DUE FROM RELATED PARTIES

12 Months Ended

Dec. 31, 2015

Notes to Financial Statements

Note 5 - DUE FROM RELATED PARTIES

The balance of $1,176,265 due from related parties included loans receivable of $1,169,114 from related parties and accounts receivable of $7,151 generated from related party revenue.

(a) Loans from related parties

The loans owed by related parties are unsecured, interest free and not expected to be paid within twelve months from December 31, 2015.

Loans receivable from related parties consists of the following:

	December 31, 2015		December 31, 2014
Shaanxi Jiuzu Shaokang Liquor Co., Ltd. (Previously Shaanxi Baishui Dukang Liquor Development Co., Ltd.), controlled by Zhang Hongjun, the Director and principal shareholder of the Company	$	-	$	813,537	interest free
Shaanxi Du Kang Liquor Group Co., Ltd., controlled by Zhang Hongjun, the Director and principal shareholder of the Company		1,164,107		1,246,025	interest free
Zhongke Aerospace & Agriculture Development Stock Co., Ltd., manager of which is Zhang Hongjun, the Director and principal shareholder of the Company		-		459,649	interest free
Shaanxi Tangrenjie Advertising Media Co., Ltd. (Previously Shaanxi Changjiang Zhongxiayou Investment Co., Ltd.), manager of which is Zhang Hongjun, the Director and principal shareholder of the Company		5,007		5,288	interest free
Shaanxi Changfa Industrial Co., Ltd., controlled by Zhang Hongjun, the Director and principal shareholder of the Company		-		374,227	interest free
Shaanxi East Mining Co., Ltd., controlled by Zhang Hongjun, the Director and principal shareholder of the Company		-		22,779	interest free
	$	1,169,114	$	2,921,505

In April 2015, Shaanxi Changjiang moved to a new office that is owned by Shaanxi Baishui Dukang Liquor Co., Ltd., a related company. Shaanxi Changjiang is allowed to occupy the space for free.

At the year end of 2015, the Company decided to write off total balances of $1,628,468 (equivalent to RMB 10,125,000) due from related parties due to the uncertain collectability. Those receivable balances consist of $454,363 receivable from Zhongke Aerospace & Agriculture Development Stock Co., Ltd., $804,181 receivable from Shaanxi Jiuzu Shaokang Liquor Co., Ltd. and $369,924 receivable from Shaanxi Changfa Industrial Co., Ltd. As Shaanxi Jiuzu Shaokang Liquor Co., Ltd. is owned by Zhang Hongjun (95% ownership), Shaanxi Changfa Industrial Co., Ltd. is owned by Zhang Hongjun (39% ownership) and Shaanxi Changjiang (13% ownership), the write-offs of $1,174,105 related to those companies are accounted for as a transaction between entities under common control and recorded as an adjustment to stockholder's equity (additional paid-in capital).

(b) Sales revenue from related parties

The Company entered into a lease and a complementary agreement with Shaanxi Huanghe Bay Ecological Agriculture Co., Ltd, a company owed by Zhang Hongjun (82% ownership), dated July 26, 2010 and March 25, 2011, respectively. According to the agreements, the use right of a piece of land with the area of 5,706,666.67 square meters was leased to Shaanxi Huanghe Bay Ecological Agriculture Co., Ltd. for traveling and amusement from January 1, 2011 to December 31, 2029. The annual rent in US dollars is approximately $1.2 million (equivalent to RMB 7,500,000). As of December 31, 2015, the Company only received rent payment for year 2011 and no any collection afterward. Due to the uncertain collectability, the Company decided to write off all the uncollected receivables related to land lease in the amount of $3,618,818 (equivalent to RMB 22,500,000) and decided not to recognize any revenue for the year ended December 31, 2015.

The Company provided solar power to one of its related parties, Heyang County Huanghe Bay Resort Hotel Co., Ltd. since 2014. As of December 31, 2015, no collection has been received. The Company wrote off the receivable balance of $26,597 (equivalent to RMB 165,366) for 2014 and the remaining receivable balance was $7,151 at December 31, 2015.

Accounts receivable from related parties consists of the following:

	December 31, 2015		December 31, 2014
Shaanxi Huanghe Bay Ecological Agriculture Co.,Ltd. (Previously Shaanxi Huanghe Bay Spring Lake Park Co., Ltd.), controlled by Zhang Hongjun, the Director and principal shareholder of the Company	$	-	$	3,660,918	interest free
Heyang County Huanghe Bay Resort Hotel Co.,Ltd., controlled by Zhang Hongjun, the Director and principal shareholder of the Company	$	7,151	$	26,906	interest free
		7,151		3,687,824