x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
FLORIDA
|
88-0404114
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification Number)
|
10 Huangcheng Road (N), Longkou, Shandong Province, PRC
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Large Accelerated Filer o
|
|
Non-Accelerated Filer (Do not check if a smaller reporting company) o
|
Smaller Reporting Company x
|
Page
|
||||
PART I:
|
FINANCIAL INFORMATION
|
3 | ||
ITEM 1.
|
Financial Statements
|
3 | ||
Consolidated Balance Sheets as of June 25, 2011 (unaudited) and December 25, 2010
|
3 | |||
Consolidated Statements of Operations (unaudited) for the three months and six months ended June 25, 2011 and 2010
|
4 | |||
Consolidated Statements of Stockholders’ Equity and Comprehensive Income (unaudited) for the three months and six months ended June 25, 2011 and the year ended December 25, 2010
|
5 | |||
Consolidated Statements of Cash Flows (unaudited) for the six months ended June 25, 2011 and 2010
|
6 | |||
Notes to Consolidated Financial Statements (unaudited)
|
7 | |||
ITEM 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
17 | ||
ITEM 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
23 | ||
ITEM 4T.
|
Controls and Procedures
|
24 | ||
PART II:
|
OTHER INFORMATION
|
25 | ||
ITEM 1.
|
Legal Proceedings
|
25 | ||
ITEM 1A.
|
Risk Factors
|
25 | ||
ITEM 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
25 | ||
ITEM 3.
|
Defaults Upon Senior Securities
|
25 | ||
ITEM 4.
|
(Removed and Reserved)
|
25 | ||
ITEM 5.
|
Other Information
|
25 | ||
ITEM 6.
|
Exhibits
|
25 | ||
SIGNATURES
|
28 | |||
EXHIBITS
|
June 25,
2011
|
December 25,
2010
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 6,441 | $ | 2,756 | ||||
Accounts receivable, net
|
12,308 | 13,519 | ||||||
Deposits and prepayments, net
|
6,936 | 11,523 | ||||||
Inventories, net
|
10,737 | 10,847 | ||||||
Total current assets
|
36,422 | 38,645 | ||||||
Property, machinery and equipment, net
|
26,677 | 26,619 | ||||||
Land use rights, net
|
2,642 | 2,595 | ||||||
Due from related companies
|
56 | 54 | ||||||
Total assets
|
$ | 65,797 | $ | 67,913 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 3,617 | $ | 5,773 | ||||
Other payables and accruals
|
2,321 | 2,473 | ||||||
Taxes payable
|
135 | 169 | ||||||
Embedded derivatives, at fair value
|
612 | 678 | ||||||
Total current liabilities
|
6,685 | 9,093 | ||||||
Due to shareholder
|
4,332 | 4,031 | ||||||
Due to joint venture partners
|
488 | 438 | ||||||
Total liabilities
|
11,505 | 13,562 | ||||||
Series A and B Redeemable Convertible Preferred Stock, $0.0001 par value:
Authorized shares - 5,000,000
Issued and outstanding –1,742 shares and 1,742 shares at June 25, 2011 and December 25, 2010, respectively
|
1,742 | 1,742 | ||||||
Commitments
|
||||||||
Stockholders’ equity:
|
||||||||
Class A Common Stock, $0.0001 par value:
Authorized shares - 100,000,000
Issued and outstanding – 100,000,000 at June 25, 2011 and 100,000,000 at December 25, 2010
|
9 | 9 | ||||||
Class B Common Stock, $0.0001 par value:
Authorized shares - 2,000,000
Issued and outstanding – none
|
-- | -- | ||||||
Additional paid-in capital
|
37,275 | 37,275 | ||||||
Retained earnings
|
(2,042 | ) | (221 | ) | ||||
Accumulated other comprehensive income
|
17,178 | 15,418 | ||||||
Total NWD stockholders’ equity
|
52,420 | 52,481 | ||||||
Non-controlling interest
|
130 | 128 | ||||||
Total equity
|
52,550 | 52,609 | ||||||
Total liabilities and stockholders’ equity
|
$ | 65,797 | $ | 67,913 |
Three months ended
June 25,
|
Six months ended
June 25,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net revenue
|
$ | 5,560 | $ | 6,547 | $ | 12,443 | $ | 12,593 | ||||||||
Cost of goods sold
|
(5,403 | ) | (6,610 | ) | (11,791 | ) | (12,633 | ) | ||||||||
Gross profit (loss)
|
157 | (63 | ) | 652 | (40 | ) | ||||||||||
Selling and distribution expenses
|
(165 | ) | (247 | ) | (412 | ) | (424 | ) | ||||||||
General and administrative expenses
|
(1,832 | ) | (3,211 | ) | (2,668 | ) | (5,303 | ) | ||||||||
Loss from operations
|
(1,840 | ) | (3,521 | ) | (2,428 | ) | (5,767 | ) | ||||||||
Other income (expense):
|
||||||||||||||||
Other income (expenses)
|
643 | (115 | ) | 626 | (449 | ) | ||||||||||
Interest income
|
2 | 1 | 3 | 1 | ||||||||||||
Gain/(loss) on fair value adjustments to embedded derivatives
|
(15 | ) | 41 | 66 | 51 | |||||||||||
Loss before income taxes and non-controlling interests
|
(1,210 | ) | (3,594 | ) | (1,733 | ) | (6,164 | ) | ||||||||
Provision for income taxes
|
(26 | ) | (1 | ) | (27 | ) | (1 | ) | ||||||||
Net loss
|
(1,236 | ) | (3,595 | ) | (1,760 | ) | (6,165 | ) | ||||||||
Net loss attributable to non-controlling interest
|
1 | -- | 2 | -- | ||||||||||||
Net loss attributable to controlling interest
|
$ | (1,235 | ) | $ | (3,595 | ) | $ | (1,758 | ) | $ | (6,165 | ) | ||||
Accretion of Redeemable Preferred Stock
|
-- | (75 | ) | -- | (192 | ) | ||||||||||
Preferred Stock Dividends
|
(31 | ) | (35 | ) | (61 | ) | (83 | ) | ||||||||
Loss attributable to common stockholders
|
$ | (1,266 | ) | $ | (3,705 | ) | $ | (1,819 | ) | $ | (6,440 | ) | ||||
Earnings per common share
|
||||||||||||||||
Basic
|
$ | (0.013 | ) | $ | (0.04 | ) | $ | (0.018 | ) | $ | (0.07 | ) | ||||
Diluted
|
$ | (0.013 | ) | $ | (0.04 | ) | $ | (0.018 | ) | $ | (0.07 | ) | ||||
Weighted average number of common shares outstanding
|
||||||||||||||||
Basic
|
100,000 | 96,807 | 100,000 | 93,124 | ||||||||||||
Diluted
|
100,000 | 96,807 | 100,000 | 93,124 |
Class A Common Stock Shares Amount
|
Additional Paid-in Capital
|
Deferred Stock Compensation
|
Retained Earnings
|
Accumulated Other Comprehensive Income
|
Total NWD Stockholders’ Equity
|
Non Controlling Interests
|
Total Equity
|
Comprehensive Income
|
||||||||||||||||||||||||||||||||
Balance at December 25, 2009
|
83,364 | $ | 8 | $ | 35,569 | $ | (75 | ) | $ | 9,187 | $ | 13,405 | $ | 58,094 | $ | 125 | $ | 58,219 | $ | (11,011 | ) | |||||||||||||||||||
Net loss
|
- | - | - | - | (9,011 | ) | - | (9,011 | ) | 3 | (9,008 | ) | (9,011 | ) | ||||||||||||||||||||||||||
Accretion of Redeemable Preferred Stock
|
- | - | - | - | (282 | ) | - | (282 | ) | - | (282 | ) | - | |||||||||||||||||||||||||||
Preferred Stock Dividends
|
- | - | - | - | (115 | ) | - | (115 | ) | - | (115 | ) | - | |||||||||||||||||||||||||||
Foreign currency translation adjustment
|
- | - | - | - | - | 2,013 | 2,013 | - | 2,013 | 2,013 | ||||||||||||||||||||||||||||||
Conversion of preferred stock and related dividend payments made in Class A Common Stock
|
16,636 | 1 | 1,706 | - | - | - | 1,707 | - | 1,707 | - | ||||||||||||||||||||||||||||||
Share-based compensation to CFO
|
- | - | - | 75 | - | - | 75 | - | 75 | - | ||||||||||||||||||||||||||||||
Balance at December 25, 2010
|
100,000 | $ | 9 | $ | 37,275 | $ | - | $ | (221 | ) | $ | 15,418 | $ | 52,481 | $ | 128 | $ | 52,609 | $ | (6,998 | ) | |||||||||||||||||||
Net loss
|
- | - | - | - | (1,760 | ) | - | (1,760 | ) | 2 | (1,758 | ) | (1,760 | ) | ||||||||||||||||||||||||||
Preferred Stock Dividends
|
- | - | - | - | (61 | ) | - | (61 | ) | - | (61 | ) | - | |||||||||||||||||||||||||||
Foreign currency translation adjustment
|
- | - | - | - | - | 1,760 | 1,760 | - | 1,760 | 1,760 | ||||||||||||||||||||||||||||||
Balance at June 25, 2011(Unaudited)
|
100,000 | $ | 9 | $ | 37,275 | $ | - | $ | (2,042 | ) | $ | 17,178 | $ | 52,420 | $ | 130 | $ | 52,550 | $ | - |
Six months ended
June 25,
|
||||||||
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$ | (1,758 | ) | $ | (6,165 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Allowance for doubtful accounts
|
1,420 | 4,115 | ||||||
Provision for inventory reserve
|
11 | 2 | ||||||
Depreciation and amortization of land use rights
|
1,043 | 978 | ||||||
Loss on sale of machinery and equipment
|
-- | 260 | ||||||
Gain on fair value adjustments to embedded derivatives
|
(66 | ) | (51 | ) | ||||
Stock-based compensation expense
|
-- | 75 | ||||||
Non-controlling interests
|
(2 | ) | -- | |||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
93 | (4,925 | ) | |||||
Deposits and prepayments
|
4,757 | 17 | ||||||
Inventories
|
363 | 3,924 | ||||||
Accounts payable
|
(2,245 | ) | 1,292 | |||||
Other payables and accruals
|
(270 | ) | 125 | |||||
Taxes payable
|
(37 | ) | (101 | ) | ||||
Net cash provided by (used in) operating activities
|
3,309 | (454 | ) | |||||
Cash flows from investing activities:
|
||||||||
Proceeds from sale of property, machinery and equipment
|
-- | 15 | ||||||
Purchases of property, machinery and equipment
|
(57 | ) | (25 | ) | ||||
Net cash used in investing activities
|
(57 | ) | (10 | ) | ||||
Cash flows from financing activities:
|
||||||||
Proceeds from (Repayment of) shareholder loan
|
195 | (206 | ) | |||||
Proceeds from joint venture partners
|
38 | 36 | ||||||
Net cash provided by (used in) financing activities
|
233 | (170 | ) | |||||
Impact of foreign currency translation on cash
|
200 | 395 | ||||||
Net increase (decrease) in cash and cash equivalents
|
3,685 | (239 | ) | |||||
Cash and cash equivalents at the beginning of period
|
2,756 | 3,440 | ||||||
Cash and cash equivalents at the end of period
|
$ | 6,441 | $ | 3,201 | ||||
Non-Cash Investing and Financing Activities
|
||||||||
Conversion of preferred stock into common stock
|
$ | -- | $ | 1,504 | ||||
Dividend payments on preferred stock in the form of common stock
|
$ | -- | $ | 83 | ||||
Supplemental disclosure of cash flows information:
|
||||||||
Income taxes paid
|
$ | 19 | $ | 1 |
Level 1 - quoted prices (unadjusted) in active markets for identical asset or liabilities that the Company has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active exchange-traded securities and exchange-based derivatives.
