x | Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
¨ | Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Utah | 90-0438712 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
No. 18 Zhong Guan Cun Dong St. Haidian District Beijing, PRC | 100083 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer ¨ | Accelerated filer ¨ |
Non-accelerated filer ¨ (Do not check if a smaller reporting company) | Smaller reporting company x |
| Page | |
Special Note Regarding Forward-Looking Statements | 4 | |
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PART I | FINANCIAL INFORMATION | 5 |
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Item 1. | Financial Statements (Unaudited) | 5 |
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| Notes to Financial Statements (Unaudited) | 14 |
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operation | 42 |
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Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |
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Item 4. | Controls and Procedures | 49 |
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PART II | OTHER INFORMATION | 51 |
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Item 1. | Legal Proceedings | 51 |
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Item 1A. | Risk Factors | 51 |
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 51 |
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Item 3. | Defaults Upon Senior Securities | 51 |
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Item 4. | Mining Safety Disclosure | 51 |
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Item 5. | Other Information | 51 |
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Item 6. | Exhibits | 51 |
1. | I have reviewed this quarterly report on Form 10-Q of Sino Gas International Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Yuchuan Liu | |
Yuchuan Liu | |
Chief Executive Officer | |
(Principal Executive Officer) | |
| | Notes | | 6/30/2013 | | 12/31/2012 | | ||
ASSETS | | | | | | | | | |
Current Assets | | | | | | | | | |
Cash & cash equivalents | | 2(e) | | $ | 10,912,830 | | $ | 13,836,027 | |
Restricted cash | | | | | - | | | 232,326 | |
Notes receivable | | | | | 646,392 | | | 65,254 | |
Accounts receivable | | 2(f),3 | | | 10,985,628 | | | 11,951,962 | |
Other receivables | | 4 | | | 5,875,565 | | | 3,228,774 | |
Related party receivable | | 5 | | | 387,496 | | | 343,551 | |
Inventory | | | | | 2,010,685 | | | 719,342 | |
Advance to suppliers | | 2(g) | | | 3,955,983 | | | 5,364,552 | |
Prepaid expenses and taxes | | | | | 1,609,469 | | | 969,229 | |
Total Current Assets | | | | | 36,384,048 | | | 36,711,017 | |
| | | | | | | | | |
Non-Current Assets | | | | | | | | | |
Investment | | 2(h),6 | | | 23,511,366 | | | 23,213,107 | |
Property, plant & equipment, net | | 2(j),7 | | | 53,661,642 | | | 53,267,196 | |
Construction in progress | | 2(m) | | | 49,420,008 | | | 43,384,156 | |
Intangible assets, net | | 2(k),9 | | | 960,627 | | | 949,987 | |
Goodwill | | 2(l),8 | | | 4,598,321 | | | 1,677,975 | |
Deposit | | | | | 605,572 | | | 562,790 | |
Total Non-current Assets | | | | | 132,757,536 | | | 123,055,211 | |
| | | | | | | | | |
Total Assets | | | | $ | 169,141,584 | | $ | 159,766,228 | |
| | | | | | | | | |
LIABILITIES & STOCKHOLDERS' EQUITY | | | | | | | | | |
| | | | | | | | | |
LIABILITIES | | | | | | | | | |
Current Liabilities | | | | | | | | | |
Bank loans | | 10(a) | | $ | 26,825,248 | | $ | 21,810,580 | |
Accounts payable | | | | | 15,176,006 | | | 17,073,587 | |
Other payables - current portion | | 11(a) | | | 9,532,420 | | | 9,578,447 | |
Accrued liabilities | | | | | 180,723 | | | 38,259 | |
Convertible Bonds | | 12 | | | 8,405,679 | | | 8,020,825 | |
Unearned revenue | | 2(n) | | | 6,662,588 | | | 3,813,148 | |
Related party payable | | | | | 187,051 | | | - | |
Notes payable | | | | | 113,119 | | | - | |
Total Current Liabilities | | | | | 67,082,834 | | | 60,334,846 | |
| | | | | | | | | |
Non-current Liabilities | | | | | | | | | |
Long-term bank loans | | 10(b) | | | 10,439,223 | | | 11,557,765 | |
Total Non-current Liabilities | | | | | 10,439,223 | | | 11,557,765 | |
| | | | | | | | | |
Total Liabilities | | | | $ | 77,522,057 | | $ | 71,892,611 | |
STOCKHOLDERS' EQUITY | | Notes | | 6/30/2013 | | 12/31/2012 | | ||
| | | | | | | | | |
Preferred Stock B US$0.001 par value; 5,000,000 shares authorized; 200,997 shares issued and outstanding as of June 30, 2013 and December 31, 2012, respectively. | | 13 | | $ | 201 | | $ | 201 | |
| | | | | | | | | |
Additional paid in capital - Preferred Stock B | | | | | 233,655 | | | 233,655 | |
| | | | | | | | | |
Preferred Stock B-1 US$0.001 par value; 3,000,000 shares authorized; nil shares issued and outstanding as of June 30, 2013 and December 31, 2012, respectively. | | 13 | | | - | | | - | |
| | | | | | | | | |
Additional paid in capital - Preferred Stock B-1 | | | | | - | | | - | |
| | | | | | | | | |
Common Stock US$0.001 par value; 250,000,000 shares authorized; 31,802,382 shares issued and outstanding as of June 30, 2013 and December 31, 2012, respectively. | | 13 | | | 31,801 | | | 31,801 | |
| | | | | | | | | |
Additional paid in capital - Common Stock | | | | | 38,069,322 | | | 38,069,322 | |
| | | | | | | | | |
Additional paid in capital - Beneficial Conversion Feature | | | | | 515,851 | | | 515,851 | |
| | | | | | | | | |
Statutory reserve | | 2(w) | | | 6,738,287 | | | 6,150,234 | |
Retained earnings | | | | | 31,447,895 | | | 30,024,006 | |
Minority Interest | | | | | 7,372,994 | | | 7,374,492 | |
Accumulated other comprehensive income | | 2(x) | | | 7,209,521 | | | 5,474,055 | |
Total Stockholders' Equity | | | | | 91,613,527 | | | 87,873,617 | |
| | | | | | | | | |
Total Liabilities & Stockholders' Equity | | | | $ | 169,141,584 | | $ | 159,766,228 | |
| | | | Three Months Ended | | Six Months Ended | | ||||||||
| | Note | | 6/30/2013 | | 6/30/2012 | | 6/30/2013 | | 6/30/2012 | | ||||
Sales revenue | | 2(q) | | | 14,862,867 | | $ | 10,819,666 | | | 28,292,758 | | $ | 21,573,269 | |
Cost of revenue | | | | | 9,710,563 | | | 6,472,799 | | | 19,600,777 | | | 14,539,830 | |
Gross Profit | | | | | 5,152,304 | | | 4,346,867 | | | 8,691,981 | | | 7,033,439 | |
| | | | | | | | | | | | | | | |
Operating Expense | | | | | | | | | | | | | | | |
Selling expense | | | | | 1,183,255 | | | 749,948 | | | 2,398,953 | | | 1,515,635 | |
General and administrative expense | | | | | 1,224,119 | | | 1,126,767 | | | 2,871,477 | | | 2,084,131 | |
Total operating expense | | | | | 2,407,374 | | | 1,876,715 | | | 5,270,430 | | | 3,599,766 | |
| | | | | | | | | | | | | | | |
Operating Income | | | | | 2,744,930 | | | 2,470,152 | | | 3,421,551 | | | 3,433,673 | |
| | | | | | | | | | | | | | | |
Other Income/(Expense) | | | | | | | | | | | | | | | |
Investment loss | | | | | (2,112) | | | - | | | (2,112) | | | - | |
Other income | | | | | 29,983 | | | 12,362 | | | 31,442 | | | 34,699 | |
Other expense | | | | | (57,552) | | | (8,352) | | | (123,867) | | | (127,094) | |
Interest income | | | | | 58,811 | | | 54,647 | | | 100,162 | | | 155,965 | |
Interest expense | | | | | (943,680) | | | (853,461) | | | (1,868,552) | | | (1,625,765) | |
Total other income/(expense) | | | | | (914,550) | | | (794,805) | | | (1,862,927) | | | (1,562,195) | |
| | | | | | | | | | | | | | | |
Income before tax | | | | | 1,830,380 | | | 1,675,348 | | | 1,558,624 | | | 1,871,478 | |
| | | | | | | | | | | | | | | |
Income tax | | 2(r),12 | | | (416,059) | | | (91,182) | | | (778,683) | | | (329,439) | |
| | | | | | | | | | | | | | | |
Gain/(Loss) from discontinued operations, net of tax | | | | | - | | | - | | | - | | | - | |
| | | | | | | | | | | | | | | |
Net income | | | | | 1,414,321 | | $ | 1,584,166 | | | 779,941 | | $ | 1,542,039 | |
| | | | | | | | | | | | | | | |
Net income (loss) attributable to: | | | | | | | | | | | | | | | |
- Common stockholders | | | | $ | 1,415,111 | | $ | 1,584,292 | | $ | 781,439 | | $ | 1,542,968 | |
- Non-controlling interest | | | | | (790) | | $ | (126) | | | (1,498) | | $ | (929) | |
| | | | | | | | | | | | | | | |
Earnings per share | | 2(z),13 | | | | | | | | | | | | | |
Basic | | | | $ | 0.03 | | $ | 0.05 | | $ | 0.03 | | $ | 0.05 | |
Diluted | | | | $ | 0.03 | | $ | 0.05 | | $ | 0.03 | | $ | 0.05 | |
| | | | | | | | | | | | | | | |
Weighted Average Shares Outstanding | | | | | | | | | | | | | | | |
Basic | | | | | 31,802,382 | | | 31,793,698 | | | 31,802,382 | | | 31,793,698 | |
Diluted | | | | | 31,802,382 | | | 31,793,698 | | | 31,802,382 | | | 31,793,698 | |
| | Preferred Stock B | | Preferred Stock B-1 | | Common Stock | | ||||||||||||
| | | | | | APIC - | | | | | | APIC - | | | | | | APIC - | |
| | Shares | | | | Preferred | | Shares | | | | Preferred | | Shares | | | | Common | |
| | Outstanding | | Amount | | Stock B | | Outstanding | | Amount | | Stock B-1 | | Outstanding | | Amount | | Stock | |
Balance at January 1, 2012 | | 209,681 | | 210 | | 243,750 | | - | | - | | - | | 31,793,698 | | 31,792 | | 36,302,875 | |
Net Income | | - | | - | | - | | - | | - | | - | | - | | - | | - | |
