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We have a history of losses and no revenues, which raise substantial doubt about our ability to continue as a going concern.  

  

From inception to March 31, 2014, we have incurred aggregate net losses of $370,127 We can offer no assurance that we will ever operate profitably or that we will generate positive cash flow in the future. In addition, our operating results in the future may be subject to significant fluctuations due to many factors not within our control, such as the unpredictability of when customers will order products, the size of customers’ orders, the demand for our products, and the level of competition and general economic conditions.

  

Our company’s operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. No assurance can be given that we may be able to operate on a profitable basis.

  

Due to the nature of our business and the early stage of our development, our securities must be considered highly speculative. We have not realized a profit from our operations to date and there is little likelihood that we will realize any profits in the short or medium term. Any profitability in the future from our business will be dependent upon the successful commercialization or licensing of our core products, which themselves are subject to numerous risk factors as set forth below.

  

We expect to continue to incur development costs and operating costs. Consequently, we expect to incur operating losses and negative cash flows until our products gain market acceptance sufficient to generate a commercially viable and sustainable level of sales, and/or additional products are developed and commercially released and sales of such products made so that we are operating in a profitable manner. Our history of losses and no revenues raise substantial doubt about our ability to continue as a going concern.

  

We have had negative cash flows from operations since inception. We will require significant additional financing, the availability of which cannot be assured, and if our company is unable to obtain such financing, our business may fail.  

  

To date, we have had negative cash flows from operations and have depended on sales of our equity securities and debt financing to meet our cash requirements. We may continue to have negative cash flows. We have estimated that we will require approximately USD$900,000 to carry out our business plan for the next twelve months. There is no assurance that actual cash requirements will not exceed our estimates. We will require additional financing to finance working capital and pay for operating expenses and capital requirements until we achieve a positive cash flow.

  

Our ability to market and sell our advertising services will be dependent upon our ability to raise significant additional financing. If we are unable to obtain such financing, we will not be able to fully develop our business. Specifically, we will need to raise additional funds to:

  

We may not be able to obtain additional equity or debt financing on acceptable terms as required. Even if financing is available, it may not be available on terms that are favorable to us or in sufficient amounts to satisfy our requirements. Any additional equity financing may involve substantial dilution to our then existing shareholders. If we require, but are unable to obtain, additional financing in the future, we may be unable to implement our business plan and our growth strategies, respond to changing business or economic conditions, withstand adverse operating results and compete effectively. More importantly, if we are unable to raise further financing when required, we may be forced to scale down our operations and our ability to generate revenues may be negatively affected.

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not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business.

If we issue additional shares in the future, it will result in the dilution of our existing shareholders.

We are authorized to issue up to 100,000,000 shares of common stock with a par value of $0.0001. Our board of directors may choose to issue some or all of such shares to acquire one or more businesses or to provide additional financing in the future. The issuance of any such shares will result in a reduction of the book value and market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will cause a reduction in the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our company.

Trading of our stock may be restricted by the Securities Exchange Commission's penny stock regulations, which may limit a stockholder's ability to buy and sell our stock.

The Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

FINRA sales practice requirements may also limit a stockholder's ability to buy and sell our stock.

In addition to the "penny stock" rules described above, the Financial Industry Regulatory Authority (FINRA), formerly the National Association of Securities Dealers or NASD, has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Except where otherwise indicated, the following discussion and analysis pertains to the business and financial condition of our newly acquired, wholly owned subsidiary, Million Place Investments Ltd. (Million Place), and it’s 49% owned subsidiary and cooperative foreign joint-venture partner, Inner Mongolia Yulong Pump and Boiler Production Company Limited. (Yulong Pump)  Million Place holds a 49% equity share of Yulong Pump, together with a perpetual option to purchase an additional 2% equity stake in Yulong Pump in consideration of $96,278.  By virtue of its 49% interest in Yulong Pump, Million Place is the deemed cooperative foreign joint venture partner of Yulong Pump.

On May 22, 2014 Million Place entered into a Joint Venture Contract with Yulong Pump pursuant to which the companies intend to jointly engage in the manufacture of industrial boilers, the provision of consultancy services for the design of boiler systems, the manufacture of industrial water pumps and accessories, and the acquisition and development of real estate.  Pursuant to the Joint Venture Contract, Million Place will be solely responsible all operations and management of the joint venture and shall have exclusive authority to enter into agreements on behalf of the joint venture.  Million Place will in turn receive compensation for services it provides to the joint venture and shall be entitled to a 49% share of profit generated by the joint venture.  Pursuant to the Joint Venture Contract, Yulong Pump has allocated its 143,106 square foot commercial property located in Wulateqianqi, Mongolia to the joint venture operation.  That property is currently under construction and is further described below.  Additional assets or operations may be allocated to the joint venture on an ongoing basis. 

The following discussion and analysis should be read in conjunction with the following financial statements and accompanying notes that appear elsewhere in this current report. 