|
Level 2 - inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities, non-exchange-based derivatives, mutual funds, and fair-value hedges.
|
Level 3 - unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. Financial assets and liabilities utilizing Level 3 inputs include infrequently-traded, non-exchange-based derivatives and commingled investment funds, and are measured using present value pricing models.
|
(In thousands)
|
Fair Value
|
||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Embedded derivative liabilities as of June 25, 2011
|
$
|
--
|
$
|
--
|
$
|
612
|
$
|
612
|
|||||||
Embedded derivative liabilities as of June 25, 2010
|
$
|
--
|
$
|
--
|
$
|
16
|
$
|
16
|
Inside China
|
Outside China
|
Total
|
||||||||||
Assets
|
||||||||||||
- Cash and cash equivalents
|
$ | 6,439 | $ | 2 | $ | 6,441 | ||||||
- Others
|
59,336 | 20 | 59,356 | |||||||||
Total assets
|
65,775 | 22 | 65,797 | |||||||||
Liabilities, excluding Series B Redeemable Convertible Preferred Stock
|
6,294 | 5,211 | 11,505 | |||||||||
Equity
|
40,121 | 12,429 | 52,550 |
Inside China
|
Outside China
|
Total
|
||||||||||
Net revenue
|
$ | 12,443 | $ | -- | $ | 12,443 | ||||||
Cost of goods sold
|
(11,791 | ) | -- | (11,791 | ) | |||||||
General and administrative expenses
|
(2,270 | ) | (398 | ) | (2,668 | ) | ||||||
Loss from operations
|
(2,030 | ) | (398 | ) | (2,428 | ) | ||||||
Provision for income taxes
|
(27 | ) | -- | (27 | ) | |||||||
Other income
|
629 | 66 | 695 | |||||||||
Net loss attributable to controlling interest
|
(1,426 | ) | (332 | ) | (1,758 | ) |
Three Months Ended June 25,
|
||||||||||||||||||||||||
2011
|
2010
|
|||||||||||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||||||||||
Average
|
Average
|
|||||||||||||||||||||||
Loss
|
Shares
|
Per-Share
|
Loss
|
Shares
|
Per-Share
|
|||||||||||||||||||
Earnings per share – basic
|
||||||||||||||||||||||||
Loss available to common stockholders
|
$ | (1,266 | ) | 100,000 | $ | (0.013 | ) | $ | (3,705 | ) | 96,807 | $ | (0.04 | ) | ||||||||||
Effect of dilutive securities
|
||||||||||||||||||||||||
Redeemable convertible preferred stock
|
-- | -- | -- | -- | ||||||||||||||||||||
Options and warrants
|
-- | -- | -- | -- | ||||||||||||||||||||
Earnings per share – diluted
|
$ | (1,266 | ) | 100,000 | $ | (0.013 | ) | $ | (3,705 | ) | 96,807 | $ | ( 0.04 | ) |
Six Months Ended June 25,
|
||||||||||||||||||||||||
2011
|
2010
|
|||||||||||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||||||||||
Average
|
Average
|
|||||||||||||||||||||||
Loss
|
Shares
|
Per-Share
|
Loss
|
Shares
|
Per-Share
|
|||||||||||||||||||
Loss per share – basic
|
||||||||||||||||||||||||
Loss available to common stockholders
|
$ | (1,819 | ) | 100,000 | $ | (0.018 | ) | $ | (6,440 | ) | 93,124 | $ | (0.07 | ) | ||||||||||
Effect of dilutive securities
|
||||||||||||||||||||||||
Redeemable convertible preferred stock
|
-- | -- | -- | -- | ||||||||||||||||||||
Options and warrants
|
-- | -- | -- | -- | ||||||||||||||||||||
Loss per share – diluted
|
$ | (1,819 | ) | 100,000 | $ | (0.018 | ) | $ | (6,440 | ) | 93,124 | $ | (0.07 | ) |
June 25, 2011
|
December 25, 2010
|
|||||||
(Unaudited)
|
||||||||
Accounts receivable
|
$ | 20,462 | $ | 20,689 | ||||
Less: Allowance for doubtful accounts
|
(8,154 | ) | (7,170 | ) | ||||
$ | 12,308 | $ | 13,519 |
June 25, 2011
|
December 25, 2010
|
|||||||
(Unaudited)
|
||||||||
Balance at the beginning of the period
|
$ | 7,170 | $ | 2,725 | ||||
Add: provision during the period
|
1,620 | 4,609 | ||||||
Less: write-offs during the period
|
(636 | ) | (164 | ) | ||||
Balance at the end of the period
|
$ | 8,154 | $ | 7,170 |
June 25, 2011
|
December 25, 2010
|
|||||||
(Unaudited)
|
||||||||
Deposits for raw materials
|
$ | 296 | $ | 8,417 | ||||
Prepayments and advances
|
6,447 | 2,849 | ||||||
Land lease prepayment
|
193 | 257 | ||||||
$ | 6,936 | $ | 11,523 |
June 25, 2011
|
December 25, 2010
|
|||||||
(Unaudited)
|
||||||||
Raw materials (including packing materials)
|
$ | 9,879 | $ | 9,360 | ||||
Finished goods
|
876 | 1,494 | ||||||
10,755 | 10,854 | |||||||
Less: Inventory reserve
|
(18 | ) | (7 | ) | ||||
$ | 10,737 | $ | 10,847 |
June 25, 2011
|
December 25, 2010
|
|||||||
(Unaudited)
|
||||||||
Balance at the beginning of the period
|
$ | 7 | $ | 512 | ||||
Add: provision during the period
|
11 | 17 | ||||||
Less: write-offs during the period
|
-- | (522 | ) | |||||
Balance at the end of the period
|
$ | 18 | $ | 7 |
June 25, 2011
|
December 25, 2010
|
|||||||
(Unaudited)
|
||||||||
Xinlong Asia Food (Luoyang) Co., Ltd.*
|
$ | 56 | $ | 54 | ||||
Due from related companies for sales
|
$ | 56 | $ | 54 |
Useful Life
|
June 25, 2011
|
December 25, 2010
|
||||||||||
(In years)
|
(Unaudited)
|
|||||||||||
Buildings
|
40 | $ | 14,050 | $ | 13,701 | |||||||
Machinery and equipment
|
5 - 12 | 23,286 | 22,687 | |||||||||
Construction in process
|
520 | 400 | ||||||||||
37,856 | 36,788 | |||||||||||
Less: Accumulated depreciation and amortization
|
(11,179 | ) | (10,169 | ) | ||||||||
$ | 26,677 | $ | 26,619 |
June 25, 2011
|
December 25, 2010
|
|||||||
(Unaudited)
|
||||||||
Land use rights
|
$ | 3,286 | $ | 3,206 | ||||
Less: Accumulated amortization
|
(644 | ) | (611 | ) | ||||
$ | 2,642 | $ | 2,595 |
June 25, 2011
|
December 25, 2010
|
|||||||
(Unaudited)
|
||||||||
Deposits from customers
|
$ | 733 | $ | 613 | ||||
Accruals for payroll, bonus and benefits
|
293 | 519 | ||||||
Utilities and accrued expenses
|
1,295 | 1,341 | ||||||
$ | 2,321 | $ | 2,473 |
Series B Preferred Stock
|
|
Preferred Dividend
|
7% per annum, payable quarterly in arrears in cash or, at the Company’s option subject to satisfaction of certain conditions, shares of Class A Common Stock valued at 95% of the volume-weighted current market price.
