WEB NEWS CFO Trail
On May 17, 2011, we received resignations from Shouren Zhao, Xiangfei Zeng, Xuanjun Yang and Liming Bi. Mr. Zhao resigned as president, chief executive officer and as chairman to our company’s board of directors. Ms. Zeng resigned as our company’s
chief financial officer . Mr. Yang and Mr. Bi resigned as directors of our company. Mr. Zhao’s, Ms. Zeng’s, Mr. Yang’s and Mr. Bi’s resignations were not the result of any disagreements with the Company regarding its operations, policies, practices or otherwise. We also decreased the number of directors on our board of directors to two (2).
Internal Controls
During the first six months of fiscal year 2011, we implemented the following measures to improve our internal control over financial reporting:
strengthened our internal control over financial reporting and disclosure controls and procedures.
Comments & Business Outlook
Condensed Consolidated Statements of Operations and Comprehensive Income
For the three months ended
For the six months ended
February 28,
February 28,
2011
2010
2011
2010
Revenue
$ 17,041,517
$ 11,667,963
$ 37, 843,194
$ 22,598,664
Cost of goods sold
11,383,143 10,701,769 2 5,451,133 20,926,959
Gross profit
5,658,374 966,194 12,392,061 1,671,705
Operating costs and expenses:
Selling expenses
108,285 47,782 169,818 134,429
G&A expenses:
3,419,559 971,417 4,231,486 1,636,363
Total operating expenses
3,527,844 1,019,199 4,401,304 1,770,792
Income (loss) from operations
2,130,530 (53,005 ) 7,990,757 (99,087 )
Other income (expenses)
Interest expense
(326,777 ) (232,682 ) (621,817 ) (454,780 )
Government subsidies/grants
364,986 466,085 364,986 2,341,421
Other Income (expenses)
(18,690 ) 4,042 (6,993 ) 67
Income before income taxes
2,150,049 184,440 7,726,933 1,787,621
Income taxes expense (benefit)
920,476 (478 ) 2,314,702 402,769
Net income
$ 1,229,573 $ 184,918
$ 5,412,231 $ 1,384,852
Other comprehensive income
Foreign currency translation adjustment
387,496 (39,048 ) 936,434 15,511
Comprehensive income
1,617,069 145,870 6,348,665 1,400,363
Earnings per share - basic and diluted
$ 0.02 $ 0.00 $ 0.07
$ 0.02
Weighted average shares outstanding - basic and diluted
78,832,064 78,832,064 78,832,064 78,832,064
Comments & Business Outlook
Condensed Consolidated Statements of Operations and Comprehensive Income
(UNAUDITED)
For the three months ended
November 30,
2010
2009
Revenue
20,801,677 10,930,701
Cost of goods sold
14,067,990 10,225,190
Gross profit
6,733,687 705,511
Operating costs and expenses:
Selling expenses
61,533 86,647
G&A expenses:
710,139 625,380
Depreciation on office equipment:
101,788 39,566
Total operating expenses
873,460 751,593
Income (loss) from operations
5,860,227 (46,082 )
Other income (expenses)
Interest expense
(295,040 ) (222,098 )
Government subsidies/grants and other income
11,697 1,871,361
Income before income taxes
5,576,884 1,603,181
Income taxes expense
1,394,226 403,247
Net income
4,182,658 1,199,934
Other comprehensive income
Foreign currency translation adjustment
548,938 54,559
Comprehensive income
4,731,596 1,254,493
Earnings per share - basic and diluted
0.05 0.02
Weighted average shares outstanding - basic and diluted
78,832,064 78,832,064
The Company produces cement through the advanced dry production process, an energy efficient and environmentally friendly cement production technique. Although the Chinese government has mandated the elimination of 250 million tons of outdated cement production capacity by 2010, only 60% of the total output in the region is currently produced by dry process. The Company has a rigorous quality control system and received ISO9001 quality system certification and international accreditation in March 2006. In addition, our Company passed the national GB/T 19001-2000 standard authentication. The Company’s pollution control exceeds the national standard and received “green building material” certification in 2007.
The Company has an abundant supply of high quality raw materials. The Company has obtained a 30 year mining right for 87 million tons of limestone reserve, which can supply two cement clinker production lines with a daily output of 2,500 tons for 40 years. Presently, the Company is one of the largest cement producers and distributors in the north Changjiang region of Anhui, with a 10% market share within a 100 mile radius of its facility.
The Company is the only producer of P.II52.5 cement (the highest quality cement) in the north Changjiang region of Anhui and Jiangsu Provinces, with 70% market share within a 100 miles radius of its facility. Annual production capacity of the Company is two million tons cement and cement clinker. The Company’s main market for cement is in Hefei (Anhui Province), with total sales of 750 thousand tons, representing 75% of our total annual cement production and an additional 25% is sold in Chaohu and its surrounding areas, Moreover, the Company’s main cement clinker market is in Chaohu with total sales of 800 thousand tons in the area, representing 80% of our total annual cement clinker production, and an additional 20% is sold in Hefei.
Liquidity Requirements
Our Business Plan
We plan to raise adequate capital over the next five years for expansion and growth.
We invested over USD$50 million to build up one cement production line with daily production of 2,500 tons and one cement clinker production line with daily production of 2,500 tons. The newly invested cement clinker production line was put into production in October 2008.
We invested USD$10 million to establish a waste heat power generator system to convert waste heat into electricity, which was put into operation on October 25, 2009, in order to realize significant savings on electricity costs, to improve our margins and reduce reliance on outside power sources. From October 25, 2009 to August 31, 2010, the waste heat power generator system has generated electricity of 39.6 million kilowatt-hours and saved us USD$3.45 million in electricity costs.
The Company anticipates that it will need approximately $30 million to implement its business plan and meet its capital expenditure needs over the next three years. The Company currently does not have any arrangements for additional financing and it may not be able to obtain financing when required.
Comments & Business Outlook
Consolidated Statements of Operations and Comprehensive Income
For the years ended August 31, 2010 and 2009
August 31,
August 31,
2010
2009
Revenue
$ 50,063,989 $ 55,637,894
Cost of goods sold
46,806,105 51,839,166
Gross profit
3,257,884 3,798,728
Operating costs and expenses:
Selling expenses
254,150 362,989
General & administrative expenses
2,843,077 2,039,092
Depreciation on office equipment
181,652 190,401
Total operating expenses
3,278,879 2,592,482
Income (loss) from operations
(20,995 ) 1,206,246
Other income (expenses)
Interest expense
(997,680 ) (418,283 )
Government subsidies/grants and other income
1,574,765 3,277,866
Income before income taxes
556,090 4,065,829
Income taxes expense
139,093 1,157,370
Net income
$ 416,997 $ 2,908,459
Other comprehensive income (loss)
Foreign currency translation adjustment
88,023 (59,876 )
Comprehensive income
$ 505,020 $ 2,848,583
Earnings per share - basic and diluted
$ 0.01 $ 0.04
Weighted average shares outstanding - basic and diluted
78,832,064 78,832,064
Research