• December 31, 2013 and December 31, 2012.
• Unaudited financial statements of Million Place Investments Ltd. for the period ended March 31, 2014.
• Audited financial statements of Inner Mongolia Yulong Pump and Boiler Production Company Limited for the years ended December 31, 2013 and December 31, 2012.
• Unaudited financial statements of Inner Mongolia Yulong Pump and Boiler Production Company Limited for the period ended March 31, 2014.
• Pro-forma financials of Asia Pacific Boiler Corporation for the acquisition of Million Place Investments Ltd.

The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.  Our actual results could differ materially from those discussed in the forward looking statements.  Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this annual report, particularly in the section entitled “Risk Factors” beginning on page 11 of this current report.

The consolidated financial statements contained herein are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

Cash Requirements

Over the next 12 months, through our wholly owned subsidiaryMillion Place, we intend to engage in the acquisition, development and management of commercial real estate assets in cooperation with our joint venture partner, Yulong Pump.  Together with Yulong Pump, we are also seeking to engage in the manufacture and sale of industrial water pumps and accessories and industrial boilers for commercial buildings, and the provision of consultancy services for the design of boiler systems.  We anticipate that we will incur the following operating expenses during this period:

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We will require funds of approximately $900,000 over the next twelve months (beginning April 1, 2014) to execute our business plan. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares.  There is no assurance that we will secure any additional financing or maintain operations at a level sufficient for an investor to obtain a return on their investment in our common stock. Further, we may continue to be unprofitable.

  

Purchase of Significant Equipment

  

We do not anticipate the purchase or sale of any plant or significant equipment during the next 12 months.

  

Going Concern

  

There is significant doubt about our ability to continue as a going concern.

Our company has incurred a net loss of $370,128 for the period from inception on June 23, 2011 to March 31, 2014 and has generated no revenues.  The continuity of our future operations is dependent upon our ability to raise additional capital and to successfully execute our business plans in a timely manner. These conditions raise substantial doubt about our ability to continue as a going concern.  We intend to continue relying upon the issuance of equity securities to finance our operations.  However there can be no assurance we will be successful in raising the funds necessary to maintain operations, or that a self-supporting level of operations will ever be achieved.  The likely outcome of these future events is indeterminable.  The financial statement does not include any adjustment to reflect the possible future effect on the recoverability and classification of the assets or the amounts and classification of liabilities that may result should we cease to continue as a going concern.

Financial Results of Million Place Investments Ltd.

  

Results of Operations (Million Place Investments Ltd.) for the Fiscal Years Ended December 31, 2012 and 2013, and for the periods ending March 31, 2013 and March 31, 2012. 

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Million Place`s operating results for the fiscal years ended December 31, 2013 and 2012, and for the three months periods ended March 31, 2014 and March 31, 2013 are summarized as follows:

  

Expenses

  

Million Place`s operating expenses for the fiscal year ended December 31, 2013 and 2012, and for the period from August 3, 2010 (date of inception) to December 31, 2013 are outlined in the table below:

   

Expenses for the three months ended March 31, 2014, were $878 as compared to $6,579 for the comparative period in 2013. Expenses for the year ended December 31, 2013, were $6,579 as compared to $Nil for the comparative period in 2012. Million Place`s expenses are attributable to its general administrative expenses incurred in carrying on its business and consist of legal and accounting, fees, statutory  corporate fees, and fees and expenses associated with our public filings.  Million Place has had no revenues since its inception.

  

Equity Compensation

  

Million Place has no equity compensation plans or arrangements.

  

Liquidity and Financial Condition

  

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As of March 31, 2014, Million Place had working capital of $2,142,655, $2,143,833 in total current assets and $1,178 in total current liabilities.  

  

Million Place is dependent on funds raised through equity financings and proceeds from shareholder loans. Million Place`scumulative net loss of $90,897 as at March 31, 2013 was funded primarily by related party loans.

 

During the three months ended March 31, 2014, Million Place spent $878 on operations, whereas Million Place spent $6,579 on operating activities during the same period in 2013. The decrease in our expenditures on operating activities during the three months ended December 31, 2014 was primarily due to a decrease in professional fees following the establishment of Million Place.

 

During the year ended December 31, 2013, Million Place spent Nil on operations, whereas Million Place spent $6,579 on operating activities during the same period in fiscal 2012. The increase in Million Place`sexpenditures on operating activities during the year ended December 31, 2013 was primarily due to increases in general and administrative expenses.

 

During the year ended December 31, 2013, Million Place used $2,227,273 in investing activities related to its acquisition of a 49% interest in Inner Mongolia Yulong Pump Production Company Limited. Subsequent to that investment, Million Place has not used any funds in investing activities. 

 

During the three months ended March 31, 2014, Million Place received $878 from financing activities, which consisted of proceeds of a related party loan.  Million Place received no funds from financing activities during the three months ended March 31, 2012.  During the year ended December 31, 2013, Million Place received no funds from financing activities. During the year ended December 31, 2012 Million Place received $2,233,552 in financing activities which consisted of $10,000 in proceeds from stock issued for cash and $2,223,552 in additional paid in capital.

