Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended |
Mar. 31, 2015 | |
Document And Entity Information | |
Entity Registrant Name | Yasheng Group |
Entity Central Index Key | 1123312 |
Document Type | 10-Q |
Document Period End Date | 31-Mar-15 |
Amendment Flag | FALSE |
Current Fiscal Year End Date | -19 |
Is Entity a Well-known Seasoned Issuer? | No |
Is Entity a Voluntary Filer? | No |
Is Entity's Reporting Status Current? | Yes |
Entity Filer Category | Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | 155,097,355 |
Document Fiscal Period Focus | Q1 |
Document Fiscal Year Focus | 2015 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (unaudited) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
ASSETS | ||
Cash and cash equivalents | $11,877,596 | $11,907,242 |
Accounts receivable, net | 122,012,168 | 112,094,824 |
Inventories | 339,890,437 | 341,756,253 |
Prepaid and other current assets | 3,924,189 | 4,070,937 |
Total current assets | 477,704,390 | 469,829,256 |
Equity and other investments | 209,148 | 209,941 |
Property, plant and equipment, net | 912,687,552 | 905,268,722 |
Construction in progress | 6,617,632 | 6,960,289 |
Intangible assets, net | 1,092,756,003 | 1,097,762,161 |
Total assets | 2,489,974,725 | 2,480,030,369 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Accounts payable and accrued expenses | 25,151,516 | 27,402,889 |
Short term loans | 4,558,627 | 4,902,762 |
VAT tax payable | 653,433 | 701,760 |
Current portion of long term debt | 3,273,627 | 3,560,394 |
Other current liabilities | 581,062 | 607,853 |
Total current liabilities | 34,218,265 | 37,175,658 |
Long term payable | 19,674,391 | 21,073,928 |
Total liabilities | 53,892,656 | 58,249,586 |
Stockholders' equity: | ||
Common stock, US $1.00 par value 800,000,000 shares authorized 155,097,355 shares issued and outstanding | 155,097,355 | 155,097,355 |
Accumulated other comprehensive income | 437,049,405 | 443,988,809 |
Retained earnings | 1,843,935,309 | 1,822,694,617 |
Total stockholders' equity | 2,436,082,069 | 2,421,780,781 |
Total liabilities & stockholders' equity | $2,489,974,725 | $2,480,030,369 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Stockholders' equity: | ||
Common stock par value | $1 | $1 |
Common stock shares authorized | 800,000,000 | 800,000,000 |
Common stock shares issued | 155,097,355 | 155,097,355 |
Common stock shares Outstanding | 155,097,355 | 155,097,355 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Statement [Abstract] | ||
Net sales | $210,036,064 | $209,211,523 |
Cost of goods sold | 187,006,793 | 186,222,266 |
Gross profit | 23,029,272 | 22,989,257 |
Operating expenses: | ||
Sales and marketing | 395,848 | 390,454 |
General and administrative | 977,082 | 962,975 |
Total operating expenses | 1,372,931 | 1,353,429 |
Operating profit | 21,656,341 | 21,635,828 |
Interest expense | 653,058 | 666,044 |
Other income (expense) | 237,409 | 263,494 |
Income before income tax expense | 21,240,692 | 21,233,279 |
Income tax expense | 0 | 0 |
Net income | $21,240,692 | $21,233,279 |
Basic earnings per share | $0.14 | $0.14 |
Weighted average number of shares | 155,097,355 | 155,097,355 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash flows from operating activities: | ||
Net income | $21,240,692 | $21,233,279 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 3,225,561 | 3,215,162 |
Allowance for doubtful accounts | 1,385,945 | 499,183 |
Changes in assets and liabilities: | ||
Accounts receivable | -11,303,289 | -10,003,669 |
Inventories | 1,902,870 | 3,232,529 |
Prepaid and other current assets | 131,371 | 140,304 |
Accounts payable | -2,141,441 | -1,837,806 |
Tax payables | -45,676 | -25,355 |
Accrued expenses and other current liabilities | -30,924 | -24,998 |
Net cash provided by operating activities | 14,365,109 | 16,428,629 |
Cash flows from investing activities: | ||
Purchase of assets | -12,430,907 | -14,321,957 |
Investments | 0 | 0 |
Net cash used in investing activities | -12,430,907 | -14,321,957 |
Cash flows from financing activities: | ||
Payment on land lease | -1,319,937 | -1,576,967 |
Increase (decrease) in debt | -598,936 | -711,267 |
Net cash provided by financing activities | -1,918,873 | -2,288,235 |
Effect of exchange rate change on cash and cash equivalents | -44,976 | -101,730 |
Net increase (decrease) in cash and cash equivalents | -29,646 | -283,292 |
Cash and cash equivalents at beginning of period | 11,907,242 | 11,337,958 |
Cash and cash equivalents at end of period | 11,877,596 | 11,054,666 |
Supplemental Disclosures: | ||
Cash paid for interest | $653,058 | $666,044 |
1_Basis_of_Presentation_Organi
1. Basis of Presentation, Organization and Business | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
1. Basis of Presentation, Organization and Business | The accompanying unaudited condensed consolidated financial statement (“statements”) have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. |
Operating results for the period are not necessarily indicative of the results that may be expected for the full year. These statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in Yasheng Group's Form 10-K. The statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). All necessary adjustments have been made to present the financial statements in accordance with US GAAP. | |
