
|
|
|
$
|
3,000.00
|
|
|
3/31/2008
|
|
|
|
0.26
|
%
|
|
Simon Bai
|
|
CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.00
|
%
|
|
Total
|
|
|
|
|
|
20,400,000
|
|
|
$
|
32,000.00
|
|
|
|
|
|
|
53.40
|
%
|
* The percentage was based on the total outstanding shares of 38,204,000 as of March 31, 2013.
Loans from Shareholders
On March 2, 2008, founder of the Company, Mr. Zhiyong Li opened a bank account at Chicago branch with CitiBank. Mr. Zhiyong Li loaned $500.00 to the Company to open the bank account, and the same amount have returned back to him on March, 2009. In the year of 2009, the Company’s founder and CEO, Mr. Zhiyong Li have loaned $53,631 to Beijing subsidiary, Hyperera Technology (Beijing) Co. Ltd for operating and administrating expenses.
In 2010, the Company repaid the loan balance to Mr. Li Zhiyong. As of December 31, 2010, there was travel related expense of $985 paid by Mr. Li Zhiyong, which was accounted as loans from shareholders.
From January to March 31, 2011, there were no additional loans from Mr. Li Zhiyong. Therefore, as of March 31, 2011, the total balance of Loans from Shareholders was $985.
HYPERERA, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE C – RELATED PARTY TRANSACTIONS (Continued)
Loans from Shareholders (Continued)
From April to June 30, 2011, Mr. Zhiyong Li advanced additional amount of $6,901 to the Company. The loans would be repaid as request without interest. As of December 31, 2011, the balance of loan from Shareholder was $7,886.
In 2012, Mr. Zhiyong Li advanced additional $24,867 to the Company. Therefore, as of December 31, 2012, the balance of loan from Shareholder was $32,753. The loans would be repaid as request without interest.
For the period January 1 to March 31, 2013, the Company returned $ 24,616 back to the shareholder. Therefore, as of March 31, 2013, the balance of loan from Shareholder is $8,137. The loans would be repaid as request without interest.
Loans to Related Party Supplier- Beijing Chaoran
From
October to December 2010, the Company advanced short-term loans of $995,836 as of December 31, 2010 to related party supplier, Beijing Chaoran. The interest rate was agreed at annual rate of 3.0%, the accrued interest receivables were $3,127. The repayment terms were demanded as request by the Company.
From January to March 31, 2011, the Company advanced additional short-term loans of $747,500 to related party supplier, Beijing Chaoran. The interest rate was estimated at annual rate of 3%, the accrued interest receivables were $9,273.
On April 15, 2011, Beijing Chaoran returned the loan amount of $1,538,462 to the Company; the Company signed a loan agreement with un-related party Greensaver Corporation to advance loan amount of $1,538,462 at annual interest rate of 10%. The loan term is for short-term 6 months.
As of December 31, 2012, the balance of loan amount to Related Party Supplier-Beijing Chaoran was $5,873, and the interest incomes from Beijng Chaoran were based on annual interest rate of 3%.
As of March 31, 2013, the balance of loan amount to Related Party Supplier-Beijing Chaoran is $ 9,754, and the interest incomes from Beijng Chaoran were based on annual interest rate of 3%.
HYPERERA, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE C – RELATED PARTY TRANSACTIONS (Continued)
Cost of Goods Sold
The Company’s purchase cost is primarily from supplier, Beijing Chaoran Chuangshi Technology Co., Ltd (“Beijing Chaoran”), owned 100% by Mr.Liancheng Li, the father of Mr. Zhiyong Li. The management believes that the purchase price for the parts will be market price.
The products the Company will sell are provided by Beijing Chaoran Chuangshi Technology Co., Ltd. Beijing Chaoran was established in 2002 specializing in management information system applied in power industry. The Company signed a two-year software license and distribution agreement with Beijing Chaoran on March 1, 2009.
