x
|
Quarterly Report Pursuant to
Section 13 Or 15(d) of the Securities Exchange Act of 1934 for the
Quarterly Period Ended September 30,
2010
|
¨
|
Transition Report Pursuant to
Section 13 or 15(d) of The Securities Exchange Act of 1934 for the
Transition Period from _______ to
_______
|
Delaware
|
02-0563302
|
(State
or Other Jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller
reporting company x
|
Item
1. Financial Statements
|
F-1
|
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
3
|
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
15
|
|
Item
4T. Controls and Procedures
|
15
|
|
PART
II – OTHER INFOMRATION
|
||
Item
1. Legal Proceedings
|
15
|
|
Item
1A. Risk Factors
|
16
|
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
16
|
|
Item
3. Defaults Upon Senior Securities
|
16
|
|
Item
4. [Reserved]
|
16
|
|
Item
5. Other Information
|
16
|
|
Item
6. Exhibits
|
16
|
|
Signatures
|
17
|
Page
|
||
Condensed
Consolidated Sheets as of September 30, 2010 and December 31,
2009
|
F-2
|
|
Condensed
Consolidated s of Operations And Comprehensive Income for the Three and
Nine Months ended September 30, 2010 and 2009
|
F-3
|
|
Condensed
Consolidated for the Nine Months ended September 30, 2010 and
2009
|
F-4
|
|
Condensed
Consolidated of Stockholders’ Equity for the Nine Months ended September
30, 2010
|
F-5
|
|
Notes
to Condensed Consolidated Financial Statements
|
F-6
to F-22
|
September 30, 2010
|
December 31, 2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 491,844 | $ | 227,329 | ||||
Accounts
receivable, trade
|
11,237,197 | 12,510,875 | ||||||
Retention
receivable, current
|
649,542 | 874,759 | ||||||
Inventories
|
1,583,246 | 638,775 | ||||||
Deferred
tax assets
|
1,437 | 1,408 | ||||||
Prepayments
and other receivables
|
1,564,466 | 603,456 | ||||||
Total
current assets
|
15,527,732 | 14,856,602 | ||||||
Retention
receivable, non-current
|
418,468 | - | ||||||
Plant
and equipment, net
|
2,028,114 | 2,169,740 | ||||||
Construction
in progress
|
12,808,645 | 9,045,332 | ||||||
TOTAL
ASSETS
|
$ | 30,782,959 | $ | 26,071,674 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable, trade
|
$ | 2,734,320 | $ | 2,055,839 | ||||
Customer
deposits
|
53,667 | 152,850 | ||||||
Income
tax payable
|
315,247 | 201,480 | ||||||
Convertible
promissory notes, net
|
486,843 | - | ||||||
Current
portion of obligation under finance lease
|
572,400 | 437,917 | ||||||
Amount
due to a related party
|
188,500 | - | ||||||
Other
payables and accrued liabilities
|
619,443 | 1,928,494 | ||||||
Total
current liabilities
|
4,970,420 | 4,776,580 | ||||||
Long-term
liabilities:
|
||||||||
Obligation
under finance lease
|
108,809 | 675,809 | ||||||
TOTAL
LIABILITIES
|
5,079,229 | 5,452,389 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders’
equity:
|
||||||||
Common
stock, $0.001 par value; 50,000,000 shares authorized; 5,326,485 and
5,326,485 shares issued and outstanding, respectively
|
5,326 | 5,326 | ||||||
Additional
paid-in capital
|
8,728,906 | 7,977,221 | ||||||
Statutory
reserve
|
1,449,345 | 1,449,345 | ||||||
Accumulated
other comprehensive income
|