Yasheng Group (“The Company”) is a California corporation with primary operations in China. The Company produces and markets high-quality farming and sideline products including livestock and poultry. It also designs, develops and markets new technologies related to agriculture. | |
Product offerings include 30+ major agriculture goods under 6 major product categories which include: field crops: cotton, corns, barley, wheat, flax, alfalfa; vegetables: onions, potatoes, beet, and peas; fruit trees: apples, pears, apricots; specialty crops: hops, wolfberries, cumin, liquorices; seeds: black melon seeds, sunflower seeds, corn seeds, Hemp Seeds, flax seeds; poultry: eggs. | |
Yasheng sells its products through an extensive nationwide sales and distribution network covering 18 provinces and over 100 cities in China. Products are also sold directly to food processors as well as processed internally by the company and then resold to supermarkets or other distributors, or further processed for retail food distribution. The Company also sells many of its products fresh within Gansu province as well as nationally to food processors and distributors, or directly to supermarkets. Customers are based primarily in China and include national and international leading companies. Products are also sold as feed for livestock, ingredients for Chinese traditional medicines as well as other important ingredients in the food industry. |
2_Summary_of_Significant_Accou
2. Summary of Significant Accounting Policies | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
2. Summary of Significant Accounting Policies | |||||||||
(a) | Accounting standards | ||||||||
The consolidated financial statements have been prepared on a historical cost basis to reflect the financial position and results of operations of the Company in accordance with accounting principles generally accepted in the United States of America. | |||||||||
(b) | Fiscal year | ||||||||
The Company’s fiscal year ends on the 31st of December of each calendar year. | |||||||||
(c) | Consolidation | ||||||||
The consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated. | |||||||||
(d) | Use of estimates | ||||||||
The Company’s discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. | |||||||||
(e) | Revenue recognition | ||||||||
We mainly sell food products. We recognize revenue when title and risk of loss are transferred to our customers. This generally happens upon delivery of our products. | |||||||||
(f) | Shipping and handling costs | ||||||||
The Company records outward freight, purchasing and receiving costs in selling expenses; inspection costs and warehousing costs are recorded as general and administrative expenses. | |||||||||
(g) | Cash and cash equivalents | ||||||||
Cash and cash equivalents include cash on hand, demand deposits held by banks, and securities with maturities of three months or less. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash equivalents are composed primarily of investments in money market accounts stated at cost, which approximates fair value. | |||||||||
(h) | Inventories | ||||||||
Inventories are recorded using the weighted average method and are valued at the lower of cost or market. | |||||||||
(i) | Accounts receivable, net | ||||||||
The carrying amount of accounts receivable is reduced by a valuation allowance that reflects the Company’s best estimate of the amounts that will not be collected. In addition to reviewing delinquent accounts receivable, the Company considers many factors in estimating its general allowance, including aging analysis, historical bad debt records, customer credit analysis and any specific known troubled accounts. | |||||||||
(j) | Property, plant and equipment | ||||||||
Property, plant and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. Amortization of leasehold improvements is calculated on a straight-line basis over the life of the asset or the term of the lease, whichever is shorter. Major renewals and betterments are capitalized and depreciated; maintenance and repairs that do not extend the life of the respective assets are charged to expense as incurred. Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in income. Depreciation related to property and equipment used in production is reported in cost of sales. Property and equipment are depreciated over their estimated useful lives as follows: | |||||||||
Buildings and improvements | 20 - 40 years | ||||||||
Farming facilities | 10 years | ||||||||
Machinery and equipment | 7 years | ||||||||
Transportation and other facilities | 3 - 15 years | ||||||||
Long-term assets of the Company are reviewed annually to assess whether the carrying value has become impaired, according to the guidelines established in Statement of Accounting Standards (SFAS) No. 144, "Accounting for the Impairment of Disposal of Long-Lived Assets." The Company also evaluates the periods of amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives. No impairment of assets was recorded in the periods reported. | |||||||||
3/31/15 | 3/31/14 | ||||||||
Buildings and improvements | $ | 122,270,094 | $ | 114,271,116 | |||||
