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8-K - FORM 8-K CURRENT REPORT - Tsingda eEDU Corp | compass8k081310.htm |
Exhibit 99.1
JEFFREY & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
61 BERDAN AVENUE
WAYNE, NEW JERSEY 07470
LICENSED TO PRACTICE
TEL: 973-628-0022
IN NEW YORK AND NEW JERSEY
FAX: 973-696-9002
MEMBER OF AICPA
E-MAIL: rgjcpa@optonline.net
PRIVATE COMPANIES PRACTICE SECTION
MEMBER CENTER FOR AUDIT QUALITY
REGISTERED PUBLIC ACCOUNTING FIRM WITH
PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD
Report of Independent Registered Public Accounting Firm
Board of Directors
Beijing Tsingda Century Investment Consultant of Education Co., Ltd.
We have audited the accompanying consolidated balance sheets of Beijing Tsingda Century Investment Consultant of Education Co., Ltd. as of December 31, 2009 and 2008, and the related consolidated statements of income, changes in stockholders' equity, and statements of cash flows for the years ended December 31, 2009 and 2008. These financial statements are the responsibility of the Company management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted the audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial positions of Beijing Tsingda Century Investment Consultant of Education Co., Ltd. as of December 31, 2009 and 2008, and the consolidated results of its operations and its cash flows for the years ended December 31, 2009 and 2008 in conformity with U. S. generally accepted accounting principles.
/s/ Robert G. Jeffrey
JEFFREY & COMPANY
July 30, 2010
Wayne, New Jersey
1
BEIJING TSINGDA CENTURY INVESTMENT CONSULTANT OF EDUCATION CO., LTD.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2009 AND 2008
ASSETS |
| 2009 |
| 2008 |
Current Assets |
|
|
|
|
Cash | $ | 457,219 | $ | 2,314,262 |
Short term investments |
| 555,783 |
| 303,463 |
Accounts receivable, net of provision for doubtful |
|
|
|
|
accounts of $301,001 |
| 4,228,510 |
| 2,242,170 |
Advances to suppliers |
| 3,880,307 |
| 530,876 |
Other accounts receivable |
| 1,836,830 |
| 296,965 |
Stockholder advances |
| 476,220 |
| 2,294,041 |
Prepaid expense |
| 39,453 |
| 108,643 |
Inventory |
| 40,558 |
| 40,443 |
Deferred tax assets |
| 155,690 |
| 233,246 |
|
|
|
|
|
Total current assets |
| 11,670,570 |
| 8,364,109 |
|
|
|
|
|
FIXED ASSETS |
|
|
|
|
Furniture and equipment |
| 3,084,147 |
| 487,031 |
Accumulated depreciation |
| 366,213 |
| 77,370 |
Net furniture and equipment |
| 2,717,934 |
| 409,661 |
|
|
|
|
|
Intangible assets |
| 4,059,639 |
| 1,524,777 |
Accumulated amortization |
| 1,205,873 |
| 450,660 |
Net intangible assets |
| 2,853,766 |
| 1,074,117 |
Total fixed assets |
| 5,571,700 |
| 1,483,778 |
OTHER ASSETS |
|
|
|
|
Long term prepaid expense |
| - |
| 166,065 |
|
|
|
|
|
Total Assets | $ | 17,242,270 | $ | 10,013,952 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
Short term loan | $ | - | $ | 131,306 |
Accounts payable |
| 24,133 |
| 9,294 |
Advances from customers |
| 270,229 |
| 74,230 |
Accrued expenses |
| 175,528 |
| 115,187 |
Other accounts payable |
| 265,103 |
| 13,064 |
Taxes payable |
| 1,946,542 |
| 605,090 |
Deferred revenue |
| 1,037,932 |
| 1,554,975 |
|
|
|
|
|
Total current liabilities |
| 3,719,467 |
| 2,503,146 |
|
|
|
|
|
Stockholders Equity |
|
|
|
|
Paid in Capital |
| 4,421,156 |
| 4,421,156 |
Retained earnings |
| 7,531,177 |
| 2,386,884 |
Earnings appropriated for statutory reserves |
| 1,329,032 |
| 421,215 |
Accumulated other comprehensive income (loss) |
| 241,438 |
| 281,551 |
|
|
|
|
|
Total stockholders equity |
| 13,522,803 |
| 7,510,806 |
|
|
|
|
|
Total Liabilities and Stockholders Equity | $ | 17,242,270 | $ | 10,013,952 |
The accompanying notes are an integral part of these financial statements.