1,873,878 | 1,348,382 | ||||||
Retained
earnings
|
13,646,275 | 9,839,011 | ||||||
Total
stockholders’ equity
|
25,703,730 | 20,619,285 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$ | 30,782,959 | $ | 26,071,674 |
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
REVENUES,
NET
|
||||||||||||||||
Products
|
$ | 3,680,336 | $ | 6,697,102 | $ | 9,845,180 | $ | 13,426,663 | ||||||||
Services
|
3,987,846 | 869,319 | 7,506,297 | 1,778,294 | ||||||||||||
Project
|
377,176 | - | 752,333 | - | ||||||||||||
Total
revenues, net
|
8,045,358 | 7,566,421 | 18,103,810 | 15,204,957 | ||||||||||||
COST
OF REVENUES:
|
||||||||||||||||
Cost
of products
|
2,569,018 | 4,200,439 | 6,833,561 | 9,016,453 | ||||||||||||
Cost
of services
|
2,318,911 | 647,932 | 5,103,747 | 1,266,213 | ||||||||||||
Cost
of project
|
308,028 | - | 614,406 | - | ||||||||||||
Total
cost of revenues
|
5,195,957 | 4,848,371 | 12,551,714 | 10,282,666 | ||||||||||||
GROSS
PROFIT
|
2,849,401 | 2,718,050 | 5,552,096 | 4,922,291 | ||||||||||||
OPERATING
EXPENSES:
|
||||||||||||||||
Sales
and marketing
|
25,786 | 32,040 | 58,438 | 106,493 | ||||||||||||
General
and administrative
|
290,972 | 193,955 | 644,482 | 533,201 | ||||||||||||
Stock
based compensation
|
- | - | - | 349,000 | ||||||||||||
Total
operating expenses
|
316,758 | 225,995 | 702,920 | 988,694 | ||||||||||||
INCOME
FROM OPERATIONS
|
2,532,643 | 2,492,055 | 4,849,176 | 3,933,597 | ||||||||||||
Other
(expense) income:
|
||||||||||||||||
Interest
income
|
193 | 1,493 | 787 | 10,498 | ||||||||||||
Other
income
|
- | 4 | - | 10,165 | ||||||||||||
Subsidy
income
|
- | - | - | 33,613 | ||||||||||||
Interest
expense
|
(152,369 | ) | - | (387,149 | ) | - | ||||||||||
Total
other (expense) income
|
(152,176 | ) | 1,497 | (386,362 | ) | 54,276 | ||||||||||
INCOME
BEFORE INCOME TAXES
|
2,380,467 | 2,493,552 | 4,462,814 | 3,987,873 | ||||||||||||
Income
tax expense
|
(310,705 | ) | (317,084 | ) | (655,550 | ) | (560,544 | ) | ||||||||
NET
INCOME
|
$ | 2,069,762 | $ | 2,176,468 | $ | 3,807,264 | $ | 3,427,329 | ||||||||
Other
comprehensive income:
|
||||||||||||||||
–
Foreign currency translation gain
|
429,251 | 26,493 | 525,496 | 66,822 | ||||||||||||
COMPREHENSIVE
INCOME
|
$ | 2,499,013 | $ | 2,202,961 | $ | 4,332,760 | $ | 3,494,151 | ||||||||
Net
income per share:
|
||||||||||||||||
–
Basic
|
$ | 0.39 | $ | 0.41 | $ | 0.71 | $ | 0.64 | ||||||||
–
Diluted
|
$ | 0.38 | $ | 0.40 | $ | 0.70 | $ | 0.64 | ||||||||
Weighted
average common stock outstanding:
|
||||||||||||||||
–
Basic
|
5,326,485 | 5,316,555 | 5,326,485 | 5,316,555 | ||||||||||||
–
Diluted
|
5,413,819 | 5,496,555 | 5,401,019 | 5,389,128 |
Nine months ended September 30,
|
||||||||
2010
|
2009
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 3,807,264 | $ | 3,427,329 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities
|
||||||||
Depreciation
|
218,760 | 233,085 | ||||||
Stock
based compensation
|
- | 349,000 | ||||||
(Gain)
loss on disposal of plant and equipment
|
(223 | ) | 4,844 | |||||
Warrant
expenses, non-cash
|
278,528 | - | ||||||
Change
in operating assets and liabilities:
|
||||||||
Accounts
