Nevada
|
000-26175
|
88-0409151
|
||
(State or other jurisdiction of
incorporation)
|
(Commission File Number)
|
(I.R.S. Employer
Identification No.)
|
Suite 7A01, Baicheng Building
584 Yingbin Road
Dashi, Panyu District
Guangzhou, Guangdong, China
|
511430
|
|
(Address of principal executive offices)
|
(Zip Code)
|
¨
|
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))
|
(a)
|
Financial information with respect to acquired company.
|
|
(b)
|
Pro-forma financial information.
|
|
Filed herewith
|
||
(d)
|
Exhibits.
|
CHINA WATER GROUP, INC.
|
||
Date: June 9, 2011
|
By:
|
/s/ Wenge Fang
|
Name: Wenge Fang
|
||
Title: President
|
Page
|
||||
Financial Statements
|
||||
Report of Independent Registered Public Accounting Firm
|
1 | |||
Balance Sheets
|
2 | |||
Statements of Operations and Comprehensive Loss
|
3 | |||
Statements of Shareholders’ Equity
|
4 | |||
Statements of Cash Flows
|
5 | |||
Notes to Financial Statements
|
6 |
December 31,
|
December 31,
|
|||||||
2007
|
2006
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
19,161
|
$
|
40,956
|
||||
Accounts receivable
|
22,584
|
-
|
||||||
Inventory
|
461,003
|
150,539
|
||||||
Advance payments
|
33,305
|
30,034
|
||||||
VAT tax receivable
|
1,654
|
9,443
|
||||||
Income tax receivable
|
90,797
|
10,743
|
||||||
Other receivables
|
24,346
|
18,672
|
||||||
Total current assets
|
652,850
|
260,387
|
||||||
Property, plant and equipment, net
|
813,732
|
782,063
|
||||||
Intangible assets, net
|
130,193
|
124,286
|
||||||
Other assets
|
1,709,317
|
948,958
|
||||||
Total assets
|
$
|
3,306,092
|
$
|
2,115,694
|
||||
Liabilities and shareholders’ equity (deficit)
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
177,698
|
$
|
40,613
|
||||
Accrued salaries
|
20,398
|
8,850
|
||||||
Other payables
|
3,195,653
|
1,986,163
|
||||||
Total current liabilities
|
3,393,749
|
2,035,626
|
||||||
Total liabilities
|
3,393,749
|
2,035,626
|
||||||
Shareholders’ equity:
|
||||||||
Contributed capital
|
96,800
|
96,800
|
||||||
Accumulated deficit
|
(184,344
|
)
|
(21,810
|
)
|
||||
Accumulated other comprehensive income (loss)
|
(113
|
)
|
5,078
|
|||||
Total shareholders’ equity (deficit)
|
(87,657
|
)
|
80,068
|
|||||
Total liabilities and shareholders’ equity (deficit)
|
$
|
3,306,092
|
$
|
2,115,694
|
The accompanying notes are an integral part of these financial statements.
|
|
For the Years Ended December 31,
|
||||||||
2007
|
2006
|
|||||||
Sales
|
$
|
70,760
|
$
|
2,893
|
||||
Cost of sales
|
47,714
|
2,088
|
||||||
Gross profit
|
23,046
|
805
|
||||||
Operating expenses
|
||||||||
Selling expenses
|
520
|
2,488
|
||||||
General and administrative expenses
|
263,540
|
30,849
|
||||||
Total operating expenses
|
264,060
|
33,337
|
||||||
Loss from operations
|
(241,014
|
)
|
(32,532
|
)
|
||||
Other income (expenses)
|
||||||||
Interest expense, net
|
(257
|
)
|
(21
|
)
|
||||
Non-operating expenses
|
(1,317
|
)
|
-
|
|||||
Total other income (expenses)
|
(1,574
|
)
|
(21
|
)
|
||||
Loss before benefit for income taxes
|
(242,588
|
)
|
(32,553
|
)
|
||||
Income tax benefit
|
80,054
|
10,743
|
||||||
Net loss
|
(162,534
|
)
|
(21,810
|
)
|
||||
Other comprehensive income (loss)
|
||||||||
Foreign currency translation adjustment
|
(5,191
|
)
|
2,678
|
|||||
Comprehensive loss
|
$
|
(167,725
|
)
|
$
|
(19,132
|
)
|
The accompanying notes are an integral part of these financial statements.