2
BEIJING TSINGDA CENTURY INVESTMENT CONSULTANT OF EDUCATION CO., LTD.
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 2009 and 2008
|
| 2009 |
| 2008 |
Revenue | $ | 14,650,863 | $ | 7,301,733 |
|
|
|
|
|
Expenses |
|
|
|
|
Selling |
| 3,875,405 |
| 1,511,838 |
General and administrative |
| 3,716,663 |
| 1,753,357 |
|
| 7,592,068 |
| 3,265,195 |
|
|
|
|
|
Operating Income |
| 7,058,795 |
| 4,036,538 |
|
|
|
|
|
Other Income (Expenses) |
|
|
|
|
Other income |
| 80,973 |
| 1,064 |
Other expenses |
| (19,638) |
| (1,956) |
Financial expense |
| - |
| (34,439) |
Total other income (expense) |
| 61,335 |
| (35,331) |
|
|
|
|
|
Income Before Income Taxes |
| 7,120,130 |
| 4,001,207 |
|
|
|
|
|
Provision for Income Taxes: |
|
|
|
|
Current |
| 989,925 |
| 1,090,448 |
Deferred |
| 78,095 |
| 62,938 |
Total income taxes |
| 1,068,020 |
| 1,153,386 |
|
|
|
|
|
Net Income |
| 6,052,110 |
| 2,847,821 |
|
|
|
|
|
Other Comprehensive Income (Loss) |
| (40,113) |
| 265,587 |
Total Comprehensive Income | $ | 6,011,997 | $ | 3,113,408 |
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
3
BEIJING TSINGDA CENTURY INVESTMENT CONSULTANT OF EDUCATION CO., LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
For the Years Ended December 31, 2009 and 2008
|
|
|
|
|
|
|
|
| Earnings |
| Accumulated |
|
|
|
|
|
|
|
|
|
|
| Appropriated |
| Other |
|
|
| Capital Stock |
| Paid in |
| Retained |
| For Statutory |
| Comprehensive |
|
| ||
| Shares |
| Amount |
| Capital |
| Earnings |
| Reserves |
| Income |
| Total |
Balance, December 31, 2007 | - | $ | 255,836 | $ | - | $ | (39,722) | $ | - | $ | $ 15,964 | $ | $ 232,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional capital contributions | - |
| 4,165,320 |
| - |
| - |
| - |
| - |
| 4,165,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the year | - |
| - |
| - |
| 2,847,821 |
| - |
| 265,587 |
| 3,113,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings appropriated for |
|
|
|
|
|
|
|
|
|
|
|
|
|
statutory reserves | - |
| - |
| - |
| (421,215) |
| 421,215 |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2008 | - |
| 4,421,156 |
| - |
| 2,386,884 |
| 421,215 |
| 281,551 |
| 7,510,806 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the year | - |
| - |
| - |
| 6,052,110 |
| - |
| (40,113) |
| 6,011,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings appropriated for |
|
|
|
|
|
|
|
|
|
|
|
|
|
statutory reserves | - |
| - |
| - |
| (907,817) |
| 907,817 |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2009 | - | $ | 4,421,156 | $ | - | $ | 7,531,177 | $ | 1,329,032 | $ | 241,438 | $ | 13,522,803 |
The accompanying notes are an integral part of these financial statements.