receivable, trade
|
1,506,879 | (3,713,394 | ) | |||||
Retention
receivable
|
(172,046 | ) | (435,252 | ) | ||||
Inventories
|
(915,044 | ) | 712,676 | |||||
Prepayments
and other receivables
|
(870,742 | ) | (165,247 | ) | ||||
Accounts
payable, trade
|
624,753 | 1,651,801 | ||||||
Customer
deposits
|
(100,580 | ) | (5,286 | ) | ||||
Income
tax payable
|
107,681 | 317,003 | ||||||
Other
payables and accrued liabilities
|
(1,323,997 | ) | 370,515 | |||||
Net
cash provided by operating activities
|
3,161,233 | 2,747,074 | ||||||
Cash
flows from investing activities:
|
||||||||
Purchase
of plant and equipment
|
(36,345 | ) | (179,089 | ) | ||||
Payments
to construction in progress
|
(3,513,416 | ) | (3,317,133 | ) | ||||
Proceeds
from disposal of plant and equipment
|
1,254 | 7,869 | ||||||
Net
cash used in investing activities
|
(3,548,507 | ) | (3,488,353 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Advance
from a director
|
188,500 | - | ||||||
Payments
on finance lease
|
(447,738 | ) | (1,075,731 | ) | ||||
Proceeds
from private placement
|
900,000 | - | ||||||
Net
cash provided by (used in) financing activities
|
640,762 | (1,075,731 | ) | |||||
Effect
on exchange rate change on cash and cash equivalents
|
11,027 | 30,008 | ||||||
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
264,515 | (1,787,002 | ) | |||||
BEGINNING
OF PERIOD
|
227,329 | 2,252,771 | ||||||
END
OF PERIOD
|
$ | 491,844 | $ | 465,769 | ||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash
paid for income taxes
|
$ | 547,869 | $ | 243,100 | ||||
Cash
paid for interest
|
$ | 55,661 | $ | - | ||||
SUPPLEMENTAL
DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
Settlement
of note payable to offset with accounts receivable
|
$ | 528,138 | $ | - | ||||
Equipment
purchased under finance leases
|
$ | - | $ | 2,331,019 |
Common
stock
|
Additional
|
Statutory
|
Accumulated
other
comprehensive
|
Retained
|
Total
stockholders’
|
|||||||||||||||||||||||
No.
of shares
|
Amount
|
paid-in
capital
|
reserve
|
income
|
earnings
|
equity
|
||||||||||||||||||||||
Balance
as of January 1, 2010, as restated
|
5,326,485 | $ | 5,326 | $ | 7,977,221 | $ | 1,449,345 | $ | 1,348,382 | $ | 9,839,011 | $ | 20,619,285 | |||||||||||||||
Beneficial
conversion feature and warrants granted in connection with convertible
promissory notes
|
- | - | 751,685 | - | - | - | 751,685 | |||||||||||||||||||||
Foreign
currency translation adjustment
|
- | - | - | - | 525,496 | - | 525,496 | |||||||||||||||||||||
Net
income for the period
|
- | - | - | - | - | 3,807,264 | 3,807,264 | |||||||||||||||||||||
Balance
as of September 30, 2010
|
5,326,485 | $ | 5,326 | $ | 8,728,906 | $ | 1,449,345 | $ | 1,873,878 | $ | 13,646,275 | $ | 25,703,730 |
NOTE-1
|
BASIS
OF PRESENTATION
|
NOTE-2
|
ORGANIZATION
AND BUSINESS BACKGROUND
|
Name
|
Place of incorporation
and kind of
legal entity
|
Principal activities
and place of operation
|
Particulars of
issued/
registered share
capital
|
Effective
interest
held
|
||||
Liaoning
Nengfa Weiye Energy Technology Co. Ltd (“Nengfa Energy”)
|
The
PRC, a limited liability company
|
Production