|
Redemption
|
December 22, 2010
Beginning at the end of the 24th month following closing and on each third monthly anniversary of that date (quarterly) thereafter, the Company shall redeem 1/13th of the face value of the Preferred Stock in either cash or Class A Common Stock valued at 90% of the volume-weighted current market price.
|
Mandatory Conversion
|
The Company may at any time force the conversion of the Preferred Stock if the volume-weighted current market price of the Class A Common Stock exceeds 200% of its price at issuance of the Preferred Stock.
|
Registration
|
The Company shall file to register the underlying Class A common shares with 30 days of the closing date and make its best efforts to have the Registration declared effective at the earliest date. In the event such Registration is not continuously effective during the period such shares are subject to transfer restrictions under the U.S. federal securities laws, then (subject to certain exceptions) the holders are entitled to receive liquidated damages equal to 2.0% of the purchase price of the Preferred Stock per month.
|
Anti-dilution
|
In the event the Company issues, at any time while Preferred Stock are still outstanding, Common Stock or any type of securities giving rights to Common Stock at a price below the Issue Price, the Company agrees to extend full-ratchet anti-dilution protection to the investors.
|
Redeemable Convertible Preferred Stock
|
Preferred shares
|
Balance
|
||||||
(in thousands)
|
||||||||
-- | $ | -- | ||||||
Series B
|
1,742 | 1,742 | ||||||
Less: unamortized discount
|
-- | (1,065 | ) | |||||
Add: adjustment for quarterly redemption reversion
|
-- | 1,065 | ||||||
Balance December 25, 2010
|
1,742 | $ | 1,742 | |||||
Balance June 25, 2011(Unaudited)
|
1,742 | $ | 1,742 |
Embedded Conversion Feature
|
|
Expected life (in years)
|
Remaining Term to conversion or redemption date at each valuation date
|
Expected volatility
|
335.17%
|
Risk-free interest rate
|
0.12%
|
Dividend yield
|
0
|
Fair Value at December 25, 2009
|
$ | 76 | ||
Loss on change in value of derivatives during the period
|
619 | |||
Conversion of 1,752 shares of Series B Preferred Stock to common stock during 2010
|
(17 | ) | ||
Fair Value at December 25, 2010
|
$ | 678 | ||
Gain on change in value of derivatives during the period
|
(66 | ) | ||
Fair Value at June 25, 2011(Unaudited)
|
$ | 612 |
Shares
|
Weighted Average Exercise Price
|
||
Outstanding at December 25, 2010
|
6,126,645
|
1.3889
|
|
Issued
|
--
|
--
|
|
Exercised
|
--
|
--
|
|
Expired
|
--
|
--
|
|
Outstanding at June 25, 2011(Unaudited)
|
6,126,645
|
1.3889
|
Shares of Class A Common Stock
Issuable Under Warrants
|
Exercise
Price
|
|||||||
July 2005 private placement
|
||||||||
6-year warrants
|
3,157,895 | $ | 1.04 | |||||
December 2005 private placement
|
||||||||
6-year warrants
|
2,968,750 | 1.76 | ||||||
Warrants exercisable at June 25, 2011(Unaudited)
|
6,126,645 |
Three months ended
June 25,
|
Six months ended
June 25,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Pre-determined annual fee charged by joint venture partners:
|
||||||||||||||||
Shandong Longfeng Group Company (a)
|
$ | 7 | $ | 7 | $ | 14 | $ | 14 | ||||||||
Shandong Longfeng Flour Company Limited (b)
|
13 | 12 | 25 | 23 | ||||||||||||
$ | 20 | $ | 19 | $ | 39 | $ | 37 |
June 25, 2011
|
June 25, 2010
|
|||||||
Net loss
|
$ | (1,760 | ) | $ | (6,165 | ) | ||
Foreign currency translation adjustment
|
1,760 | 396 | ||||||
Comprehensive loss
|
$ | -- | $ | (5,769 | ) |
For the three months ended
June 25, unaudited
|
For the six months ended
June 25, unaudited
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(US$'000)
|
(US$'000)
|
(US$'000)
|
(US$'000)
|
|||||||||||||
Net revenue
|
||||||||||||||||
Instant noodles
|
1,788 | 1,060 | 3,985 | 2,072 | ||||||||||||
Flour
|
2,301 | 4,388 | 5,438 | 7,717 | ||||||||||||
Soybean
|
1,471 | 1,099 | 3,020 | 2,804 | ||||||||||||
5,560 | 6,547 | 12,443 | 12,593 | |||||||||||||
Loss from operation
|
||||||||||||||||
Instant noodles
|
(345 | ) | (450 | ) | (485 | ) | (1,027 | ) | ||||||||
Flour
|
(920 | ) | (2,077 | ) | (1,507 | ) | (3,687 | ) | ||||||||
Soybean
|
(575 | ) | (994 | ) | (436 | ) | (1,053 | ) | ||||||||
(1,840 | ) | (3,521 | ) | (2,428 | ) | (5,767 | ) | |||||||||
Depreciation and amortization
|
||||||||||||||||
Instant noodles
|
212 | 263 | 442 | 451 | ||||||||||||
Flour
|
99 | 112 | 217 | 202 | ||||||||||||
Soybean
|
180 | 191 | 384 | 325 | ||||||||||||
491 | 566 | 1,043 | 978 |
June 25,
|
December 25,
|
|||||||
2011, unaudited
|
2010
|
|||||||
(US$'000)
|
(US$'000)
|
|||||||
Identifiable long-term assets
|
||||||||
Instant noodles
|
12,176 | 12,096 | ||||||
Flour
|
7,109 | 7,225 | ||||||
Soybean
|
10,090 | 9,947 | ||||||
29,375 | 29,268 |
-
|
Acquire additional locations to increase our production capacity
|
-
|
Build strategic alliances with multinational food groups to enhance product range and capitalize on our China distribution network
|
Three months ended
June 25,
|
Six months ended
June 25,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||
Net revenue
|
$ | 5,560 | $ | 6,547 | $ | 12,443 | $ | 12,593 | ||||||||
Cost of goods sold
|
(5,403 | ) | (6,610 | ) | (11,791 | ) | (12,633 | ) | ||||||||
Gross profit (loss)
|
157 | (63 | ) | 652 | (40 | ) | ||||||||||
Selling and distribution expenses
|
(165 | ) | (247 | ) | (412 | ) | (424 | ) | ||||||||
General and administrative expenses
|
(1,832 | ) | (3,211 | ) | (2,668 | ) | (5,303 | ) | ||||||||
(Loss) gain on fair value adjustments to embedded derivatives
|
(15 | ) | 41 | 66 | 51 | |||||||||||
Loss before income taxes
|
(1,210 | ) | (3,594 | ) | (1,733 | ) | (6,164 | ) | ||||||||
Income taxes expense
|
(26 | ) | (1 | ) | (27 | ) | (1 | ) | ||||||||
Net loss attributable to controlling interest
|
(1,235 | ) | (3,595 | ) | (1,758 | ) | (6,165 | ) |
Series B Preferred Stock
|
|
Preferred Dividend
|
7% per annum, payable quarterly in arrears in cash or, at the Company’s option subject to satisfaction of certain conditions, shares of Class A Common Stock valued at 95% of the volume-weighted current market price.
|
Redemption
|
December 22, 2010
Beginning at the end of the 24th month following closing and on each third monthly anniversary of that date (quarterly) thereafter, the Company shall redeem 1/13th of the face value of the Preferred Stock in either cash or Class A Common Stock valued at 90% of the volume-weighted current market price.
|
Mandatory Conversion
|
The Company may at any time force the conversion of the Preferred Stock if the volume-weighted current market price of the Class A Common Stock exceeds 200% of its price at issuance of the Preferred Stock.
|
Registration
|
The Company shall file to register the underlying Class A common shares with 30 days of the closing date and make its best efforts to have the Registration declared effective at the earliest date. In the event such Registration is not continuously effective during the period such shares are subject to transfer restrictions under the U.S. federal securities laws, then (subject to certain exceptions) the holders are entitled to receive liquidated damages equal to 2.0% of the purchase price of the Preferred Stock per month.
|
Anti-dilution
|
In the event the Company issues, at any time while Preferred Stock are still outstanding, Common Stock or any type of securities giving rights to Common Stock at a price below the Issue Price, the Company agrees to extend full-ratchet anti-dilution protection to the investors.
|
Payment Obligations By Period
|
||||||||||||||||||||||||||||
2011
|
2012
|
2013
|
2014
|
2015
|
Thereafter
|
Total
|
||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||||||
Pre-determined annual fee charged by joint venture partners
|
65 | 129 | 129 | 129 | 129 | 4,270 | 4,851 |
Description
|
||
2.1
|
Share Exchange Agreement dated as of December 18, 2001 (incorporated herein by reference from our filing on the Definitive Proxy 14/A filed on October 11, 2001).
|
|
3.1
|
Amended Articles of Incorporation (incorporated herewith by reference to Exhibit 3.1 to our Definitive Proxy 14/A filed on October 11, 2001).
|
|
3.2
|
By-laws (incorporated herewith by reference to Exhibit 3.2 to our Definitive Proxy 14/A filed on October 11, 2001).
|
|
3.3
|
Certificate of Designations of Preferences, Rights and Limitations of the Series A 7% Convertible Preferred Stock (incorporated herewith by reference to Exhibit 3.1 of our Form 8-K filed on July 12, 2005).
|
|
3.4
|
Certificate of Designations of Preferences, Rights and Limitations of the Series B 7% Convertible Preferred Stock (incorporated herewith by reference to Exhibit 3.1 of our Form 8-K filed on December 23, 2005).
|
|
4.1
|
Subscription Agreement, dated September 4, 2003 (incorporated herewith by reference to Exhibit 4.1 to our Registration Statement on Form S-3 filed on October 3, 2003).