|
|
Accumulated
|
||||||||||||||||
other
|
Total
|
|||||||||||||||
Contributed
|
Accumulated
|
Comprehensive
|
Shareholders’
|
|||||||||||||
Captial
|
Deficit
|
Income (loss)
|
Equity (deficit)
|
|||||||||||||
Balance at December 31, 2005
|
$
|
96,800
|
$
|
-
|
$
|
2,400
|
$
|
99,200
|
||||||||
Capital Contribution
|
-
|
-
|
||||||||||||||
Net loss
|
-
|
(21,810
|
)
|
(21,810
|
)
|
|||||||||||
Other comprehensive income (loss)
|
-
|
-
|
2,678
|
2,678
|
||||||||||||
Balance at December 31, 2006
|
$
|
96,800
|
$
|
(21,810
|
)
|
$
|
5,078
|
$
|
80,068
|
|||||||
Capital Contribution
|
-
|
-
|
||||||||||||||
Net loss
|
-
|
(162,534
|
)
|
(162,534
|
)
|
|||||||||||
Other comprehensive income (loss)
|
-
|
-
|
(5,191
|
)
|
(5,191
|
)
|
||||||||||
Balance at December 31, 2007
|
$
|
96,800
|
$
|
(184,344
|
)
|
$
|
(113
|
)
|
$
|
(87,657
|
)
|
The accompanying notes are an integral part of these financial statements.
|
|
For the Years Ended December 31,
|
||||||||
2007
|
2006
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(162,534
|
)
|
$
|
(21,810
|
)
|
||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization
|
32,171
|
10,863
|
||||||
Changes in current assets and current liabilities:
|
||||||||
Accounts receivable
|
(21,690
|
)
|
-
|
|||||
Inventory
|
(288,130
|
)
|
(147,451
|
)
|
||||
Advance payments
|
(1,139
|
)
|
(29,418
|
)
|
||||
VAT tax receivable
|
8,110
|
(9,249
|
)
|
|||||
Income tax receivable
|
(80,054
|
)
|
(10,743
|
)
|
||||
Other receivables
|
(4,204
|
)
|
(12,562
|
)
|
||||
Other assets
|
(666,975
|
)
|
(918,392
|
)
|
||||
Accounts payable
|
128,947
|
39,780
|
||||||
Accrued salaries
|
10,501
|
8,499
|
||||||
Other payables
|
1,029,164
|
1,863,843
|
||||||
Total adjustments
|
146,701
|
795,170
|
||||||
Net cash provided by (used in) operating activities
|
(15,833
|
)
|
773,360
|
|||||
Cash flows from investing activities:
|
||||||||
Acquisition of property and equipment
|
(7,830
|
)
|
(756,577
|
)
|
||||
Construction in progress
|
-
|
24,126
|
||||||
Intangible assets
|
-
|
(32,321
|
)
|
|||||
Net cash used in investing activities
|
(7,830
|
)
|
(764,772
|
)
|
||||
Effect of foreign currency translation on cash
|
1,868
|
1,235
|
||||||
Net increase (decrease) in cash and cash equivalents
|
(21,795
|
)
|
9,823
|
|||||
Cash and cash equivalents at beginning of year
|
40,956
|
31,133
|
||||||
Cash and cash equivalents at end of year
|
$
|
19,161
|
$
|
40,956
|
The accompanying notes are an integral part of these financial statements.
|
|
Vehicles
|
10years
|
Furniture, machinery and equipment
|
10 to 50 years
|
Buildings and improvements
|
10 to 50 years
|
●
|
ASU No. 2010-01— Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash. This Update clarifies that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share). The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009 with retrospective application.
|
●
|
ASU No. 2010-02— Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. This Update amends Subtopic 810-10 and related guidance to clarify that the scope of the decrease in ownership provisions of the Subtopic and related guidance applies to (i) a subsidiary or group of assets that is a business or nonprofit activity; (ii) a subsidiary that is a business or nonprofit activity that is transferred to an equity method investee or joint venture; and (iii) an exchange of a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity, but does not apply to: (i) sales of in substance real estate; and (ii) conveyances of oil and gas mineral rights. The amendments in this Update are effective beginning in the period that an entity adopts FAS 160 (now included in Subtopic 810-10).
|
●
|
ASU No. 2010-06— Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This Update amends Subtopic 820-10 that requires new disclosures about transfers in and out of Levels 1 and 2 and activity in Level 3 fair value measurements. This Update also amends Subtopic 820-10 to clarify certain existing disclosures. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010.
|
●
|
ASU No. 2009-14 - Software (Topic 985): Certain Revenue Arrangements That Include Software Elements (formerly EITF Issue No. 09-3). This standard removes tangible products from the scope of software revenue recognition guidance and also provides guidance on determining whether software deliverables in an arrangement that includes a tangible product, such as embedded software, are within the scope of the software revenue guidance.