Farming facilities | 109,733.203 | 102,554,395 | |||||||
Machinery and equipment | 14,884,058 | 13,910,335 | |||||||
Transportation | 353,861,690 | 326,951,346 | |||||||
Windbreak and Sand-break Trees | 430,237,964 | 402,091,555 | |||||||
Total | 1,030,987,009 | 959,778,748 | |||||||
Less: Accumulated Depreciation and amortization | 118,299,457 | 105,819,463 | |||||||
Net | $ | 912,687,552 | $ | 853,959,285 | |||||
(k) | Intangible assets | ||||||||
Intangible assets consist of land use rights and are recorded at cost. Under PRC’s current property rights regime, use rights for specified periods (e.g., 40 to 70 years) can be obtained from the state through the up-front payment of land use fees. The fees are determined by the location, type and density of the proposed development. This separation of land ownership and use rights allows the trading of land use rights while maintaining state ownership of land. The Company has over 300,000 acres of agriculture land that are utilized for grazing, cultivation, and reclamation, of which 65,000 acres are under cultivation using the latest scientific technologies to produce a wide variety of agricultural products. | |||||||||
(l) | Impairment of long-lived assets | ||||||||
The carrying amounts of long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of assets to future undiscounted net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell. | |||||||||
(m) | Investments | ||||||||
Investments consist primarily of less than 20% equity positions in non-marketable securities and are recorded at lower of cost or market. | |||||||||
(n) | Foreign currency translation | ||||||||
The accompanying financial statements are presented in United States (US) dollars. The functional currency is the Renminbi (“RMB”). The financial statements are translated into US dollars from RMB at year-end exchange rates for assets and liabilities, and weighed average exchange rates for revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. | |||||||||
Gains and losses resulting from foreign currency translation are recorded in a separate component of shareholders’ equity. Foreign currency translation adjustments are included in accumulated other comprehensive income in the consolidated statements of shareholders’ equity for the years presented. | |||||||||
RMB is not freely convertible into the currency of other nations. All such exchange transactions must take place through authorized institutions. There is no guarantee the RMB amounts could have been, or could be, converted into US dollars at rates used in translation. | |||||||||
(o) | Income taxes | ||||||||
As an agricultural enterprise, the Company and all of its agricultural subsidiaries are exempted from enterprise income taxes with approval from the Gansu Provincial Bureau of Local Taxation. The only non-agricultural subsidiary, Baiyin Cement Plant, has suffered net loss for the years shown and therefore has no applicable taxable income. Because of the uncertainty of future profits, no deferred tax assets have been set up at this time. | |||||||||
(p) | Earnings per share | ||||||||
Basic earnings per share are computed using the weighted average number of common shares outstanding during the year. Diluted earnings per share are computed using the weighted average number of common and, if dilutive, potential common shares outstanding during the year. The Company has no potentially dilutive shares for the periods shown. | |||||||||
(q) | Economic and Political Risks | ||||||||
The Company faces a number of risks and challenges as a result of having primary operations and markets in the PRC. Changing political climates in the PRC could have a significant effect on the Company's business. | |||||||||
(r) | Advertising expense | ||||||||
The Company records advertising expenses in the period incurred. | |||||||||
(s) | Comprehensive income | ||||||||
Comprehensive income is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. Accumulated other comprehensive income, as presented on the accompanying consolidated balance sheets, consists of mainly the cumulative foreign currency translation adjustment. | |||||||||
(t) | Recently issued accounting standards | ||||||||
Recent Accounting Guidance Not Yet Adopted | |||||||||
In May 2014, as part of its ongoing efforts to assist in the convergence of U.S. GAAP and International Financial Reporting Standards, the Financial Accounting Standards Board (FASB) issued a new standard related to revenue recognition. Under the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard will be effective for us beginning in 2017, and early adoption is not permitted. We are currently evaluation the impact of this st5andard on our consolidated financial statements. | |||||||||
In April 2015, the FASB issued guidance to simplify the presentation of debt issuance costs. This new guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. This new guidance will be effective in 2016. We are currently evaluating the impact of this standard on our consolidated financial statements. | |||||||||
(u) | Value added tax (VAT) | ||||||||
Value added tax is a consumption tax levied on value added. While the standard VAT rate in PRC is 17%, the Company's agricultural subsidiaries enjoy a reduced VAT rate of 4%. |