Under the terms of the agreement Beijing Chaoran authorizes Hyperera to be its exclusive sales and service agent for suegery anesthesia clinic management software and ICU management system product lines. The product lines shall include the products that Beijing Chaoran developed before the agreement signed and the products that will be developed solely by Beijing Chaoran during the term of the agreement. Beijing Chaoran is the exclusive supplier of the products Hyperera sells. The management of Hyperera, Inc. believes that the purchase price for the system and software from Hyperera will be market price. Hyperera, Inc. and Beijing Chaoran are two totally separated entities, i.e., Hyperara, Inc. is a USA corporation and will fully comply with USA regulations and USA general accepted accounting principles; Beijing Chaoran is a Chinese company and it will comply with Chinese legal systems. Hyperera, Inc. and Beijing Chaoran will operate independently. Beijing Chaoran, as a Chinese local company, will record their software and hardware costs based on the Chinese accounting regulations rulings. But, when Hyperera, Inc. purchases the software and hardware and the services from Beijing Chaoran, Hyperera, Inc. will assume the product and service liabilities with customers, and Hyperera, Inc. record the actual costs paid to Beijing Chaoran as long as the products or services been delivered to Hyperera, Inc. by Beijing Chaoran.
The management of Beijing Chaoran disclosed to Hyperera, Inc. that Beijing Chaoran adopted the cost plus pricing policies with market adjustment, negotiable with customers. Beijing Chaoran adopted the cost plus system for all the products for all customers including the product, surgery anesthesia clinic management software and ICU management system exclusively distributed by Hyperera, Inc. Specifically, the selling price for Beijing Chaoran is determined by total actual cost of direct materials (hardware), direct labor, and allocated overhead, plus 5-10% of total cost.
In March 1, 2009, the Company placed order to purchase the three hardware parts through Beijing Chaoran, the total cost of the hardware purchase is $207,998.00, the amount of $59,998 and $ 148,000 was prepaid on March 9 and 18, 2009 respectively.
HYPERERA, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE C – RELATED PARTY TRANSACTIONS (Continued)
Cost of Goods Sold (Continued)
And the prepaid amount of $59,998 became cost of good sold as of December 31, 2009, and the prepaid amount of $148,000 became cost of good sold as of March 31, 2010.
For the three months ended March 31, 2013 and 2012, there was no cost of goods sold incurred.
NOTE D – SHAREHOLDERS’ EQUITY
Under the Company’s Articles of Incorporation dated February 19, 2008, the Company is authorized to issue 200,000,000 shares of capital stock with a par value of $0.001.
On Feburary19, 2008, the Company was incorporated in the State of Nevada.
On February 19, 2008, , the Company issued 20,000,000 shares to three founders of the Company, Zhiyong Li, Wei Wu, and Huitao Zhou at $0.001 per share or $20,000 for initial capital (stock subscription receivable). On March 31, 2008, the Company issued total 5,200,000 shares to 52 shareholders at $0.03 per share or $156,000 for common stock (stock subscription receivable). On April 28, 2008, the Company issued additional 1,400,000 shares to 14 shareholders at $0.03 per share or $42,000 for common stock (stock subscription receivable). On July 20, 2008, additional 1,200,000 shares were issued to 7 shareholders at $ 0.03 per share, and the total proceeds of $36,000 were received.
On July 20, 2008, 139,000 shares were issued to Williams Law Group at $ 0.03 per share for the legal service value $4,170.
At December 15, 2009, additional 60,000 shares were issued to 3 shareholders, Baozhong Fu, Long Zhang, and Xuefeng Zhang, Chinese citizens, at $ 0.20 per share, and the total proceeds of $12,000 were received.
On September 10, 2010, additional 2,030,000 shares were issued to 79 shareholders, Chinese citizens, at $ 0.20 per share or $ 406,000 for common stock (stock subscription receivable). On December 15, 2010, additional 5,855,000 shares were issued to 70 shareholders at $0.20 per share for $1,171,000. On December 31, 2010, additional 100,000 shares were issued to Mr. Jing Li for financial consulting services at $0.20 per share for $20,000. Therefore, as of December 31, 2010, the Company has a total of 35,984,000 shares were issued and outstanding.