Conversion of Preferred Stock B to Common Stock | | (8,684) | | (9) | | (10,095) | | - | | - | | - | | 8,684 | | 9 | | 68,435 | |
Expiration of Convertible Bond | | - | | | | - | | - | | - | | - | | - | | - | | 2,584,912 | |
Conversion of Convertible Bonds to Common Stock | | - | | - | | - | | - | | - | | - | | - | | - | | - | |
Appropriation of Income to Non-controlling Interest | | - | | - | | - | | - | | - | | - | | - | | - | | - | |
Issuance of Subsidiary’s Common Stock | | - | | - | | - | | - | | - | | - | | - | | - | | (886,900) | |
Appropriation of Retained Earnings | | - | | - | | - | | - | | - | | - | | - | | - | | - | |
Foreign Currency Translation Adjustment | | - | | - | | - | | - | | - | | - | | - | | - | | - | |
Balance at December 31, 2012 | | 200,997 | | 201 | | 233,655 | | - | | - | | - | | 31,802,382 | | 31,801 | | 38,069,322 | |
| | | | | | | | | | | | | | | | | | | |
Balance at January 1, 2013 | | 200,997 | | 201 | | 233,655 | | - | | - | | - | | 31,802,382 | | 31,801 | | 38,069,322 | |
Net Income | | - | | - | | - | | - | | - | | - | | - | | - | | - | |
Appropriation of Income to Non-controlling Interest | | - | | - | | - | | - | | - | | - | | - | | - | | - | |
Appropriation of Retained Earnings | | - | | - | | - | | - | | - | | - | | - | | - | | - | |
Foreign Currency Translation Adjustment | | - | | - | | - | | - | | - | | - | | - | | - | | - | |
Balance at June 30, 2013 | | 200,997 | | 201 | | 233,655 | | - | | - | | - | | 31,802,382 | | 31,801 | | 38,069,322 | |
| | Common Stock | | | | | | | | | | | | ||||||||
| | | | | | | | APIC - | | | | | | | | | | | | | |
| | APIC - | | APIC - | | APIC - | | Convertible | | APIC - | | | | | | | | Accumulated | | | |
| | Warrants | | Warrants | | Warrants | | Bonds | | Beneficial | | | | | | | | Other | | | |
| | Series: | | Series: | | Series: | | Detachable | | Conversion | | Statutory | | Retained | | Minority | | Comprehensive | | | |
| | A,B,J,C,D | | E,G | | F,R | | Warrants | | Feature | | Reserve | | Earnings | | Interest | | Income | | Total | |
Balance at January 1, 2012 | | - | | - | | - | | 223,367 | | 1,408,648 | | 6,150,234 | | 24,702,285 | | 3,417,981 | | 8,222,939 | | 80,704,081 | |
Net Income | | - | | - | | - | | - | | - | | - | | 6,383,440 | | - | | - | | 6,383,440 | |
Conversion of Preferred Stock B to Common Stock | | - | | - | | - | | - | | (58,340) | | - | | - | | - | | - | | - | |
Expiration of Convertible Bond | | - | | - | | - | | (223,367) | | (1,092,522) | | - | | - | | - | | - | | 1,269,023 | |
Conversion of Convertible Bonds to Common Stock | | - | | - | | - | | - | | 258,065 | | - | | - | | - | | - | | 258,065 | |
Appropriation of Income to Non-controlling Interest | | - | | - | | - | | - | | - | | - | | (1,061,719) | | 1,061,719 | | - | | - | |
Issuance of Subsidiary’s Common Stock | | - | | - | | - | | - | | - | | - | | - | | 2,894,792 | | - | | 2,007,892 | |
Appropriation of Retained Earnings | | - | | - | | - | | - | | - | | - | | - | | - | | - | | - | |
Foreign Currency Translation Adjustment | | - | | - | | - | | - | | - | | - | | - | | - | | (2,748,884) | | (2,748,884) | |
Balance at December 31, 2012 | | - | | - | | - | | - | | 515,851 | | 6,150,234 | | 30,024,006 | | 7,374,492 | | 5,474,055 | | 87,873,617 | |
| | | | | | | | | | | | | | | | | | | | | |
Balance at January 1, 2013 | | - | | - | | - | | - | | 515,851 | | 6,150,234 | | 30,024,006 | | 7,374,492 | | 5,474,055 | | 87,873,617 | |
Net Income | | - | | - | | - | | - | | - | | - | | 779,939 | | - | | - | | 779,939 | |
Appropriation of Income to Non-controlling Interest | | - | | - | | - | | - | | - | | - | | 1,498 | | (1,498) | | - | | - | |
Appropriation of Retained Earnings | | - | | - | | - | | - | | - | | 588,053 | | 642,452 | | - | | - | | 1,230,505 | |
Foreign Currency Translation Adjustment | | - | | - | | - | | - | | - | | - | | - | | - | | 1,735,466 | | 1,735,466 | |
Balance at June 30, 2013 | | - | | - | | - | | - | | 515,851 | | 6,738,287 | | 31,447,895 | | 7,372,994 | | 7,209,521 | | 91,619,527 | |
| | 6/30/2013 | | 12/31/2012 | | Total | | |||
Comprehensive Income | | | | | | | | | | |
Net Income | | $ | 779,939 | | $ | 6,383,440 | | $ | 7,163,379 | |
Other Comprehensive Income | | | | | | | | | | |
Foreign Currency Translation Adjustment | | | 1,735,466 | | | (2,748,884) | | | (1,013,418) | |
Total | | $ | 2,515,405 | | $ | 3,634,556 | | $ | 6,149,961 | |
| | Three Months Ended | | Six Months Ended | | ||||||
| | 6/30/2013 | | 6/30/2012 | | 6/30/2013 | | 6/30/2012 | | ||
Cash Flows from Operating Activities | | | | | | | | | | | |
Net Income | | 1,414,321 | | $ | 1,584,165 | | 779,939 | | $ | 1,542,039 | |
Bad debt provision | | (6,012) | | | (24,311) | | (9,761) | | | (3,520) | |
Depreciation expense | | 425,937 | | | 459,908 | | 836,739 | | | 756,082 | |
Amortization expense of intangible assets | | 40,373 | | | 5,836 | | 29,794 | | | 17,481 | |
Amortization expense of convertible bonds | | 196,516 | | | 205,604 | | 384,853 | | | 401,668 | |
Loss/(gain) on disposal of property and equipment | | - | | | - | | - | | | | |
Withdraw/(deposit) in restricted time deposits | | - | | | 143,102 | | 232,326 | | | (438,676) | |
Decrease/(increase) in accounts and other receivables | | (2,479,696) | | | 3,984,538 | | (2,251,834) | | | 2,728,166 | |
Decrease/(increase) in inventory | | (269,938) | | | 285,643 | | (1,291,345) | | | (866,164) | |
Decrease/(increase) in prepaid expenses | | 5,159,628 | | | (1,243,171) | | 768,330 | | | (1,321,653) | |
Decrease/(Increase) in related party receivable | | (23,910) | | | 508 | | (43,945) | | | (3,021) | |
Increase/(decrease) in accounts and other payables | | 3,933,927 | | | 1,291,210 | | 1,235,348 | | | 3,823,659 | |
Cash Sourced/(Used) in Operating Activities of Continued Operation | | 8,391,146 | | | 6,693,032 | | 670,444 | | | 6,636,061 | |
Cash Sourced/(Used) in Operating Activities of Discontinued Operation | | - | | | - | | - | | | - | |
Cash Sourced/(Used) in Operating Activities | | 8,391,146 | | | 6,693,032 | | 670,444 | | | 6,636,061 | |
| | | | | | | | | | | |
Cash Flows from Investing Activities | | | | | | | | | | | |
Decrease/(Increase) in deposit | | 74,865 | | | (2,613,479) | | (42,782) | | | (2,305,650) | |
Proceeds from disposal of discontinued operation | | - | | | - | | - | | | - | |
Increase of investment in equity | | (213,428) | | | 13,473 | | (298,259) | | | (80,173) | |
Purchase of property, plant & equipment | | (748,110) | | | (1,640,425) | | (1,231,184) | | | (4,128,127) | |
Increase of goodwill | | - | | | | | (2,920,345) | | | | |
Purchase of other intangible assets | | - | | | - | | - | | | - | |
Increase in construction in progress | | (2,248,735) | | | (707,318) | | (6,035,852) | | | (1,172,128) | |
Cash Sourced/(Used) in Investing Activities of Continued Operation | | (3,135,408) | | | (4,947,749) | | (10,528,422) | | | (7,686,078) | |
Cash Sourced/(Used) in Investing Activities of Discontinued Operation | | - | | | - | | - | | | - | |
Cash Sourced/(Used) in Investing Activities | | (3,135,408) | | | (4,947,749) | | (10,528,422) | | | (7,686,078) | |
| | | | | | | | | | | |
Cash Flows from Financing Activities | | | | | | | | | | | |
Increase/(decrease) of bank loans | | 363,045 | | | 2,239,384 | | 3,896,126 | | | 4,815,441 | |
Increase of statutory reserve | | 305,100 | | | | | 1,230,505 | | | | |
Increase of notes payable | | 113,119 | | | | | 113,119 | | | | |
Cash Sourced/(Used) in Financing Activities | | 781,264 | | | 2,239,384 | | 5,239,750 | | | 4,815,441 | |
| | | | | | | | | | | |
Net increase in cash & cash equivalents for the periods | | 6,037,002 | | | 3,984,668 | | (4,618,228) | | | 3,765,424 | |
Effect of currency translation | | (491,793) | | | (222,500) | | 1,695,031 | | | (236,787) | |
Cash & cash equivalents at the beginning of periods | | 5,367,621 | | | 2,641,015 | | 13,836,027 | | | 2,874,546 | |
Cash & cash equivalents at the end of periods | | 10,912,830 | | $ | 6,403,183 | | 10,912,830 | | $ | 6,403,183 | |
| | | | | | | | | | | |
Supplementary cash flows information | | | | | | | | | | | |
Interest received | | 58,811 | | $ | 155,965 | | 100,162 | | $ | 101,318 | |
Interest paid | | 961,214 | | | 1,362,603 | | 1,726,086 | | | 703,916 | |
Income tax paid | | 484,000 | | | 1,416,910 | | 781,853 | | | 762,507 | |
1. | ORGANIZATION AND PRINCIPAL ACTIVITIES |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| (a) | Method of Accounting |
| (b) | Use of estimates |
| (c) | Economic and political risks |
| (d) | Principles of Consolidation |
| | Place of | | Date of | | Beneficial | | Equity | | Registered | |
Name of Company | | Incorporation | | Incorporation | | Interest % | | Interest % | | Capital | |
GAS Investment China Co., Ltd. | | The British Virgin Islands | | 6/19/2003 | | 100 | | 100 | | USD 10,000,000 | |
| | | | | | | | | | | |
Sino Gas Construction, Ltd. | | The British Virgin Islands | | 1/9/2007 | | 51 | | 51 | | USD 98,039 | |
| | | | | | | | | | | |
Sino Gas Investment Development, Ltd. | | The British Virgin Islands | | 1/9/2007 | | 100 | | 100 | | USD 50,000 | |
| | | | | | | | | | | |
Tongyuan International Holding Limited | | Hong Kong | | 12/20/2011 | | 51 | | 51 | | HKD 10,000 | |
| | | | | | | | | | | |