4
BEIJING TSINGDA CENTURY INVESTMENT CONSULTANT OF EDUCATION CO., LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
|
| 2009 |
| 2008 |
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
Net income | $ | 6,052,110 | $ | 2,847,821 |
Adjustments to reconcile net income to net cash provided by |
|
|
|
|
operating activities: |
|
|
|
|
Charges not requiring the outlay of cash: |
|
|
|
|
Depreciation and amortization |
| 1,042,182 |
| 453,655 |
Decrease (increase) in deferred revenue |
| (520,630) |
| 360,636 |
Increases in deferred income taxes |
| 78,094 |
| 62,938 |
Changes in assets and liabilities: |
|
|
|
|
Increases in accounts receivable |
| (1,979,699) |
| (1,704,753) |
Increases in other receivables |
| (1,538,299) |
| (1,218,795) |
Decrease in stockholder advances |
| 1,822,543 |
| - |
Decrease (increase) in advances to suppliers |
| (3,407,580) |
| 115,610 |
Increases in inventory |
| (14) |
| (38,041) |
Decrease (increase) in prepaid expense |
| 69,423 |
| (106,957) |
Increase (decrease) in accounts payable |
| 14,808 |
| (237,178) |
Increases in wages payable |
| 60,022 |
| 37,764 |
Increase (decrease) in taxes payable |
| 1,339,219 |
| (280,418) |
Increase (decrease) in other payables |
| 251,870 |
| (1,280,521) |
Increase (decrease) in customer advances |
| 195,708 |
| (2,542,168) |
Decrease (increase) in long term prepaid expense |
| 166,389 |
| (163,488) |
Increases in short term investments |
| (251,430) |
| (298,754) |
|
|
|
|
|
Net Cash Consumed By Operating Activities |
| 3,394,716 |
| (3,992,649) |
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
Purchases of fixed assets |
| (2,594,509) |
| (329,705) |
Additions of intangible assets |
| (2,529,710) |
| (1,049,094) |
|
|
|
|
|
Net Cash Consumed By Investing Activities |
| (5,124,219) |
| (1,378,799) |
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
Capital contributions |
| - |
| 4,308,951 |
Repayments of short term loans |
| (131,562) |
| (1,307,049) |
|
|
|
|
|
Net Cash Provided By Financing Activities |
| (131,562) |
| 3,001,902 |
|
|
|
|
|
Affect on cash of foreign exchange rate changes |
| 4,022 |
| 259,509 |
|
|
|
|
|
Net change in cash |
| (1,857,043) |
| (2,110,037) |
|
|
|
|
|
Cash Balance, Beginning of Period |
| 2,314,262 |
| 4,424,299 |
|
|
|
|
|
Cash Balance, End of Period | $ | 457,219 | $ | 2,314,262 |
The accompanying notes are an integral part of these financial statements.
5
BEIJING TSINGDA CENTURY INVESTMENT CONSULTANT OF EDUCATION CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
1. ORGANIZATION and BUSINESS
Organization of Company
The Company was incorporated in the Peoples Republic of China (PRC), on October 23, 2003. Its wholly owned subsidiary, Beijing Tsingda Century Network Technology Co. Ltd. (Network), was incorporated in the PRC on February 14, 2004. These two companies conduct similar operations in the PRC. Company operations are headquartered in the city of Beijing. These operations focus on providing education services for students ranging from six to eighteen years of age. The Company operates what management believes is the largest chain of online and offline education centers in the PRC.
Risks and Uncertainties
The Company operates under the authority of a business license which was granted in 2003 and expires in 2023. Renewal of the license will depend on the result of government inspections which are made to ensure environmental laws are not breached.
The officers of the Company control through direct ownership most of the equity interests of the Company. As a result, insiders will be able to control the outcome of all matters requiring approval of equity owners and will be able to elect all of the Company directors.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidated Statements
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Network. All intercompany transactions and balances have been eliminated in consolidation.
Cash
For purposes of the statements of cash flows, the Company considers all short term debt securities purchased with a maturity of three months or less to be cash equivalents.
Concentrations Of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash, short term investments, accounts receivable and advances to suppliers. However, all Company assets are located in the PRC and Company cash balances are on deposit at financial institutions in the PRC, the currency of which is not free trading. Foreign exchange transactions are required to be conducted through institutions authorized by the Chinese government and there is no guaranty that Chinese currency can be converted to U.S. or other currencies.
