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Going concern

9 Months Ended

Sep. 30, 2012

Going concern [Text Block]

2.	GOING CONCERN

	The consolidated financial statements have been prepared on the basis that the Group will continue to operate throughout the next twelve months as a going concern. The Group’s consolidated current liabilities exceeded its consolidated current assets by approximately $52 million as of September 30, 2012. In addition the Group has commitments for tenant improvement projects and the purchase of commercial properties totaling $10.7 million as of September 30, 2012. Management believes that these factors raise substantial doubt about the Company’s ability to continue as a going concern.

	The Group has historically financed its operations principally from cash flows generating in operating activities and from external financing raised from banks and other lenders. The Group expects to generate more cash flow from operation activities with increasing occupancy rates in its commercial properties and the expiration of lease holidays. In addition, the Group expects to enjoy a commission income of up to RMB76 million (approximately $12 million), from exclusive agent services provided on the Mintai Project.

	The Group has also undertaken a plan to sell commercial buildings in Shanghai to Shandong Shengli Steel Pipe Co., Ltd. at a price of not less than RMB380 million (approximately $60 million), and a letter of intent with Shandong Shengli Steel Pipe Co., Ltd. for the sale of commercial properties in Shanghai was signed in August 2012. The selling of the commercial buildings is still currently in progress.

	The Group expects to obtain credit facilities from banks by pledging the existing unmortgaged properties, up to $46.7 million, and expects no difficulties to revolve credit facilities or borrowings when necessary based on the good relationship with the lenders.

The Group believes that available cash and cash equivalents and cash provided by operating activities, together with cash available from borrowings, should enable it to meet presently anticipated cash needs for at least the next 12 months and the Group have prepared the consolidated financial statements on a going concern basis. However, the Group continues to have ongoing obligations and it expects that it will require additional capital in order to execute its longer-term business plan. If the Group is unable to raise additional capital or encounters unforeseen circumstances that place constraints on its capital resources, management will be required to take various measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing the Group’s business development activities, suspending the pursuit of its business plan, controlling overhead expenses and seeking to sell commercial properties. Management cannot provide any assurance that the Group will raise additional capital if needed. The Group has not received any commitments for new financing and cannot provide any assurance a new financing will be available to the Group on acceptable terms, if at all.

Disclosure of accounting policy for reporting when there is a substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time (generally a year from the balance sheet date). Disclose: (a) pertinent conditions and events giving rise to the assessment of substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time, (b) the possible effects of such conditions and events, (c) management's evaluation of the significance of those conditions and events and any mitigating factors, (d) possible discontinuance of operations, (e) management's plans (including relevant prospective financial information), and (f) information about the recoverability or classification of recorded asset amounts or the amounts or classification of liabilities. If management's plans alleviate the substantial doubt about the entity's ability to continue as a going concern, disclosure of the principal conditions and events that initially raised the substantial doubt about the entity's ability to continue as a going concern would be expected to be considered. Disclose whether operations for the current or prior years generated sufficient cash to cover current obligations, whether waivers were obtained from creditors relating to the company's default under the provisions of debt agreements and possible effects of such conditions and events, such as: whether there is a possible need to obtain additional financing (debt or equity) or to liquidate certain holdings to offset future cash flow deficiencies. Disclose appropriate parent company information when parent is dependent upon remittances from subsidiaries to satisfy its obligations.

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