|
|
4.2
|
Subscription Agreement, dated October 3, 2003 (incorporated herewith by reference to Exhibit 4.2 to our Registration Statement on Form S-3 filed on October 3, 2003).
|
|
4.3
|
Common Stock Purchase Warrants for the September 4, 2003 Private Placement (incorporated herewith by reference to Exhibit 4.3 to our Registration Statement on Form S-3 filed on October 3, 2003).
|
|
4.4
|
Common Stock Purchase Warrants for the October 3, 2003 Private Placement (incorporated herewith by reference to Exhibit 4.4 to our Registration Statement on Form S-3 filed on October 3, 2003).
|
4.5
|
Form of Warrant issued to Midsummer Investment Ltd. and Islandia, L.P. (incorporated herewith by reference to Exhibit 4.1 to our Form 8-K filed on July 12, 2005).
|
|
4.6
|
Form of Warrant issued to Alliance Financial, LLC, Renaissance Advisors BVI, John F. Steinmetz, TN Capital Equities, Ltd. and Kathleen McDonnell (incorporated herewith by reference to Exhibit 4.2 to our Registration Statement on Form S-3 filed on August 11, 2005).
|
4.7
|
Securities Purchase Agreement, dated July 11, 2005, relating to the sale of the Series A 7% Convertible Preferred Stock (incorporated herewith by reference to Exhibit 10.1 to our Form 8-K filed on July 12, 2005).
|
4.8
|
Registration Rights Agreement, dated July 11, 2005, by and among New Dragon Asia Corp. and the investors named therein (incorporated herewith by reference to Exhibit 10.2 to our Form 8-K filed on July 12, 2005).
|
4.9
|
Form of Warrant issued to Midsummer Investment Ltd. and Islandia, L.P. (incorporated herewith by reference to Exhibit 4.1 to our Form 8-K filed on December 23, 2005).
|
4.10
|
Form of Warrant issued to Alliance Financial, LLC, Renaissance Advisors, Inc., John F. Steinmetz, TN Capital Equities, Ltd. and Kathleen McDonnell (incorporated herewith by reference to Exhibit 4.2 to our Registration Statement on Form S-3 filed on January 20, 2006).
|
4.11
|
Securities Purchase Agreement, dated December 22, 2005, relating to the sale of the Series B 7% Convertible Preferred Stock (incorporated herewith by reference to Exhibit 10.1 to our Form 8-K filed on December 23, 2005).
|
4.12
|
Registration Rights Agreement, dated December 22, 2005, by and among New Dragon Asia Corp. and the investors named therein (incorporated herewith by reference to Exhibit 10.2 to our Form 8-K filed on December 23, 2005).
|
4.13
|
Registration Rights Agreement, dated December 22, 2005, by and among New Dragon Asia Corp. and New Dragon Food Ltd. (incorporated herewith by reference to Exhibit 4.5 to our Registration Statement on Form S-3 filed on January 20, 2006).
|
10.1
|
Sino-Foreign Joint Venture Contract for the New Dragon Asia Flour (Yantai) Company Limited, dated June 1, 1999 (incorporated herewith by reference to Exhibit 10.1 to our Registration Statement on Form S-3 filed on October 3, 2003).
|
10.2
|
Subcontracting Agreement, for the New Dragon Asia Flour (Yantai) Company Limited, dated June 26, 1999 (incorporated herewith by reference to Exhibit 10.2 to our Registration Statement on Form S-3 filed on October 3, 2003).
|
10.3
|
Sino-Foreign Joint Venture Contract for the New Dragon Asia Food (Yantai) Company Limited, dated November 28, 1998 (incorporated herewith by reference to Exhibit 10.3 to our Registration Statement on Form S-3 filed on October 3, 2003).
|
10.4
|
Subcontracting Agreement, for the New Dragon Asia Food (Yantai) Company Limited, dated December 26, 1998 (incorporated herewith by reference to Exhibit 10.4 to our Registration Statement on Form S-3 filed on October 3, 2003).
|
10.5
|
Sino-Foreign Joint Venture Contract for the New Dragon Asia Food (Dalian) Company Limited, dated November 28, 1998 (incorporated herewith by reference to Exhibit 10.5 to our Registration Statement on Form S-3 filed on October 3, 2003).
|
10.6
|
Subcontracting Agreement, for the New Dragon Asia Food (Dalian) Company Limited, dated December 26, 1998 (incorporated herewith by reference to Exhibit 10.6 to our Registration Statement on Form S-3 filed on October 3, 2003).
|
10.7
|
Sino-Foreign Joint Venture Contract for the Sanhe New Dragon Asia Food Company Limited, dated November 28, 1998 (incorporated herewith by reference to Exhibit 10.7 to our Registration Statement on Form S-3 filed on October 3, 2003).
|
10.8
|
Subcontracting Agreement, for the Sanhe New Dragon Asia Food Company Limited, dated December 26, 1998 (incorporated herewith by reference to Exhibit 10.8 to our Registration Statement on Form S-3 filed on October 3, 2003).
|
10.9
|
Employment Agreement between New Dragon Asia Corp. and Peter Mak, dated November 2, 2004 (incorporated herewith by reference to Exhibit 10.9 to our Form 8-K filed on June 29, 2005).
|
10.10
|
Employment Supplement between New Dragon Asia Corp. and Peter Mak, dated June 22, 2005 (incorporated herewith by reference to Exhibit 10.9 to our Form 8-K filed on June 29, 2005).
|
10.11
|
Supplementary Agreement to Employment Agreement between New Dragon Asia Corp. and Peter Mak, dated January 20, 2006 (incorporated herewith by reference to Exhibit 10.10 to our Form 8-K filed on January 24, 2006).
|
10.12
|
Amended and Restated Equity Incentive Plan (incorporated herewith by reference to Exhibit C to our Definitive Information Statement on Schedule 14C filed on May 4, 2009).
|
10.13
|
Stock Option Agreement between New Dragon Asia Corp. and Peter Mak, dated December 13, 2006 (incorporated herewith by reference to Exhibit 10.1 to our Form 8-K filed on December 15, 2006).
|
10.14
|
Settlement Agreement and General Release between New Dragon Asia Corp and Berry-Shino Securities Inc., dated August 15, 2007 (incorporated by reference to Exhibit 10.1 to our Form 8-K filed on August 15, 2007).
|
10.15
|
Employment Agreement dated April 1, 2009 between New Dragon Asia Corp. and Ling Wang (incorporated herewith by reference to Exhibit 10.1 to our Registration Statement on Form S-8 filed on May 8, 2009).
|
21.1
|
Subsidiaries of New Dragon Asia Corp., (incorporated by reference to Exhibit 21.1 to our Form 10-K filed on April 6, 2010).
|
31.1
|
Certification of Chief Executive Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
31.2
|
Certification of the Principal Financial Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
32.1
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002), filed herewith.
|
NEW DRAGON ASIA CORP.
|
||
Dated: August 1, 2011
|
By:
|
/s/ Li Xia Wang
|
Name: Li Xia Wang (Principal Executive Officer)
|
||
Title: Chief Executive Officer
|
Dated: August 1, 2011
|
By:
|
/s/ Qi Xue
|
Name: Qi Xue
|
||
Title: Chief Financial Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of New Dragon Asia Corp.:
|
2.
|
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
||
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated: August 1, 2011
|
By:
|
/s/ Li Xia WANG
|
Li Xia WANG (Principal Executive Officer)
|
||
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of New Dragon Asia Corp.:
|
2.
|
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated: August 1, 2011
|
By:
|
/s/ Qi Xue
|
Qi Xue
|
||
Chief Financial Officer
|
Dated: August 1, 2011
|
By:
|
/s/ Li Xia WANG
|
Li Xia WANG (Principal Executive Officer)
|
||
Chief Executive Officer
|
||
Dated: August 1, 2011
|
By:
|
/s/ Qi Xue
|
Qi Xue
|
||
Chief Financial Officer
|
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
|
Jun. 25, 2011
|
Dec. 25, 2010
|
---|---|---|
Series A and B Redeemable Convertible Preferred Stock, par value | $ 0.0001 | $ 0.0001 |
Series A and B Redeemable Convertible Preferred Stock, Authorized shares | 5,000,000 | 5,000,000 |
Series A and B Redeemable Convertible Preferred Stock, Issued | 1,742 | 1,742 |
Series A and B Redeemable Convertible Preferred Stock, outstanding | 1,742 | 1,742 |
Class A Common Stock
|
 |  |
Common Stock, par value | $ 0.0001 | $ 0.0001 |
Common Stock, Authorized shares | 100,000,000 | 100,000,000 |
Common Stock, Issued | 100,000,000 | 100,000,000 |
Common Stock, outstanding | 100,000,000 | 100,000,000 |
Class B Common Stock
|
 |  |
Common Stock, par value | $ 0.0001 | $ 0.0001 |
Common Stock, Authorized shares | 2,000,000 | 2,000,000 |
Common Stock, Issued | 0 | 0 |
Common Stock, outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 25, 2011
|
Jun. 25, 2010
|
Jun. 25, 2011
|
Jun. 25, 2010
|
|
Net revenue | $ 5,560 | $ 6,547 | $ 12,443 | $ 12,593 |
Cost of goods sold | (5,403) | (6,610) | (11,791) | (12,633) |
Gross profit (loss) | 157 | (63) | 652 | (40) |
Selling and distribution expenses | (165) | (247) | (412) | (424) |
General and administrative expenses | (1,832) | (3,211) | (2,668) | (5,303) |
Loss from operations | (1,840) | (3,521) | (2,428) | (5,767) |
Other income (expense): | Â | Â | Â | Â |
Other income (expenses) | 643 | (115) | 626 | (449) |
Interest income | 2 | 1 | 3 | 1 |
Gain/(loss) on fair value adjustments to embedded derivatives | (15) | 41 | 66 | 51 |
Loss before income taxes and non-controlling interests | (1,210) | (3,594) | (1,733) | (6,164) |
Provision for income taxes | (26) | (1) | (27) | (1) |
Net loss | (1,236) | (3,595) | (1,760) | (6,165) |
Net loss attributable to non-controlling interest | 1 | Â | 2 | Â |
Net loss attributable to controlling interest | (1,235) | (3,595) | (1,758) | (6,165) |
Accretion of Redeemable Preferred Stock | Â | (75) | Â | (192) |
Preferred Stock Dividends | (31) | (35) | (61) | (83) |
Loss attributable to common stockholders | $ (1,266) | $ (3,705) | $ (1,819) | $ (6,440) |
Earnings per common share | Â | Â | Â | Â |
Basic | $ (0.013) | $ (0.040) | $ (0.018) | $ (0.070) |
Diluted | $ (0.013) | $ (0.040) | $ (0.018) | $ (0.070) |
Weighted average number of common shares outstanding | Â | Â | Â | Â |
Basic | 100,000 | 96,807 | 100,000 | 93,124 |
Diluted | 100,000 | 96,807 | 100,000 | 93,124 |
STOCK-BASED COMPENSATION
|
6 Months Ended |
---|---|
Jun. 25, 2011
|
|
STOCK-BASED COMPENSATION |
NOTE 17. STOCK-BASED COMPENSATION
The
Company measures the cost of services received in exchange for an
award of equity instruments based on the grant-date fair value of
the award. The Company used the Black-Scholes option-pricing model
to estimate the fair value of the options at the date of
grant.
