China Kangtai Cactus Bio-Tech Co., Ltd

10QSB 1 s06q.htm China Kangtai Cactus Bio-Tech Co., Ltd

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

[ X ]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2006

[ ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 0-32375

AMERICAN UNITY INVESTMENTS, INC.

(Exact Name of small business issuer as specified in its charter)

Florida

65-0067192

(State or other Jurisdiction of

(I.R.S. Employer

Incorporation or Organization)

Identification No.)

Suite 508 Huan Tai Plaza, No. A12, Zhong Guan Cun South St., Haidian District, Beijing 100081

(Address of Principal Executive Offices)

(Zip Code)

(86)10- 62109702

(Issuer's Telephone Number, including Area Code)

Indicate by check mark whether the Registrant (i) has filed all reports required to be filed by Section 13, or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (ii) has been subject to such filing requirements for the past 90 days.

Yes [ X ] No [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [ X ]

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.

Common Stock, $.0005 par value

145,074,102

Title of Class

Number of Shares outstanding

at September 30, 2006

Transitional Small Business Format Yes [ ] No [ X ]

AMERICAN UNITY INVESTMENTS, INC.

AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEET

AS OF SEPTEMBER 30, 2006 (UNAUDITED)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

3,089,557

Other receivable and prepaid expenses

440,695

Total Current Assets

3,530,252

PROPERTY, PLANT AND EQUIPMENT, NET

215,767

TOTAL ASSETS

3,746,019

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

CURRENT LIABILITIES

Accrued expenses and other liabilities

694,785

Due to a stockholder

232,228

Due to a related company

2,816,620

Deferred revenue, current portion

98,145

Total Current Liabilities

3,841,778

Deferred revenue, net off current portion

351,687

Total Liabilities

4,193,465

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ DEFICIENCY

Common stock ($0.0005 par value, authorized 200,000,000 shares

issued and outstanding145,074,102 shares)

72,537

Additional paid-in capital

1,000,000

Deficit accumulated during the development stage

(1,695,078)

Accumulated other comprehensive losses

(8,364)

Minority Interests

183,459

Total Stockholders’ Deficiency

(447,446)

TOTAL LIABILITIES AND STOCHOLDERS’ DEFICIENCY

3,746,019

The accompanying notes are an integral part of these financial statements

AMERICAN UNITY INVESTMENTS, INC.

AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (UNAUDITED)

For the three

For the nine

months ended

Sept 30, 2006

Sept 30, 2005

Sept 30, 2006

Sept 30, 2005

REVENUES

Product Sales

1,795,559

3,009,568

Maintenance Services

17,855

24,536

Total Revenue

1,813,414

3,034,104

LESS: COSTS OF SALES

675,782

1,105,282

GROSS PROFIT

1,137,632

1,928,822

LESS: OPERATING EXPENSES

Selling expenses

887,204

General and administrative expenses

604,420

1,047,244

Merger expenses

825,000

Total Operating Expenses

2,316,624

2,759,448

INCOME/(LOSS) FROM OPERATIONS

(1,178,992)

(830,626)

OTHER INCOME (EXPENSES)

Interest income

7,326

9,455

Imputed interest expenses

51,907

Other income

15,885

LOSS BEFORE INCOME TAXES

(1,103,874)

(805,286)

PROVISION FOR INCOME TAXES

(72,263)

(343,908)

MINORITY INTERESTS

(8,405)

(58,499)

NET INCOME/(LOSS)

(1,184,542)

(1,207,693)

OTHER COMPREHENSIVE LOSS

Foreign currency translation loss

(8,364)

Net loss per share-basic and diluted

0.02

Weighted average number of shares

Outstanding, during the period

- basic and diluted

145,074,102

50,000,000

145,074,102

50,000,000

The accompanying notes are an integral part of these financial statements

AMERICAN UNITY INVESTMENTS, INC.

AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED 2006 AND 2005 (UNAUDITED)

For the nine

months ended

Sept 30, 2006

Sept 30, 2005

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

(1,207,693)

Changes in operating assets and liabilities

(Increase)/Decrease in:

Other receivable and prepaid expenses

(396,864)

Notes receivable

934,115

Increase/(Decrease) in:

Accrued and other liabilities

641,284

Deferred revenue

449,832

Net cash provided by operating activities

420,674

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, fixture and equipment

(215,767)

Net cash used in investing activities

(215,767)

CASH FLOWS FROM FINANCING ACTIVITIES

Due to a related company

2,697,555

Minority interests

183,459

Net cash provided by financing activities

2,881,014

EFFECT OF EXCHANGE RATE ON CASH

(8,364)

NET INCREASE IN CASH AND CASH EQUIVALENTS

3,077,557

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

12,000

CASH AND CASH EQUIVALENTS AT END OF PERIOD

3,089,557

The accompanying notes are an integral part of these financial statements

AMERICAN UNITY INVESTMENTS, INC.

AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2006 AND 2005 (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

(A)

Organization

The accompanying financial statements are unaudited, but in the opinion of the management of the Company, contain all adjustments, consisting of only normal recurring accruals, necessary to present fairly the financial position at September 30, 2006, the results of operations for the three and nine months ended September 30, 2006 and 2005, and the cash flows for the nine months ended September 30, 2006 and 2005.

Reference is made to the Company's Form 10-KSB for the year ended December 31, 2005. The results of operations for the three and nine months ended September 30, 2006 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2006.

American Unity Investments, Inc. (the “Company”) was incorporated on June 23, 1988, under the laws of the State of Florida under the name Autec Associates, Inc. The Company incorporated a wholly owned Wyoming subsidiary in the quarter ended March 31, 2005.

On January 12, 2004, the Company decided to sell its existing business assets and enter into the mining exploration industry. In connection with this change of business, the Company entered into a purchase and sale agreement, dated February 26, 2004, whereby the Company sold net assets of $13,533 to Mr. Art Garrison (former president of the Company) in consideration of the return of Mr. Garrison’s 221,500 shares of the Company’s common stock to the Company’s treasury. These shares were subsequently retired. The results of all prior jewelry-making operations have been retroactively reclassified as discontinued operations in these financial statements. Due to the fact that the Company was no longer actively engaged in significant business operations, the Company is deemed to have entered the exploration stage as of February 26, 2004.

In July 2006, the Company amended its Articles of Incorporation whereby the corporate name was changed to American Unity Investments, Inc. The name change was effective by merger into a wholly owned Florida subsidiary of that name.

American Unity Investments, Inc. Nevada, the operating subsidiary (“AUI”) was incorporated under the laws of the State of Nevada on December 2, 2004 and has elected a fiscal year end of December 31. The Company intends to raise capital to fund its acquisition of suitable forestry businesses in the People’s Republic of China.

The acquisition of AUI has been accounted for as a reverse acquisition, with AUI as the accounting acquiror and the Company as the acquired company. All the operations of the Company as of September 30, 2006 were carried on by AUI as the operating subsidiary.

A subsidiary, Beijing TKE Resource Development Co., Limited was incorporated in the June 2006 quarter which is engaging in the business of trading of forests. On January 8, 2006, the Company entered into an Equity Transfer Agreement to acquire 100% of Beijing DongZhaoXu Forestry Development Co., Ltd. (“Beijing DongZhaoXu”) for $246,700 (Rmb 2,000,000) being the total registered and fully paid up capital of Beijing DongZhaoXu. Beijing DongZhaoXu is owned as to 80% by a stockholder of the Company and is engaged in the leasing of forestry land in China. The transaction will be treated as an acquisition of business under common control.

The completion of the acquisition of Beijing DongZhaoXu is subject to governmental approval of the People’s Republic of China. As of September 30, 2006, the acquisition has not been completed and management has decided not to proceed with the acquisition. See note 4.

(B)

Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

AMERICAN UNITY INVESTMENTS, INC.

AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2006 AND 2005 (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION (CONTINUED)

(C)

Cash and cash equivalents

For purpose of the statements of cash flows, cash and cash equivalents include cash on hand and demand deposits with a bank with a maturity of less than three months.

(D)

Long-lived assets

In accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the impairment or disposal of Long-Lived Assets", long-lived assets and certain identifiable intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed using undiscounted net cash flows related to the long- lived assets. The Company reviews long-lived assets to determine that carrying values are not impaired.

(E)

Fair value of financial instruments

Statement of Financial Accounting Standards No. 107, "Disclosure About Fair Value of Financial Instruments," requires certain disclosures regarding the fair value of financial instruments. Trade accounts receivable, accounts payable, and accrued liabilities are reflected in the financial statements at fair value because of the short-term maturity of the instruments.

(F)

Income taxes

The Company accounts for income taxes under the Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“Statement 109”). Under Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date.

(G)

Foreign currency translation

The functional currency of the Company is the Chinese Renminbi (“RMB”). Transactions denominated in currencies other than RMB are translated into United States dollars using year end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transaction occurred. Net gains and losses resulting from foreign exchange translations are included in the statements of operations and stockholder’s equity as other comprehensive income (loss). Cumulative translation adjustment amounts were insignificant at and for the nine months ended September 30, 2006 and 2005 as the RMB is pegged to the United States dollar.