of a variety of industrial valve components which are widely used in
water supply and sewage system, coal and gas fields, power generation
stations, petroleum and chemical industries in the PRC
|
US$3,580,880
|
100%
|
||||
Liaoning
Nengfa Weiye Tei Fa Sales Co., Ltd. (“Sales Company”)
|
The
PRC, a limited liability company
|
Sales
and marketing of valves components and products in the PRC
|
RMB5,000,000
|
100%
|
||||
NOTE-3
|
SUMMARY
OF SIGNIFICANT ACCOUNTING
POLICIES
|
·
|
Use
of estimates
|
·
|
Basis
of consolidation
|
·
|
Cash
and cash equivalents
|
·
|
Accounts
receivable
|
·
|
Retention
receivable
|
·
|
Inventories
|
·
|
Plant
and equipment
|
Depreciable
life
|
Residual
value
|
|||
Plant
and machinery
|
1 –
20 years
|
5%
|
||
Furniture,
fixture and equipment
|
5 –
8 years
|
5%
|
·
|
Construction
in progress
|
·
|
Finance
leases
|
·
|
Impairment
of long-lived assets
|
·
|
Revenue
recognition
|
(a)
|
Energy
saving flow control equipment;
|
(b)
|
Energy
project management and sub-contracting service;
and
|
(c)
|
Energy-saving
construction projects
|
(a)
|
Sale
of products
|
(b)
|
Service
revenue
|
(c)
|
Project
revenue
|
(d)
|
Interest
income
|
·
|
Comprehensive
income
|
·
|
Income
taxes
|
·
|
Product
warranty
|
·
|
Stock
based compensation
|
·
|
Net
income per share
|
·
|
Foreign
currencies translation
|
September 30, 2010
|
September 30, 2009
|
|||||||
Period-end
RMB:US$1 exchange rate
|
6.6981 | 6.8376 | ||||||
Period
average RMB:US$1 exchange rate
|
6.8164 | 6.8425 |
·
|
Related
parties
|
·
|
Segment
reporting
|
·
|
Fair
value measurement
|
·
|
Financial
instruments
|
·
|
Recent
accounting pronouncements
|
NOTE-4
|
INVENTORIES
|
September 30, 2010
|
December 31, 2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
Raw
materials
|
$ | 1,201,115 | $ | 512,903 | ||||
Work-in-process
|
223,838 | 122,123 | ||||||
Finished
goods
|
158,293 | 3,749 | ||||||
$ | 1,583,246 | $ | 638,775 |
NOTE-5
|
PREPAYMENTS
AND OTHER RECEIVABLES
|
September 30, 2010
|
December 31, 2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
Prepayment
to vendors for raw materials
|
$ | 1,490,361 | $ | 545,102 | ||||
Prepayment
to equipment vendors
|
- | 7,115 | ||||||
Prepaid
operating expenses
|
50,165 | 34,801 | ||||||
Other
receivables
|
23,940 | 16,438 | ||||||
$ | 1,564,466 | $ | 603,456 |
NOTE-6
|
NOTE
PAYABLE
|
NOTE-7
|
AMOUNT
DUE TO A RELATED PARTY
|
NOTE-8
|
OTHER
PAYABLES AND ACCRUED
LIABILITIES
|
September 30, 2010
|
December 31, 2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
Rent
payable
|
$ | 29,859 | $ | 40,221 | ||||
Payable
to the PRC government for land use rights
|
- | 1,018,682 | ||||||
Value
added tax payable
|
233,649 | 263,834 | ||||||
Provision
for contingent liability
|
200,000 | 200,000 | ||||||
Accrued
operating expenses
|
155,834 | 372,324 | ||||||
Other
payable
|
101 | 33,433 | ||||||
$ | 619,443 | $ | 1,928,494 |
NOTE-9
|
PROMISSORY
NOTES PAYABLE
|
September 30, 2010
|
||||
Notional
amount of the convertible promissory notes payable, net of
expenses
|
960,000 | |||
Less
: warrant portion
|
(285,342 | ) | ||
Less:
debt discount, unamortized
|
(187,815 | ) | ||