Beijing Zhong Ran Weiye Gas Co., Ltd. | | PRC | | 8/29/2001 | | 100 | | 100 | | RMB 206,000,000 | |
| | | | | | | | | | | |
Beijing Chenguang Gas Co., Ltd. | | PRC | | 10/30/2002 | | 100 | | 100 | | RMB 35,239,600 | |
| | | | | | | | | | | |
Guannan Weiye Gas Co., Ltd. | | PRC | | 6/19/2003 | | 100 | | 100 | | RMB 9,510,000 | |
| | | | | | | | | | | |
Ningjin Weiye Gas Co., Ltd. | | PRC | | 12/3/2003 | | 100 | | 100 | | RMB 3,000,000 | |
| | | | | | | | | | | |
Yutian Zhongran Weiye Gas Co., Ltd. | | PRC | | 12/19/2003 | | 100 | | 100 | | RMB 3,000,000 | |
| | | | | | | | | | | |
Xingtang Weiye Gas Co., Ltd. | | PRC | | 2/18/2004 | | 100 | | 100 | | RMB 3,000,000 | |
| | | | | | | | | | | |
Wuqiao Gas Co., Ltd. | | PRC | | 6/30/2004 | | 100 | | 100 | | RMB 2,000,000 | |
| | | | | | | | | | | |
Sihong Weiye Gas Co., Ltd. | | PRC | | 12/3/2004 | | 100 | | 95 | | RMB 10,000,000 | |
| | | | | | | | | | | |
Langfang Weiye Dangerous Goods Transportation Co., Ltd. | | PRC | | 3/22/2005 | | 100 | | 95 | | RMB 1,000,000 | |
| | | | | | | | | | | |
Linzhang Weiye Gas Co., Ltd. | | PRC | | 7/6/2005 | | 100 | | 100 | | RMB 1,000,000 | |
| | | | | | | | | | | |
Jiangsu Weiye Gas Co., Ltd. | | PRC | | 8/22/2005 | | 100 | | 98.9 | | RMB 45,694,900 | |
| | | | | | | | | | | |
Zhangjiakou City Xiahuayuan Jinli Gas Co., Ltd. | | PRC | | 9/30/2005 | | 100 | | 100 | | RMB 2,000,000 | |
| | | | | | | | | | | |
Longyao Zhongran Weiye Gas Co., Ltd. | | PRC | | 10/13/2005 | | 100 | | 100 | | RMB 3,000,000 | |
Yuxian Jinli Gas Co., Ltd. | | PRC | | 11/8/2005 | | 100 | | 100 | | RMB 9,500,000 | |
| | | | | | | | | | | |
Hengshui Weiye Gas Co., Ltd. | | PRC | | 12/20/2005 | | 100 | | 100 | | RMB 3,000,000 | |
| | | | | | | | | | | |
Changli Weiye Gas Co., Ltd. | | PRC | | 12/8/2006 | | 100 | | 100 | | RMB 3,000,000 | |
| | | | | | | | | | | |
Chenan Chenguang Gas Co., Ltd. | | PRC | | 1/23/2007 | | 100 | | 100 | | RMB 1,500,000 | |
| | | | | | | | | | | |
Wuhe Weiye Gas Co., Ltd. | | PRC | | 1/30/2007 | | 100 | | 100 | | RMB 3,000,000 | |
| | | | | | | | | | | |
Gucheng Weiye Gas Co., Ltd. | | PRC | | 3/21/2007 | | 100 | | 100 | | RMB 3,000,000 | |
| | | | | | | | | | | |
Luquan Chenguang Gas Co., Ltd. | | PRC | | 4/27/2007 | | 100 | | 100 | | RMB 2,000,000 | |
| | | | | | | | | | | |
Shijiazhuang Chenguang Gas Co., Ltd. | | PRC | | 6/14/2007 | | 100 | | 100 | | RMB 2,000,000 | |
| | | | | | | | | | | |
Nangong Weiye Gas Co., Ltd. | | PRC | | 6/25/2007 | | 100 | | 100 | | RMB 3,000,000 | |
| | | | | | | | | | | |
Sixian Weiye Gas Co., Ltd. | | PRC | | 9/3/2007 | | 100 | | 100 | | RMB 3,000,000 | |
| | | | | | | | | | | |
Baishan Weiye Gas Co., Ltd. | | PRC | | 7/13/2007 | | 100 | | 100 | | RMB 15,000,000 | |
| | | | | | | | | | | |
Xinhe Weiye Gas Co., Ltd. | | PRC | | 7/2/2009 | | 100 | | 100 | | RMB 300,000 | |
| | | | | | | | | | | |
Hebei Weiye Gas (Group) Co., Ltd. | | PRC | | 12/18/2009 | | 100 | | 100 | | RMB 75,439,270 | |
| | | | | | | | | | | |
Gaocheng Weiye Gas Co., Ltd. | | PRC | | 1/27/2010 | | 100 | | 100 | | RMB 200,000 | |
| | | | | | | | | | | |
Jiangsu Zhong Ran Weiye Energy Investment Co., Ltd. | | PRC | | 3/10/2011 | | 100 | | 99 | | RMB 200,000,000 | |
| | | | | | | | | | | |
Fusong Weiye Gas Co., Ltd. | | PRC | | 7/29/2011 | | 100 | | 90 | | RMB 10,000,000 | |
| | | | | | | | | | | |
Jize Weiye Gas Co., Ltd. | | PRC | | 9/20/2011 | | 100 | | 100 | | RMB 1,000,000 | |
| | | | | | | | | | | |
Baishan Weiye Cheyong Gas Co., Ltd. | | PRC | | 8/13/2012 | | 100 | | 100 | | RMB 1,000,000 | |
| | | | | | | | | | | |
Baishan Weiye Wuzi Co., Ltd. | | PRC | | 11/5/2012 | | 100 | | 100 | | RMB 1,000,000 | |
| | | | | | | | | | | |
Baishan Liquified Gas Co., Ltd. | | PRC | | 8/31/2012 | | 100 | | 100 | | RMB 2,000,000 | |
| (e) | Cash and Cash Equivalents |
| (f) | Accounts Receivable |
| (g) | Advances to Suppliers |
| (h) | Investments in Equity Securities |
| (i) | Accounting for the Impairment of Long-Lived Assets |
| (j) | Property, Plant and Equipment |
Assets Class | | Estimated Useful Life | |
Gas Pipelines (Up to December 31, 2007) | | 25 years | |
Gas Pipelines (Starting from January 1, 2008) | | 50 years | |
Buildings | | 25 years | |
Leasehold Improvements | | 25 years | |
Machinery & Equipment | | 20 years | |
Motor Vehicles | | 10 years | |
Office Equipment | | 8 years | |
| (k) | Intangible Assets |
Asset Class | | Estimated Useful Life | |
Land use rights | | 20 - 50 years | |
Franchises | | 30 years | |
Accounting software | | 3 years | |
| (l) | Goodwill |
| (m) | Construction in Progress |
| (n) | Unearned Revenue |
| (o) | Financial Instruments |
At June 30, | | Quoted in | | Significant | | | | | | ||||
2013: | | Active Markets | | Other | | Significant | | | | ||||
| | for Identical | | Observable | | Unobservable | | | | ||||
| | Assets | | Inputs | | Inputs | | | | ||||
| | (Level 1) | | (Level 2) | | (Level 3) | | Total | | ||||
Financial assets: | | | | | | | | | | | | | |
Cash | | $ | 10,912,830 | | $ | - | | $ | - | | $ | 10,912,830 | |
Notes receivable | | | 646,392 | | | - | | | - | | | 646,392 | |
Total financial assets | | $ | 11,559,222 | | $ | - | | $ | - | | $ | 11,559,222 | |
| | | | | | | | | | | | | |
Financial liabilities: | | | | | | | | | | | | | |
Notes payable | | $ | - | | $ | - | | $ | - | | $ | - | |
Total financial liabilities | | $ | - | | $ | - | | $ | - | | $ | - | |
At December 31, | | Quoted in | | Significant | | | | | | ||||
2012: | | Active Markets | | Other | | Significant | | | | ||||
| | for Identical | | Observable | | Unobservable | | | | ||||
| | Assets | | Inputs | | Inputs | | | | ||||
| | (Level 1) | | (Level 2) | | (Level 3) | | Total | | ||||
Financial assets: | | | | | | | | | | | | | |
Cash | | $ | 13,836,027 | | $ | - | | $ | - | | $ | 13,836,027 | |
Restricted cash | | | 65,254 | | | - | | | - | | | 65,254 | |
Total financial assets | | $ | 13,901,281 | | $ | - | | $ | - | | $ | 13,901,281 | |
| | | | | | | | | | | | | |
Financial liabilities: | | | | | | | | | | | | | |
Notes payable | | $ | - | | $ | - | | $ | - | | $ | - | |
Total financial liabilities | | $ | - | | $ | - | | $ | - | | $ | - | |
| (p) | Foreign Currency Translation |
| | 6/30/2013 | | 12/31/2012 | |
Years end RMB : US$ exchange rate | | 6.1882 | | 6.3161 | |
Average yearly RMB : US$ exchange rate | | 6.2479 | | 6.3198 | |
| (q) | Revenue Recognition |
| (r) | Cost of Revenue |
| (s) | Investment Income |
| (t) | Income Taxes |
| ⋅ | All of the operating companies are located in the PRC; GAS Investment China Co., Ltd., Sino Gas Construction, Ltd., and Sino Gas Investment Development, Ltd. are located in the British Virgin Islands; and Tongyuan International Holdings Limitied is located in Hong Kong. All of these entities are subject to the relevant tax laws and regulations of the PRC, Hong Kong, and the British Virgin Islands in which the related entities are domiciled. The maximum tax rates of the subsidiaries pursuant to the countries in which they are domiciled are: |
Subsidiary | | Country of Domicile | | Income Tax Rate | |
PRC Operating Companies (per Note 2. (d) Principals of Consolidation) | | PRC | | 25.0 | % |
| | | | | |
i. GAS Investment China Co., Ltd. | | BVI | | 0.00 | % |
ii. Sino Gas Construction, Ltd. | | BVI | | 0.00 | % |
iii. Sino Gas Investment Development, Ltd. | | BVI | | 0.00 | % |
iv. Tongyuan International Holdings Limitied | | Hong Kong | | 16.5 | % |
| ⋅ | Effective January 1, 2008, the PRC government implemented a new 25% tax rate for all enterprises regardless of whether it was a domestic or foreign enterprise, without any tax holiday, which is defined as "two-year exemption followed by three-year half exemption" hitherto enjoyed by tax payers. As a result of the new tax law, the standard 15% tax rate preference terminated as of December 31, 2007. However, the PRC government has established a set of transition rules to allow enterprises that utilized the tax holidays prior to January 1, 2008 to continue utilizing the tax preference. |
| ⋅ | Since Sino Gas International Holdings, Inc. is primarily a holding company without any business activities in the United States, the Company shall not be subject to United States income tax for six months ended June 30, 2013. |
| (u) | Advertising |
| (v) | Risk |
| ⋅ | Concentration of Credit Risk |
| ⋅ | Environmental risks |
| ⋅ | Inflation Risk |
| ⋅ | Economic and Political Risks |
| (w) | Statutory Reserves |
| i. | Making up cumulative prior years’ losses, if any; |
| ii. | Allocations to the “Statutory reserve” of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company's registered capital; |
| iii. | Allocations to the discretionary surplus reserve, if approved in the shareholders’ general meeting. |
| (x) | Comprehensive Income |
| (y) | Recent Accounting Pronouncements |
| a. | The amendments in the technical corrections and improvements section are categorized as follows: |
| ⋅ | Source literature amendments. These amendments are considered necessary due to differences between source literature and the FASB ASC. The amendments primarily carry forward legacy document guidance and/or subsequent amendments into the FASB ASC. Often, either writing style or phrasing in the legacy documents did not directly relate to the FASB ASC format and style so that the meaning of certain guidance might have been unintentionally altered. |