3_Inventories
3. Inventories | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
3. Inventories | The major classes of inventory: raw materials, packaging materials, products in process, finished goods, stocks, low-value consumable goods, materials in transit as well as others. | ||||||||
The following is a breakdown of the major categories of inventories. | |||||||||
Inventory Breakdown | As of 3/31/2015 | As of 3/31/2014 | |||||||
Raw material | 67,463,960 | 66,141,137 | |||||||
Finished goods | 180,593,123 | 175,502,312 | |||||||
Low value consumable goods | 45,953,618 | 45,052,567 | |||||||
Packaging material | 30,101,978 | 29,511,743 | |||||||
Maintenance material | 15,777,758 | 15,468,390 | |||||||
Total | 339,890,437 | 331,676,149 |
4_China_contribution_plan
4. China contribution plan | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
4. China contribution plan | The Company’s subsidiaries in China participate in a government-mandated multi-employer defined contribution plan pursuant to which certain retirement, medical and other welfare benefits are provided to employees. Chinese labor regulations require the Company’s subsidiaries to pay to the local labor bureau a monthly contribution at a stated contribution rate based on the monthly basic compensation of qualified employees. The relevant local labor bureau is responsible for meeting all retirement benefit obligations; the Company has no further commitments beyond its monthly contribution. |
5_Profit_appropriation
5. Profit appropriation | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
5. Profit appropriation | Pursuant to the laws applicable to China’s Foreign Investment Enterprises, each of the Company’s subsidiaries in China allow make appropriations from its after-tax profit to non-distributable reserve funds as determined by the Board of Directors. These reserve funds include a (i) general reserve, (ii) enterprise expansion fund and (iii) staff bonus and welfare fund. The general reserve fund requires annual appropriations of 10% of after-tax profit (as determined under PRC GAAP) until these reserves equal 50% of the amount of paid-in capital; the other fund appropriations are at the Company’s discretion. Payment to the statutory general reserve fund is at the Company discretion. Allocations to these statutory reserve funds can only be used for specific purposes and are not transferable to us in the form of loans, advances or cash dividends. |
6_Concentration_of_risks
6. Concentration of risks | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
6. Concentration of risks | The operations of the Company are substantially located in the PRC and accordingly, investing in the shares of the Company is subject to among others, the PRC’s political, economic and legal risks. |
7_Income_taxes
7. Income taxes | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
7. Income taxes | The Company and all of its agricultural subsidiaries are exempt from income taxes in the PRC. The Company has not filed an income tax return in the US. |
8_Debt
8. Debt | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
8. Debt | The Company obtains secured lending from the banks using two types of arrangements, collateral and guarantee. Collateral are loans secured against the assets of the Yasheng Group, while guarantee are loans provided with the guarantee from a third party. |
9_Employee_benefit_plans
9. Employee benefit plans | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
9. Employee benefit plans | The Company provides the following benefits for all employees: |
A. Employee Welfare Fund: An amount equal to 14% of payroll is set aside by the Company for standard employee benefits. This fund is managed and controlled by the Company. All required payments current. | |
B. Open Policy Pension: The Company pays to national and community insurance agents an amount equal to 20% of payroll. This insurance continues to cover the employee subsequent to retirement. | |
C. Unemployment Insurance: The Company pays to the national employment administrative entities an amount equal to 1% of payroll. Any dismissed employee thereby receives a specified amount of family-support funds for a designated period. | |
D. Housing Surplus Reserve: The Company pays to the national housing fund administrative entities an amount equal to 10% of payroll for deposit into the employees' future housing allowance accounts. | |
The aforesaid items are for employee's benefits and should be accounted for as the Company's expenses. |
10_Operating_leases
10. Operating leases | 3 Months Ended |
Mar. 31, 2015 | |
Notes to Financial Statements | |
10. Operating leases | The Company has no operating leases for the periods shown. |
11_Segments
11. Segments | 3 Months Ended | ||||||||||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||
11. Segments | In its operation of the business, management, including upper management and the board of director’s, reviews certain information as it relates to the Company as a whole. The information most used and useful is the profitability by subsidiary. Accordingly, these are the segments which are presented in the table below. | ||||||||||||||||||||||||||||||||