The
Company issued 2,000,000 Class A Common Shares to the CFO as annual
compensation for the service term from April 1, 2009 to March 31,
2010. The fair value of such common shares was $300,000. The
Company recognized $75,000 as compensation expense for the six
months ended June 25, 2010. No stock-based compensation occurred
for the six months ended June 25, 2011.
|
Document and Entity Information
|
6 Months Ended | |
---|---|---|
Jun. 25, 2011
|
Jul. 31, 2011
|
|
Document Information [Line Items] | Â | Â |
Document Type | 10-Q | Â |
Amendment Flag | false | Â |
Document Period End Date | Jun. 25, 2011 | |
Document Fiscal Year Focus | 2011 | Â |
Document Fiscal Period Focus | Q2 | Â |
Trading Symbol | NDAC | Â |
Entity Registrant Name | NEW DRAGON ASIA CORP | Â |
Entity Central Index Key | 0001089590 | Â |
Current Fiscal Year End Date | --12-25 | Â |
Entity Filer Category | Smaller Reporting Company | Â |
Entity Common Stock, Shares Outstanding | Â | 100,000,000 |
COMPREHENSIVE INCOME
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 25, 2011
|
|||||||||||||||||||||||||||||||||||||
COMPREHENSIVE INCOME |
NOTE 20. COMPREHENSIVE INCOME
The
following table summarizes the comprehensive income for the six
months ended June 25, 2011 and 2010 (in thousands,
unaudited):
|
"+ text.join( "
\n" ) +"
" + text[p] + "
\n"; } } }else{ formatted = '' + raw + '
'; } html = ''+ "\n"+''+ "\n"+''+ "\n"+' formatted: '+ ( this.Default == 'raw' ? 'as Filed' : 'with Text Wrapped' ) +''+ "\n"+' | '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
ACCOUNTS RECEIVABLE
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 25, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS RECEIVABLE |
NOTE 6. ACCOUNTS RECEIVABLE
Accounts
receivable consisted of the following (in
thousands):
The
activity in the Company’s allowance for doubtful accounts is
summarized as follows (in thousands):
|
SEGMENT INFORMATION
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 25, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION |
NOTE 21. SEGMENT INFORMATION
The
Company classifies its products into three core business segments;
namely instant noodles, flour and soybean. In view of the fact that
the Company operates principally in Mainland China, no geographical
segment information is presented.
|
TAXATION
|
6 Months Ended |
---|---|
Jun. 25, 2011
|
|
TAXATION |
NOTE 19. TAXATION
The
PRC subsidiaries within the Company are subject to PRC income taxes
on an entity basis on income arising in or derived from the tax
jurisdiction in which they operate. The group companies that are
incorporated under the International Business Companies Act of the
British Virgin Islands are exempt from payment of the British
Virgin Islands income tax.
Substantially
all of the Company’s income was generated in the PRC, which
is subject to PRC income taxes at rates ranging from 24% to a
statutory rate of 25%. Two of the PRC subsidiaries of the Company
are eligible to be exempt from income taxes for a two-year period
commencing with the year in which their operations are profitable
and then subject to a 50% reduction in income taxes for the next
three years, starting from their first profitable year. Several PRC
subsidiaries receive preferential tax rates in regions in which
they operated and are also entitled to partial tax refunds from
those tax bureaus.
New
Dragon Asia Corp. is a Florida corporation with wholly-owned
operating subsidiaries. As a result, the Company is not subject to
PRC tax for the activities at the Florida company level. Costs or
expenses incurred at the Florida company level, such as the
stock-based compensation and the amortization of financing costs
and derivative accounting related to Series A Preferred Stock and
Series B Preferred Stock, cannot be used to offset any income
derived in the PRC when measuring the PRC income tax liabilities.
As of June 25, 2011 and December 25, 2010, there were no material
deferred tax assets or deferred tax liabilities. The expenses of
the United States company are not recoverable against future
taxable income in the United States or the PRC and meet the
definition of permanent differences for tax accounting purposes.
The Company has never been audited by the taxing authority in the
United States or the PRC. The Company believes that it has filed
properly in all required jurisdictions.
|
LAND USE RIGHTS
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 25, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
LAND USE RIGHTS |
NOTE 11. LAND USE RIGHTS
Land
use rights consisted of the following (in thousands):
Amortization expense was approximately $19,000
and $60,000 for the three months ended June 25, 2011 and 2010,
respectively, and $33,000 and $86,000 for the six months ended June
25, 2011 and 2010, respectively.
|
BASIS OF PRESENTATION
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 25, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION |
NOTE 2. BASIS OF PRESENTATION
The
consolidated financial statements include the financial statements
of New Dragon Asia Corp. and all of its wholly and majority owned
subsidiaries (Note 1). Intercompany balances and
transactions have been eliminated in consolidation.
Accounting
Standards Codification (“ASC”) Topic 810,
“Consolidation of Variable Interest Entities” (formerly
Standards of Financial Accounting Standards (“SFAS”)
167, “Amendments to FASB Interpretation No.
46(R))” an investor with a majority of the
variable interests (primary beneficiary) in a variable interest
entity (“VIE”) to consolidate the entity. A
VIE is an entity in which the voting equity investors do not have a
controlling financial interest or the equity investment at risk is
insufficient to finance the entity’s activities without
receiving additional subordinated financial support from other
parties. VIEs are required to be consolidated by their primary
beneficiaries if they do not effectively disperse risks among the
parties involved. The primary beneficiary of a VIE is
the party that absorbs a majority of the entity’s expected
losses or receives a majority of its expected residual
returns. The Company has completed a review of its
investments in both non-marketable and marketable equity interests
as well as other arrangements to determine whether it is the
primarily beneficiary of any VIEs. The review did not
identify any VIEs.
The
consolidated financial statements have been prepared in accordance
with ASC Topic 810. These Consolidated Financial
Statements for interim periods are unaudited. In the
opinion of management, the consolidated financial statements
include all adjustments, consisting only of normal, recurring
adjustments, necessary for their fair presentation. The
results reported in these Consolidated Financial Statements are not
necessarily indicative of the results that may be reported for the
entire year. The preparation of financial statements in
conformity with ASC Topic 810 requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities as
of the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. The
Company regularly evaluates estimates and assumptions related to
allowances for doubtful accounts, sales returns and allowance, and
inventory reserves. Although management believes these estimates
and assumptions are adequate and reasonable under the
circumstances, actual results could differ from those
estimates.
Contractual Joint Ventures
A
contractual joint venture is an entity established between the
Company and another joint venture partner, with the rights and
obligations of each party governed by a
contract. Currently, the Company has established three
contractual joint ventures with three Chinese partners in China,
with percentage of ownership ranging from 79.64% to
90%. Pursuant to each Chinese joint venture agreement,
each Chinese joint venture partner is entitled to receive a
pre-determined annual fee and is not responsible for any profit or
loss, regardless of the ownership in the contractual joint
venture. In view of such contracted profit sharing
arrangement, the three contractual joint ventures are regarded as
100% owned by the Company. Hence, the Company’s
consolidated financial statements include the financial statements
of the contractual joint ventures.
Accounting for Derivative Instruments
Derivatives
are recorded on the Company’s balance sheet at fair value.
These derivatives, including embedded derivatives in the
Company’s Series B Redeemable Convertible Preferred Stock are
separately valued and accounted for on the Company’s balance
sheet.
The
Company has determined that the conversion features of its
redeemable convertible preferred stock and warrants to purchase
common stock are derivatives that the Company is required to
account for as if they were free-standing instruments. The Company
also has a derivative due to having shares outstanding exceeding
its authorized limit. The Company has also determined that it is
required to designate these derivatives as liabilities in its
financial statements. As a result, the Company reports the value of
these embedded derivatives as current liabilities on its balance
sheet and reports changes in the value of these derivatives as
non-operating gains or losses on its statement of operations. The
value of the derivatives is required to be recalculated (and
resulting non-operating gains or losses reflected in the statement
of operations and resulting adjustments to the associated liability
amounts reflected on the balance sheet) on a quarterly basis, and
is based on the market value of the Company’s common stock.
