EX-99.1 2 v121262_ex99-1.htm Unassociated Document
EXHIBIT 99.1

RESTATEMENT FOR QUARTER ENDED JANUARY 31, 2007

The Company has restated its previously issued consolidated financial statements for the quarter ended January 31, 2007 and for the quarter ended April 30, 2007. During the review for the quarter ended July 31, 2007, the Company discovered an accounting error occurring in the filed financial statements for the quarter ended January 31, 2007 and for the quarter ended April 30, 2007. Certain amounts of sales rebate payable were not accrued from sales.

The following table summarizes the impact of the restatement adjustments on the consolidated balance sheet as of January 31, 2007:
 
   
As of January 31, 2007
  
   
As Previously Reported
  
Total Adjustments
  
As Restated
  
CURRENT ASSETS
               
Cash and cash equivalents
  
$
2,786,802
        
$
2,786,802
  
Accounts receivable, net
    
10,614,644
          
10,614,644
  
Inventories
    
1,629,150
          
1,629,150
  
Prepayments
    
434,812
          
434,812
  
Other receivables, net
   
1,513
          
1,513
  
Deferred expenses
    
117,336
          
117,336
  
TOTAL CURRENT ASSETS
   
　15,584,257
    
 　
    
　15,584,257
  
PROPERTY, PLANT AND EQUIPMENT, NET
    
　2,639,300
    
 　
    
　2,639,300
  
CONSTRUCTION IN PROGRESS
    
　151,718
    
 　
    
　151,718
  
TOTAL ASSETS
  
$
18,375,275
    
 　
  
$
18,375,275
  
                     
CURRENT LIABILITIES
                    
Accounts payables and accruals
                    
- due to related parties
  
$
--
        
$
--
  
- due to third parties
    
619,917
          
619,917
 
Other payables
                   
- due to related parties
    
135,003
          
135,003
 
- due to third parties
    
　1,331,295
    
　1,071,462
   
　2,402,757
 
TOTAL CURRENT LIABILITIES
    
　2,086,215
    
　1,071,462
   
　3,157,677
 
TOTAL LIABILITIES
    
　2,086,215
    
　1,071,462
   
　3,157,677
 
                     
COMMITMENTS AND CONTINGENCIES
                   
                     
STOCKHOLDERS' EQUITY
                    
Common Stock - Authorized common shares 100,000,000, outstanding number of shares 35,000,181 at par value of 0.001; authorized preferred shares 1,000,000
    
35,000
          
35,000
 
Additional Paid-in capital
    
6,310,822
          
6,310,822
 
Reserves
    
1,610,192
          
1,610,192
 
Retained earnings
   
8,110,203
    
(1,063,593
)
  
7,046,610
 
Accumulated other comprehensive income
    
　222,843
    
　(7,869
)
  
　214,974
 
TOTAL STOCKHOLDERS' EQUITY
    
　16,289,060
    
　(1,071,462
)
  
　15,217,598
 
                     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  
$
18,375,275
    
  　
  
$
18,375,275
 
 
1
 
The following table summarizes the impact of the restatement adjustments on the consolidated statement of operations for the three months ended January 31, 2007:

   
Three Months Ended January 31, 2007
  
   
As Previously Reported
  
Total Adjustments
  
As Restated
  
                
SALES
  
$
10,567,586
 
$
(1,063,593
)
$
9,503,993
 
COST OF SALES
    
　(4,572,936
)
  
 　
    
　(4,572,936
)
GROSS PROFIT
    
5,994,650
   
(1,063,593
)
  
4,931,057
 
                     
SELLING AND DISTRIBUTION EXPENSES
    
(105,575
)
        
(105,575
)
ADVERTISING
    
(9,149
)
        
(9,149
)
GENERAL AND ADMINISTRATIVE EXPENSES
    
(319,785
)
        
(319,785
)
DEPRECIATION AND AMORTIZATION
    
　(68,294
)
  
 　
    
　(68,294
)
INCOME FROM OPERATIONS
    
5,491,847
   
(1,063,593
)
  
4,428,254
 
                     
OTHER INCOME
    
3,347
         
3,347
 
OTHER EXPENSES
    
　(13
)
  
 　
    
　(13
)
INCOME BEFORE INCOME TAXES
    
5,495,181
   
(1,063,593
)
  
4,431,588
 
                     
INCOME TAXES
    
--
          
--
  
 
    
 　
    
 　
    
 　
  
NET INCOME
   
　5,495,181
   
　(1,063,593
)
  
　4,431,588
 
                     
NET INCOME PER COMMON SHARE BASIC AND FULLY DILUTED
    
0.157
    
(0.030
)
  
0.127
 
 
2
 
The following table summarizes the impact of the restatement adjustments on the consolidated statement of cash flows for the three months ended January 31, 2007:

   
Three Months Ended January 31, 2007
  
 
  
As Previously Reported
  
Total Adjustments
  
As Restated
  
CASH FLOWS FROM OPERATING ACTIVITIES:
  
  
       
  
  
Net income
  
$
5,495,181
  
$
(1,063,593
)
$
4,431,588
  
Adjustments to reconcile net income to net cash from
                   
 operating activities :
                    
Depreciation and amortization
    
68,294
          
68,294
  
Changes in operating assets and liabilities:
                    
 Accounts receivable, net
    
(3,048,548
)
        
(3,048,548
)
 Inventories
    
(1,007,006
)
        
(1,007,006
)
 Prepayments
    
(332,339
)
        
(332,339
)
 Other receivables, net
   
1,142,321
         
1,142,321
 
 Deferred expenses
    
(1,513
)
        
(1,513
)
 Accounts payable and accruals
   
(166,798
)
        
(166,798
)
 Other payables
               
0
 
 - due to third parties
    
135,003
   
1,071,462
    
1,206,465
 
 - due to related parties
    
　(545,746
)
  
　0
   
　(545,746
)
NET CASH FROM OPERATING ACTIVITIES
    
　1,738,849
    
　7,869
   
　1,746,718
  
                     
CASH FLOWS FROM INVESTING ACTIVITIES:
                    
Acquisition of property, plant and equipment
    
(97,309
)
        
(97,309
)
Construction in Progress
    
　(45,108
)
  
 　
    
　(45,108
)
NET CASH USED IN INVESTING ACTIVITIES
  
$
(142,417
)
  
 　
  
$
(142,417
)
                     
NET CHANGE IN CASH AND CASH EQUIVALENTS
    
1,596,432
    
7,869
    
1,604,501
 
                     
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
    
169,103
    
(7,869
)
  
161,234
 
                     
Cash and cash equivalents, beginning of period
    
　1,021,267
    
 　
    
　1,021,267
 
                     
Cash and cash equivalents, end of period
  
$
2,786,802
    
 　
  
$
2,786,802
  
 
3