|
●
|
ASU No. 2009-13 - Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements (formerly EITF Issue No. 08-1). This standard modifies the revenue recognition guidance for arrangements that involve the delivery of multiple elements, such as product, software, services or support, to a customer at different times as part of a single revenue generating transaction. This standard provides principles and application guidance to determine whether multiple deliverables exist, how the individual deliverables should be separated and how to allocate the revenue in the arrangement among those separate deliverables. The standard also expands the disclosure requirements for multiple deliverable revenue arrangements.
|
December 31, 2007
|
December 31, 2006
|
|||||||
Raw materials
|
$
|
237,351
|
$
|
105,265
|
||||
Finished goods
|
223,652
|
45,274
|
||||||
Total
|
$
|
461,003
|
$
|
150,539
|
December 31, 2007
|
December 31, 2006
|
|||||||
Buildings
|
$
|
167,178
|
$
|
156,325
|
||||
Vehicles
|
29,779
|
27,846
|
||||||
Machinery and equipment
|
650,215
|
600,986
|
||||||
Furniture and office equipment
|
6,163
|
5,160
|
||||||
Subtotal
|
853,335
|
790,317
|
||||||
Less: accumulated depreciation
|
39,603
|
8,254
|
||||||
Total
|
$
|
813,732
|
$
|
782,063
|
December 31, 2007
|
December 31, 2006
|
|||||||
Right to use land
|
$
|
136,090
|
$
|
127,255
|
||||
Less: accumulated amortization
|
5,897
|
2,969
|
||||||
Total
|
$
|
130,193
|
$
|
124,286
|
Historical
|
Pro Forma
|
||||||||||||||||
China
Water
|
Aba
|
Adjustments
|
Notes
|
Combined
|
|||||||||||||
Assets
|
|||||||||||||||||
Current assets:
|
|||||||||||||||||
Cash and cash equivalents
|
19,161 | 19,161 | |||||||||||||||
Accounts receivable
|
22,584 | 22,584 | |||||||||||||||
Prepayments, deposits and other receivables
|
6,798,632 | 150,102 | 6,948,734 | ||||||||||||||
Inventory
|
461,003 | 461,003 | |||||||||||||||
Due from related companies
|
271,691 | 271,691 | |||||||||||||||
Total current assets
|
7,070,323 | 652,850 | 0 | 7,723,173 | |||||||||||||
Property, plant and equipment, net
|
813,732 | 813732 | |||||||||||||||
Construction in progress
|
|||||||||||||||||
Intangible assets
|
130,193 | 130,193 | |||||||||||||||
Goodwill
|
13,536,657 |
(b)
|
13,536,657 | ||||||||||||||
Other Assets
|
1,709,317 | 1,709,317 | |||||||||||||||
Assets of discontinued division
|
16,384,834 | 16,384,834 | |||||||||||||||
Total assets
|
23,455,157 | 3,306,092 | 13,536,657 |
(b)
|
40,297,906 | ||||||||||||
Liabilities
|
|||||||||||||||||
Current liabilities:
|
|||||||||||||||||
Warrant liability
|
1,179,965 | ||||||||||||||||
Accounts payable
|
|||||||||||||||||
Accounts payable and accrued expenses
|
1,210,060 | 198,096 | 1,408,156 | ||||||||||||||
Other payable
|
3,195,653 | 3,195,653 | |||||||||||||||
Due to directors
|
118,049 | 118,049 | |||||||||||||||
Due to related companies
|
|||||||||||||||||
Due to affiliated companies
|
|||||||||||||||||
Income tax payable
|
|||||||||||||||||
Total current liabilities
|
2,508,074 | 3,393,749 | 0 | 5,901,823 | |||||||||||||
Long-term liabilities:
|
|||||||||||||||||
Outstanding obligation for acquisition of a subsidiary
|
13,449,000 |
(b)
|
13,449,000 | ||||||||||||||
Total long-term liabilities
|
0 | 0 | 13,449,000 |
(b)
|
13,449,000 | ||||||||||||
0 | |||||||||||||||||
Liabilities of discontinued division
|
14,208,665 | 14,208,665 | |||||||||||||||
Total liabilities
|
16,716,739 | 3,393,749 | 13,449,000 |
(b)
|
33,559,488 | ||||||||||||
Equity
|
|||||||||||||||||