| ⋅ | Guidance clarification and reference corrections. These amendments include updated wording or corrected references, or a combination of both. |
| ⋅ | Relocated guidance. These amendments primarily move authoritative literature guidance from one location to another location that is deemed more appropriate within the FASB ASC. |
| b. | On the fair value measurements issue, the guidance in ASU 2012-04 identifies when the use of the term “fair value” should be linked to the definition of fair value included in FASB ASC 820, entitled Fair Value Measurement. Most of the amendments are of a nonsubstantive nature. Many of the amendments relate to conforming wording to be consistent with the terminology in FASB ASC 820 for example, references to market value and current market value have been changed to appropriately refer to fair value so that the literature is consistent throughout. |
| (z) | Earnings per Share |
| (aa) | Subsequent Events |
3. | ACCOUNTS RECEIVABLE |
Accounts Receivable | | ||||||
| | 6/30/2013 | | 12/31/2012 | | ||
Accounts receivable | | $ | 11,096,594 | | $ | 12,072,689 | |
Less: Allowance for bad debt | | | (110,966) | | | (120,727) | |
Accounts receivable, net | | $ | 10,985,628 | | $ | 11,951,962 | |
Allowance for Bad Debt | | ||||||
| | 6/30/2013 | | 12/31/2012 | | ||
Beginning balance | | $ | (120,727) | | $ | (104,323) | |
Allowance provided | | | - | | | (16,404) | |
Charge against allowance | | | 9,761 | | | - | |
Reversals | | | - | | | - | |
Ending balance | | $ | (110,966) | | $ | (120,727) | |
Accounts Receivable Aging Analysis | | ||||||
| | 6/30/2013 | | 12/31/2012 | | ||
<30 Days | | $ | 4,711,099 | | $ | 4,264,620 | |
30-60 Days | | | 609,519 | | | 1,122,384 | |
60-90 Days | | | 1,538,761 | | | 2,253,942 | |
90-180 Days | | | 643,209 | | | 480,993 | |
180-360 Days | | | 2,466,820 | | | 95,569 | |
>360 Days | | | 1,127,186 | | | 3,855,181 | |
Total | | $ | 11,096,594 | | $ | 12,072,689 | |
Hebei Natural Gas Co., Ltd. | | $ | 476,145 | | 4.29 | % |
Beijing Langfa Oil and Gas Technolody Co., Ltd | | | 290,932 | | 2.62 | % |
Hebei Zhonggang Steel Co., Ltd. | | | 640,585 | | 5.77 | % |
Beijing Yinzuo Hezhi Real Estate Development Co., Ltd. | | | 391,583 | | 3.53 | % |
Beijing Tongzhou Ayou Liquified Gas Station | | | 393,010 | | 3.54 | % |
Hebei Dihua Real Estate Co., Ltd | | | 589,946 | | 5.32 | % |
Shanghai DaTun energy co., Ltd. (Jiangsu Branch) | | | 416,521 | | 3.75 | % |
Jiangsu Zhonghuang Real Estate Co., Ltd. | | | 526,890 | | 4.75 | % |
Lianyun Port Zhaolong Home Development Co., Ltd. | | | 512,815 | | 4.62 | % |
Zaoqiang Taihe Real Estate Co., Ltd. | | | 416,923 | | 3.76 | % |
| | $ | 4,655,350 | | 41.96 | % |
4. | OTHER RECEIVABLES |
| | 6/30/2013 | | 12/31/2012 | | ||
Employee travel advance | | $ | 722,928 | | $ | 323,463 | |
Advance for consultant service | | | 1,241,608 | | | 786,404 | |
Short term security deposit for construction pipeline | | | 329,366 | | | 186,090 | |
Others | | | 3,581,663 | | | 1,932,817 | |
| | $ | 5,875,565 | | $ | 3,228,774 | |
5. | RELATED PARTY RECEIVABLE |
6. | INVESTMENT |
Ref. | | | | 6/30/2013 | | 12/31/2012 | | ||
(1) | | Beijing Zhongran Xiangke Oil Gas Technology Co., Ltd. | | $ | 10,152,122 | | $ | 9,938,953 | |
(2) | | Qujing City Fuel Gas Co., Ltd. | | | 9,157,282 | | | 9,157,282 | |
(3) | | Tongshan Hengxin Jiaye Gas Co., Ltd. | | | 4,169,642 | | | 4,085,207 | |
(4) | | China Construction Bank | | | 32,320 | | | 31,665 | |
| | Total | | $ | 23,511,366 | | $ | 23,213,107 | |
| (1) | The Company through its wholly owned subsidiary Beijing Gas invested $1,658,803 (RMB 13,465,648) in the acquisition of a 40% equity position in Xiangke Oil Gas. The $10,152,122 investment as of June 30, 2013 consisted of principal and accumulated post-acquisition investment income attributed to Xiangke Oil Gas’ operation results. |
| (2) | Along with two local partners in Qujing city, the second largest city in Yunnan province of PRC, Beijing Gas established Qujing City Fuel Gas Co., Ltd. with registered capital of $4,387,761 (RMB 30,000,000). Beijing Gas’ original investment of $1,746,764 (RMB 11,700,000) represented 39% equity ownership of Qujing Gas. |
Investment | | Xiangke Oil Gas | | Qujing Gas | | ||
Investment Cost | | $ | 1,658,803 | | $ | 7,766,760 | |
Prior years investment income | | | 4,672,645 | | | 232,393 | |
2011 investment income | | | 892,338 | | | 512,387 | |
2012 investment income | | | 2,777,386 | | | 645,742 | |
| | $ | 10,001,172 | | $ | 9,157,282 | |
| (3) | On April 23, 2008, Beijing Gas entered into an agreement to acquire a 100% equity interest in Tongshan Hengxin Jiaye Natural Gas Co., Ltd. (“Tongshan Gas”), for a purchase price of $4,660,000 (RMB 32,600,000). Tongshan is a regional natural gas distributor and developer of natural gas distribution networks in Jiangsu province of the PRC. As of June 30, 2013, the Company has not finished the registration of the equity transfer with the Tongshan City Industrial and Commercial Administration. Therefore, acquisition payments of $4,169,642 for Tongshan Gas were classified as investment as of that date. |
| (4) | The Company purchased a $32,320 (RMB 200,000) long-term fund with the Bank of Construction in an effort to maintain a favorable relationship and enhance further credit facility. |
7. | PROPERTY, PLANT AND EQUIPMENT |
6/30/2013 | | At Cost | | Accumulated Depreciation | | Net | | |||
Gas Pipelines | | $ | 50,277,069 | | $ | 4,430,464 | | $ | 45,846,605 | |
Motor Vehicles | | | 6,869,425 | | | 3,058,175 | | | 3,811,250 | |
Machinery & Equipment | | | 2,151,262 | | | 503,211 | | | 1,648,051 | |
Buildings | | | 2,519,121 | | | 456,157 | | | 2,062,964 | |
Leasehold Improvements | | | 176,343 | | | 80,665 | | | 95,678 | |
Office Equipment | | | 399,893 | | | 202,799 | | | 197,094 | |
Total | | $ | 62,393,113 | | $ | 8,731,471 | | $ | 53,661,642 | |
12/31/2012 | | At Cost | | Accumulated Depreciation | | Net | | |||
Gas Pipelines | | $ | 50,028,098 | | $ | 3,961,187 | | $ | 46,066,911 | |
Motor Vehicles | | | 6,628,442 | | | 2,835,134 | | | 3,793,308 | |
Machinery & Equipment | | | 2,180,403 | | | 484,195 | | | 1,696,208 | |
Buildings | | | 1,862,560 | | | 378,184 | | | 1,484,376 | |
Leasehold Improvements | | | 88,071 | | | 68,158 | | | 19,913 | |
Office Equipment | | | 374,355 | | | 167,875 | | | 206,480 | |
Total | | $ | 61,161,929 | | $ | 7,894,733 | | $ | 53,267,196 | |
8. | GOODWILL |
| | 6/30/2013 | | 12/31/2012 | | ||
Yuxian Gas | | $ | 10,954 | | $ | 10,954 | |
Guannan Gas | | | 409,963 | | | 409,963 | |
Chengguang Gas | | | 1,257,058 | | | 1,257,058 | |
Baishan Gas | | | 2,920,346 | | | - | |
| | $ | 4,598,321 | | $ | 1,677,975 | |
9. | INTANGIBLE ASSETS |
6/30/2013 | | At Cost | | Accumulated Amortization | | Net | | |||
Land Use rights | | $ | 1,095,685 | | $ | 137,996 | | $ | 957,689 | |
Franchises | | | 403,995 | | | 403,995 | | | - | |
Accounting Software | | | 50,847 | | | 47,909 | | | 2,937 | |
| | $ | 1,550,527 | | $ | 589,900 | | $ | 960,627 | |
12/31/2012 | | At Cost | | Accumulated Amortization | | Net | | |||
Land Use Rights | | $ | 1,009,020 | | $ | 108,115 | | $ | 900,905 | |
Franchises | | | 395,813 | | | 395,813 | | | - | |
Accounting Software | | | 105,260 | | | 56,178 | | | 49,082 | |
| | $ | 1,510,093 | | $ | 560,106 | | $ | 949,987 | |
10. | LOANS |
| a. | SHORT-TERM BANK LOANS |
Name of Bank | | Note | | Due Date | | Interest Rate | | | 6/30/2013 | | 12/31/2012 | | ||
China Minsheng Banking Corp., Ltd. - Pinganli Branch | | 1 | | 02/28/2013 | | 9.512 | % | | $ | - | | $ | 1,108,279 | |
China Merchants Bank - Beijing Shouti Branch | | 5 | | 06/14/2013 | | 7.888 | % | | | - | | | 1,583,255 | |
Bank of China - Baishan Branch | | 4 | | 06/19/2014 | | 6.650 | % | | | 1,939,175 | | | 1,424,930 | |
Bank of China - Shijiazhuang Branch | | 3 | | 06/06/2014 | | 7.200 | % | | | 1,615,979 | | | 1,583,255 | |
Nanjing Bank | | 6 | | 01/17/2013 | | 7.500 | % | | | - | | | 357,627 | |
Nanjing Bank | | 6 | | 01/17/2013 | | 8.800 | % | | | - | | | 799,386 | |
Wuhe Yongtai Bank | | | | 06/20/2014 | | 9.900 | % | | | 807,989 | | | 759,963 | |
Bank of Beijing Zhongguancun Haidian Park Branch | | | | 07/31/2013 | | 7.200 | % | | | 484,794 | | | 791,628 | |
Baishan Dinghe Small Loan Co., Ltd. | | | | On Demand | | 43.200 | % | | | - | | | 316,651 | |
Nanjing Bank | | 6 | | 10/24/2013 | | 7.500 | % | | | 1,478,621 | | | 1,448,679 | |
Dalian Bank - Beijing Branch | | 2 | | 12/31/2013 | | 8.100 | % | | | 4,847,936 | | | 1,345,767 | |
China Development Bank - Beijing Branch | | 7 | | 12/26/2013 | | 6.900 | % | | | 8,079,894 | | | 7,916,277 | |
Pudong Development Bank - Shijiazhuang Bruanch | | | | 10/30/2013 | | 7.800 | % | | | 2,423,968 | | | 2,374,883 | |
Pudong Development Bank - Shijiazhuang Bruanch | | | | 1/7/2014 | | 7.800 | % | | | 807,989 | | | - | |
Nanjing Bank | | 6 | | 2/21/2014 | | 7.500 | % | | | 1,753,337 | | | - | |
Industrial and Commercial Bank of China Zhongguancun Branch | | | | 6/25/2014 | | 5.000 | % | | | 969,587 | | | - | |