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Together with our wholly owned subsidiary, Million Place,we estimate that wewill require additional funds to finance our planned expenses over the next 12 months (beginning April 1, 2014). These funds may be raised through, equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares.

 

We anticipate that our expenses over the next 12 months (beginning April 1, 2014) will be approximately $900,000 as described in the table above. These estimates may change significantly depending on the rate at which we accelerate our planned business activities and our ability to raise capital from our shareholders or other sources. 

Contractual Obligations

As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.

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Inflation

Inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities.

Seasonality

Million Place`s operating results and operating cash flows historically have not been subject to seasonal variations. This pattern may change, however, in the event that we succeed in bringing our planned products to market.

Critical Accounting Policies (Million Place Investments Ltd.)

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.  This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.  As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.  We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management's difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:

Basis of presentation

 

The accompanying financial statements have been prepared in accordance with United States generally accepted accounting principles ( “U.S. GAAP” ) The information furnished herein reflects all adjustments ( consisting of normal recurring accruals and adjustments ) which are , in the opinion of management, necessary to fairly present the operating results for the respective periods.

 

Use of estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

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Concentration of risks

 

Inner Mongolia Yulong Pump Production Company Limited transacts all its business in Renminbi ( “RMB”), which is not freely convertible into foreign currencies. All foreign exchange transactions continue to take place either through the People’s Bank of China (the “PBOC”) or other banks authorised to buy and sell foreign currencies at the exchange rates quoted by PBOC. Approval of

foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices , shipping documents and signed contracts. The value of the RMB is subject to change as a result of central government policies and international economic and political developments affecting supply and demand in the PRC foreign trading system market.

 

Foreign currency exchange rate risk

 

Starting July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. The depreciation of the U.S. dollar against RmMB  was approximately 0.89%, 4.53% and 2.38% during the years 2010,2011 and 2012, respectively. While the international reaction to the RMB appreciation has generally been positive, there remains significant international pressure to the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the RMB against the U.S. dollar.

 

Foreign currency translation

 

The reporting currency is the U.S. dollars. The functional currency of our major investment in Inner Mongolia Yulong Pump Production Company Limited is in RMB.

 

Cash and cash equivalent

 

Cash and cash equivalents include all cash, deposits in banks and other highly liquid investments with initial maturities of three months or less. As of December 31 2013, all of our cash was denominated in RMB and was partially held on hand by Cashier. RMB is not freely convertible into foreign currencies and the remittance of these funds out of the PRC is subject to exchange control restrictions imposed by the PRC government. As of March 31 2014 the Company does not have any.

 

Going concern

 

Million Place has sustained operating loss of US$6,579 since inception. The company’s continuation as going concern is dependent on management’s ability to develop profitable operations, and /or obtain additional financing from its stockholders and /or other third parties.

The accompanying financial statements have been prepared assuming that Million Place will continue as a going concern.

  

Investments

 

The Company has a 49% interest in Yulong Pump, a pump and boiler production company in Inner Mongolia. We use the equity method to account for investments in Inner Mongolia Yulong Pump production Company Limited; accordingly, the results of operations of Yulong Pump are included in equity in earnings of equity method investees on the Company’s statements of operation. Our net income includes the Company’s proportionate share of the net income or loss of Yulong Pump. Our judgment regarding the level of influence over each equity method investment includes considering key factors such as our ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions.

 

The carrying value of the Company’s investment in Inner Mongolia Yulong Pump Production Company Limited is stated at historical cost of RMB 14,700,000 ($2,227,273 USD) less its share of loss for Yulong Pump of amount USD 83,440 from inception to March 31, 2014.

 

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Recently Issued Accounting Pronouncements

 

In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders' equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 during the quarter ended March 31, 2014, thereby no longer presenting or disclosing any information required by Topic 915

  

Financial Results of Inner Mongolia Yulong Pump Production Company Ltd..

  

Results of Operations (Inner Mongolia Yulong Pump Production Company Ltd.) for the Fiscal Years Ended December 31, 2012 and 2013, and for the periods ending March 31, 2013 and March 31, 2012. 

  

Our operating results for the fiscal years ended December 31, 2013 and 2012, and for the three months periods ended March 31, 2014 and March 31, 2013 are summarized as follows:

   

Expenses

 

Yulong Pump`s operating expenses for the fiscal year ended December 31, 2013 and 2012, and for the period from August 3, 2010 (date of inception) to December 31, 2013 are outlined in the table below:

  

Expenses for the three months ended March 31, 2014, were $6,258 as compared to $4,937 for the comparative period in 2013. Expenses for the year ended December 31, 2013, were $6,579 as compared to $Nil for the comparative period in 2012. Yulong Pump`s expenses are attributable to its general administrative expenses incurred in carrying on its business and include professional fees and statutory corporate fees..

 

Equity Compensation

 

Yulong Pump does not have any equity compensation plans or arrangements.

