EX-99.2 3 v121262_ex99-2.htm Unassociated Document
EXHIBIT 99.2
RESTATEMENT FOR QUARTER ENDED APRIL 30, 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 April 30, 2007:

   
As of April 30, 2007 
  
   
As Previously Reported 
  
Total Adjustments
  
As Restated 
  
CURRENT ASSETS
              
Cash and cash equivalents
  
$
3,786,469
        
$
3,786,469
  
Trade receivables, net (Note 5)
    
11,859,115
          
11,859,115
  
Inventories (Note 6)
    
1,352,302
          
1,352,302
  
Prepaid expenses and deposits
   
135,883
          
135,883
  
Other receivables
    
20,172
          
20,172
  
Deferred expenses (Note 9)
    
118,434
          
118,434
  
TOTAL CURRENT ASSETS
    
17,272,375
    
 
    
17,272,375
  
PROPERTY, PLANT AND EQUIPMENT (Note 7)
    
2,615,139
          
2,615,139
  
CONSTRUCTION IN PROGRESS (Note 8)
    
667,575
    
 
    
667,575
  
TOTAL ASSETS
  
$
20,555,089
    
 
  
$
20,555,089
  
                     
CURRENT LIABILITIES
                    
Accounts payables and accruals (Note 10)
                    
- due to related parties
 
$
-
        
$
-
  
- due to third parties
   
519,822
          
519,822
  
Total accounts payables and accruals
   
519,822
          
519,822
  
Other payables (Note 11)
    
891,257
    
1,725,634
   
2,616,891
  
TOTAL CURRENT LIABILITIES
    
1,411,079
    
 
    
3,136,713
  
TOTAL LIABILITIES
   
1,411,079
    
1,725,634
    
3,136,713
  
                     
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 2,500,000
    
35,000
          
35,000
 
Additional paid in capital
   
6,333,264
          
6,333,264
 
Reserves
    
1,962,808
          
1,962,808
 
Retained earnings
   
10,420,513
    
(1,712,961
)
  
8,707,552
 
Accumulated other comprehensive income
    
392,425
    
(12,673
)
  
379,752
 
TOTAL STOCKHOLDERS’ EQUITY
    
19,144,010
    
(1,725,634
)
  
17,418,376
 
                     
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  
$
20,555,089
         
$
20,555,089
 
 
 
1
 
The following table summarizes the impact of the restatement adjustments on the consolidated statement of operations for the three months and six months ended April 30, 2007:

   
Three Months Ended April 30, 2007
  
Six Months Ended April 30, 2007
  
   
As Previously Reported
  
Total Adjustments
  
As Restated
  
As Previously Reported
  
Total Adjustments
  
As Restated
  
SALES
  
$
6,964,700
 
$
(649,368
)
$
6,315,332
 
$
17,532,286
 
$
(1,712,961
)
$
15,819,325
 
COST OF SALES
    
　(3,120,081
)
  
  　
    
　(3,120,081
)
  
　(7,693,017
)
  
  　
    
　(7,693,017
)
GROSS PROFIT
    
3,844,619
   
(649,368
)
  
3,195,251
   
9,839,269
   
(1,712,961
)
  
8,126,308
 
                                       
SELLING AND DISTRIBUTION EXPENSES
    
(16,871
)
        
(16,871
)
  
(122,446
)
        
(122,446
)
ADVERTISING EXPENSE
    
(163,532
)
        
(163,532
)
  
(172,681
)
        
(172,681
)
GENERAL AND ADMINISTRATIVE EXPENSES
    
(369,728
)
        
(369,728
)
  
(636,504
)
        
(636,504
)
PROVISION FOR DOUBTFUL ACCOUNTS
    
(568,113
)
        
(568,113
)
  
(621,122
)
        
(621,122
)
DEPRECIATION AND AMORTIZATION
    
　(70,181
)
  
 　
    
　(70,181
)
  
　(138,475
)
  
 　
    
　(138,475
)
INCOME FROM OPERATIONS
    
2,656,194
   
(649,368
)
  
2,006,826
   
8,148,041
   
(1,712,961
)
  
6,435,080
 
                                       
OTHER INCOME
    
　6,732
   
 　
    
　6,732
   
　10,066
   
 　
    
　10,066
 
INCOME BEFORE INCOME TAXES
   
2,662,926
   
(649,368
)
  
2,013,558
   
8,158,107
   
(1,712,961
)
  
6,445,146
 
                                       
INCOME TAXES
    
　--
    
 　
    
　--
    
　--
    
 　
    
　--
  
                                       
NET INCOME
  
$
2,662,926
   
　(649,368
)
$
2,013,558
 
$
8,158,107
   
　(1,712,961
)
$
6,445,146
 
                                       
BASIC EARNINGS PER SHARE
    
0.076
   
(0.019
)
  
0.058
   
0.233
    
(0.049
)
  
0.184
 
DILUTED EARNING PER SHARE
    
0.076
   
(0.019
)
  
0.058
   
0.233
    
(0.049
)
  
0.184
 
 
2

The following table summarizes the impact of the restatement adjustments on the consolidated statement of cash flows for the six months ended April 30, 2007:

   
Six Months Ended April 30, 2007
  
 
  
As Previously Reported
  
Total Adjustments
  
As Restated
  
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Net income
  
$
8,158,107
 
$
(1,712,961
)
$
6,445,146
 
Adjustments to reconcile net income to net cash from
                   
operating activities :
                    
Depreciation and amortization
    
138,475
         
138,475
 
Fair Value of Warrants Issued
    
22,442
         
22,442
 
Changes in operating assets and liabilities:
                    
Trade receivables, net
    
(4,293,019
)
        
(4,293,019
)
Inventories
    
(730,158
)
        
(730,158
)
Other receivables, net
    
1,123,662
         
1,123,662
 
Deferred expenses
   
(2,610
)
        
(2,610
)
Prepaid expenses and deposits
    
(33,410
)
        
(33,410
)
Accounts payable and accruals
   
(266,893
)
        
(266,893
)
Other Payable
   
　(985,785
)
  
　1,725,634
   
　789,849
 
NET CASH PROVIDED BY OPERATING ACTIVITIES
    
　3,130,811
   
　12,673
   
　3,143,484
 
                     
CASH FLOWS FROM INVESTING ACTIVITIES:
                    
Acquisition of property, plant and equipment
    
(143,330
)
        
(143,330
)
Construction in Progress
    
　(560,965
)
        
　(560,965
)
NET CASH USED IN INVESTING ACTIVITIES
  
$
(704,295
)
      
$
(704,295
)
                     
NET CHANGE IN CASH AND CASH EQUIVALENTS
    
2,426,516
   
12,673
    
2,439,189
  
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
    
338,686
   
(12,673
)
  
326,013
  
Cash and cash equivalents, beginning of period
    
　1,021,267
         
　1,021,267
 
Cash and cash equivalents, end of period
  
$
3,786,469
       
$
3,786,469
 
 
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