Note 4 - Acquisition of A Subsidiary

9 Months Ended

Feb. 28, 2014

Notes

Note 4 - Acquisition of A Subsidiary

NOTE 4 – ACQUISITION OF A SUBSIDIARY

On January 22, 2014, Hongsheng completed the acquisition of a 56% equity interest in Xin Chang for a total consideration of RMB4.5 million (the “Acquisition”). The consideration are separated into two tranches: 1) $256,269 paid to Xin Chang’s then major shareholder upon signing of the Acquisition Agreement; and 2) another $489,900 to be paid to Xin Chang as an operating fund in batches based on Xin Chang’s financial needs as determined by the Company.

Management has assessed the fair value of the assets and liabilities of Xin Chang as of the acquisition date, and is analyzed as follows:

Assets
Cash and cash equivalents	$2,157
Trade receivables	200,301
Prepaid expenses and other receivables	9,030
Intangible assets, net – Operating concession	245,655
Total assets	$457,143
Liabilities
Accounts payable	$44,145
Accrued expenses and other payables	63,738
Tax payable	9,294
Total liabilities	117,177
Net assets acquired	339,966
Less: Net assets attributable to non-controlling interests	(149,585)
Net assets acquired attributable to shareholders of the Company	190,381
Cash consideration	256,269
Goodwill	65,888