China Merchants Bank | | | | 6/26/2014 | | 8.100 | % | | | 1,615,979 | | | - | |
Total | | | | | | | | | $ | 26,825,248 | | $ | 21,810,580 | |
| 1) | The loan provided by China Minsheng Bank Corp., Ltd. was guaranteed by the CEO Mr. Liu Yuchuan’s personal credit. |
| 2) | The loans provided by Bank of Dalian were secured by the Company’s subsidiary Chengguang Gas’ registered capital, CEO Mr. Liu Yuchuan and COO Mr. Zhou Zhicheng’s personal home properties, which have been appraised at total fair market value of $933,254 (RMB 6,380,854) |
| 3) | The loan provided by Bank of China Shijiazhuang Branch was guaranteed by Hebei Desheng Guarantee Co., Ltd. (“Hebei Desheng”). In connection with this collateralization, the Company was required to pay approximately $45,000 (RMB 300,000) as a financial service fee to Hebei Desheng. |
| 4) | The loan provided by Bank of China Baishan Branch was secured by the Company’s subsidiary Beijing Zhongran Weiye Gas Co., Ltd. with the authority of gas payment collection and Baishan Weiye Gas Co. Ltd. with liability. |
| 5) | The loan provided by China Merchants Bank was guaranteed by the CEO Mr. Liu Yuchuan with unlimited liability, and the management Mr. Wang Weidong and Ms. Song Erxin with $154,703 (RMB 1,000,000) liabilities each. |
| 6) | The loan provided by Nanjing Bank was secured by Beijing Zhongyou Sanhuan Technology Development Co., Ltd and CEO Mr. Liu Yuchuan. |
| 7) | The Company obtained the loans from China Development Bank via a collateralized agent Zhongyuan Guoxin Credit Guarantee Co., Ltd. (the “Guarantor”). The Guarantor guaranteed to the Banks the entire principal and accrued interest. The Company pledged all of Beijing Gas’ subsidiaries and deposited $1,028,464 (RMB 6,800,000), which was classified as non-current asset deposits, with the Guarantor, and was required to pay 2% of the outstanding loans as a financial service fee to the Guarantor per annum. Because the Company lacked the favorable credit history to directly establish a credit facility with the banks, the credit collateralization from Guarantor was chosen as a financing solution. |
| b. | LONG-TERM BANK LOANS |
Name of Bank | | Due Date | | Interest Rate | | | 6/30/2013 | | 12/31/2012 | | ||
Bank of China - Baishan Branch | | 06/24/2015 | | 6.650 | % | | $ | 1,939,175 | | $ | 2,849,860 | |
Peixuan Rural Credit Cooperation | | 07/18/2014 | | 11.674 | % | | | 4,847,936 | | | 4,749,766 | |
Baishan Huida Investment Management Co, Ltd. | | 12/31/2030 | | 6.250 | % | | | 3,552,112 | | | 3,958,139 | |
Total | | | | | | | $ | 10,439,223 | | $ | 11,557,765 | |
11. | OTHER PAYABLES |
| (a) | Current other payables consisted of the following at June 30, 2013 and December 31, 2012: |
Ref. | | | | 6/30/2013 | | 12/31/2012 | | ||
(1) | | Amount due to Employees | | $ | 4,405,734 | | $ | 3,241,752 | |
(2) | | Tax Payable | | | 933,606 | | | 1,256,502 | |
(3) | | Payables to Subcontractors | | | 2,919,200 | | | 3,614,959 | |
(4) | | Others | | | 1,273,880 | | | 1,465,234 | |
| | Total | | $ | 9,532,420 | | $ | 9,578,447 | |
| (1). | Amounts due to employees included accrual payroll, welfare payable, continued education training program cost and individual travel advance. All of these amounts were unsecured, interest free, and have no fixed repayment terms. |
| (2). | The tax payable consists of value added tax, sales tax, income tax and local tax payables. |
| (3). | Payables to subcontractors are unbilled liabilities. |
12. | CONVERTIBLE BONDS AND BOND WARRANTS |
| (a) | $8,000,000 Convertible Bond |
| | | | 6/30/2013 | | 12/31/2012 | | ||
Ref. | | | | 8M Bonds | | 8M Bonds | | ||
(1) | | Convertible Bonds Payable principal | | $ | 8,000,000 | | $ | 8,000,000 | |
(2) | | Less: Interest Discount - Warrants | | | - | | | - | |
(3) | | Less: Interest Discount - Beneficial Conversion Feature | | | - | | | (258,065) | |
(4) | | Less: Bond Discount - Issuance Cost | | | - | | | - | |
(5) | | Accretion of Interest Discount - Warrants | | | - | | | - | |
(6) | | Accretion of Interest Discount - Beneficial Conversion Feature | | | - | | | 258,065 | |
(7) | | Accretion of Bond Discount - Issuance Cost | | | - | | | - | |
(8) | | Accretion of Interest Discount - Redemption | | | 405,679 | | | 20,825 | |
(9) | | Conversion of Convertible Bonds into Common Stock | | | - | | | - | |
| | Convertible Bonds Payable, net | | $ | 8,405,679 | | $ | 8,020,825 | |
| (1) | The principal amounts listed above represent the face amount of the convertible notes. |
| (2) | The proceeds were allocated between the convertible bonds and warrants based on their relative fair value. See Note 13 Capital Stock for the calculation of fair value of convertible bonds detachable warrants. |
| (3) | Because the conversion price is $0.31, which is lower than the fair market value of common stock on the date of issuance, the beneficial conversion feature was applied. Since the $8M bond will expire in one year, the beneficial conversion feature was amortized immediately. |
| (4) | The bond has no issuance cost. |
| (5) | Based on a 15% per annum redemption rate, the redemption values were determined to be $800,000. |
13. | CAPITAL STOCK |
| | Authorized Shares | | Shares issued and outstanding | |
Common Stock | | 250,000,000 | | 31,802,382 | |
Convertible Preferred Stock A | | 20,000,000 | | - | |
Convertible Preferred Stock B | | 5,000,000 | | 200,997 | |
Convertible Preferred Stock B-1 | | 3,000,000 | | - | |
14. | INCOME TAX |
| | June 30, | | June 30, | | ||
Description | | 2013 | | 2012 | | ||
Income (loss) before taxes: | | | | | | | |
US | | $ | (732,054) | | | (740,518) | |
BVI | | | (1,023,472) | | | (394,731) | |
PRC | | | 3,314,150 | | | 3,006,727 | |
Total income before taxes | | $ | 1,558,624 | | $ | 1,871,478 | |
| | | | | | | |
Provision for taxes:- | | | | | | | |
Current: | | | | | | | |
US | | | - | | | - | |
BVI | | | - | | | - | |
PRC | | | (778,683) | | | (329,439) | |
| | | (778,683) | | | (329,439) | |
Deferred: | | | | | | | |
US | | | - | | | - | |
BVI | | | - | | | - | |
PRC | | | - | | | - | |
Valuation allowance | | | - | | | - | |
| | | - | | | - | |
| | | | | | | |
Total provision for taxes | | | (778,683) | | | (329,439) | |
| | | | | | | |
Effective tax rate | | | 49.96 | % | | 17.60 | % |
| | June 30, | | June 30, | |
| | 2013 | | 2012 | |
U.S. federal statutory income tax rate | | 34.00 | % | 34.00 | |
Lower rates in PRC, net | | (9.00) | % | (9.00) | % |
Tax holiday | | 24.96 | % | (7.40) | % |
Accruals in foreign jurisdictions | | N/A | | N/A | |
Effective tax rate | | 49.96 | % | 17.60 | % |
15. | SEGMENT INFORMATION |
Financial Position Segment Report |
As of June 30, 2013 |
| | | | | Gas Pipeline | | Shell, BVIs, & | | | | | ||
| | Gas Distribution | | Installation | | Eliminations | | Total | | ||||
Assets | | | | | | | | | | | | | |
Current Assets | | $ | 23,748,000 | | $ | 11,595,768 | | $ | 1,040,280 | | $ | 36,384,408 | |
Non-Current Assets | | | 41,939,713 | | | 85,892,042 | | | 4,925,781 | | | 132,757,536 | |
Total Assets | | | 65,687,713 | | | 97,487,810 | | | 5,966,061 | | | 163,141,584 | |
| | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | |
Current Liabilities | | | 9,972,902 | | | 57,109,932 | | | - | | | 67,082,834 | |
Non-current Liabilities | | | 1,551,952 | | | 8,887,271 | | | - | | | 10,439,223 | |
Total Liabilities | | | 11,524,854 | | | 65,997,203 | | | - | | | 77,522,057 | |
| | | | | | | | | | | | | |
Net Assets | | | 54,162,859 | | | 31,490,607 | | | 5,966,061 | | | 91,619,527 | |
| | | | | | | | | | | | | |
Liabilities & Equities | | $ | 65,687,713 | | $ | 97,487,810 | | $ | 5,966,061 | | $ | 169,141,584 | |
Operation Result Segment Report |
For the six months ended June 30, 2013 |
| | | | | Gas Pipeline | | Shell, BVIs, & | | | | | ||
| | Gas Distribution | | Installation | | Eliminations | | Total | | ||||
| | | | | | | | | | | | | |
Sales Revenue | | $ | 26,394,280 | | $ | 12,887,906 | | $ | (10,989,428) | | $ | 28,292,758 | |
Cost of Revenue | | | (25,102,083) | | | (5,488,122) | | | 10,989,428 | | | (19,600,777) | |
Gross Profit | | | 1,292,197 | | | 7,399,784 | | | - | | | 8,691,981 | |
| | | | | | | | | | | | | |
Operating Expense | | | (626,313) | | | (3,586,587) | | | (1,057,530) | | | (5,270,430) | |
Operating Income/(Loss) | | | 665,884 | | | 3,813,196 | | | (1,057,530) | | | 3,421,551 | |
| | | | | | | | | | | | | |
Other Income/(Loss) | | | (276,952) | | | (885,867) | | | (700,108) | | | (1,862,927) | |
Earnings before tax | | | 388,932 | | | 2,927,330 | | | (1,757,638) | | | 1,558,624 | |
| | | | | | | | | | | | | |
Income tax | | | (91,324) | | | (687,359) | | | - | | | (778,683) | |
Gain/(loss) from discontinued operation, net of tax | | | - | | | - | | | - | | | - | |
| | | | | | | | | | | | | |
Net Income | | $ | 297,608 | | $ | 2,239,971 | | $ | (1,757,638) | | $ | 779,941 | |
Financial Position Segment Report |
As of June 30, 2012 |
| | | | | Gas Pipeline | | Shell, BVIs, & | | | | | ||
| | Gas Distribution | | Installation | | Eliminations | | Total | | ||||
Assets | | | | | | | | | | | | | |
Current Assets | | $ | 19,461,208 | | $ | 9,324,346 | | $ | 616,360 | | $ | 29,401,914 | |