(H)

Income (loss) per share

Basic income (loss) per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the year. Diluted (loss) income per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There are no potentially dilutive securities for 2006 and 2005.

(I)

Segments

The Company operates in only one segment, thereafter segment disclosure is not presented.

AMERICAN UNITY INVESTMENTS, INC.

AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2006 AND 2005 (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION (CONTINUED)

(J)

Recent Accounting Pronouncements

In December 2004, the FASB issued SFAS No. 123R “Share-Based Payment” (“SFAS 123R”), a revision to SFAS No. 123 “Accounting for Stock-Based Compensation” (“SFAS 123”), and superseding APB Opinion No. 25 “Accounting for Stock Issued to Employees” and its related implementation guidance. SFAS 123R establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, including obtaining employee services in share-based payment transactions. SFAS 123R applies to all awards granted after the required effective date and to awards modified, repurchased, or cancelled after that date. Adoption of the provisions of SFAS 123R is effective as of the beginning of the first interim or annual reporting period that begins after June 15, 2005. The guidelines of this statement are not applicable to the Company.

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs -- an amendment of ARB No. 43, Chapter 4"(“SFAS 151”) This statement clarifies the criteria of "abnormal amounts" of freight, handling costs, and spoilage that are required to be expensed as current period charges rather than deferred in inventory. In addition, this statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for the Company July 1, 2005. The Company does not expect the adoption of this statement will have any material impact on the its results or financial position.

In December 2004, the FASB issued SFAS no. 153, Exchanges of Nonmonetary Assets an amendment of APB Opinion No. 29. This Statement addresses the measurement of exchanges of nonmonetary assets. It eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29, Accounting for Nonmonetary Transactions, and replaces it with an exception for exchanges that do not have commercial substance. This Statement specifies that a nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The Company does not expect the adoption of this statement will have any material impact on the its results or financial position

In December 2004, the FASB issued SFAS No. 152, Accounting for Real Estate Time-Sharing Transactions an amendment of FASB Statements No. 66 and 67. This Statement amends FASB Statement No. 66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real Estate Time-Sharing Transactions. This Statement also amends FASB Statement No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. This Statement is effective for financial statements for fiscal years beginning after June 15, 2005. The guidelines of this statement are not applicable to the Company.

SFAS No. 154 (“SFAS 154”), Accounting Changes and Error Corrections, was issued in May 2005 and replaces APB Opinion No. 20 and SFAS No. 3 (“SFAS 3”). SFAS No. 154 requires retrospective application for voluntary changes in accounting principle in most instances and is required to be applied to all accounting changes made in fiscal years beginning after December 15, 2005. The Company’s expected January 1, 2006 adoption of SFAS No. 154 is not expected to have any material impact on its results or financial position.

In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments” (SFAS 155”), which amends SFAS No. 133, “Accounting for Derivatives Instruments and Hedging Activities” (“SFAS 133”) and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities” (SFAS 140”). SFAS 155 amends SFAS 133 to narrow the scope exception for interest-only and principal-only strips on debt instruments to include only such strips representing rights to receive a specified portion of the contractual interest or principle cash flows. SFAS 155 also amends SFAS 140 to allow qualifying special-purpose entities to hold a passive derivative financial instrument pertaining to beneficial interests that itself is a derivative instruments. The Company is currently evaluating the impact this new Standard, but believes that will not have that it will not have a material impact on the Company’s financial position.

AMERICAN UNITY INVESTMENTS, INC.

AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2006 AND 2005 (UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION (CONTINUED)

(K)

Revenue Recognition

General

We recognize revenue in accordance with the SEC' s Staff Accounting Bulletin Topic 13, Revenue Recognition" ("SAB Topic 13".) Revenue is recognized when all of the following criteria are met : (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller' s price to the buyer is fixed and determinable; and (4) collectibility is reasonably assured

Product Sales

Revenue from sales is recorded when title and risk of loss have passed to the buyer and provided the criteria in SAB Topic 13 are met

Maintenance Services

Maintenance services income is recognized on a time proportion basis according to the term of contracts.

Deferred Revenue

The unrecognized portion of the maintenance service income is classified as deferred revenue.

(L)

Cost of Product Sales

Cost of products sales includes direct purchase cost of plants.