Recognition Of Revenue
Revenue is realized through sales to franchisees and other agents of rights to conduct online and offline education services. Access to these services is obtained through the use of cards. These cards are also sold to individual consumers. The cards are used in a manner similar to the use of prepaid cards.
Revenue is recognized as education services are consumed. Management is able to track the use of these services through its computer monitoring systems.
Fair Value of Financial Instruments
The carrying amounts of the Companys financial instruments, which include cash, short term investments, accounts receivable and other receivables, advances to suppliers, accounts payable, accrued liabilities, and other liabilities, approximate their fair values at December 31, 2009.
Fixed Assets
Fixed assets are recorded at cost. Depreciation and amortization is computed using the straight line method, with lives of five years for computers and related equipment and furniture, and eight to ten years for automobiles. Intangibles are the cost of computerized video lessons delivered both online and offline; this cost is amortized by the straight line method using lives of three years.
Taxes
The Company generates its income in China where Value Added Tax, Business Tax, Income Tax, City Construction and Development Tax, and Education Surcharge taxes are applicable. The Company does not conduct any operations in the U.S.; therefore, U.S. taxes are not applicable.
6
BEIJING TSINGDA CENTURY INVESTMENT CONSULTANT OF EDUCATION CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD)
Use Of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimated.
Common Stock
Common stock of the Company will occasionally be issued in return for services. Values will be assigned to these issuances equal to the market value of the common stock at the applicable measurement dates. A Measurement Date is defined under pronouncements of the Financial Accounting Standards Board (FASB) which state the criteria to be used for the valuation of stock issued for goods and services.
Stock Options
Stock options, if issued, will be valued at fair value on the dates of issuance using a Black Scholes valuation model, in accordance with pronouncements of the FASB.
Recently Adopted Accounting Pronouncements
Management believes that none of the recently adopted accounting pronouncements will have a material affect on the Company financial position, results of operations, or cash flows.
Other Comprehensive Income
The Company reports as other comprehensive income revenues, expenses, and gains and losses that are not included in the determination of net income. Resultant gains and losses during the years 2009 and 2008 are all the result of translations of Chinese currency amounts to U.S. dollars.
Foreign Currency Translation
All Company assets are located in China. These assets and related liabilities are recorded on the books of the Company in the currency of China (Renminbi), which is the functional currency. They are translated into US dollars as follows:
(a) Assets and liabilities, at the rates of exchange in effect at balance sheet dates;
(b) Equity accounts, at the exchange rates prevailing at the times of the transactions that established the equity accounts; and
(c) Revenues and expenses, at the average rate of exchange for the year.
Gains and losses arising from this translation of foreign currency are included in other comprehensive income.
Product Warranties
Refunds to students who withdraw from courses are rarely made and are made only at the discretion of the Company. For this reason and, since revenue is recognized only as services are provided, no provision is needed for possible withdrawals.
Net Income Per Share
As is traditional in the PRC, the Company has not issued stock certificates to equity owners. An equity owners proportionate ownership share of the Company depends on the portion of equity capital contributed and is determined each year by a CPA licensed in the PRC. Therefore, earnings per share has not been calculated.
Advertising Cost
The Company expenses advertising costs when an advertisement occurs. Amounts expensed were $2,068,405 during 2009 and $400,009 during 2008.
Segment Reporting
Management treats the operations of the Company as one segment.
7
BEIJING TSINGDA CENTURY INVESTMENT CONSULTANT OF EDUCATION CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
3. PAID IN CAPITAL
The Company began operations in October 2003 with a capital contribution of $64,000. Its wholly owned subsidiary began operations in February 2004 with a capital contribution of $128,000. During 2007, the shareholders of Network, most of whom were also shareholders of the Company, contributed their equity interests in Network to the Company. During 2008, additional cash capital contributions totaling $4,165,000 were made to the Company.
