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.
fiscal year ends on the 31st of December of each calendar year.
financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions
have been eliminated.
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.
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.
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.
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.
recorded using the weighted average method and are valued at the lower of cost or market.
amount of accounts receivable is reduced by a valuation allowance that reflects the Companys 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
plant and equipment|
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|
|Machinery and equipment
|Transportation and other facilities
||3 - 15 years|
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.
|Buildings and improvements
|Machinery and equipment
|Windbreak and Sand-break
Accumulated Depreciation and amortization
consist of land use rights and are recorded at cost. Under PRCs 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 250,000 acres of agriculture land that are
utilized for grazing, cultivation, and reclamation, of which 50,000 acres are under cultivation using the latest scientific technologies
to produce a wide variety of agricultural products.
|Impairment of long-lived assets|
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
primarily of less than 20% equity positions in non-marketable securities and are recorded at lower of cost or market.
||Foreign currency translation|
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.
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.
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.
||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.
The Company records
advertising expenses in the period incurred.
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|
Adopted Accounting Guidance
On July 1,
2011, we adopted guidance issued by the Financial Accounting Standards Board (FASB) on disclosure requirements related
to fair value measurements. The guidance requires the disclosure of roll-forward activities on purchases, sales, issuance,
and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). Adoption
of this new guidance did not have a material impact on our financial statements.
On January 1,
2012, we adopted guidance issued by the FASB on accounting and disclosure requirements related to fair value measurements. The
guidance limits the highest-and-best-use measure to nonfinancial assets, permits certain financial assets and liabilities with
offsetting positions in market or counterparty credit risks to be measured at a net basis, and provides guidance on the applicability
of premiums and discounts. Additionally, the guidance expands the disclosures on Level 3 inputs by requiring quantitative
disclosure of the unobservable inputs and assumptions, as well as description of the valuation processes and the sensitivity of
the fair value to changes in unobservable inputs. Adoption of this new guidance did not have a material impact on our financial
Accounting Guidance Not Yet Adopted
In December 2011,
the FASB issued guidance enhancing disclosure requirements about the nature of an entitys right to offset and related arrangements
associated with its financial instruments and derivative instruments. The new guidance requires the disclosure of the gross amounts
subject to rights of set-off, amounts offset in accordance with the accounting standards followed, and the related net exposure.
The new guidance will be effective for us beginning July 1, 2013. Other than requiring additional disclosures, we do not
anticipate material impacts on our financial statements upon adoption.
2011, the FASB issued guidance on testing goodwill for impairment. The new guidance provides an entity the option to first perform
a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than
its carrying amount. If an entity determines that this is the case, it is required to perform the currently prescribed two-step
goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized
for that reporting unit (if any). If an entity determines that the fair value of a reporting unit is greater than its carrying
amount, the two-step goodwill impairment test is not required. The new guidance will be effective for us beginning July 1,
In June 2011,
the FASB issued guidance on presentation of comprehensive income. The new guidance eliminates the current option to report
other comprehensive income and its components in the statement of changes in stockholders equity. Instead, an entity
will be required to present either a continuous statement of net income and other comprehensive income or in two separate but
consecutive statements. This portion of the guidance will be effective for us beginning July 1, 2012 and will require
financial statement presentation changes only. The new guidance also required entities to present reclassification adjustments
out of accumulated other comprehensive income by component in both the statement in which net income is presented and the statement
in which other comprehensive income is presented. However, in December 2011, the FASB issued guidance which indefinitely defers
the guidance related to the presentation of reclassification adjustments.
||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%.