Stockholders' equity:
|
|||||||||||||||||
Preferred stock, $0.001 par value, 50,000,000 authorized shares, no shares issued and outstanding
|
|||||||||||||||||
Common stock, $0.001 par value, 200,000,000 shares authorized; 139,383,450 shares issued and outstanding at December 31, 2008 and 2007
|
139,383 | 32,199 |
(c)
|
171,582 | |||||||||||||
Contributed capital
|
96,800 | (96,800 | ) |
(b)
|
|||||||||||||
Additional paid-in capital
|
6,131,532 | (32,199 | ) |
(b)
|
6,099,333 | ||||||||||||
Retained earnings (accumulated deficit)
|
(670,851 | ) | (184,344 | ) | 184,344 |
(c)
|
(670,851 | ) | |||||||||
Accumulated other comprehensive income
|
1,138,354 | (113 | ) | 113 |
(c)
|
1,138,354 | |||||||||||
Total stockholders' equity
|
6,738,418 | (87657 | ) | 87,657 |
(b)(c)
|
6,738,418 | |||||||||||
Noncontrolling interest
|
- | ||||||||||||||||
Total equity
|
6,738,418 | (87,657 | ) | 87,657 | 6,738,418 | ||||||||||||
Total liabilities and equity
|
23,455,157 | 3,306,092 | 13,536,657 | 40,297,906 |
Aggregate Cost
|
||||
of the
|
||||
Acquisition
|
||||
($ in thousands)
|
||||
Net assets acquired
|
(88
|
)
|
||
Goodwill
|
13,538
|
|||
Total
|
13,450
|
Historical
|
Pro Forma
|
||||||||||||||
China
Water
|
Aba
|
Adjustments
|
Notes
|
Combined
|
|||||||||||
Revenue:
|
|||||||||||||||
Revenue from sales of bottled water
|
- | 70,760.00 | 70,760.00 | ||||||||||||
Total revenue
|
- | 70,760 | 70,760 | ||||||||||||
Cost of revenue:
|
|||||||||||||||
Cost of revenue from sales of bottled water
|
- | 47,714 | 47,714 | ||||||||||||
Total cost of revenue
|
- | 47,714 | 47,714 | ||||||||||||
Gross profit
|
- | 23,046 | 23,046 | ||||||||||||
Operating expenses:
|
|||||||||||||||
Selling, general and administrative
|
- | 264,060.00 | 264,060.00 | ||||||||||||
Loss from operations
|
- | (241,014 | ) | (241,014 | ) | ||||||||||
Other income (expenses):
|
|||||||||||||||
Interest expense
|
- | (257 | ) | (257 | ) | ||||||||||
Penalty for late effectiveness of registration statement
|
(89,046 | ) | (89,046 | ) | |||||||||||
Gain (loss) on fair value of derivative instruments
|
(203,904 | ) | (203,904 | ) | |||||||||||
Other income (expense)
|
0 | (1,317 | ) | (1,317 | ) | ||||||||||
Total other income (expenses)
|
(292,950 | ) | (1,574 | ) | (294,524 | ) | |||||||||
Loss from continuing operations before income tax
|
(292,950 | ) | (242,588 | ) | (535,538 | ) | |||||||||
Provision for income tax
|
- | ||||||||||||||
Loss from continuing operations
|
(292,950 | ) | (242,588 | ) | (535,538 | ) | |||||||||
Noncontrolling interest
|
- | ||||||||||||||
Discontinued operations:
|
|||||||||||||||
Loss from discontinued operations of Evergreen Asset Group (including loss on disposal of approximately $3,844,000 in 2008)
|
(1,627,566 | ) | (1,627,566 | ) | |||||||||||
Income tax
|
(217 | ) | 80,054 | 79,837 | |||||||||||
Loss from discontinued operations
|
(1,627,783 | ) | (1,627,783 | ) | |||||||||||
Net loss
|
(1,920,733 | ) | (162,534 | ) | (2,083,267 | ) | |||||||||
Other comprehensive income
|
|||||||||||||||
Foreign currency translation adjustment
|
686,965 | (5191 | ) | 681774 | |||||||||||
Comprehensive income (loss)
|
(1,233,768 | ) | (167,725 | ) | (1,401,493 | ) | |||||||||
Basic earnings (loss) per share
|
(0.01 | ) | (0.01 | ) | (0.01 | ) | |||||||||
Diluted earnings (loss) per share
|
(0.01 | ) | (0.01 | ) | (0.01 | ) | |||||||||
Weighted average number of common shares outstanding Basic and Diluted
|
139,383,450 | 139,383,450 | 139,383,450 |