4. STATUTORY RESERVE
As required by the Chinese law that governs accounting, the Company allocates 10% of its after tax profits, as determined from year to year, if any, to a Statutory Reserve Fund and 5% to a Statutory Public Welfare Fund, as determined from year to year. These funds are allocated appropriately until reserves reach 50% of Paid in Capital.
5. RELATED PARTY TRANSACTIONS
Advances were made during 2008 and 2009 to the chief executive officer of the Company and to its executive vice president, both of whom are significant Company shareholders. The outstanding balance of such advances was $1,996,821 and $186,747 respectively at December 31, 2008. Additional advances of $299,734 and $6,584 were made during 2009 and repayments of $1,836,257 and $177,864 were received, leaving balances of $460,716 and $15,468 at December 31, 2009.
6. RENTALS UNDER OPERATING LEASES
The Company conducts its operations from its principal business office in Beijing, and from a rental facility that is operated as a learning center. Leases for these two facilities expire more than one year after December 31, 2009. Future rent for these leases is presented below:
2010 | $480,491 |
|
2011 | 80,082 |
|
7. BANK LOAN
The Company had a short term bank loan during 2008 which was fully paid in 2009. Interest on this loan was at the rate of 6.5%.
8
BEIJING TSINGDA CENTURY INVESTMENT CONSULTANT OF EDUCATION CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
8. INCOME TAXES
The Company is required to file income tax returns in the PRC, for itself and its subsidiary.
The Company has been granted status as a New High-Tech Enterprise by the Beijing Science and Technology Commission. One of the benefits of this status is a three year reduction in the rate of income tax paid by the Company. This reduced rate will be 15% for the years 2009-2011.
The Company has one class of transactions that causes the recognition of a significant deferred tax benefit: The Company recognizes revenue only as it is earned; for income tax purposes, however, revenue is recognized as it is collected, resulting in the accrual of taxes before the income is recognized on the financial statements. Under pronouncements of the FASB, deferred tax assets may be recognized unless it is more likely than not that the tax benefit will not be realized. The Company recorded deferred tax assets in 2009 and 2008 of $155,690 and $233,246, respectively.
A reconciliation of the taxes calculated by applying the Chinese statutory rate to pre tax income with the provisions for income taxes is presented below.
|
| 2009 |
| 2008 |
Taxes calculated using statutory rates | $ | 1,068,020 | $ | 1,000,302 |
|
|
|
|
|
Impact of change in tax rate |
|
|
|
|
on revenue deferred to 2009 |
| - |
| 153,084 |
Provisions for income tax | $ | 1,068,020 | $ | 1,153,386 |
9. EXPENSES
Major items included in Selling & Administrative expenses were the following:
|
| 2009 |
| 2008 |
Rent | $ | 382,988 | $ | 331,318 |
Advertising |
| 2,068,405 |
| 400,009 |
Office expense |
| 169,603 |
| 258,094 |
Salaries and benefits |
| 1,145,801 |
| 742,756 |
Meetings and conferences |
| 566,594 |
| 22,753 |
Depreciation and amortization |
| 1,043,602 |
| 399,795 |
10. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash of $2,956 and $42,916 was paid for interest during 2009 and 2008, respectively.
Cash was paid for income taxes during these years in the amounts of $806,391 and $803,186, respectively.
There was no non cash financing or investing activity during either 2009 or 2008.
11. CONTINGENCIES
Consistent with business practices in China, the Company carries no insurance except for auto insurance.
9
BEIJING TSINGDA CENTURY INVESTMENT CONSULTANT OF EDUCATION CO. LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
12. SUBSEQUENT EVENTS
In May 2009, the FASB issued a pronouncement which established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The Company included the requirements of this guidance in the preparation of the accompanying consolidated financial statements, and concluded its review on the date of issuance of these financial statements.
On April 26, 2010, the Company entered into a series of contractual agreements with Beijing Tsingda Century Management Consulting Ltd. (Tsingda Management), a company incorporated in the Peoples Republic of China (PRC). These agreements allowed Tsingda Management to obtain control of the management and cash flows of the Company.
