Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2013

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Note 13   –CONDENSED FINANCIAL INFORMATION OF REGISTRANT

The following condensed financial information of the Company includes the US parent only balance sheets as of December 31, 2013 and 2012, and the US parent company only statements of operations, and cash flows for the years ended December 31, 2013 and 2012:

Condensed Balance Sheets:

  

	As of December 31,
	2013		2012
A S S E T S
ASSETS:
Prepaid expense	$	-	$	3,000
Investment in subsidiaries and VIEs		8,966,555		10,814,666
Total assets	$	8,966,555	$	10,817,666
L I A B I L I T I E S    A N D    S T O C K H O L D E R S'   E Q U I T Y
LIABILITIES:
Due to related parties	$	22,389	$	32,204
Total liabilities		22,389		32,204
STOCKHOLDERS' EQUITY:
Preferred stock - par value $0.001; 1,000,000 shares authorized; no shares issued and outstanding		-		-
Common stock - par value $0.001; 200,000,000 shares authorized; 20,054,000 and 20,036,000 shares issued and outstanding at December 31, 2013 and 2012, respectively		20,054		20,036
Additional paid-in-capital		7,361,665		7,361,143
Retained earnings		1,562,447		3,404,283
Total stockholders' equity		8,944,166		10,785,462
Total liabilities and stockholders' equity	$	8,966,555	$	10,817,666

Condensed Statements of Operations

	For the Year ended December 31,
	2013			2012
REVENUES
Share of losses from investment in subsidiaries and VIEs	$	(1,771,272	)	$	(1,086,195	)
OPERATING EXPENSES
General and administrative expenses		70,564			119,203
NET LOSS	$	(1,841,836	)	$	(1,205,398	)

Condensed Statements of Cash Flows

	For the Year ended December 31,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,841,836	)	$	(1,205,398	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Share of earnings from investment in subsidiaries and VIEs		1,771,272			1,086,195
Share-based compensation		540			18,000
Net cash used in operating activities		(70,024	)		(101,203	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advance from shareholders		70,024			101,203
Net cash provided by financing activities		70,024			101,203
NET INCREASE IN CASH		-			-
CASH, beginning of year		-			-
CASH, end of year	$	-		$	-

Basis of Presentation

The Company records its investment in its subsidiaries and VIEs under the equity method of accounting. Such investment is presented as “Investment in subsidiaries and VIEs” on the condensed balance sheets and shares of the subsidiaries and VIEs’ profits is presented as “Share of earnings from investment in subsidiaries and VIEs” in the condensed statements of operations.

Certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted. The parent only financial information has been derived from the Company’s consolidated financial statements and should be read in conjunction with the Company’s consolidated financial statements.

Restricted Net Assets

Under PRC laws and regulations, the Company’s PRC subsidiaries and VIEs are restricted in their ability to transfer certain of their net assets to the Company in the form of dividend payments, loans or advances. The restricted net assets of the Company’s PRC subsidiaries and VIEs amounted to $8,966,555 and $10,814,666 as of December 31, 2013 and 2012, respectively.

In addition, the Company’s operations and revenues are conducted and generated in the PRC, all of the Company’s revenues being earned and currency received are denominated in RMB. RMB is subject to the foreign exchange control regulations in China, and, as a result, the Company may be unable to distribute any dividends outside of China due to PRC foreign exchange control regulations that restrict the Company’s ability to convert RMB into US Dollars.

Schedule I of Article 5-04 of Regulation S-X requires the condensed financial information of the Company to be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of this test, restricted net assets of consolidated subsidiaries shall mean that amount of the registrant’s proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries in the form of loans, advances or cash dividends without the consent of a third party. The condensed parent company financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X as the restricted net assets of the Company’s PRC subsidiaries and VIEs exceed 25% of the consolidated net assets of the Company.