Non-Current Assets | | | 33,437,457 | | | 69,788,627 | | | 8,514,368 | | | 111,740,452 | |
Total Assets | | | 52,898,665 | | | 79,112,973 | | | 9,130,728 | | | 141,142,366 | |
| | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | |
Current Liabilities | | | 7,696,025 | | | 48,147,938 | | | | | | 55,843,963 | |
Non-current Liabilities | | | 420,755 | | | 2,632,334 | | | | | | 3,053,089 | |
Total Liabilities | | | 8,116,780 | | | 50,780,272 | | | | | | 58,897,052 | |
| | | | | | | | | | | | | |
Net Assets | | | 44,781,885 | | | 28,332,701 | | | 9,130,728 | | | 82,245,314 | |
| | | | | | | | | | | | | |
Liabilities & Equities | | $ | 52,898,665 | | $ | 79,112,973 | | $ | 9,130,728 | | $ | 141,142,366 | |
Operation Result Segment Report |
For the six months ended June 30, 2012 |
| | | | | Gas Pipeline | | Shell, BVIs, & | | | | |
| | Gas Distribution | | Installation | | Eliminations | | Total | | ||
| | | | | | | | | | | |
Sales Revenue | | $ | 21,277,075 | | $ | 10,194,373 | | (9,898,179) | | 21,573,269 | |
Cost of Revenue | | | (20,307,776) | | | (4,130,233) | | 9,898,179 | | (14,539,830) | |
Gross Profit | | | 969,299 | | | 6,064,140 | | - | | 7,033,439 | |
| | | | | | | | | | | |
Operating Expense | | | (428,306) | | | (2,679,575) | | (491,885) | | (3,599,766) | |
Operating Income/(Loss) | | | 540,993 | | | 3,384,565 | | (491,885) | | 3,433,673 | |
| | | | | | | | | | | |
Other Income/(Loss) | | | (215,291) | | | (703,540) | | (643,364) | | (1,562,195) | |
Earnings before tax | | | 325,702 | | | 2,681,025 | | (1,135,249) | | 1,871,478 | |
| | | | | | | | | | | |
Income tax | | | (35,686) | | | (293,753) | | - | | (329,439) | |
Gain/(loss) from discontinued operation, net of tax | | | - | | | - | | - | | - | |
| | | | | | | | | | | |
Net Income | | $ | 290,016 | | $ | 2,387,272 | | (1,135,249) | | 1,542,039 | |
16. | EARNINGS PER SHARE |
| | | | Six months Ended | | ||||
| | Ref | | 6/30/2013 | | 6/30/2012 | | ||
Basic Earnings Per Share Numerator: | | | | | | | | | |
Net Income | | | | $ | 779,941 | | | 1,542,039 | |
Income from continued operations | | | | | 779,941 | | | | |
Income/(loss) from discontinued operations | | | | | - | | | | |
Less: | | | | | | | | | |
Preferred Dividends | | | | | - | | | | |
Constructive Preferred Dividends | | | | | - | | | | |
income attributed to non-controlling interest | | | | | (1,498) | | | (929) | |
Net income available to Common Stockholders | | | | $ | 781,439 | | $ | 1,542,968 | |
Income from continued operations available to Common Stockholders | | | | $ | 781,439 | | $ | 1,542,968 | |
Income/(loss) from discontinued operations available to Common Stockholders | | | | | - | | | - | |
| | | | | | | | | |
Diluted Earnings Per Share Numerator: | | | | | | | | | |
Add: | | | | | | | | | |
Interest Expense for Convertible Bonds, net of tax | | | | | 704,853 | | | 643,386 | |
Net income available to Common Stockholders | | | | | 1,481,834 | | | 2,186,355 | |
Income from continued operations available to Common Stockholders | | | | | 1,486,292 | | | 2,186,355 | |
Income/(loss) from discontinued operations available to Common Stockholders | | | | | - | | | - | |
| | | | | | | | | |
Original Shares | | | | | 31,802,382 | | | 31,793,698 | |
Addition to Common Stock | | | | | - | | | - | |
Basic Weighted Average Shares Outstanding | | | | | 31,802,382 | | | 31,793,698 | |
| | | | | | | | | |
Potentially Dilutive Securities: | | | | | | | | | |
Addition to Common Stock from Conversion of Preferred Stock B | | (1) | | | - | | | | |
Addition to Common Stock from Conversion of Preferred Stock B-1 | | (2) | | | - | | | | |
Addition to Common Stock from Conversion of Convertible Bonds | | | | | - | | | | |
Addition to Common Stock from Exercise of Warrants | | (3) | | | - | | | | |
Diluted Weighted Average Shares Outstanding | | | | | 31,802,382 | | | 31,793,698 | |
| | | | | | | | | |
Earnings Per Share | | | | | | | | | |
Basic: - Net income | | | | $ | 0.03 | | $ | 0.05 | |
- Income from continued operation | | | | | 0.03 | | $ | 0.05 | |
- Income from discontinued operation | | | | | 0.00 | | | 0.00 | |
Diluted: - Net income | | | | $ | 0.03 | | $ | 0.05 | |
- Income from continued operation | | | | | 0.03 | | $ | 0.05 | |
- Income from discontinued operation | | | | | 0.00 | | | 0.00 | |
| | | | | | | | | |
Weighted Average Shares Outstanding | | | | | | | | | |
- Basic | | | | | 31,802,382 | | | 31,793,698 | |
- Diluted | | | | | 31,802,382 | | | 31,793,698 | |
| (1). | The applications of conversion of preferred stock B into common stock were anti-dilutive for the six months ended June 30, 2013 and 2012. |
| (2). | The applications of conversion of preferred stock B-1 into common stock were anti-dilutive for the six months ended June 30, 2013 and 2012. |
| (3). | The exercises of warrants to common stock were anti-dilutive for the six months ended June 30, 2013 and 2012. |
| (4). | The applications of conversion of convertible bonds into common stock were anit-dilutive for the six months ended June 30, 2013 and 2012. |
17. | DISCONTINUED OPERATION |
| a). | The following tabulation presents the calculation of gain from the disposal of the three subsidiaries: |
| | Valuation of | | Buyer’s | | | | |||
| | Disposition | | Acquisition Price | | Gain/(Loss) | | |||
Jinzhou Gas | | $ | 3,217,742 | | $ | 3,043,930 | | $ | (173,812) | |
Shenzhou Gas | | | 1,357,326 | | | 1,312,914 | | | (44,412) | |
Xinji Gas | | | 1,334,980 | | | 2,681,980 | | | 1,347,000 | |
Sishui Gas | | | 474,723 | | | - | | | (474,723) | |
| | $ | 6,384,771 | | $ | 7,038,824 | | $ | 654,053 | |
| b). | The following tabulation summarizes the operational results of the four disposal subsidiaries for the period ended June 8, 2011 and December 31, 2012, which was also accounted as income from discontinued operations net of tax in the statement of income. |
| | Condensed Income Statements | | | | | ||||||||||
| | | | | Shenzhou | | | | | | | | | | | |
| | Jinzhou Gas | | Gas | | Xinji Gas | | Sishui Gas | | Total | | |||||
Revenue | | $ | 359,787 | | $ | 277,453 | | $ | 9,569 | | $ | - | | $ | 646,809 | |
| | | | | | | | | | | | | | | | |
Cost of revenue | | | 217,313 | | | 224,412 | | | 8,224 | | | - | | | 449,949 | |
| | | | | | | | | | | | | | | | |
Gross profit | | | 142,473 | | | 53,041 | | | 1,346 | | | - | | | 196,860 | |
| | | | | | | | | | | | | | | | |
Operating expenses | | | 18,246 | | | 16,009 | | | 35,138 | | | - | | | 69,393 | |
Operating income | | | 124,227 | | | 37,032 | | | (33,792) | | | - | | | 127,467 | |
Other income/(expenses) | | | (241) | | | (226) | | | (3,218) | | | - | | | (3,685) | |
Earnings before tax | | | 123,986 | | | 36,806 | | | (37,010) | | | - | | | 123,782 | |
| | | | | | | | | | | | | | | - | |
Income tax | | | (6,197) | | | (11,167) | | | (114) | | | - | | | (17,477) | |
| | | | | | | | | | | | | | | | |
Net income | | $ | 117,789 | | $ | 25,640 | | $ | (37,124) | | $ | - | | $ | 106,305 | |
| | For the three months ended June 30 | | | | | | |||||
| | 2013 | | | 2012 | | | Change | | |||
(in US$ millions) | | US$ | | | US$ | | | | | |||
Net Revenues | | | 14.9 | | | | 10.8 | | | | 37.4 | % |
Gross Profit | | | 5.2 | | | | 4.3 | | | | 18.5 | % |
Operating Income | | | 2.7 | | | | 2.5 | | | | 8 | % |
Net Income | | | 1.4 | | | | 1.6 | | | | -10.7 | % |
Gross Margin | | | 34.7 | % | | | 40.2 | % | | | -5.5 | % |
Net Margin | | | 9.5 | % | | | 14.6 | % | | | -5.1 | % |
| | For the six months ended June 30 | | | | | | |||||
| | 2013 | | | 2012 | | | Change | | |||
| | US$ | | | US$ | | | | | |||
Net Revenues | | | 28.3 | | | | 21.6 | | | | 31.2 | % |
Gross Profit | | | 8.7 | | | | 7.0 | | | | 23.6 | % |
Operating Income | | | 3.4 | | | | 3.4 | | | | 0 | % |
Net Income | | | 0.8 | | | | 1.5 | | | | -49.4 | |
Gross Margin | | | 30.7 | % | | | 32.6 | % | | | -1.9 | % |
Net Margin | | | 2.8 | % | | | 7.1 | % | | | -4.3 | % |
| | | For the three months ended June 30, | | | | | | ||||||||||
| | 2013 | | | 2012 | | | Change | | |||||||||
(in US$ millions) | | US$ | | % | | | US$ | | % | | | % | | |||||
Net Revenues | | | 14.9 | | | 100 | % | | | 10.8 | | | 100 | % | | | 37.4 | % |
Connection Fees | | | 7.3 | | | 48.9 | % | | | 5.5 | | | 50.5 | % | | | 33.1 | % |
Gas Sales | | | 7.6 | | | 50.7 | % | | | 5.4 | | | 49.5 | % | | | 40.5 | % |
| | | For the six months ended June 30, | | | | | | ||||||||||
| | 2013 | | | 2012 | | | Change | | |||||||||
(in US$ millions) | | US$ | | % | | | US$ | | % | | | % | | |||||
Net Revenues | | | 28.3 | | | 100 | % | | | 21.6 | | | 100 | % | | | 31.2 | % |
Connection Fees | | | 10.4 | | | 36.7 | % | | | 8.3 | | | 38.5 | % | | | 25 | % |
Gas Sales | | | 17.9 | | | 63.1 | % | | | 13.3 | | | 61.5 | % | | | 34.5 | % |
Other Sales | | | 0.06 | | | 0.2 | % | | | | | | | | | | | |
| | For the three months ended June 30, | | | | | | |||||||||||
| | 2013 | | | 2012 | | | Change | | |||||||||
(in US$ millions) | | US$ | | % | | | US$ | | % | | | % | | |||||
Connection Fees | | | 7.3 | | | 100 | % | | | 5.5 | | | 100 | % | | | 33.1 | % |
Residential Users | | | 7.2 | | | 98.6 | % | | | 5.0 | | | 91.9 | % | | | 42.8 | % |
Industrial and Commercial Users | | | 0.1 | | | 1.4 | % | | | 0.5 | | | 8.1 | % | | | -80 | % |