Breakdown by Subsidiary Unit: US Dollar | |||||||||||||||||||||||||||||||||
Net Sales | Net Sales | Cost of Sales | Cost of Sales | Gross Profit | Gross Profit | ||||||||||||||||||||||||||||
Subsidiaries | ended | ended | ended | ended | ended | ended | |||||||||||||||||||||||||||
3/31/15 | 3/31/14 | 3/31/15 | 3/31/14 | 3/31/15 | 3/31/14 | ||||||||||||||||||||||||||||
Gansu Tiaoshan Agricultural-Industrial-Commercial Group Co., Ltd | $ | 51,070,601 | $ | 50,870,112 | $ | 45,972,220 | $ | 45,779,409 | $ | 5,098,092 | $ | 5,089,234 | |||||||||||||||||||||
Gansu Tiaoshan Agricultural-Industrial-Commercial Group Co., Ltd | $ | 49,444,537 | $ | 49,250,432 | $ | 43,662,026 | $ | 43,478,856 | $ | 5,782,276 | $ | 5,772,229 | |||||||||||||||||||||
Gansu Hongtai Agricultural Technology Co., Ltd. | 28,865,148 | 28,751,832 | 27,102,040 | 26,988,342 | 1,762,981 | 1,759,918 | |||||||||||||||||||||||||||
Gansu Xiaheqing Industrial Co., Ltd. | 4,699,751 | 4,681,301 | 4,146,232 | 4,128,838 | 553,497 | 552,535 | |||||||||||||||||||||||||||
Gansu Jinta Hengsheng Agricultural Development Co., Ltd. | 25,886,476 | 25,784,853 | 23,108,405 | 23,011,461 | 2,777,949 | 2,773,122 | |||||||||||||||||||||||||||
Gansu Jinta Xingsheng Industrial Co., Ltd. | 25,307,674 | 25,208,323 | 21,796,408 | 21,704,968 | 3,511,143 | 3,505,042 | |||||||||||||||||||||||||||
Gansu Jinta Yongsheng Agricultural Development Company. | 24,500,425 | 24,404,243 | 20,956,678 | 20,868,761 | 3,543,677 | 3,537,520 | |||||||||||||||||||||||||||
Gansu Jinta Yuantai Commercial Trading Co., Ltd. | 261,454 | 260,428 | 262,784 | 261,682 | -344 | -343 | |||||||||||||||||||||||||||
Totals for Quarter | $ | 210,036,064 | $ | 209,211,523 | $ | 187,006,793 | $ | 186,222,266 | $ | 23,029,272 | $ | 22,989,257 | |||||||||||||||||||||
Other segments that assist management in its analysis of the company's performance are the segments by product group, namely, agriculture, livestock and biotechnology. The following table contains that breakout of gross profit by product group. | |||||||||||||||||||||||||||||||||
3 months ended 3-31-2015 | |||||||||||||||||||||||||||||||||
Sales | Sales | Cost of Sales | Cost of Sales | Gross Profit | Gross Profit | Gross Profit % | Gross Profit % | ||||||||||||||||||||||||||
ended | ended | ended | ended | ended | ended | ended | ended | ||||||||||||||||||||||||||
3/31/15 | 3/31/14 | 3/31/15 | 3/31/14 | 3/31/15 | 3/31/14 | 3/31/15 | 3/31/14 | ||||||||||||||||||||||||||
Agriculture | $ | 208,308,014 | 207,490,256 | 185,370,473 | $ | 184,592,811 | $ | 23,442,903 | $ | 22,897,445 | 11.25 | 11.04 | |||||||||||||||||||||
Livestock | 371,128 | 369,671 | 352,285 | 350,807 | 19,314 | 18,865 | 5.2 | 5.1 | |||||||||||||||||||||||||
Biotechnology | 1,356,923 | 1,351,596 | 1,284,036 | 1,278,649 | 74,685 | 72,947 | 5.5 | 5.4 | |||||||||||||||||||||||||
Total for Quarter | $ | 210,036,064 | $ | 209,211,523 | $ | 187,006,793 | $ | 186,222,266 | $ | 23,029,272 | $ | 22,493,438 | 10.96 | 10.99 | |||||||||||||||||||
2_Summary_of_Significant_Accou1
2. Summary of Significant Accounting Policies (Policies) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
(a) Accounting standards | The consolidated financial statements have been prepared on a historical cost basis to reflect the financial position and results of operations of the Company in accordance with accounting principles generally accepted in the United States of America. | ||||||||
(b) Fiscal year | The Company’s fiscal year ends on the 31st of December of each calendar year. | ||||||||
(c) Consolidation | The consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated. | ||||||||
(d) Use of estimates | The Company’s discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. | ||||||||
(e) Revenue recognition | We mainly sell food products. We recognize revenue when title and risk of loss are transferred to our customers. This generally happens upon delivery of our products. | ||||||||
(f) Shipping and handling costs | The Company records outward freight, purchasing and receiving costs in selling expenses; inspection costs and warehousing costs are recorded as general and administrative expenses. | ||||||||
(g) Cash and cash equivalents | Cash and cash equivalents include cash on hand, demand deposits held by banks, and securities with maturities of three months or less. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash equivalents are composed primarily of investments in money market accounts stated at cost, which approximates fair value. | ||||||||
(h) Inventories | Inventories are recorded using the weighted average method and are valued at the lower of cost or market. | ||||||||
(i) Accounts receivable, net | The carrying amount of accounts receivable is reduced by a valuation allowance that reflects the Company’s best estimate of the amounts that will not be collected. In addition to reviewing delinquent accounts receivable, the Company considers many factors in estimating its general allowance, including aging analysis, historical bad debt records, customer credit analysis and any specific known troubled accounts. | ||||||||