HYPERERA, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE D – SHAREHOLDERS’ EQUITY (Continued)
At January 1, 2011, 50,000 shares were issued to one shareholder at $0.20 per share for $10,000. On March 31, 2011, additional 1,660,000 shares were issued to 13 shareholders, Chinese citizens at RMB 1.40 per share, equivalent at USD $0.2153 per share for RMB 2,324,000. At May 1, 2011, 210,000 shares were issued to 8 shareholders at $0.30 per share for $63,000. At June 30, 2011, 200,000 shares were issued to one shareholder at $0.20 per share for $40,000 which was stock subscription receivable as of June 30, 2011.
At July 15, 2011 100,000 shares were issued to one shareholder at $0.45 per share, total proceeds of $45,000 were received on July 2011.
There was no share issued in year 2012 and three months ended March 31, 2013.
Therefore, as of March 31, 2013, the total outstanding common shares were 38,204,000.
Stock Subscription Receivable
At February 19, 2008, the Company had receivables from its four founding stockholders aggregating $20,000 for the purchase of their Company common stock.
At March 31, 2008, the Company had receivables from its 52 shareholders aggregating $ 156,000 for the purchase of their Company common stock.
And at April 28, 2008, the Company had receivables from its 14 shareholders aggregating $ 42,000 for the purchase of their Company common stock.
All receivables of the above $ 218,000 were subsequently paid in full in July 2008.
At March 31, 2011, the Company had receivables from 4 shareholders aggregating of $90,426 for 420,000 shares issued. The total receipts were received on April 2011.
At June 30, 2011, 200,000 shares were issued to one shareholder at $0.20 per share for $40,000 which was stock subscription receivable as of June 30, 2011. Total proceeds at $1,318 were received on July 2011.
At October 2011, the stock subscription receivable of $ 38,682 was received.
As of March 31, 2013, total stock subscription receivable on balance sheet is $0.00.
HYPERERA, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE E – GOING CONCERN
As shown in the accompanying financial statements which have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern, the Company has incurred operating losses of $50,733 and $60,442 for three months ended March 31, 2013 and 2012 and a cumulative operating loss of $ 885,133 for the period February 19, 2008 (inception) through March 31, 2013. The Company is considered to be a development stage company.
The financial statements do not include any adjustments relating to the carrying amounts of recorded assets or the carrying amounts and classification of recorded liabilities that may be required should the Company be unable to continue as a going concern.
The Company’s short-term loans to GreenSaver Corp. of $1,538,462 raised substantial doubt about it’s ability to carry out it’s operational business plan and cause uncertainty about its cash flows immediately, such borrows or withdraws may raise substantial doubt about the Company’s ability to continue as going concern immediately. The Company amended the loan agreement with new management of the Greensaver Corp and new management of Greensaver Corp will start paying the principal and interest to the Company over the next 3 years, the loan balance will be paid off by July 31, 2015 based on the amended loan agreement signed on March 2013. Due to GreenSaver Corp is in reorganization under the local Chinese laws; there may be uncertainty about the Greesaver Corp. The risk of the loan default is significant high. If the loan is in default, then the Company may be required to cease or curtail its operation immediately.
There is no guarantee that the Company will be able to raise enough capital or generate revenues to sustain its operations and carry out its business plan. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainty and if the Company is unable to generate significant revenue or secure financing, then the Company may be required to cease or curtail its operation.