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Liquidity and Financial Condition

 

 

As of March 31, 2014, Yulong Pump had working capital of $8,494,349, $8,501,189 in total current assets and $6,840 in total current liabilities.  

   

Yulong Pump isdependent on funds raised through equity financings and proceeds from shareholder loans.  Yulong Pump`s cumulative net loss of $30,709 as at March 31, 2013 was funded primarily by related party loans.

 

During the three months ended March 31, 2014, Yulong Pump spent $6,258  on operations, whereas the company spent $4,935 on operating activities during the same period in 2013. The increase in Yulong Pump`s expenditures on operating activities during the three months ended December 31, 2014 was primarily due to increased professionl fees.

 

During the year ended December 31, 2012, Yulong Pump spent $22,039 on operations, whereas it spent $144,845 on operating activities during the same period in fiscal 2013. The increase in its expenditures on operating activities during the year ended December 31, 2013 was primarily due to increases in general and administrative expenses.

 

During the year ended December 31, 2013, Yulong Pump used $30,978,623 in investing activities related to the purchase of the Wulateqianui . Subsequent to that investment, Yulong Pump has not used any funds in investing activities. 

 

Yulong Pump received no funds from financing activities during the three months ended March 31, 2014 or during fiscal 2013 or 2012

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Siginificant Accounting Policies (Inner Mongolia Yulong Pump)

 

Basis of presentation

 

The accompanying financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”).

 

The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods.

 

Use of estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Concentrations of risks

 

Credit risk

 

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, trade receivables and advances to suppliers. As of March 31, 2014 and December 31, 2013, with respect to trade receivables and advances to suppliers, the Company extends credit based on evaluations of the customers' and suppliers' financial position and business history with the Company. The Company generally is required to make advances to suppliers.

 

Currency convertibility risk

 

Inner Mongolia Yulong Pump Production Company Limited transacts all of its business in Renminbi (“RMB”), which is not freely convertible into foreign currencies. All foreign exchange transactions continue to take place either through the People’s Bank of China (the “PBOC”) or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts. The value of the RMB is subject to change as a result of central government policies and international economic and political developments affecting supply and demand in the PRC foreign exchange trading system market.

 

Foreign currency exchange rate risk

 

Starting July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. The depreciation of the U.S. dollar against RMB was approximately 4.53%, 2.38%, and 6.05% during the years 2011, 2012, and 2013, respectively. While the international reaction to the RMB appreciation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the RMB against the U.S. dollar.

 

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Foreign currency translation and other comprehensive income

 

The reporting currency of the company is the US dollar. The Company uses the local currency, Renminbi (RMB), as its functional currency. Assets and liabilities are translated at the unified exchange rate as quoted by the Peoples’ Bank of China at the end of the period. The statement of operations accounts are translated at the average translation rates and the equity accounts are translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

 

Translation adjustments included in the accumulated other comprehensive income amounted to $(859,887) and $(587,563) for the three months ended March 31, 2014 and 2013, respectively. The balance sheet amounts, with the exception of equity at March 31, 2014 and December 31, 2013, were translated at 6.2 RMB and 6.31 RMB to $1.00 USD respectively. Cash flows are also translated at average translation rates for the periods, therefore, amounts reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

 

The PRC government imposes significant restrictions on fund transfer out of PRC that are not related to business operations. These restrictions have not had a material impact on the Company because it has not engaged in any significant transactions that are subject to the restrictions.

 

Cash and cash equivalents

 

Cash and cash equivalents include all cash, deposits in banks and other highly liquid maturities of three months or less. As of March 31, 2014, all of our cash was denominated in RMB and was partially held on hand. RMB is not freely convertible into foreign currencies and the remittance of these funds out of PRC is subject to exchange control restrictions imposed by the PRC government. As of March 31, 2014, and December 31, 2013, the Company did not have any cash equivalents.

 

Inventory

 

Inventory is stated at the lower of cost or market. Cost is determined on a weighted average basis. The Company estimates net realizable value based on intended use, current market value and inventory aging analysis. The Company writes down the inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of the inventory and the estimated market value based upon assumptions about the future demand and market conditions. The amount presented in the accompanying balance sheet is $204,765 and $210,268 at March 31, 2014 and December 31, 2013 respectively.

 

Plant and equipment

 

Plant and equipment are stated at cost less accumulated depreciation. Cost represents the purchase price of the assets and other costs incurred to bring the asset into its existing use. Depreciation is provided on a straight line basis over the assets’ estimated useful lives with no salvage value. The useful lives are as follows:

 

•              Building and improvements:  10-40 Years

•              Machinery: 10-30 Years

•              Other equipment:  5 Years

•              Transportation equipment: 5 Years

 

Maintenance or repairs are charged to expenses as incurred. Upon sale or disposition, the historically recorded asset cost and accumulated depreciation are removed from the accounts and the net amount less proceeds from disposal is charged or credited to other income/expenses.

 

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Construction in process

 

Yulong Pump purchased three levels of real property in a commercial building, and the total acquisition cost of the purchase is recorded as construction in process.