| | For the six months ended June 30, | | | | | | |||||||||||
| | 2013 | | | 2012 | | | Change | | |||||||||
(in US$ millions) | | US$ | | % | | | US$ | | % | | | % | | |||||
Connection Fees | | | 10.4 | | | 100 | % | | | 8.3 | | | 100 | % | | | 25 | % |
Residential Users | | | 10.1 | | | 97 | % | | | 7.3 | | | 88 | % | | | 37.9 | % |
Industrial and Commercial Users | | | 0.3 | | | 3 | % | | | 1.0 | | | 12 | % | | | -69 | % |
| | For the three months ended June 30, | | | | | | |||||||||||
| | 2013 | | | 2012 | | | Change | | |||||||||
(in US$ millions) | | US$ | | % | | | US$ | | % | | | % | | |||||
Gas Sales | | | 7.5 | | | 100 | % | | | 5.4 | | | 100 | % | | | 40.5 | % |
Residential Users | | | 2.2 | | | 29.1 | % | | | 2.2 | | | 41.3 | % | | | 0 | % |
Industrial and Commercial Users | | | 5.3 | | | 70.9 | % | | | 3.2 | | | 58.7 | % | | | 65.6 | % |
| | For the six months ended June 30, | | | | | | |||||||||||
| | 2013 | | | 2012 | | | Change | | |||||||||
(in US$ millions) | | US$ | | % | | | US$ | | % | | | % | | |||||
Gas Sales | | | 17.9 | | | 100 | % | | | 13.3 | | | 100 | % | | | 34.5 | % |
Residential Users | | | 8.1 | | | 45.2 | % | | | 8.0 | | | 60.2 | % | | | 1.0 | % |
Industrial and Commercial Users | | | 9.8 | | | 54.8 | % | | | 5.3 | | | 39.8 | % | | | 84.9 | % |
| | For the three months ended June 30, | | | | | ||||||||||||
| | 2013 | | | 2012 | | | Change | | |||||||||
(in US$ millions) | | US$ | | % | | | US$ | | % | | | % | | |||||
Cost of Revenues | | | 9.7 | | | 100 | % | | | 6.5 | | | 100 | % | | | 50 | % |
Connection Fee Cost | | | 2.5 | | | 25.8 | % | | | 1.4 | | | 21.2 | % | | | 82.4 | % |
Gas Cost | | | 7.2 | | | 74.2 | % | | | 5.1 | | | 78.8 | % | | | 41.3 | % |
| | For the six months ended June 30, | | | | | | |||||||||||
| | 2013 | | | 2012 | | | Change | | |||||||||
(in US$ millions) | | US$ | | % | | | US$ | | % | | | % | | |||||
Cost of Revenues | | | 19.6 | | | 100 | % | | | 14.5 | | | 100 | % | | | 34.8 | % |
Connection Fee Cost | | | 3.0 | | | 15.2 | % | | | 2.2 | | | 15.4 | % | | | 33.1 | % |
Gas Cost | | | 16.6 | | | 84.8 | % | | | 12.3 | | | 84.6 | % | | | 35.1 | % |
| | For the three months ended June 30, | | | | | | |||||||||||
| | 2013 | | | 2012 | | | Change | | |||||||||
(in US$ millions) | | US$ | | % | | | US$ | | % | | | % | | |||||
Gross Profit | | | 5.2 | | | 100 | % | | | 4.3 | | | 100 | % | | | 18.5 | % |
Connection | | | 4.8 | | | 92.5 | % | | | 4.1 | | | 94.1 | % | | | 16.6 | % |
Gas | | | 0.4 | | | 6.3 | % | | | 0.2 | | | 5.9 | % | | | 25.2 | % |
| | June 30, | | December 31, | | ||
| | 2013 | | 2012 | | ||
At Cost | | | 62,393,113 | | | 61,161,929 | |
Gas Pipelines | | $ | 50,277,069 | | $ | 50,028,098 | |
Motor Vehicles | | | 6,869,425 | | | 6,628,442 | |
Machinery & Equipment | | | 2,151,262 | | | 2,180,403 | |
Buildings | | | 2,519,121 | | | 1,862,560 | |
Leasehold Improvements | | | 176,343 | | | 88,071 | |
Office Equipment | | | 399,893 | | | 374,355 | |
Less Accumulated depreciation | | | 8,731,471 | | | 7,894,733 | |
| | $ | 53,661,642 | | $ | 53,267,196 | |
Exhibit Number: | | Description |
31.1* | | Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2* | | Certification of Principal Accounting Officer under Section 302 of the Sarbanes-Oxley Act of 2002. |
32 | | Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 |
101.INS | | XBRL Instance Document |
101.SCH | | XBRL Taxonomy Extension Schema Document |
101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document |
| SINO GAS INTERNATIONAL HOLDINGS, INC. | | |
| | | |
Date: August 15, 2013 | By: | /s/ Yuchuan Liu | |
| | Yuchuan Liu | |
| | Chairman and Chief Executive Officer | |
| | (Principal Executive Officer) | |
| SINO GAS INTERNATIONAL HOLDINGS, INC. | | |
| | | |
Date: August 15, 2013 | By: | /s/ Baoling Wang | |
| | Baoling Wang | |
| | (Principal Accounting Officer) | |
1. | I have reviewed this quarterly report on Form 10-Q of Sino Gas International Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Yuchuan Liu | |
Yuchuan Liu | |
Chief Executive Officer (Principal Executive Officer) | |
1. | I have reviewed this quarterly report on Form 10-Q of Sino Gas International Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Baoling Wang | |
Baoling Wang | |
(Principal Accounting Officer) | |
(1) | The Quarterly Report of the Company on Form 10-Q (“Report”) for the fiscal period ended June 30, 2013 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Yuchuan Liu | |
Yuchuan Liu | |
Chief Executive Officer | |
(Principal Executive Officer) | |
/s/ Baoling Wang | |
Baoling Wang | |
(Principal Accounting Officer) | |
DISCONTINUED OPERATION (Details 1) (USD $)
|
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2013
|
Dec. 31, 2012
|
|
Revenue | $ 646,809 | $ 646,809 |
Cost of revenue | 449,949 | 449,949 |
Gross profit | 196,860 | |
Operating expenses | 69,393 | 69,393 |
Operating income | 127,467 | 127,467 |
Other income/(expenses) | (3,685) | (3,685) |
Earnings before tax | 123,782 | 123,782 |
Income tax | (17,477) | (17,477) |
Net income | 106,305 | 106,305 |
Jinzhou Gas [Member]
|
||
Revenue | 359,787 | 0 |
Cost of revenue | 217,313 | 217,313 |
Gross profit | 142,473 | 142,473 |
Operating expenses | 18,246 | 18,246 |
Operating income | 124,227 | 124,227 |
Other income/(expenses) | (241) | (241) |
Earnings before tax | 123,986 | 123,986 |
Income tax | (6,197) | (6,197) |
Net income | 117,789 | 117,789 |
Shenzhou Gas [Member]
|
||
Revenue | 277,453 | 277,453 |
Cost of revenue | 224,412 | 224,412 |
Gross profit | 53,041 | 53,041 |
Operating expenses | 16,009 | 16,009 |
Operating income | 37,032 | 37,032 |
Other income/(expenses) | (226) | (226) |
Earnings before tax | 36,806 | 36,806 |
Income tax | (11,167) | (11,167) |
Net income | 25,640 | 25,640 |
Xinji Gas [Member]
|
||
Revenue | 9,569 | 9,569 |
Cost of revenue | 8,224 | 8,224 |
Gross profit | 1,346 | 1,346 |
Operating expenses | 35,138 | 35,138 |
Operating income | (33,792) | (33,792) |
Other income/(expenses) | (3,218) | (3,218) |
Earnings before tax | (37,010) | (37,010) |
Income tax | (114) | (114) |
Net income | (37,124) | (37,124) |
Sishui Gas [Member]
|
||
Revenue | 0 | 0 |
Cost of revenue | 0 | 0 |
Gross profit | 0 | 0 |
Operating expenses | 0 | 0 |
Operating income | 0 | 0 |
Other income/(expenses) | 0 | 0 |
Earnings before tax | 0 | 0 |
Income tax | 0 | 0 |
Net income | $ 0 | $ 0 |
LOANS
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Jun. 30, 2013
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] |
Note:
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ACCOUNTS RECEIVABLE (Details Textual)
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6 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Dec. 31, 2012
|
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Accounts Receivable Payment Terms Description | For natural gas sales, revenue is due when the gas is sold. Most residential customers settle their accounts via prepayments with debit cards, while industrial customers are billed and pay according to the contract terms ranging from 10 days to one month. | |
Construction Contracts Connection Fee Collection Terms Description | For construction projects, connection fees are generally collected in installments. First deposits of 30% of the total contract sum are received from the client when the project commences. A second payment of 30% is received at a milestone set out in the contracts. A third payment of 30% is received after construction is completed. The remaining 10% is typically held back by the client and acts as a warranty on the quality of the project. The retained money is usually received by the company after the 1 year warranty period. | |
Allowance For Doubtful Accounts Receivable Percentage | 1.00% | 1.00% |
Concentration Risk, Percentage | 41.96% | |
Ten Customers [Member]
|
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Concentration Risk, Percentage | 55.38% |
Consolidated Statements of Income (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
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Sales revenue | $ 14,862,867 | $ 10,819,666 | $ 28,292,758 | $ 21,573,269 |
Cost of revenue | 9,710,563 | 6,472,799 | 19,600,777 | 14,539,830 |
Gross Profit | 5,152,304 | 4,346,867 | 8,691,981 | 7,033,439 |
Operating Expense | ||||
Selling expense | 1,183,255 | 749,948 | 2,398,953 | 1,515,635 |
General and administrative expense | 1,224,119 | 1,126,767 | 2,871,477 | 2,084,131 |
Total operating expense | 2,407,374 | 1,876,715 | 5,270,430 | 3,599,766 |
Operating Income | 2,744,930 | 2,470,152 | 3,421,551 | 3,433,673 |
Other Income/(Expense) | ||||
Investment loss | (2,112) | 0 | (2,112) | 0 |
Other income | 29,983 | 12,362 | 31,442 | 34,699 |
Other expense | (57,552) | (8,352) | (123,867) | (127,094) |
Interest income | 58,811 | 54,647 | 100,162 | 155,965 |
Interest expense | (943,680) | (853,461) | (1,868,552) | (1,625,765) |
Total other income/(expense) | (914,550) | (794,805) | (1,862,927) | (1,562,195) |
Income before tax | 1,830,380 | 1,675,348 | 1,558,624 | 1,871,478 |
Income tax | (416,059) | (91,182) | (778,683) | (329,439) |
Gain/(Loss) from discontinued operations, net of tax | 0 | 0 | 0 | 0 |