Tsindga Management is wholly owned by Tsing Da Century Investment Technology Co Ltd. (Tsing Da), a company incorporated in the British Virgin Islands.
On May 24, 2010, a share exchange agreement was reached between Tsing Da, Compass Acquisition Corporation (Compass), a Cayman Islands company, and all of the shareholders of Tsing Da (Tsing Da Shareholders). Under the share exchange agreement, Compass acquired 100% of the outstanding equity interests of Tsing Da, and in return a majority of its equity shares were delivered to the Tsing Da Shareholders. Compass is a company registered with the Securities and Exchange Commission,
10
BEIJING TSINGDA CENTURY INVESTMENT CONSULTANT OF EDUCATION CO., LTD
CONSOLIDATED BALANCE SHEETS
|
| March 31, 2010 |
| December 31, 2009 |
|
| (unaudited) |
| (audited) |
ASSETS |
|
|
|
|
Current assets |
|
|
|
|
Cash | $ | 426,712 | $ | 457,219 |
Short term investments |
| 555,874 |
| 555,783 |
Accounts receivable, net of provision for doubtful accounts of $301,050 |
| 4,915,674 |
| 4,228,510 |
Advances to suppliers |
| 4,833,605 |
| 3,880,307 |
Other accounts receivable |
| 3,112,793 |
| 1,836,830 |
Stockholder advances |
| 104,198 |
| 476,220 |
Prepaid expense |
| - |
| 39,453 |
Inventory |
| 40,564 |
| 40,558 |
Deferred tax assets |
| 102,495 |
| 155,690 |
|
|
|
|
|
Total current assets |
| 14,091,915 |
| 11,670,570 |
|
|
|
|
|
Fixed Assets |
|
|
|
|
Furniture and equipment |
| 3,084,643 |
| 3,084,147 |
Accumulated depreciation |
| 513,112 |
| 366,213 |
Net furniture and equipment |
| 2,571,531 |
| 2,717,934 |
|
|
|
|
|
Intangible assets |
| 4,082,854 |
| 4,059,639 |
Accumulated amortization |
| 1,597,021 |
| 1,205,873 |
Net intangible assets |
| 2,485,833 |
| 2,853,766 |
Total fixed assets |
| 5,057,364 |
| 5,571,700 |
Other assets |
|
|
|
|
Long term prepaid expense |
| 28,185 |
| - |
|
|
|
|
|
Total Assets | $ | 19,177,464 | $ | 17,242,270 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable | $ | 11,973 | $ | 24,133 |
Advances from customers |
| 284,568 |
| 270,229 |
Accrued expenses |
| 209,751 |
| 175,528 |
Other accounts payable |
| 144,447 |
| 265,103 |
Taxes payable |
| 2,420,383 |
| 1,946,542 |
Deferred revenue |
| 683,299 |
| 1,037,932 |
|
|
|
|
|
Total current liabilities |
| 3,754,421 |
| 3,719,467 |
|
|
|
|
|
Shareholders' Equity |
|
|
|
|
Paid in capital |
| 4,421,156 |
| 4,421.156 |
Retained earnings |
| 9,144,556 |
| 7,531,177 |
Earnings appropriated for statutory reserves |
| 1,613,746 |
| 1,329,032 |
Accumulated other comprehensive income |
| 243,585 |
| 241,438 |
|
|
|
|
|
Total shareholders equity |
| 15,423,043 |
| 13,522,803 |
|
|
|
|
|
Total Liabilities and Shareholders Equity | $ | 19,177,464 | $ | 17,242,270 |
The accompanying notes are an integral part of these financial statements.