 

Land use rights

 

All land in the PRC is owned by the government. However, the grants “land use rights”.The Company acquired land use rights in 1998 for a total of $126,000 (RMB 799,000). The land use rights are for 50 years and expire in 2048. The Company amortizes the land use rights over the fifty-year term. The amortization expense for the three months ended March 31, 2014 and 2013 are $655 and $642, respectively.

 

Impairment of long-lived assets

 

Yulong Pump evaluates long-lived assets for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate their net book value may not be recoverable. When these events occur, we compare the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, and based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. There can be no assurance however, that market conditions will not change or demand for the Yulong Pump’s products will continue. Either of these could result in the future impairment of long-lived assets.

 

Income taxes

 

Yulong Pump hasimplemented certain provisions of ASC 740, Income Taxes (“ASC 740”), which clarifies the accounting and disclosure for uncertain tax positions, as defined. ASC 740 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. Yulong Pump adopted the provisions of ASC 740 and have analyzed filing positions in each PRC jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. Yulong Pump has identified the PRC as its “major” tax jurisdiction. The PRC tax law provides a (3-5 years) statute of limitation and Yulong Pump`sincome tax returns are subject to examination by tax authorities during that period. All penalties and interest are expensed as incurred. For the three months ended March 31, 2014 and 2013, there were no penalties and interest..

 

Yulong Pump believes that its income tax positions and deductions will be sustained by an audit and do not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. In addition, Yulong Pump did not record a cumulative effect adjustment. Related to the adoption of ASC 740. Yulong Pump`spolicy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes.

 

Yulong Pump`stax provision for interim periods is determined using an estimate of our annual effective tax rate based on rates established within the PRC and, adjusted for discrete items, if any, that are taken into account in the relevant period.  Each quarter Yulong Pump updates its estimate of the annual effective tax rate, and if its estimated tax rate changes, Yulong Pump makes a cumulative adjustment.

 

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Comprehensive loss

 

Comprehensive loss is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, ASC 220, Comprehensive Income requires that all items are required to be recognized under current accounting standards as components of comprehensive loss be reported in a financial statement that is displayed with the same prominence as other financial statements. For the periods presented, the Yulong Pump`scomprehensive loss includes net loss and foreign currency translation adjustments and is presented in the statements of operations and comprehensive loss.

 

Going concern

 

Yulong Pump has sustained operating losses of $2,909,569 since inception.  The company’s continuation as a going concern is dependent on management’s ability to develop profitable operations, and / or obtain additional financing from its stockholders and / or other third parties.

 

The accompanying financial statements have been prepared assuming that Yulong Pump will continue as a going concern; however, the above conditions raise substantial doubt about the company’s ability to do so.  The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should Yulong Pump be unable to continue as a going concern.

 

DESCRIPTION OF PROPERTIES

 

Our business office is located at Unit 10 & 11, 26^th Floor, Lippo Center, Tower 2, 89 Queensway Admiralty, Hong Kong.  This facility is provided to us free of charge by our Chairman and Director, John Gong.

On August 5, 2013 Yulong Pump entered into Real Estate Sales Contracts (Lease Agreements) with Wulateqianqi Hua Yuan Real Estate Limited Company pursuant to which Yulong Pump acquired the land use rights, expiring on September 15, 2080, to the third, fourth and fifth floors of a 6 story commercial building under development and located in Wulanteqianqi, Mongolia, China.  The leasehold area of the property is approximately 143,106 square feet.  Yulong pump paid RMB 1,888,355,325 (approximately USD $30,782,044) in consideration of the land use rights.  The property is under construction with completion anticipated by Spring of 2015  The Wulateqianqi property was subsequently allocated to the joint venture between Million Place and Yulong Pump pursuant to the Joint Venture Agreement dated May 22, 2014.  Million Place is therefore responsible for the administration and management of the property and entitled to receive 49% of the joint venture proceeds.  We plan to lease the property following completion of construction and have identified a potential tenant to occupy the entire space.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT  

 

The following table sets forth, as of July 31, 2014, certain information with respect to the beneficial ownership of our common shares by each shareholder known by us to be the beneficial owner of more than 5% of our common shares, as well as by each of our current directors and executive officers as a group. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.

 

 

 

 

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Changes in Control

We are unaware of any contract or other arrangement or provisions of our Articles or Bylaws the operation of which may at a subsequent date result in a change of control of our company. There are not any provisions in our Articles or Bylaws, the operation of which would delay, defer, or prevent a change in control of our company.

DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

The following individuals serve as the directors and executive officers of our company as of the date of this annual report. All directors of our company hold office until the next annual meeting of our shareholders or until their successors have been elected and qualified. The executive officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office.

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Business Experience

 

The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.