Convertible
promissory notes, net
|
$ | 486,843 |
Expected
life (in years)
|
5 | |||
Volatility
|
63.38%-65.46 | % | ||
Risk
free interest rate
|
0.32 | % | ||
Dividend
yield
|
0 | % | ||
Weighted
average fair value
|
4.4 – 4.73 |
NOTE-10
|
OBLIGATION
UNDER FINANCE LEASE
|
September 30, 2010
|
||||
Finance
lease
|
$ | 681,209 | ||
Less:
current portion
|
(572,400 | ) | ||
Non-current
portion
|
$ | 108,809 |
Years
ending September 30:
|
||||
2011
|
$ | 619,904 | ||
2012
|
115,150 | |||
Total
finance leases obligation
|
735,054 | |||
Less:
interest
|
(53,845 | ) | ||
Present
value of minimum obligation
|
$ | 681,209 |
NOTE-11
|
INCOME
TAXES
|
Nine months ended September 30,
|
||||||||
2010
|
2009
|
|||||||
Income
before income taxes from PRC operation
|
$ | 5,043,945 | $ | 4,475,335 | ||||
Statutory
income tax rate
|
25 | % | 25 | % | ||||
Income
tax expense at statutory rate
|
1,260,986 | 1,118,834 | ||||||
Tax
effect of non-deductible item
|
9,697 | - | ||||||
Tax
effect from tax holiday
|
(615,133 | ) | (558,290 | ) | ||||
Income
tax expense
|
$ | 655,550 | $ | 560,544 |
NOTE-12
|
WARRANTS
|
Expected
life (in years)
|
5 | |||
Volatility
|
340.61%- 456.53 | % | ||
Risk
free interest rate
|
2.28% - 2.89 | % | ||
Dividend
yield
|
0 | % |
NOTE-13
|
SEGMENT
INFORMATION
|
·
|
Heavy
manufacturing business – production of valves components and the provision
of valve improvement and engineering services;
and
|
·
|
Energy-saving
related business – production of wind-energy equipment, provision of
energy-saving related re-engineering and technical services and long-term
construction projects.
|
Three months ended September 30, 2010
|
||||||||||||
Heavy
manufacturing
business
|
Energy-saving
related business
|
Total
|
||||||||||
Operating
revenues, net:
|
||||||||||||
-
Products
|
$ | 3,548,050 | $ | 132,286 | $ | 3,680,336 | ||||||
-
Services
|
2,714,008 | 1,273,838 | 3,987,846 | |||||||||
-
Project
|
- | 377,176 | 377,176 | |||||||||
Total
operating revenues
|
6,262,058 | 1,783,300 | 8,045,358 | |||||||||
Cost
of revenues
|
(4,663,983 | ) | (531,974 | ) | (5,195,957 | ) | ||||||
Gross
profit
|
1,598,075 | 1,251,326 | 2,849,401 | |||||||||
Depreciation
|
51,919 | 21,446 | 73,365 | |||||||||
Total
assets
|
26,510,793 | 4,272,166 | 30,782,959 | |||||||||
Expenditure
for long-lived assets
|
$ | 773,200 | $ | - | $ | 773,200 |
Nine months ended September 30, 2010
|
||||||||||||
Heavy
manufacturing
business
|
Energy-saving
related business
|
Total
|
||||||||||
Operating
revenues, net:
|
||||||||||||
-
Products
|
$ | 9,473,141 | $ | 372,039 | $ | 9,845,180 | ||||||
-
Services
|
6,232,459 | 1,273,838 | 7,506,297 | |||||||||
-
Project
|
- | 752,333 | 752,333 | |||||||||
Total
operating revenues
|
15,705,600 | 2,398,210 | 18,103,810 | |||||||||
Cost
of revenues
|
(11,482,360 | ) | (1,069,354 | ) | (12,551,714 | ) | ||||||
Gross
profit
|
4,223,240 | 1,328,856 | 5,552,096 | |||||||||
Depreciation
|
187,720 | 31,040 | 218,760 | |||||||||
Total
assets
|
26,510,793 | 4,272,166 | 30,782,959 | |||||||||
Expenditure
for long-lived assets
|
$ | 3,549,761 | $ | - | $ | 3,549,761 |
Three months ended September 30, 2009