(M)

Property, fixture and equipment

Property, fixture and equipment, net, is stated at cost less accumulated depreciation and amortization. Furniture, fixture and equipment acquired in business combinations is stated at fair value estimated to be the replacement cost. Depreciation and amortization is computed using the straight-line method over the estimated useful life of the asset or the life of the project, whichever is less, if the equipment has been purchased for a particular use. Office equipment, furniture and fixtures are depreciated over five years and the leasehold lands are depreciated over the lease term.

INCOME TAX

The Company has net operating loss carry forwards for income taxes amounting to approximately $1,646,578 as at September 30, 2006 which may be available to reduce future years’ taxable income. These carry forwards, will expire, if not utilized, commencing in 2024. Management believes that the realization of the benefits from these losses appears uncertain due to the Company’s limited operating history and continuing losses. Accordingly, a full, deferred tax asset valuation allowance has been provided and no deferred tax asset valuation allowance has been provided and no deferred tax asset benefit has been recorded.

SHAREHOLDERS’ EQUITY

On January 26, 2005, the Company effected a consolidation of the Company’s common stock on a twenty to one basis. This share consolidation decreased the number of the Company’s common shares issued and outstanding from 20,470,000 to 1,023,500.

A 1-for-4 forward stock split was effected in June 2005.

In connection with the acquisition of AUI described in Note 1, the Company effected a 1-for-1000 reverse stock split of the common stock on April 17, 2006, resulting in approximately 72,521 pre-merger shares outstanding. The Company issued 50,000,000 shares to acquire AUI and also issued 22,463,768 shares on April 17, 2006 upon conversion of the remaining $43,700 of outstanding convertible debentures. As a result, there are 72,535,051 shares of common stock outstanding (50,000,000 +72,521+22,463,768 shares). In August 2006 the Company effected a 1-for-2 forward stock split. As a result all share numbers in the financial statements have been adjusted to account for the stock split.

AMERICAN UNITY INVESTMENTS, INC.

AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2006 AND 2005 (UNAUDITED)

RELATED PARTY TRANSACTIONS

As of September 30, 2006, the Company owed a stockholder $232,228 for advances made on an unsecured basis and repayable on demand. Imputed interest is charged at 6% per annum on the amount due. Total imputed interest recorded as additional paid-in capital amounted to $46,065 and $15,846 for the three months ended June 30, 2006 and March 31, 2006 respectively. There was no imputed interest recorded in 2005. According to the current management decision, the loan was confirmed interest free and the imputed interest was reversed accordingly.

As of September 30, 2006, the Company owed a related party $2,816,620 for advances made on an unsecured basis and repayable on demand. Imputed interest is charged at of 6% per annum on the amount due. Total imputed interest recorded as additional paid-in capital amounted to $5,842 and $$2,921 for the three months ended June 30, 2006 and 2005, respectively. According to the current management decision, the loan was confirmed interest free and the imputed interest was reversed accordingly. Management is discussing with the related party a conversion of the loan into equity of the Company, pending review of the Company’s financial results in future periods.

In-kind contribution:

During this quarter, the subsidiary, Beijing TKE Resource Development Co., Limited has purchased forestry land from a related company, Beijing DongZhaoXu at the price of $675,782.

GOING CONCERN

As reflected in the accompanying financial statements, the Company has an accumulated deficit of $1,646,578 at September 30, 2006. The Company’s total current liabilities exceed its total current assets by $263,026. These factors raise substantial doubt about its ability to continue as a going concern. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. The Company is actively pursuing additional funding and potential merger or acquisition candidates and strategic partners, which would enhance stockholders’ investment. Management believes that the above actions will allow the Company to continue operations through the next fiscal year.

NOTES PAYABLE

Principal and accrued interest due under three related notes payable of $14,029 and related party accounts payable of $144,000 to CHR were forgiven as of December 31, 2004.

Other notes payable at September 30, 2006 are:

Convertible loan agreement dated May 25, 2004, maturing May 31, 2005	$ 20,000
Convertible loan agreement dated August 1, 2004, maturing August 1, 2005	5,000
Convertible loan agreement dated October 15, 2004, maturing October 31, 2005	23,500
	$ 48,500

Other notes payable bear interest at 10% per annum and interest of $7,927 has been accrued as of September 30, 2006. Under the convertible loan agreements, the lender has the option to convert the debt, including any accrued interest, to common stock of the Company at a rate to be negotiated at the time of conversion.

AMERICAN UNITY INVESTMENTS, INC.

AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2006 AND 2005 (UNAUDITED)

DEFERRED REVENUE

The following table sets forth as September 30, 2006 the net deferred revenue balances for the maintenance service income of the forests:

Current portion of deferred revenue

98,145

Deferred revenue, net of current portion

351,687

Total Deferred Revenue

449,832

INCOME TAX

Current year provision:

- US

- Republic of China

343,908

US tax has not been provided as the group did not generate any net earnings arising in USA during the period. Taxes on earnings assessable elsewhere has been calculated at the rates of tax prevailing in the county which the group operates, based on existing legislation, interpretation and practices in respect thereof.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

RESULTS OF OPERATIONS

Our first revenues were generated in the quarter ended June 30, 2006. Revenues almost entirely consisted of resales of foresty property and sales of forestry products from the People’s Republic of China. Maintenance services consisted of services provided to the owners of forest properties. Our business consists of the sale of forestry products and also the buying and selling sale of forest rights to a large number of parties. In connection with our resale of forest rights, we also enter into prepaid contracts with the purchasers under which we are obligated to maintain the forested land.

Our gross margin was 64% in the quarter. Because this is our first two quarters of full operations in our sphere of business, revenue comparisons to other quarters are not meaningful. We believe our business is only developing and management cannot make any reliable forecast as to future revenue trends. Selling, general and administrative expenses increased from $442,824 in the six months ended June 30, 2006, compared to $2,759,448 in the September 30, 2006 quarter. The increase in these expenses is attributable to our commencing full operations. Selling expenses of $887,204 in the quarter increased due to certain portion was not recorded in previous quarter in absence of respective invoices charge to the Company. In addition, merger and acquisition cost of $825,000 was recorded in the quarter.

Our operating funds have been provided to date by the shareholder. Although it has indicated it will continue to provide funding for the remainder of 2006, the shareholder is under no legal obligation to continue to advance funds, and the Company intends to make one or more offerings of its securities to fund operations. Deferred revenues represent payments by forestry owners to the Company for which the Company is obligated to render future performance. Our cash needs for 2006 will depend on our level of forestry purchases.

Information included in this report includes forward looking statements, which can be identified by the use of forward-looking terminology such as may, will, expect, anticipate, believe, estimate, or continue, or the negative thereof or other variations thereon or comparable terminology. The statements and disclaimers in this report constitute cautionary statements identifying important factors, including risks and uncertainties, relating to the forward-looking statements that could cause actual results to differ materially from those reflected in the forward-looking statements.

ITEM 3. CONTROLS AND PROCEDURES.

(a) Evaluation of disclosure controls and procedures. The Company’s principal executive officer and its principal financial officer, based on their evaluation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d -14 (c) as of September 30, 2006, have concluded that the Company’s disclosure controls and procedures are adequate and effective for the purposes set forth in the definition in Exchange Act rules.

(b) Changes in internal controls. There were no significant changes in the Company’s internal controls or in other factors that could significantly affect the Company’s internal controls subsequent to the date of their evaluation.

PART II - OTHER INFORMATION

Item 1.

LEGAL PROCEEDINGS - None

Item 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS - None

Item 3.

DEFAULTS UPON SENIOR SECURITIES - None

Item 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On May 28, 2006, 9 shareholders holding an aggregate of 72,463,768 shares approved an amendment to the articles of incorporation to change the name of the Company to American Unity Investments, Inc. This amendment was never carried out. Instead, in August 2006, the Company merged with and into a wholly owned Florida subsidiary, American Unity Investments, Inc, with the subsidiary being the surviving entity. As a result of the merger the Company’s name was changed to that of the Florida subsidiary. No shareholder approval was required for the merger under Florida law because

the articles of incorporation of the Florida subsidiary were identical (except for certain historical matters and the corporate name) with the articles of incorporation of the parent company.

Item 5.

OTHER INFORMATION

The Company has received a communication dated October 14, 2006 from Charlie Peng, the former President of the Company, stating that he vacated his office as President on June 5, 2006, that he sent a letter to that effect on June 25, 2006 to formally resign and that he had published a notice of his resignation in China Consumer News, published in Beijing, China. in Beijing . The Company has been unable to confirm whether former management received notice of this resignation, but has no information available to permit it to disagree with Mr. Peng’s assertions

Item 6.

EXHIBITS

31. Chief Executive Officer and Chief Financial Officer - Rule 13a-15(e) Certification. Filed herewith.

32. Chief Executive Officer and Chief Financial Officer - Sarbanes-Oxley Act Section 906 Certification. Previously filed.

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 thereunto duly authorized.

AMERICAN UNITY INVESTMENTS, INC.

Date: November 14, 2006

By:/s/ Bing Lu

Chief Financial Officer

(Principal Financial and Accounting Officer)

Date: November 14, 2006

By:/s/ Christian Lillieroos

Chief Executive and Operating Officer

(Duly Authorized Officer)