 

Gong Chin Ong(John Gong) – Chairman and Director

  

John Gong was appointed as or president, chief executive officer, chief financial officer, secretary, treasurer and director on September 24, 2012.  On November 30, 2012 he resigned as president, chief executive officer, chief financial officer, secretary, treasurer and was appointed as chairman.  Mr. John Gong has worked for several major financial institutions, including Citibank, N.A. Singapore, where he was an Investment Manager in the investment advisory and investment management unit, Peregrine Investment Holdings, UBS, (as an Associate Director), Merrill Lynch International Bank (as a Vice President) and Head of Investments at Allied Capital Management.  He was employed upon graduation as a Management Associate at Citibank in 1988, where he was responsible for asset allocation and strategic investment input to the banks’ Investment Policy Committee. He started the Asian Discretionary Portfolio for Citibank clients (AD) which invest funds in the Asian equity markets. Besides being involved in managing the funds and advising clients on various investments and mergers / acquisitions, he has also written several articles on the economic and investment environment for Asia, on behalf of the bank in its Monthly Economic Review, and other publications for use by the bank's relationship managers and clients. The Singapore newspaper, Straits Times, has quoted some of his views and comments.  He is active in raising funds for companies from large private equity investors and through the International Capital Markets and is advisor to several large multinational and publicly-listed companies in South East Asia, and USA. He has also a strong relationship with major global private equity firms, investment banks, and securities lawyers, accountants, and other investment securities service providers.  Mr. Gong graduated from Washington State University, Washington, U.S.A., in 1986 with a Bachelor of Business Administration degree, with a concentration in Finance at the age of 19. He has been a guest speaker at the National University of Singapore. Mr Gong qualified as a Chartered Financial Analyst (CFA) in 1992, and is a Life Member of the American Association of Individual Investors (USA), Life member of Computerized Investing (USA), and was a Member of Association of Investment Management Research, and Member of Institute of Chartered Financial Analysts.  We appointed Mr. Gong as an officer and director of our company because of his experience and success with capital raising and investment banking, given the critical aspect of capital raising for startup companies.

 

 

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Qin Xiu Shan – President and Director

Qin Xiu Shan was appointed as president of our company on November 22, 2012 and as a director of our board of directors on March 18, 2014.  Mr. Qin is a native of Inner Mongolia, Han and is also an engineer by traning. Mr. Qin graduated from the Renmin University of China in 1993, and earned his MBA in 1998. He has worked as senior management for numerous large enterprises, and has over 20 years of industrial investment and management experience.  Currently, Mr. Qin serves as the Chairman and Executive Director of the Inner Mongolia YuLong Pump Co., Ltd., Hohhot Deason Boiler Manufacturers Limited, and Shenzhen Financial Harbour Investment Guarantee Co., Ltd.  Mr. Qin Xiu Shan is an outstanding private entrepreneur in Inner Mongolia, China. His subordinates and the enterprises under his management, have won several awards from the Government and relevant organizations.  We appointed Mr. Qin because of his extensive business experience and knowledge of the boiler industry in China, the local laws and the investing environment.

 

Yang Chin Leong (Simon Yang) – Chief Financial Officer, Treasure and Directorr

 

Simon Yang was appointed as chief financial officer, secretary and treasurer of our company on November 22, 2012.  On March 18, 2014 Mr. Yang resigned as secretary and was appointed a director of our board of directors.  Mr. Yang graduated from University of Otago, New Zealand and was admitted into New Zealand Society of Accountants in 1981 as an Associate Chartered Accountant. Mr. Yang spent the first three years of his career in a professional accounting firm and thereafter was in the finance functions in commercial business sectors.  Mr. Yang worked with Barr Burgess & Stewart (affiliate firm of then Coopers & Lybrand) for three years after graduation in New Zealand and moved back to Singapore in 1980 where he worked for a short period with European Standards Electronics (now known as Thomson Multi Media) as an accountant and then joined the Member firm of SIMEX, Sin Huat Bullion Pte. Ltd. (a founding member firm of the predecessor to SIMEX;GES, the Gold Exchange of Singapore) as its Administration and Finance Manager . This was followed by being the Internal Audit/Manager as well as Director of Operations for subsidiary companies of Tuan Sing Limited and serving as company Director of the subsidiary companies in Malaysia.  Simon Yang then joined American multi-national telecommunication company AT&T Consumer Products as its Methods/Audit Manager initially and was later reassigned to the finance department as its Accounting Manager.  Mr. Yang left to join NatSteel Electronics as Finance and Administration Director and moved on to the investment holding company of NatSteel Limited, NatSteel Technology Limited, as its Chief Financial Officer. Subsequently he left to join WyWy Creative Lifestyle (a joint venture firm between Singapore Technology Group and WyWy Group) as its Chief Operating Officer running family lifestyle business.  After a long professional career Mr. Yang left to pursue his own interests.  He was appointed as an officer and director of our company for his knowledge of accounting rules and regulations, corporate governance, internal control and experience in financial management for a large corporation and public companies.