(j) Property, plant and equipment | Property, plant and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. Amortization of leasehold improvements is calculated on a straight-line basis over the life of the asset or the term of the lease, whichever is shorter. Major renewals and betterments are capitalized and depreciated; maintenance and repairs that do not extend the life of the respective assets are charged to expense as incurred. Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in income. Depreciation related to property and equipment used in production is reported in cost of sales. Property and equipment are depreciated over their estimated useful lives as follows: | ||||||||
Buildings and improvements | 20 - 40 years | ||||||||
Farming facilities | 10 years | ||||||||
Machinery and equipment | 7 years | ||||||||
Transportation and other facilities | 3 - 15 years | ||||||||
Long-term assets of the Company are reviewed annually to assess whether the carrying value has become impaired, according to the guidelines established in Statement of Accounting Standards (SFAS) No. 144, "Accounting for the Impairment of Disposal of Long-Lived Assets." The Company also evaluates the periods of amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives. No impairment of assets was recorded in the periods reported. | |||||||||
3/31/15 | 3/31/14 | ||||||||
Buildings and improvements | $ | 122,270,094 | $ | 114,271,116 | |||||
Farming facilities | 109,733.203 | 102,554,395 | |||||||
Machinery and equipment | 14,884,058 | 13,910,335 | |||||||
Transportation | 353,861,690 | 326,951,346 | |||||||
Windbreak and Sand-break Trees | 430,237,964 | 402,091,555 | |||||||
Total | 1,030,987,009 | 959,778,748 | |||||||
Less: Accumulated Depreciation and amortization | 118,299,457 | 105,819,463 | |||||||
Net | $ | 912,687,552 | $ | 853,959,285 | |||||
(k) Intangible assets | Intangible assets consist of land use rights and are recorded at cost. Under PRC’s current property rights regime, use rights for specified periods (e.g., 40 to 70 years) can be obtained from the state through the up-front payment of land use fees. The fees are determined by the location, type and density of the proposed development. This separation of land ownership and use rights allows the trading of land use rights while maintaining state ownership of land. The Company has over 300,000 acres of agriculture land that are utilized for grazing, cultivation, and reclamation, of which 65,000 acres are under cultivation using the latest scientific technologies to produce a wide variety of agricultural products. | ||||||||
(l) Impairment of long-lived assets | The carrying amounts of long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of assets to future undiscounted net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell. | ||||||||
(m) Investments | Investments consist primarily of less than 20% equity positions in non-marketable securities and are recorded at lower of cost or market. | ||||||||
(n) Foreign currency translation | The accompanying financial statements are presented in United States (US) dollars. The functional currency is the Renminbi (“RMB”). The financial statements are translated into US dollars from RMB at year-end exchange rates for assets and liabilities, and weighed average exchange rates for revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. | ||||||||
Gains and losses resulting from foreign currency translation are recorded in a separate component of shareholders’ equity. Foreign currency translation adjustments are included in accumulated other comprehensive income in the consolidated statements of shareholders’ equity for the years presented. | |||||||||
RMB is not freely convertible into the currency of other nations. All such exchange transactions must take place through authorized institutions. There is no guarantee the RMB amounts could have been, or could be, converted into US dollars at rates used in translation. | |||||||||
(o) Income taxes | As an agricultural enterprise, the Company and all of its agricultural subsidiaries are exempted from enterprise income taxes with approval from the Gansu Provincial Bureau of Local Taxation. The only non-agricultural subsidiary, Baiyin Cement Plant, has suffered net loss for the years shown and therefore has no applicable taxable income. Because of the uncertainty of future profits, no deferred tax assets have been set up at this time. | ||||||||
(p) Earnings per share | Basic earnings per share are computed using the weighted average number of common shares outstanding during the year. Diluted earnings per share are computed using the weighted average number of common and, if dilutive, potential common shares outstanding during the year. The Company has no potentially dilutive shares for the periods shown. | ||||||||
(q) Economic and Political Risks | The Company faces a number of risks and challenges as a result of having primary operations and markets in the PRC. Changing political climates in the PRC could have a significant effect on the Company's business. | ||||||||
(r) Advertising expense | The Company records advertising expenses in the period incurred. | ||||||||