11
BEIJING TSINGDA CENTURY INVESTMENT CONSULTANT OF EDUCATION CO., LTD.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2010 AND 2009
(Unaudited)
|
| March 31, 2010 |
| March 31, 2009 |
|
|
|
|
|
Revenue | $ | 3,851,061 | $ | 3,453,353 |
|
|
|
|
|
Expenses |
|
|
|
|
Selling |
| 594.018 |
| 1,565,395 |
General and administrative |
| 1,023,108 |
| 972,196 |
|
| 1,617,126 |
| 2,537,591 |
|
|
|
|
|
Operating Income |
| 2,233,935 |
| 915,762 |
|
|
|
|
|
Other Income (Expenses) |
|
|
|
|
Other income |
| - |
| 1,412 |
Interest expense |
| (885) |
| - |
Total other income (expense) |
| (885) |
| 1,412 |
|
|
|
|
|
Income Before Income Taxes |
| 2,233,050 |
| 917,174 |
|
|
|
|
|
Provision for Income Taxes |
| 334,958 |
| 143,104 |
Net Income |
| 1,898,093 |
| 774,070 |
|
|
|
|
|
Other Comprehensive Income |
| 2,147 |
| 94,527 |
Total Comprehensive Income | $ | 1,900,240 | $ | 868,597 |
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
12
BEIJING TSINGDA CENTURY INVESTMENT CONSULTANT OF EDUCATION CO., LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2010 AND 2009
(Unaudited)
|
| 2010 |
| 2009 |
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
Net income | $ | 1,896,863 | $ | 774,076 |
Adjustments to reconcile net income to net cash provided by |
|
|
|
|
operating activities: |
|
|
|
|
Charges and credits not requiring the use of cash: |
|
|
|
|
Depreciation and amortization |
| 537,799 |
| 322,810 |
Decreases in deferred revenue |
| (354,802) |
| (130,049) |
Increases in deferred tax expense |
| 53,220 |
| 19,508 |
Changes in assets and liabilities: |
|
|
|
|
Increases in accounts receivable |
| (765,011) |
| (562,544) |
Increases in other receivables |
| (957401)) |
| (458,910) |
Increase in inventory |
| (379) |
|
|
Decrease in stockholder advances |
|
|
|
|
Increases in advances to suppliers |
| (952,684) |
| (1,075,571) |
Increase (decrease ) in stockholder advances |
|
|
|
|
Decreases in prepaid expense |
| 11,274 |
| 108,764 |
Decreases in accounts payable |
| (12,164) |
| (8,869) |
Increases in accrued expenses |
| 34,196 |
| 19,574 |
Increases in taxes payable |
| 351,281 |
| 69,241 |
(Decrease) increase in other payables |
| (120,699) |
| 15,539 |
Increases in customer advances |
| 14,296 |
| 53,902 |
Decrease in long term prepaid expense |
| - |
| 23,013 |
Decrease in short term investments |
| - |
| 303,801 |
|
|
|
|
|
Net Cash Consumed By Operating Activities |
| (264,217) |
| (525,715) |
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
Purchases of fixed assets |
| - |
| (292,686) |
Disposals of intangible assets |
| 110,589 |
| - |
Additions to intangible assets |
| - |
| (661,607) |
|
|
|
|
|
Net Cash Consumed By Investing Activities |
| 110,589 |
| (954,293) |
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
| - |
| - |
|
|
|
|
|
Affect on cash of foreign exchange rate changes |
| 123,121 |
| (452) |
|
|
|
|
|
Net change in cash |
| (30,507) |
| (1,480,460) |
|
|
|
|
|
Cash Balance, Beginning of Period |
| 457,219 |
| 2,314,261 |
|
|
|
|
|
Cash Balance, End of Period | $ | 426,712 | $ | 833,801 |
The accompanying notes are an integral part of these financial statements.
13
BEIJING TSINGDA CENTURY INVESTMENT CONSULTANT OF EDUCATION CO., LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2010
(Unaudited)
1. BASIS OF PRESENTATION
The unaudited interim financial statements of Beijing Tsingda Century Investment Consultant of Education Co., Ltd. (the Company) as of March 31, 2010 and for the three month periods ended March 31, 2010 and 2009 have been prepared in accordance with U.S. generally accepted accounting principles. In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of such periods. The results of operations for the three month period ended March 31, 2010 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2010.
Certain information and disclosures normally included in the notes to financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission, although the Company believes the disclosure is adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2009.
14