Due to the nature of the required calculations and the large number
of shares of the Company’s common stock involved in such
calculations, changes in the Company’s common stock price may
result in significant changes in the value of the derivatives and
resulting gains and losses on the Company’s statement of
operations. The Company has also recorded a derivative for the
effect of having issued shares in excess of the authorized
shares.
The
pricing model the Company uses for determining fair values of its
derivatives is a weighted average Black-Scholes-Merton Model.
Valuations derived from this model are subject to ongoing internal
and external review. The model uses market-sourced inputs such as
interest rates and option volatilities. Selection of these inputs
involves management’s judgment and may impact net
earnings.
The
consolidated financial statements also reflect additional
non-operating gains and losses related to the classification of and
accounting for: (1) the conversion features of the Series B
Preferred Stock and associated warrants, and (2) the amortization
associated with the discount recorded with respect to the Series B
Preferred Stock as a preferred stock dividend.
Fair Value of Financial Instruments
The
Company adopted ASC Topic 820, “Fair Value Measurements and
Disclosure” (formerly SFAS 157, “Fair Value
Measurements”) on January 1, 2008 to account for and
record fair values of financial instruments. This ASC establishes a
framework for measuring fair value, and expands disclosures about
fair value measurements. The ASC establishes a fair
value hierarchy that prioritizes the inputs to valuation techniques
used to measure fair value into three levels as
follows:
The
Company determines the level in the fair value hierarchy within
which each fair value measurement in its entirety falls, based on
the lowest level input that is significant to the fair value
measurement in its entirety.
The
following table presents the embedded derivative, the Company only
financial assets measured and recorded at fair value on the
Company’s Consolidated Balance Sheets on a recurring basis
and their level within the fair value hierarchy during the period
ended June 25, 2011 and 2010:
|
INVENTORIES
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 25, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES |
NOTE 8. INVENTORIES
Inventories
consisted of the following (in thousands):
The
activity in the Company’s provision for inventory reserve is
summarized as follows (in thousands):
|
REDEEMABLE CONVERTIBLE PREFERRED STOCK
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 25, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REDEEMABLE CONVERTIBLE PREFERRED STOCK |
NOTE 13. REDEEMABLE CONVERTIBLE PREFERRED STOCK
On
December 22, 2005, the Company issued 9,500 shares of Series B 7%
Redeemable Convertible Preferred Stock (“Series B Preferred
Stock”), initially convertible into an aggregate of 5,937,500
shares of Class A Common Stock at a conversion price of $1.60 per
share, raising $9.5 million in gross proceeds. Six-year warrants to
purchase an aggregate of 2,968,750 shares of Class A Common Stock
at an exercise price of $1.76 per share were also issued to the
investors. As part of the compensation to the placement agent,
five-year warrants to purchase an aggregate of 356,250 shares of
Class A Common Stock at an exercise price of $1.76 per share were
also issued. As of June 25, 2011, 8,881 shares of Series
B Preferred Stock have been converted into 31,306,750 shares of
Class A Common Stock, and no warrants have been
exercised.
The
key terms of the Series B Preferred Stock are as
follows:
In
connection with the issuance of the Redeemable Convertible Series B
Preferred Stock, the Company paid professional fees, placement
agent fees and associated expenses amounting to $1.83 million since
the issuance of the Redeemable Convertible Preferred Stocks. The
Company also identified freestanding financial instruments included
in the issuances that were required to be recorded as liabilities.
These included the embedded conversion feature and warrants
included in the Series B Preferred Stock issuance. The Company has
evaluated the fair value of these liabilities using combination of
the Black Scholes and Binomial Pricing Models. The summary of
activity in the Series B Preferred Stock is as
follows:
The
$1,742 includes a liability for shares issued on conversion that
exceeded the authorized shares of approximately $1,023, an amount
equal to their face value if they hadn’t been converted.
Derivatives related to the excess shares are included in the
derivative liability.
Embedded
derivatives relate to redeemable convertible preferred stock. We
determined that the conversion features of our redeemable
convertible preferred stock and warrants to purchase our common
stock are derivatives that we are required to account for as
freestanding instruments under U.S. GAAP. We have also determined
that we are required to designate these derivatives as liabilities
in our financial statements. As a result, we report the value of
these embedded derivatives as current liabilities on our balance
sheet and we report changes in the value of these derivatives as
non-operating gains or losses on our statement of operations. The
value of the derivatives is required to be recalculated (and
resulting non-operating gains or losses reflected in our statement
of operations and resulting adjustments to the associated liability
amounts reflected on our balance sheet) on a quarterly basis, and
is based on the market value of our common stock. Due to the nature
of the required calculations and the large number of shares of our
common stock involved in such calculations, changes in our common
stock price may result in significant changes in the value of the
derivatives and resulting gains and losses on our statements of
operations. We were required to report a change of $15 as loss
on the embedded derivative liability in other income and $41 as
gain on the embedded derivative liability in other income for the
three months ended June 25, 2011 and 2010, respectively, a change
of $66 and $51 for the six months ended June 25, 2011 and 2010,
respectively, as gain on the embedded derivative liability in other
income on our statement of operations.
The
pricing model we use for determining fair values of our derivatives
is a combination of the Black Scholes and Binomial Pricing Models.
Valuations derived from this model are subject to ongoing internal
and external review. The model uses market-sourced inputs such as
interest rates and option volatilities. Selection of these inputs
involves management’s judgment and may impact net income. The
Company has obtained a valuation report from a third-party
valuation firm to support its estimates. The principal assumptions
used to value these complex freestanding financial instruments were
as follows:
The
Company considered all of the other minor features of the
conversion option associated with the Company’s Preferred
shares, including adjustments for: (i) stock dividends and splits,
(ii) the sale of the Company’s securities, (iii) the
subsequent issuance of rights, options, or warrants to Common
shareholders, and (iv) forced conversion and redemption features.
We ultimately determined that these features were insignificant and
did not have a material impact on the concluded values of the
Series A and Series B Preferred Stock.
The
changes in the derivative liabilities during the period are as
follows:
|
DUE FROM RELATED COMPANIES
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 25, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||
DUE FROM RELATED COMPANIES |
NOTE 9. DUE FROM RELATED COMPANIES
Due
from related companies consisted of the following (in
thousands):
* Subsidiaries of Shandong Longfeng Group
Company.
|
DEPOSITS AND PREPAYMENTS
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 25, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEPOSITS AND PREPAYMENTS |
NOTE 7. DEPOSITS AND PREPAYMENTS
Deposits
and prepayments consisted of the following (in
thousands):
|
%404R0X(*;<=A-B'ZY0.BF5IB@ "`FWT;^(FH3:XO
M9?:\=&9*&O2W?2^!IBG`P^;'%W(*K(SM=B-M70Z`;H44!TS"A\\F!>3,Y5U]
MTTF1J'JM0)5B1S9J=FXK$WN6P_!)C56]IJUI_D%%;C/%['?XKIT[_KVSI9#J
M-A40"8DO]2_Q03$$9\J@3`<23?P2\80J3RF ^&$\TO2:F5E?I':?2!_N[AZ>_%=[I=1N`S<#^2!O7WWX+Q_U_KN#7O3>O?P
M]_>MAW?OOFM=.=.'[]\Z[Z_>OGF;X^I$C"9<('&YQA_(VS=75ZTWW[7>?#MY
M\^[#F^\^O'_[[SQUN%A%WN,L(:^ @AH9H573'\#NU`^?8_DF>!E@4>=#^U?H
M?LA%GS\I5)6;I@?T*64"\!%;HE552YLVKN)T1)Q4MZUHO8@%VY"C4`-*@^A3
M^:?94;=?OZ$3U,@HK-EOE`&VB?V&087NA]RF]AOKVZ'[]AME`O`16Z+5?G.1
MM:"FSD7J6:J9B^0N13>Y3]$`UB`R5=YJ=D3NUZ?H!#4R0FOV*66`;6*?8E"A
M^R&W"7W*)L6KNOIS-'9QMRE8TR1"(G&T%MU80T*3)/(>EHFX<)B$I&E+]Z58
MV,+UEK7HD&WG?#H)^]S(C5,K-GCJR\&"OHER=<&G2IF-=.>\4?:B!%P=)"N#
MTMAS^('[1#U?JIE[9C@][W5-8\\Q0DJU%+2@K51-E^E^MZ\03TOG3YLVH,=#
ML1$G.HWAJHY-,V<=)2]$GSVGR61XX/-Q:,`_.B(%>ZPZD6/.9SM'A(E2RN[@
MF6QX29&9?`5V(OA+;]B\Q]0MO=K
M8VZ=_\#8$2@=5FG_>0^/14:JYE''8K,KTNBA/DU$.KD14J\)CZB85$&AQ:VR
M&PE'ZY4.V1]D:8$J5H4J^>PB2J^,-J-;FI;]5?ILW6O<51[3^MA"EH']Q^F]
MQ5'*,-V[IO[Z_135,J(IE_6>NU(E95O$&6%,N&;=O((35SR#<\)>&\,<.WVW
M,>(V/;>9,S#:VT$Q3C5+FV64%MO4DN)U$Z;\FGD8($T`CZ^SK69?`XM\0Z\R
M$`7)T2,-O#^%[_C8+`Y]SQ5_M`-W""E#TL9W,"V)0_-;&$\]^L;[KNWEYWVT5G;;#0:EF69
MC3]-TVS>7M]\N;5.F[>H3&:[>7QKOF&1)_2OA/2/FM;)[5_77]Y`#-$5`]N5
MO[YIM-[\UFJ99S!`1OW\A!4G5)QU4E4COZIV@>ND9>:K/LU>Z93:5F%"BQ!6
MG%+'#K!255[RX!J35>E2+DW_;[%%WY1Y7]UI>/S&E$M@O_^XZ;#C0]8YO_H.