Hogan Zhang –   Secretary 

Hogan Zhang  is in an investment analyst and associate with investment experience in several industries including the financial institutions group, real estate, gaming and natural resources. He also has corporate finance and investment banking experience with BNP Parabis where he was an analyst in equity capital markets (2011), Aktis Capital Limited where he was a private equity analyst (2012).  Mr. Zhang currently works with G Capital Limited as a private equity associate and with Asia Capital Resources Holdings as a private equity associate.  Mr. Zhang holds a BSc. from the Chinese University of Hong Kong.  We appointed Mr. Zhang as secretary because they believe his corporate finance and equity market knowledge and experience will be an asset to our company.

Family Relationships

There are no family relationships between any of our directors, executive officers and proposed directors or executive officers.

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Involvement in Certain Legal Proceedings

 

To the best of our knowledge, none of our directors or executive officers has, during the past ten years:

 

 

Conflicts of Interest  

 

There are no conflicts of interest. Further, we have not established any policies to deal with possible future conflicts of interest.

 

Audit Committee Financial Expert

  

We do not have an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive. Further, because we have no operations, at the present time, we believe the services of a financial expert are not warranted.

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Audit Committee and Charter

 

We have a separately-designated audit committee of the board. Audit committee functions are performed by our board of directors. None of our directors are deemed independent. All directors also hold positions as our officers. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee. Our audit committee charter was attached as an exhibit to our annual report filed on Form 10-K with the Securities and Exchange Commission on September 12, 2012.

 

Code of Ethics

 

We adopted a Code of Ethics applicable to all of our directors, officers, employees and consultants, which is a “code of ethics” as defined by applicable rules of the SEC. Our Code of Ethics was attached as an exhibit to our annual report filed on Form 10-K with the Securities and Exchange Commission on September 12, 2012. If we make any amendments to our Code of Ethics other than technical, administrative, or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of our Code of Ethics to our president, chief executive officer, chief financial officer, or certain other finance executives, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies in a Current Report on Form 8-K filed with the SEC.

 

We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request. Requests may be sent in writing to: Asia Pacific Boiler Corporation, Unit 10 & 11, 26^th Floor, Lippo Centre Tower 2, 89 Queensway Admiralty, Hong Kong.

  

Disclosure Committee and Charter

  

We have a disclosure committee and disclosure committee charter. Our disclosure committee is comprised of all of our officers and directors. The purpose of the committee is to provide assistance to the President, Chief Executive Officer and the Chief Financial Officer in fulfilling their responsibilities regarding the identification and disclosure of material information about us and the accuracy, completeness and timeliness of our financial reports. Our disclosure committee charter was attached as an exhibit to our annual report filed on Form 10-K with the Securities and Exchange Commission on September 12, 2012

  

Section 16(a) of the Securities Exchange Act of 1934

Our common stock is not registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, our officers, directors, and principal stockholders are not subject to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act.

EXECUTIVE COMPENSATION

The particulars of the compensation paid to the following persons:

 

(a)     our principal executive officer;

(b)     our principal financial officer;

(c)     each of our three most highly compensated executive officers who were serving as executive officers at the end of the years ended June 30, 2013 and 2012; and

(d)     up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended June 30, 2013 and 2012,

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who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:

  

(1)     John Gong was appointed as or president, chief executive officer, chief financial officer, secretary, treasurer and director on September 24, 2012.  On November 30, 2012 he resigned as president, chief executive officer, chief financial officer, secretary, treasurer and was appointed as chairman.

(2)     Qin Xiu Shan was appointed as president of our company on November 22, 2012 and as director on March 18, 2014.

(3)     Simon Yang was appointed as chief financial officer, secretary and treasurer of our company on November 22, 2012. On March 18, 2014 he resigned as secretary and was appointed a director.

  

Narrative Disclosure to Summary Compensation Table

  

There are no employment contracts, compensatory plans or arrangements, including payments to be received from our company with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with our company, or its subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of our company.

 

Stock Option Plan

  

Currently, we do not have a stock option plan in favor of any director, officer, consultant or employee of our company.

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Stock Options/SAR Grants

  

During our fiscal year ended June 30, 2013 there were no options granted to our named officers or directors.

   

Outstanding Equity Awards at Fiscal Year End

   

No equity awards were outstanding as of the year ended June 30, 2013.

   

Compensation of Directors

  

We do not have any agreements for compensating our directors for their services in their capacity as directors, although such directors are expected in the future to receive stock options to purchase shares of our common stock as awarded by our board of directors.

  

We have determined that none of our directors are independent directors, as that term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(15) of the NASDAQ Marketplace Rules.

  

Pension, Retirement or Similar Benefit Plans

  

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.

 

Long-Term Incentive Plan Awards

 

We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.

 

Indebtedness of Directors, Senior Officers, Executive Officers and Other Management

  

None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years, is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.

 

Indemnification

 

Under our Articles of Incorporation and Bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.

 

Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Transactions with Related Persons of Our Company

No director, executive officer, shareholder holding at least 5% of shares of our common stock, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the year ended June 30, 2013, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the last three completed fiscal years.

Promoters and Certain Control Persons

We did not have any promoters at any time during the past five fiscal years.  

Director Independence

We currently act with three directors, consisting of John Gong, Simon Yang and Qin Xiu Shan. We have determined that none of our directors is an “independent director” as defined in NASDAQ Marketplace Rule 4200(a)(15).