Net income | 1,414,321 | 1,584,166 | 779,941 | 1,542,039 |
Net income (loss) attributable to common stockholder | 1,415,111 | 1,584,292 | 781,439 | 1,542,968 |
Net income (loss) attributable to non-controlling interest | $ (790) | $ (126) | $ (1,498) | $ (929) |
Earnings per share | ||||
Basic (in dollars per share) | $ 0.03 | $ 0.05 | $ 0.03 | $ 0.05 |
Diluted (in dollars per share) | $ 0.03 | $ 0.05 | $ 0.03 | $ 0.05 |
Weighted Average Shares Outstanding | ||||
Basic (in shares) | 31,802,382 | 31,793,698 | 31,802,382 | 31,793,698 |
Diluted (in shares) | 31,802,382 | 31,793,698 | 31,802,382 | 31,793,698 |
ACCOUNTS RECEIVABLE
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Jun. 30, 2013
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Receivables [Text Block] |
For natural gas sales, revenue is due when the gas is sold. Most residential customers settle their accounts via prepayments with debit cards, while industrial customers are billed and pay according to the contract terms ranging from 10 days to one month. For construction projects, connection fees are generally collected in installments. First deposits of 30% of the total contract sum are received from the client when the project commences. A second payment of 30% is received at a milestone set out in the contracts. A third payment of 30% is received after construction is completed. The remaining 10% is typically held back by the client and acts as a warranty on the quality of the project. The retained money is usually received by the company after the 1 year warranty period. The Company believes it has provided adequate provisions for doubtful accounts. Doubtful allowance accounts at June 30, 2013 and December 31, 2012 were approximately 1% of gross account receivables. To collect on doubtful accounts, the Company uses all of its efforts, such as having internal staff call for payment, filing legal pledges, or even hiring collection agents to collect the outstanding balance. If the collection is no longer probable, the Company will write off the balance against the allowance for doubtful accounts. The Company has not experienced any material delinquent accounts that were uncollectible and has not written off a material balance against the allowance for doubtful accounts.
The increase in accounts receivable aged 180-360 days primarily reflects sales recorded during the current year. The decrease in accounts receivable aged over 360 days reflects receipt of payments of amounts that had been due. Top ten customers accounted for 55.38% of the total accounts receivable as of June 30, 2013:
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DISCONTINUED OPERATION
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Jun. 30, 2013
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] |
The Company through its indirectly wholly owned subsidiary Beijing Gas executed share transfer agreements and other related agreements (the “Agreements”) with Hebei Natural Gas Co., Ltd. (“Hebei Gas”) to sell assets and ownership of three of its subsidiaries, a) Xinji Zhongchen Gas Co., Ltd., (“Xinji Gas”) b) Jinzhou Weiye Gas Co., Ltd., (“Jinzhou Gas”) and c) Shenzhou Weiye Gas Co., Ltd. (“Shenzhou Gas”) for total consideration of RMB 44.8 million (approximately USD $7.04 million). Upon the completion of registered capital transfer filed with local government’s industrial and commercial administration, the disposition took effect on June 8, 2011. In December, 2012, the Company also shut down Sishui Weiye Gas Col, Ltd (“Sishui Gas”), which has had no operating activities since 2007. The Company has accounted for the disposition of the assets of discontinued operation in accordance with SFAS 144 (“FASB ASC 360”), “Accounting for the Impairment or Disposal of Long-Lived Assets”. A total gain of $654,053 was recorded in the Company’s statement of income for the year ended December 31, 2012.
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OTHER PAYABLES (Details) (USD $)
|
Jun. 30, 2013
|
Dec. 31, 2012
|
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Amount due to Employees | $ 4,405,734 | [1] | $ 3,241,752 | [1] | ||||||
Tax Payable | 933,606 | [2] | 1,256,502 | [2] | ||||||
Payables to Subcontractors | 2,919,200 | [3] | 3,614,959 | [3] | ||||||
Others | 1,273,880 | 1,465,234 | ||||||||
Total | $ 9,532,420 | $ 9,578,447 | ||||||||
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INVESTMENT (Details) (USD $)
|
Jun. 30, 2013
|
Dec. 31, 2012
|
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Total | $ 23,511,366 | $ 23,213,107 | ||||||||||
Xiangke Oil Gas [Member]
|
||||||||||||
Total | 10,152,122 | [1] | 9,938,953 | [1] | ||||||||
Qujing [Member]
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Total | 9,157,282 | [2] | 9,157,282 | [2] | ||||||||
Tongshan Hengxin Jiaye Gas Co [Member]
|
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Total | 4,169,642 | [3] | 4,085,207 | [3] | ||||||||
China Construction Bank [Member]
|
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Total | $ 32,320 | [4] | $ 31,665 | [4] | ||||||||
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OTHER PAYABLES
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities Disclosure [Text Block] |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual)
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Noncontrolling Interest, Ownership Percentage by Parent | 50.00% |
Effective Income Tax Rate Foreign | 25.00% |
Standard Tax Rate | 15.00% |
Transfer To Statutory Reserve Percentage | 10.00% |
Statutory Fund Percentage | 50.00% |
Minimum [Member]
|
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Noncontrolling Interest, Ownership Percentage by Parent | 20.00% |
Maximum [Member]
|
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Noncontrolling Interest, Ownership Percentage by Parent | 50.00% |
INVESTMENT (Details 1)
|
6 Months Ended | 12 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
USD ($)
|
Dec. 31, 2012
USD ($)
|
Jun. 30, 2013
Xiangke Oil Gas [Member]
USD ($)
|
Dec. 31, 2012
Xiangke Oil Gas [Member]
USD ($)
|
Dec. 31, 2011
Xiangke Oil Gas [Member]
USD ($)
|
Jun. 30, 2013
Xiangke Oil Gas [Member]
CNY
|
Jun. 30, 2013
Qujing [Member]
USD ($)
|
Dec. 31, 2012
Qujing [Member]
USD ($)
|
Dec. 31, 2011
Qujing [Member]
USD ($)
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|||||||||
Investment Cost | $ 1,658,803 | 13,465,648 | $ 7,766,760 | ||||||||||||||
Prior years investment income | 4,672,645 | 232,393 | |||||||||||||||
2011 & 2012 investment income | 2,777,386 | 892,338 | 645,742 | 512,387 | |||||||||||||
Investment | $ 23,511,366 | $ 23,213,107 | $ 10,152,122 | [1] | $ 9,938,953 | [1] | $ 9,157,282 | [2] | $ 9,157,282 | [2] | |||||||
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SEGMENT INFORMATION (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] |
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ACCOUNTS RECEIVABLE (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | The Company has not experienced any material delinquent accounts that were uncollectible and has not written off a material balance against the allowance for doubtful accounts.
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Schedule Of Allowance For Bad Debts [Table Text Block] |
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Past Due Financing Receivables [Table Text Block] |
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Accounts Receivable [Table Text Block] | The increase in accounts receivable aged 180-360 days primarily reflects sales recorded during the current year. The decrease in accounts receivable aged over 360 days reflects receipt of payments of amounts that had been due. Top ten customers accounted for 55.38% of the total accounts receivable as of June 30, 2013:
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Table Text Block] | The following table depicts the identities of the consolidating subsidiaries as of June 30, 2013:
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Property Plant And Equipment Useful Life [Table Text Block] | Estimated useful lives of the property, plant and equipment are as follows:
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Schedule of Finite-Lived Intangible Assets [Table Text Block] | Amortization is provided over their estimated useful lives using the straight-line method. Estimated useful lives of the intangibles are as follows:
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Fair Value, by Balance Sheet Grouping [Table Text Block] | The following tables present the Company’s financial assets and liabilities at fair value in accordance with ASC 820-10:
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Schedule of Intercompany Foreign Currency Balances [Table Text Block] | The financial statements are translated into United States dollars from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.
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Investments Federal Income Tax Note, Schedule of Investments [Table Text Block] | The maximum tax rates of the subsidiaries pursuant to the countries in which they are domiciled are:
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