M%OJ:77:NV/5_GU]U7K#T5(VP:#6"GM)_-1J=WR_!\L9E+8T&?G:3E=6H%ID(
MNX=X+.&X@]`)V7KM(*NZ^?RQO
M.SG+E,QD7IZEZX9#0(YTRT=!;=;R;%7A],`LYHR0(::%VSIJ9YJ'I'5Q?Y
M]K%#'MH7[>LOK4\W&ZB<>;&)LWM53&K(J""L7!(QDM_4P&U;2H]6WO8T[=Q,
M.[>BEASL?N.;^44'&1Z3]WJ[*0XRDFHDU?20R[E$*,.'PACI]\PYK$6XC=0N
MV32N>'WB
6)9)1G?\I5K!'MFV
MS@T'HYY!W\09'#$EUV?PRY3(S3)QQW<@Y%F$"/Q!5UR9?3Y?I3#63KB;X8Q/
M:R?]T^(IDB2"$B/_D"2ZR!+=[JV(#QV<1,?)P$[K#N4`K>97W90MZ*N5)\O2
M/FN(E-\0=4(E\W$TVG^7,910X1:UF:;*8%DG_17I(H6-6^_F0C2?AIHPM"\,
M-6N=TTY9493=X3B7P98<82,GGOEV$]^CB]YLU/K=;@E\=#IUEE&V3[J);5*!
M9)O.GRE1'CO.3]7*/.4:>S8+^SE6DP$ZB.;442B$$WW4/#DT%WK%_0:=/PDZ
MZ4.G7S+DQ#MSK@%9YQ!2]S]:1`$L*TR?:9;W:(A
N#E0"+,\9RG8P,(`MN",NA/H[V]FW>R?=R/SC3"VZJ'\+U--"
M&SP+FS^)&P_Y+F_']Q,.\G#KN8X+$J*;3V?SN/1Y
M"I,RZX%0Z.HIW;$ZK6;_/]_O+[XPI`V;XEW=$>0>
MPW0`$GQCBD%AL^IB>;7B(C@JC92B`RGA[Z^.MZJ5<%SH0;)/C(OY$(A#6*P;
M%&/B9&W/["E-YW5!+P`\HA/9$L@/+01"*7KUHS)ULWV#H;K0BH`^_%#,:ZA@
M"$/17L0+4!O!:#G`AV-"`3Y#CA*4,4[T%$?`^&\N*VEC2\"[S&-+.L2`5E).
M:1E,:9?LT;`58V7%8!":U.X!N\"-T98OGL6N6F<:ZW
)!0';
M&*I&]I9LB$L@XDG4&AE>^Z`N<"-B/FADD>W#AV,YQA'#NGHJ10G39MM-CO>[
MJU.#7"($&C\I[5/C0F9P),:KD?DNAS<_D1P#U\B&EU.",A4M,7R-?%8Y^#+!
MZ1B^1LI.
!F.988P*:^MKJ2^)>X)UGLT`YL`K(!@/7919/DM!67V)#LKK:F-?1:=YC"P
MVTH1I1G`'GH#RV*:'DA:"W*CBOOIQ0U8HAAV_R$,I;KJP1.S/#R8C9_"(^ZC
M!Q=;>S_.W"BPODH,H`E_S*VW\U(P"\2RZ`K;#PZ:.JXH#>N8$?60``#+$O3:
MQA^S*>$2WQX<^#X6?73AD,$JL>CVYXY5=)X^E.FAZML(['U?_T*=`-^1[SP#
M.:>AN6JR#2;E.2IR#GLNTR(O/7(<]>5GM>/JDQ]--GYNK2*D=M2=U@7X\1`OX%^`_T:
M0G^EZM@8![H9!YOO)H\Q#:_H*H5\/C'YFI'?WL"S@6<#SP:>?QAX%JA.`[JZ
M@>X#09X?/:;(WA8[2$I!F)AY4R#ML*7,1Y+#QC)`;H#<`'EK@/Q`A6)`7C>0
MCPL;Q06-_,U"1I_K#J+"1@;F546]#UV=+'E'#66`VP"W`>[&`_=QZL3@MFZX
MO:T)WF)PKN"[+'6F&7YAL8!I@-,!M@UA"8Y526`6#=`#A5^+?%$-PN^"I8
MLWQX*.AD8-C`L('AUL!PD8HP0*P;$',KIAI8;@@LEUK!?/`H-82!;`/9!K);
M`]GEU(\=E,&4E_T.AJN.;E/A\V<58%'#&3N9AF`-@!M`+KU`'V,LC5X
MK1M>9[]GW+H#=+O0C+=8/!]W?FN#PP:'#0XW'H<+E8(!6]W`-ERA%^("^3Z+
M.@1KUK;%_NMVP>\/!6(GI5/VM>"Q(-O?0+2!:!4?&Y/?X`:T=0/M6[)8$"]<
MPKI
0@P=U:F2D0<@3CS+TB*;\V2H*
MU#,UNR"):D)K\;KBZC:N2$!AU36_AR7)BC_"QE=T;SYS,Z&TB`4#=A"8K.>_
MP7X&N[ZY6JP^D-^3'F"1*I),Y:^RD/(*9-L-(5U=/3
MV*8;='*`(0=B*U_=06O(CUDV+Y!#"ARMWFN@P44F`TRZR/;I7GBD0+#.4K5V
MMF%2?3B&$-ENQBHM3[(6?917+>=1H%N-FC(]ES^R.W\G=Q-?A)$*C.B^-S@1
M[^N]G^RGX/Z
RECENT ACCOUNTING PRONOUNCEMENTS
|
6 Months Ended |
---|---|
Jun. 25, 2011
|
|
RECENT ACCOUNTING PRONOUNCEMENTS |
NOTE 3. RECENT ACCOUNTING PRONOUNCEMENTS
In
August 2010, FASB issued ASU 2010-22 “Accounting for Various
Topics-Technical Corrections to SEC paragraphs (SEC Update)”.
ASU 2010-22 amends various SEC paragraphs based on external
comments received and the issuance of SAB 112, which amends or
rescinds portions of certain SAB topics. The Company expects the
adoption of ASU 2010-22 will not have a material impact on the
Company’s results of operations or financial
statements.
In
July 2010, FASB issued ASU 2010-20 “Receivables (Topic 310):
Disclosures about the Credit Quality of Financing Receivables and
the Allowance for Credit Losses”. ASU 2010-20 improves
the disclosures that an entity provides about the credit quality of
its financing receivables and the related allowance for credit
losses. As a result of these amendments, an entity is required to
disaggregate by portfolio segment or class certain existing
disclosures and provide certain new disclosures about its financing
receivables and related allowance for credit losses. For public
entities, the disclosures as of the end of a reporting period are
effective for interim and annual reporting period ending on or
after December 15, 2010. The disclosures about activity that occurs
during a reporting period are effective for interim and annual
reporting periods beginning on or after December 15, 2010. The
Company expects the adoption of ASU 2010-20 will not have a
material impact on the Company’s results of operations or
financial statements.
In
May 2011, the FASB issued new authoritative guidance to provide a
consistent definition of fair value and ensure that fair value
measurements and disclosure requirements are similar between GAAP
and International Financial Reporting Standards. This guidance
changes certain fair value measurement principles and enhances the
disclosure requirements for fair value measurements. This guidance
is effective for interim and annual periods beginning after
December 15, 2011 and is applied prospectively. The Company does
not expect that the adoption of this guidance will have a material
impact on its financial statements.
In
April 2010, FASB issued ASU 2010-13 “Compensation-Stock
Compensation (Topic 718) Effect of Denominating the Exercise Price
of a Share-Based Payment Award in the Currency of the Market in
Which the Underlying Equity Security Trades”. ASU 2010-13
addresses the classification of a share-based payment award with an
exercise price denominated in the currency of a market in which the
underlying equity security trades. Topic 718 is amended to clarify
that a share-based payment award with an exercise price denominated
in the currency of a market in which a substantial portion of the
entity’s equity securities trades shall not be considered to
contain a market, performance, or service condition. Therefore,
such an award is not to be classified as a liability if it
otherwise qualifies as equity classification. The amendments in
this Update should be effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December
15, 2010. The guidance should be applied by recording a
cumulative-effect adjustment to the opening balance of retained
earnings for all outstanding awards as of the beginning of the
fiscal year in which the amendments are initially applied. The
Company expects the adoption of ASU 2010-13 will not have a
material impact on the Company’s results of operations or
financial position.
In
February 2010, FASB issued ASU 2010-9 “Subsequent Events
(Topic 855) Amendments to Certain Recognition and Disclosure
Requirements”. ASU 2010-9 amends disclosure requirements
within Subtopic 855-10. An entity that is an SEC filer is not
required to disclose the date through which subsequent events have
been evaluated. This change alleviates potential conflicts between
Subtopic 855-10 and the SEC's requirements. ASU 2010-9 is effective
for interim and annual periods ending after June 15,
2010.
In
January 2010, the FASB issued ASU 2010-06, Fair Value Measurements
and Disclosures (Topic 820), Improving Disclosures about Fair Value
Measurements, amending ASC 820. ASU 2010-06 requires entities to
provide new disclosures and clarify existing disclosures relating
to fair value measurements. 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
Level 3 fair value measurements, which are effective for fiscal
years beginning after December 15, 2010 and for interim periods
within those fiscal years. The adoption of ASU 2010-6 will not have
a material impact on the Company’s results of operations or
financial position.
In
October 2009, the FASB issued ASU 2009-13, Revenue Recognition
(Topic 605), Multiple-Deliverable Revenue Arrangements amending ASC
605. ASU 2009-13 requires entities to allocate revenue in an
arrangement using estimated selling prices of the delivered goods
and services based on a selling price hierarchy. ASU 2009-13
eliminates the residual method of revenue allocation and requires
revenue to be allocated using the relative selling price method.