(s) Comprehensive income | Comprehensive income is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. Accumulated other comprehensive income, as presented on the accompanying consolidated balance sheets, consists of mainly the cumulative foreign currency translation adjustment. | ||||||||
Recently issued accounting standards | Recent Accounting Guidance Not Yet Adopted | ||||||||
In May 2014, as part of its ongoing efforts to assist in the convergence of U.S. GAAP and International Financial Reporting Standards, the Financial Accounting Standards Board (FASB) issued a new standard related to revenue recognition. Under the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard will be effective for us beginning in 2017, and early adoption is not permitted. We are currently evaluation the impact of this st5andard on our consolidated financial statements. | |||||||||
In April 2015, the FASB issued guidance to simplify the presentation of debt issuance costs. This new guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. This new guidance will be effective in 2016. We are currently evaluating the impact of this standard on our consolidated financial statements. | |||||||||
(u) Value added tax (VAT) | Value added tax is a consumption tax levied on value added. While the standard VAT rate in PRC is 17%, the Company's agricultural subsidiaries enjoy a reduced VAT rate of 4%. |
2_Summary_of_Significant_Accou2
2. Summary of Significant Accounting Policies (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
Long-term assets | 3/31/15 | 3/31/14 | |||||||
Buildings and improvements | $ | 122,270,094 | $ | 114,271,116 | |||||
Farming facilities | 109,733.203 | 102,554,395 | |||||||
Machinery and equipment | 14,884,058 | 13,910,335 | |||||||
Transportation | 353,861,690 | 326,951,346 | |||||||
Windbreak and Sand-break Trees | 430,237,964 | 402,091,555 | |||||||
Total | 1,030,987,009 | 959,778,748 | |||||||
Less: Accumulated Depreciation and amortization | 118,299,457 | 105,819,463 | |||||||
Net | $ | 912,687,552 | $ | 853,959,285 |
3_Inventories_Tables
3. Inventories (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
Inventory Breakdown | Inventory Breakdown | As of 3/31/2015 | As of 3/31/2014 | ||||||
Raw material | 67,463,960 | 66,141,137 | |||||||
Finished goods | 180,593,123 | 175,502,312 | |||||||
Low value consumable goods | 45,953,618 | 45,052,567 | |||||||
Packaging material | 30,101,978 | 29,511,743 | |||||||
Maintenance material | 15,777,758 | 15,468,390 | |||||||
Total | 339,890,437 | 331,676,149 |
11_Segments_Tables
11. Segments (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||||||||||||
Segments Tables | |||||||||||||||||||||||||||||||||
Subsidiaries | Net Sales | Net Sales | Cost of Sales | Cost of Sales | Gross Profit | Gross Profit | |||||||||||||||||||||||||||
Subsidiaries | ended | ended | ended | ended | ended | ended | |||||||||||||||||||||||||||
3/31/15 | 3/31/14 | 3/31/15 | 3/31/14 | 3/31/15 | 3/31/14 | ||||||||||||||||||||||||||||
Gansu Tiaoshan Agricultural-Industrial-Commercial Group Co., Ltd | $ | 51,070,601 | $ | 50,870,112 | $ | 45,972,220 | $ | 45,779,409 | $ | 5,098,092 | $ | 5,089,234 | |||||||||||||||||||||
Gansu Tiaoshan Agricultural-Industrial-Commercial Group Co., Ltd | $ | 49,444,537 | $ | 49,250,432 | $ | 43,662,026 | $ | 43,478,856 | $ | 5,782,276 | $ | 5,772,229 | |||||||||||||||||||||
Gansu Hongtai Agricultural Technology Co., Ltd. | 28,865,148 | 28,751,832 | 27,102,040 | 26,988,342 | 1,762,981 | 1,759,918 | |||||||||||||||||||||||||||
Gansu Xiaheqing Industrial Co., Ltd. | 4,699,751 | 4,681,301 | 4,146,232 | 4,128,838 | 553,497 | 552,535 | |||||||||||||||||||||||||||
Gansu Jinta Hengsheng Agricultural Development Co., Ltd. | 25,886,476 | 25,784,853 | 23,108,405 | 23,011,461 | 2,777,949 | 2,773,122 | |||||||||||||||||||||||||||
Gansu Jinta Xingsheng Industrial Co., Ltd. | 25,307,674 | 25,208,323 | 21,796,408 | 21,704,968 | 3,511,143 | 3,505,042 | |||||||||||||||||||||||||||
Gansu Jinta Yongsheng Agricultural Development Company. | 24,500,425 | 24,404,243 | 20,956,678 | 20,868,761 | 3,543,677 | 3,537,520 | |||||||||||||||||||||||||||
Gansu Jinta Yuantai Commercial Trading Co., Ltd. | 261,454 | 260,428 | 262,784 | 261,682 | -344 | -343 | |||||||||||||||||||||||||||
Totals for Quarter | $ | 210,036,064 | $ | 209,211,523 | $ | 187,006,793 | $ | 186,222,266 | $ | 23,029,272 | $ | 22,989,257 | |||||||||||||||||||||
Other segments | Sales | Sales | Cost of Sales | Cost of Sales | Gross Profit | Gross Profit | Gross Profit % | Gross Profit % | |||||||||||||||||||||||||
ended | ended | ended | ended | ended | ended | ended | ended | ||||||||||||||||||||||||||
3/31/15 | 3/31/14 | 3/31/15 | 3/31/14 | 3/31/15 | 3/31/14 | 3/31/15 | 3/31/14 | ||||||||||||||||||||||||||
Agriculture | $ | 208,308,014 | 207,490,256 | 185,370,473 | $ | 184,592,811 | $ | 23,442,903 | $ | 22,897,445 | 11.25 | 11.04 | |||||||||||||||||||||
Livestock | 371,128 | 369,671 | 352,285 | 350,807 | 19,314 | 18,865 | 5.2 | 5.1 | |||||||||||||||||||||||||
Biotechnology | 1,356,923 | 1,351,596 | 1,284,036 | 1,278,649 | 74,685 | 72,947 | 5.5 | 5.4 | |||||||||||||||||||||||||
Total for Quarter | $ | 210,036,064 | $ | 209,211,523 | $ | 187,006,793 | $ | 186,222,266 | $ | 23,029,272 | $ | 22,493,438 | 10.96 | 10.99 |
2_Summary_of_Significant_Accou3