|
||||||||||||
Heavy
manufacturing
business
|
Energy-saving
related business
|
Total
|
||||||||||
Operating
revenues, net:
|
||||||||||||
-
Products
|
$ | 6,646,008 | $ | 51,094 | $ | 6,697,102 | ||||||
-
Services
|
869,319 | - | 869,319 | |||||||||
Total
operating revenues
|
7,515,327 | 51,094 | 7,566,421 | |||||||||
Cost
of revenues
|
(4,810,164 | ) | (38,207 | ) | (4,848,371 | ) | ||||||
Gross
profit
|
2,705,163 | $ | 12,887 | $ | 2,718,050 | |||||||
Depreciation
|
82,363 | 1,759 | 84,122 | |||||||||
Total
assets
|
25,070,532 | 253,415 | 25,323,947 | |||||||||
Expenditure
for long-lived assets
|
$ | 721,376 | $ | - | $ | 721,376 |
Nine months ended September 30, 2009
|
||||||||||||
Heavy
manufacturing
business
|
Energy-saving
related business
|
Total
|
||||||||||
Operating
revenues, net:
|
||||||||||||
-
Products
|
$ | 13,271,984 | $ | 154,679 | $ | 13,426,663 | ||||||
-
Services
|
1,778,294 | - | 1,778,294 | |||||||||
Total
operating revenues
|
15,050,278 | 154,679 | 15,204,957 | |||||||||
Cost
of revenues
|
(10,165,687 | ) | (116,979 | ) | (10,282,666 | ) | ||||||
Gross
profit
|
4,884,591 | 37,700 | 4,922,291 | |||||||||
Depreciation
|
230,722 | 2,363 | 233,085 | |||||||||
Total
assets
|
25,070,532 | 253,415 | 25,323,947 | |||||||||
Expenditure
for long-lived assets
|
$ | 3,496,222 | $ | - | $ | 3,496,222 |
NOTE-14
|
CONCENTRATIONS
OF RISK
|
(a)
|
Major
customers
|
Three months ended September 30, 2010
|
September 30, 2010
|
||||||||||||
Customer
|
Revenues
|
Percentage
of revenues
|
Accounts and
retention
Receivable
|
||||||||||
Customer
A
|
$ | 3,398,919 | 42 | % | $ | 6,764,156 | |||||||
Customer
D
|
2,315,407 | 29 | % | 206,924 | |||||||||
Total:
|
$ | 5,714,326 | 71 | % |
Total:
|
$ | 6,971,080 |
Nine months ended September 30, 2010
|
September 30, 2010
|
||||||||||||
Customer
|
Revenues
|
Percentage
of revenues
|
Accounts and
retention
Receivable
|
||||||||||
Customer
A
|
$ | 4,998,363 | 28 | % | $ | 6,764,156 | |||||||
Customer
D
|
4,768,353 | 26 | % | 206,924 | |||||||||
Total:
|
$ | 9,766,716 | 54 | % |
Total:
|
$ | 6,971,080 |
Three months ended September 30, 2009
|
September 30, 2009
|
||||||||||||
Customer
|
Revenues
|
Percentage
of revenues
|
Accounts
Receivable
|
||||||||||
Customer
A
|
$ | 3,714,179 | 49 | % | $ | 7,414,700 | |||||||
Customer
B
|
775,643 | 10 | % | 778,084 | |||||||||
Customer
C
|
968,056 | 13 | % | 1,173,611 | |||||||||
Total:
|
$ | 5,457,878 | 72 | % |
Total:
|
$ | 9,366,395 |
(b)
|
Major
vendors
|
Three months ended September 30, 2010
|
September 30, 2010
|
||||||||||||
Vendor
|
Purchases
|
Percentage
of purchases
|
Accounts
Payable
|
||||||||||
Vendors
A
|
$ | 2,359,690 | 56 | % | $ | 339,478 | |||||||
Vendors
B
|
722,240 | 17 | % | 16,423 | |||||||||
Total:
|
$ | 3,081,930 | 73 | % |
Total:
|
$ | 355,901 |
(c)
|
Credit
risk
|
(d)
|
Interest
rate risk
|
(e)
|
Exchange
rate risk
|
(f)
|
Economic
and political risks
|
NOTE-15
|
COMMITMENTS
AND CONTINGENCIES
|
(a)
|
Operating
lease commitments
|
(b)
|
Capital
commitments
|
(c)
|
Unused
credit facility
|
(d)
|
Litigation
|
Revenue items
|
General payment terms: | |||||
1.