ASU 2009-13 is effective prospectively for revenue arrangements
entered into or materially modified in fiscal years beginning on or
after June 15, 2010. The adoption did not have a material impact on
the Company’s financial position or results of
operations.
|
CONDENSED BALANCE SHEET INFORMATION
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 25, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED BALANCE SHEET INFORMATION |
NOTE 4. CONDENSED BALANCE SHEET INFORMATION
Condensed
balance sheet information as of June 25, 2011 consisted of the
following (in thousands, unaudited):
Assets
located outside of China consist primarily of cash and cash
equivalents. Liabilities located outside of China consist primarily
of embedded derivatives, net of the related beneficial conversion
feature and fair value of the warrants.
Condensed
statement of operation information for the six months ended June
25, 2011 consisted of the following (in thousands,
unaudited):
The
Company does not believe that providing additional information
regarding cash flows is meaningful to the reader, in light of the
nature of the assets and operations located inside China and
outside China.
|
OTHER PAYABLES AND ACCRUALS
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 25, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER PAYABLES AND ACCRUALS |
NOTE 12. OTHER PAYABLES AND ACCRUALS
Other
payables and accruals consisted of the following (in
thousands):
|
EARNINGS PER SHARE
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 25, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE |
NOTE 5. EARNINGS PER SHARE
The Company computes earnings per share
(“EPS’) in accordance generally accepted accounting
principles. Companies with complex capital structures are
required to present basic and diluted EPS. Basic EPS is
measured as the income or loss available to common shareholders
divided by the weighted average common shares outstanding for the
period. Diluted EPS is similar to basic EPS but presents the
dilutive effect on a per share basis of potential common shares
(e.g., convertible securities, options and warrants) as if they had
been converted at the beginning of the periods presented, or
issuance date, if later. Potential common shares that have an
anti-dilutive effect (i.e., those that increase income per share or
decrease loss per share) are excluded from the calculation of
diluted EPS. Approximately 40,321 dilutive shares on an “as
converted” basis for the Redeemable Convertible Preferred
stock for the three and six months ended June 25, 2011 were
excluded from the calculation of diluted earnings per share since
their effect would have been
anti-dilutive. Approximately 22,977 dilutive shares on
an “as converted” basis for the Redeemable Convertible
Preferred stock for the three and six months ended June 25, 2010
were excluded from the calculation of diluted earnings per share
since their effect would have been anti-dilutive.
The
calculation of diluted weighted average common shares outstanding
for the three and six months ended June 25, 2011 and 2010 is based
on the average of the closing price of the Company’s common
stock during such periods applied to warrants and options using the
treasury stock method to determine if they are dilutive. The
Redeemable Convertible Preferred stock is included on an “as
converted “basis when these shares are dilutive.
The
following table is a reconciliation of the weighted average shares
used in the computation of basic and diluted earnings per share for
the periods presented (amounts in thousands, except per share data,
unaudited):
|
COMMON STOCK
|
6 Months Ended |
---|---|
Jun. 25, 2011
|
|
COMMON STOCK |
NOTE 15. COMMON STOCK
During
the six months ended June 25, 2011 and 2010, 0 shares and 1,238
shares of Series B Preferred Stock have been converted into 0
shares and 11,052,298 shares of Class A Common Stock,
respectively.
|
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (USD $)
In Thousands |
Total
|
Class A Common Stock
|
Additional Paid-in Capital
|
Deferred Stock Compensation
|
Retained Earnings
|
Accumulated Other Comprehensive Income
|
Total NWD Stockholders' Equity
|
Non Controlling Interests
|
Comprehensive Income
|
---|---|---|---|---|---|---|---|---|---|
Beginning balance at Dec. 25, 2009 | $ 58,219 | $ 8 | $ 35,569 | $ (75) | $ 9,187 | $ 13,405 | $ 58,094 | $ 125 | $ (11,011) |
Beginning balance (in shares) at Dec. 25, 2009 | Â | 83,364 | Â | Â | Â | Â | Â | Â | Â |
Net loss | (9,008) | Â | Â | Â | (9,011) | Â | (9,011) | 3 | (9,011) |
Accretion of Redeemable Preferred Stock | (282) | Â | Â | Â | (282) | Â | (282) | Â | Â |
Preferred Stock Dividends | (115) | Â | Â | Â | (115) | Â | (115) | Â | Â |
Foreign currency translation adjustment | 2,013 | Â | Â | Â | Â | 2,013 | 2,013 | Â | 2,013 |
Conversion of preferred stock and related dividend payments made in Class A Common Stock (in shares) | Â | 16,636 | Â | Â | Â | Â | Â | Â | Â |
Conversion of preferred stock and related dividend payments made in Class A Common Stock | 1,707 | 1 | 1,706 | Â | Â | Â | 1,707 | Â | Â |
Share-based compensation to CFO | 75 | Â | Â | 75 | Â | Â | 75 | Â | Â |
Ending balance at Dec. 25, 2010 | 52,609 | 9 | 37,275 | Â | (221) | 15,418 | 52,481 | 128 | (6,998) |
Ending balance (in shares) at Dec. 25, 2010 | Â | 100,000 | Â | Â | Â | Â | Â | Â | Â |
Net loss | (1,758) | Â | Â | Â | (1,760) | Â | (1,760) | 2 | (1,760) |
Preferred Stock Dividends | (61) | Â | Â | Â | (61) | Â | (61) | Â | Â |
Foreign currency translation adjustment | 1,760 | Â | Â | Â | Â | 1,760 | 1,760 | Â | 1,760 |
Ending balance at Jun. 25, 2011 | $ 52,550 | $ 9 | $ 37,275 | Â | $ (2,042) | $ 17,178 | $ 52,420 | $ 130 | Â |
Ending balance (in shares) at Jun. 25, 2011 | Â | 100,000 | Â | Â | Â | Â | Â | Â | Â |
WARRANTS
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 25, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANTS |
NOTE 16. WARRANTS
The following table summarizes activity
regarding the Company’s outstanding warrants:
The
number of shares of Class A Common Stock issuable under warrants
related to the private placements and respective exercise prices
are summarized as follows:
As
of June 25, 2011, these warrants had no intrinsic
value.
|
RELATED PARTY TRANSACTIONS
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 25, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS |
NOTE 18. RELATED PARTY TRANSACTIONS
Parties
are considered to be related if one party has the ability, directly
or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operational
decisions. Parties are also considered to be related if they are
subject to common control or common significant
influence.
Transactions
between New Dragon Asia Corp. and related companies are summarized
below (in thousands):
(a) Shandong Longfeng Group
Company is a joint venture partner of the Company.
(b)
Subsidiaries of Shandong Longfeng Group Company.
Loans
from the Company’s major shareholder New Dragon Asia Food
Limited are for working capital, are unsecured and bear no
interest, and are payable if requested, and funds are available.
The Company and the major shareholder have agreed that no
repayments will take place in 2011. The joint venture
partner’s amounts are similar to the condition of New Dragon
Asia Food Limited loans and no repayment is expected in
2011.
|
ORGANIZATION AND NATURE OF OPERATIONS
|
6 Months Ended |
---|---|
Jun. 25, 2011
|
|
ORGANIZATION AND NATURE OF OPERATIONS |
NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS
New
Dragon Asia Corp., a corporation incorporated in the State of
Florida (collectively with its subsidiaries, the
“Company,” “we,” “us,” or
“our”), is principally engaged in the milling, sale and
distribution of flour and related products, including instant
noodles and soybean-derived products, to retail and wholesale
customers throughout China through its foreign subsidiaries in
China. The Company is headquartered in Shandong Province in the
People’s Republic of China (“PRC” or
“China”) and has its eight manufacturing plants in
Yantai, Beijing, Chengdu, and Penglai.
|
PROPERTY, MACHINERY AND EQUIPMENT
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 25, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY, MACHINERY AND EQUIPMENT |
NOTE 10. PROPERTY, MACHINERY AND EQUIPMENT
Property,
machinery and equipment consisted of following (in
thousands):
Depreciation
and amortization expense was approximately $502,000 and $506,000
for the three months ended June 25, 2011 and 2010, respectively,
and $1,010,000 and $892,000 for the six months ended June 25, 2011
and 2010, respectively.
|
Void Share Issuances in 2010
|
6 Months Ended |
---|---|
Jun. 25, 2011
|
|
Void Share Issuances in 2010 |
Note 14. Void Share Issuances in 2010
During
2010, 19,509,894 shares of the Company’s Class A common stock
were issued in excess of the Company's Articles of
Incorporation. Such shares are void under Florida
law and are not entitled to vote at meetings of our stockholders or
to any other rights of a stockholder of the Company. In
addition, any shareholder holding such void shares is entitled to
recover their value from the Company unless the Company is able to
replace the void share with a valid share. As of June
25, 2011, this obligation results in a potential commitment to buy
back shares amounting to approximately $726,000, plus the expenses
associated with administering such claims. The Company has recorded
the liability in the Redeemable Convertible Preferred Stock account
where the shares were converted from, and that contractual
obligation could not be satisfied except with redemption or
conversion to valid shares.
The
Company had proposed in the shareholders’ meeting scheduled
held on May 20, 2011 to increase the authorized shares to
119,509,894 in order to cure the over-issuance. However, the
increase was not approved at the special meeting of shareholders.
As a result, the Company may have to buy from the market 19,509,894
shares amounting to approximately $726,000. The Company has
provided a derivative for the variability of the stock price for
the voided shares. In addition, the Company will have to settle the
over-due redemption of the Series B Redeemable Convertible
Preferred Stock amounting to approximately $800,000.
|