2. Summary of Significant Accounting Policies (Details 1) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Total | $1,030,987,009 | $959,778,748 |
Less: Accumulated Depreciation and amortization | 118,299,457 | 105,819,463 |
Net | 912,687,552 | 853,959,285 |
BuildingAndBuildingImprovements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 122,270,094 | 114,271,116 |
Farming Facilities [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 109,733,203 | 102,554,395 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 14,884,058 | 13,910,335 |
Transportation Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 353,861,690 | 326,951,346 |
Windbreak and Sandbreak Trees [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | $430,237,964 | $402,091,555 |
2_Summary_of_Significant_Accou4
2. Summary of Significant Accounting Policies (Details Narrative) | 3 Months Ended |
Mar. 31, 2015 | |
Summary Of Significant Accounting Policies Details Narrative | |
Standard VAT rate | 17.00% |
Reduced VAT rate | 4.00% |
3_Inventories_Details
3. Inventories (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
Notes to Financial Statements | |||
Raw material | $67,463,960 | $66,141,137 | |
Finished goods | 180,593,123 | 175,502,312 | |
Low value consumable goods | 45,953,618 | 45,052,567 | |
Packaging material | 30,101,978 | 29,511,743 | |
Maintenance material | 15,777,758 | 15,468,390 | |
Total | $339,890,437 | $341,756,253 | $331,676,149 |
5_Profit_appropriation_Details
5. Profit appropriation (Details Narrative) | 3 Months Ended |
Mar. 31, 2015 | |
Profit Appropriation Details Narrative | |
Profit appropriation, Reseve fund description | The general reserve fund requires annual appropriations of 10% of after-tax profit (as determined under PRC GAAP) until these reserves equal 50% of the amount of paid-in capital; the other fund appropriations are at the CompanyBs discretion. Payment to the statutory general reserve fund is at the Company discretion. |
9_Employee_benefit_plans_Detai
9. Employee benefit plans (Details Narrative) | 3 Months Ended |
Mar. 31, 2015 | |
Employee Benefit Plans Details Narrative | |
Percentage of Payroll set for employee benefits | 14.00% |
Percentage of Payroll paid to insurance agents | 20.00% |
Percentage of Payroll for unemployment insurance | 1.00% |
Percentage of Payroll paid for housing allowance accounts | 10.00% |
11_Segments_Details
11. Segments (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Related Party Transaction [Line Items] | ||
Net Sales | $210,036,064 | $209,211,523 |
Cost of Sales | 187,006,793 | 186,222,266 |
Gross Profit | 23,029,272 | 22,989,257 |
Gansu Tiaoshan Agricultural Industrial Commercial Group Company Limited [Member] | ||
Related Party Transaction [Line Items] | ||
Net Sales | 51,070,601 | 50,870,112 |
Cost of Sales | 45,972,220 | 45,779,409 |
Gross Profit | 5,098,092 | 5,089,234 |
Gansu Tiaoshan Agricultural Industrial Commercial Group Company Limited 2 [Member] | ||
Related Party Transaction [Line Items] | ||
Net Sales | 49,444,537 | 49,250,432 |
Cost of Sales | 43,662,026 | 43,478,856 |
Gross Profit | 5,782,276 | 5,772,229 |
Gansu Hongtai Agricultural Technology Company Limited [Member] | ||
Related Party Transaction [Line Items] | ||
Net Sales | 28,865,148 | 28,751,832 |
Cost of Sales | 27,102,040 | 26,988,342 |
Gross Profit | 1,762,981 | 1,759,918 |
Gansu Xiaheqing Industrial Company Limited [Member] | ||
Related Party Transaction [Line Items] | ||
Net Sales | 4,699,751 | 4,681,301 |
Cost of Sales | 4,146,232 | 4,128,838 |
Gross Profit | 553,497 | 552,535 |
Gansu Jinta Hengsheng Agricultural Development Company Limited [Member] | ||
Related Party Transaction [Line Items] | ||
Net Sales | 25,886,476 | 25,784,853 |
Cost of Sales | 23,108,405 | 23,011,461 |
Gross Profit | 2,777,949 | 2,773,122 |
Gansu Jinta Xingsheng Industrial Company Limited [Member] | ||
Related Party Transaction [Line Items] | ||
Net Sales | 25,307,674 | 25,208,323 |
Cost of Sales | 21,796,408 | 21,704,968 |
Gross Profit | 3,511,143 | 3,505,042 |
Gansu Jinta Yongsheng Agricultural Development Company [Member] | ||
Related Party Transaction [Line Items] | ||
Net Sales | 24,500,425 | 24,404,243 |
Cost of Sales | 20,956,678 | 20,868,761 |
Gross Profit | 3,543,677 | 3,537,520 |
Gansu Jinta Yuantai Commercial Trading Company Limited [Member] | ||
Related Party Transaction [Line Items] | ||
Net Sales | 261,454 | 260,428 |
Cost of Sales | 262,784 | 261,682 |
Gross Profit | ($344) | ($343) |
11_Segments_Details_1
11. Segments (Details 1) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Segment Reporting Information [Line Items] | ||
Net Sales | $210,036,064 | $209,211,523 |
Cost of Sales | 187,006,793 | 186,222,266 |
Gross Profit | 23,029,272 | 22,989,257 |
Agriculture [Member] | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 208,308,014 | 207,490,256 |
Cost of Sales | 185,370,473 | 184,592,811 |
Gross Profit | 23,442,903 | 22,897,445 |
Livestock [Member] | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 371,128 | 369,671 |
Cost of Sales | 352,285 | 350,807 |
Gross Profit | 19,314 | 18,865 |
Biotechnology [Member] | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 1,356,923 | 1,351,596 |
Cost of Sales | 1,284,036 | 1,278,649 |
Gross Profit | $74,685 | $72,947 |