Exhibit A:
|
|
|
Three Month
Ended
March 31
|
|
|
Three Month
Ended
March 31
|
|
|
Cumulative from
February 19, 2008
(Date of Inception) to
March 31,
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
Automobile Expenses
|
|
|
451
|
|
|
|
4,538
|
|
|
|
14,821
|
|
|
Administration Expense
|
|
|
225
|
|
|
|
-
|
|
|
|
225
|
|
|
Bank Service Charges
|
|
|
128
|
|
|
|
218
|
|
|
|
3,454
|
|
|
Bank Interest
|
|
|
-
|
|
|
|
31
|
|
|
|
31
|
|
|
Computer and Internet Expenses
|
|
|
159
|
|
|
|
-
|
|
|
|
403
|
|
|
Consulting Fees
|
|
|
-
|
|
|
|
-
|
|
|
|
43,000
|
|
|
Depreciation
|
|
|
3,844
|
|
|
|
2,380
|
|
|
|
25,506
|
|
|
Employees Welfare Expense
|
|
|
-
|
|
|
|
462
|
|
|
|
1,385
|
|
|
Gift and promotion Expense
|
|
|
1,758
|
|
|
|
5,173
|
|
|
|
6,931
|
|
|
small tools and equipment
|
|
|
-
|
|
|
|
150
|
|
|
|
150
|
|
|
Dues and Subscriptions
|
|
|
-
|
|
|
|
-
|
|
|
|
110
|
|
|
Insurance Expense
|
|
|
2,291
|
|
|
|
523
|
|
|
|
12,481
|
|
|
License & Registration
|
|
|
399
|
|
|
|
-
|
|
|
|
12,743
|
|
|
Meals and Entertainment
|
|
|
-
|
|
|
|
1,820
|
|
|
|
14,811
|
|
|
Meeting & Conference
|
|
|
-
|
|
|
|
-
|
|
|
|
3,857
|
|
|
Office Supplies
|
|
|
9,923
|
|
|
|
1,958
|
|
|
|
40,962
|
|
|
Purchase of Bank Note
|
|
|
-
|
|
|
|
-
|
|
|
|
7
|
|
|
Supplies
|
|
|
-
|
|
|
|
-
|
|
|
|
1,307
|
|
|
Payroll Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Wage Payment-China
|
|
|
18,426
|
|
|
|
15,104
|
|
|
|
180,974
|
|
|
Payroll Withholding Tax-China
|
|
|
35
|
|
|
|
39
|
|
|
|
4,437
|
|
|
Total Payroll Expenses
|
|
|
18,461
|
|
|
|
15,143
|
|
|
|
185,412
|
|
|
Postage
|
|
|
-
|
|
|
|
802
|
|
|
|
1,977
|
|
|
Professional Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legal Fee
|
|
|
-
|
|
|
|
-
|
|
|
|
93,253
|
|
|
Accounting & Auditing
|
|
|
-
|
|
|
|
-
|
|
|
|
83,520
|
|
|
SEC Filling Fee
|
|
|
-
|
|
|
|
11,568
|
|
|
|
29,630
|
|
|
Professional Fees - Other
|
|
|
300
|
|
|
|
300
|
|
|
|
127,961
|
|
|
Professional Fees
|
|
|
300
|
|
|
|
11,868
|
|
|
|
334,365
|
|
|
Rent Expense
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
Rent Expense - China Subsidiary
|
|
|
9,574
|
|
|
|
8,101
|
|
|
|
124,901
|
|
|
Rent Expense - US Corporation
|
|
|
1,800
|
|
|
|
1,800
|
|
|
|
36,600
|
|
|
Rent Expense - Other
|
|
|
-
|
|
|
|
-
|
|
|
|
3,024
|
|
|
Rent Expense
|
|
|
11,374
|
|
|
|
9,901
|
|
|
|
164,524
|
|
|
Tax-China Operation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax - China
|
|
|
-
|
|
|
|
-
|
|
|
|
317
|
|
|
Local Operation Tax - China
|
|
|
-
|
|
|
|
-
|
|
|
|
11,149
|
|
|
Tax-China Office Operation
|
|
|
-
|
|
|
|
-
|
|
|
|
11,466
|
|
|
Telephone Expense
|
|
|
-
|
|
|
|
-
|
|
|
|
1,213
|
|
|
Travel Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Air Tickets
|
|
|
-
|
|
|
|
1,672
|
|
|
|
41,857
|
|
|
Visa Application Fee
|
|
|
-
|
|
|
|
-
|
|
|
|
133
|
|
|
Transportation expenses
|
|
|
-
|
|
|
|
639
|
|
|
|
9,768
|
|
|
Lodging & Hotel
|
|
|
838
|
|
|
|
1,865
|
|
|
|
12,388
|
|
|
Travel Expense
|
|
|
838
|
|
|
|
4,176
|
|
|
|
64,146
|
|
|
Vehicle and Vessel Usage Tax
|
|
|
-
|
|
|
|
-
|
|
|
|
74
|
|
|
Utilities
|
|
|
582
|
|
|
|
1,302
|
|
|
|
11,366
|
|
|
Total Expense
|
|
$
|
50,733
|
|
|
$
|
60,442
|
|
|
$
|
956,726
|
|