|
Sales
of products
|
(a)
|
10%
of the contract value will be paid by the customer upon signing the
contract.
|
|||
(b)
|
50%
of the contract value will be paid by the customer after the physical
inspection (with a credit term from 30 to 90 days).
|
|||||
(c)
|
30
to 35% of the contract value will be paid upon the delivery to the
customer (with a credit term from 30 to 90 days).
|
|||||
(d)
|
5
to 10% of the contract value will be paid within 12 to 24 months (from the
delivery date) as warranty retention for the product.
|
|||||
|
||||||
2.
|
Services
|
(a)
|
10
to 15 % of the contract value will be paid by the customer upon signing
the contract.
|
|||
(b)
|
The
remaining contract value will be paid by the customer upon the completion
of the service (with a credit term from 30 to 90 days).
|
|||||
3.
|
|
Projects
|
|
Payments based on the achievement of certain milestones to be made over the term of the project. |
Depreciable life
|
Residual value
|
|||||
Plant
and machinery
|
1 –
20 years
|
5 | % | |||
Furniture,
fixture and equipment
|
5 –
8 years
|
5 | % |
September 30, 2010
|
September 30, 2009
|
|||||||
Period-end
RMB:US$1 exchange rate
|
6.6981 | 6.8376 | ||||||
Average
monthly RMB:US$1 exchange rate
|
6.8164 | 6.8425 |
Revenue
Sources:
|
Account
Receivables
|
Aging of 1-90
days
|
Aging of
91-180 days
|
Aging of
181-365 days
|
Above 365
days
|
|||||||||||||||
Products
|
7,867,034 | 3,805,352 | 2,199,601 | 1,581,617 | 257,329 | |||||||||||||||
Services
|
3,317,739 | 2,975,696 | 349,501 | - | 15,676 | |||||||||||||||
Total
|
11,248,946 | 6,781,048 | 2,549,102 | 1,598,613 | 320,183 |
Item 1.
|
Legal
Proceedings.
|
Item
1A.
|
Risk
Factors.
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of
Proceeds.
|
Item
3.
|
Defaults
Upon Senior Securities.
|
Item
4.
|
[Reserved]
|
Item
5.
|
Other
Information.
|
Item
6.
|
Exhibits.
|
NF
Energy Saving Corporation
|
||
(Registrant)
|
||
Date:
November 12, 2010
|
By:
|
/s/ Gang Li
|
Gang
Li
|
||
Chairman,
Chief Executive Officer and
President
|
Date:
November 12, 2010
|
By:
|
/s/ Li Hua Wang
|
Li
Hua Wang
|
||
Chief
Financial Officer
(Principal
Financial and Accounting
Officer)
|
Exhibit No.
|
Description
|
|
3.1
|
Certificate
of Amendment to Certificate of Incorporation (incorporated by reference to
the Company’s Current Report on Form 8-K filed with the SEC on September
16, 2010
|
|
10.1*
|
Preferred
Provider and Services Agreement between LiaoNing Nengfa Weiye Energy
Technology Co. LTD. and Nengfa Weiye Tieling Valve Joint-Sock Co.
Ltd.
|
|
31.1*
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14
of the Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31.2*
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14
of the Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
|
|
32.1*
|
Certification
of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to section 906 of the Sarbanes-Oxley Act of
2002
|
|
32.2*
|
Certification
of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to section 906 of the Sarbanes-Oxley Act of
2002
|
|
*
|
Filed
herewith
|