We do not have a standing audit, compensation or nominating committee, but our entire board of directors acts in such capacities. We believe that our members of our board of directors are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The board of directors of our company does not believe that it is necessary to have an audit committee because we believe that the functions of an audit committee can be adequately performed by the board of directors. In addition, we believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development.

LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business.  However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business.  Except as set forth below, we are currently not aware of any such legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition or operating results. 

MARKET PRICE AND DIVIDENDS ON OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

In the United States, our common shares are quoted on the Over-the-Counter Bulletin Board under the symbol “PADR.” The following quotations, obtained from Stockwatch, reflect the high and low bids for our common shares based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

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The high and low bid prices of our common stock for the periods indicated below are as follows:

 

(1)     Over-the-counter market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions.

(2)     Our common shares began trading on the Over-the-Counter Bulletin Board on June 26, 2012.

  

Our transfer agent is Quicksilver Stock Transfer, 6623 Las Vegas Blvd. South, #255 Las Vegas, Nevada 89119, telephone: (702) 629-1883; fax: (702) 562-9791.

Holders

As of August 5, 2014 there were 44 holders of record of our common stock. As of such date, 39,300,000 shares of our common stock were issued and outstanding.

 

Dividends

 

We have not declared any cash dividends, nor do we intend to do so. We are not subject to any legal restrictions respecting the payment of dividends, except that they may not be paid to render us insolvent. Dividend policy will be based on our cash resources and needs and it is anticipated that all available cash will be needed for our operations in the foreseeable future.

Equity Compensation Plans

We do not have in effect any compensation plans under which our equity securities are authorized for issuance and we do not have any outstanding stock options.

Purchases of Equity Securities by the Company

We did not purchase any of our shares of common stock or other securities during our fourth quarter of our fiscal year ended June 30, 2013.

RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED SECURITIES

  

We did not sell any equity securities which were not registered under the Securities Act during the year ended June 30, 2013 that were not otherwise disclosed on our quarterly reports on Form 10-Q or our current reports on Form 8-K filed during the year ended June 30, 2013.

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DESCRIPTION OF SECURITIES

Common Stock

We are authorized to issue up to 400,000,000 shares of common stock, par value of $0.00001 per share, and 100,000,000 shares of preferred stock, par value of $0.00001. Each outstanding share of common stock entitles the holder thereof to one vote per share on all matters. Our bylaws provide that any vacancy occurring in the board of directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the board of directors. Stockholders do not have pre-emptive rights to purchase shares in any future issuance of our common stock.

The holders of shares of our common stock are entitled to dividends out of funds legally available when and as declared by our board of directors. Our board of directors has never declared a dividend and does not anticipate declaring a dividend in the foreseeable future. Should we decide in the future to pay dividends, as a holding company, our ability to do so and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiary and other holdings and investments. In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to receive, rateably, the net assets available to stockholders after payment of all creditors.

All of the issued and outstanding shares of our common stock are duly authorized, validly issued, fully paid and non-assessable. To the extent that additional shares of our common stock are issued, the relative interests of existing stockholders will be diluted.

Anti-takeover Effects of Our Articles of Incorporation and By-laws  

Our amended and restated articles of incorporation and bylaws contain certain provisions that may have anti-takeover effects, making it more difficult for or preventing a third party from acquiring control of the Company or changing its board of directors and management. According to our bylaws and articles of incorporation, neither the holders of the Company’s common stock nor the holders of the Company's preferred stock have cumulative voting rights in the election of our directors. The combination of the present ownership by a few stockholders of a significant portion of the Company's issued and outstanding common stock and lack of cumulative voting makes it more difficult for other stockholders to replace the Company's board of directors or for a third party to obtain control of the Company by replacing its board of directors.

Anti-takeover Effects of Nevada Law

Business Combinations

The “business combination” provisions of Sections 78.411 to 78.444, inclusive, of the Nevada Revised Statutes, or NRS, prohibit a Nevada corporation with at least 200 stockholders from engaging in various “combination” transactions with any interested stockholder: for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the transaction is approved by the board of directors prior to the date the interested stockholder obtained such status; or after the expiration of the three-year period, unless:

• the transaction is approved by the board of directors or a majority of the voting power held by disinterested stockholders, or

• if the consideration to be paid by the interested stockholder is at least equal to the highest of: (a) the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination or in the transaction in which it became an interested stockholder, whichever is higher, (b) the market value per share of common stock on the date of announcement of the combination and the date the interested stockholder acquired the shares, whichever is higher, or (c) for holders of preferred stock, the highest liquidation value of the preferred stock, if it is higher.

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A “combination” is defined to include mergers or consolidations or any sale, lease exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions, with an "interested stockholder" having: (a) an aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation, (b) an aggregate market value equal to 5% or more of the aggregate market value of all outstanding shares of the corporation, or (c) 10% or more of the earning power or net income of the corporation.

In general, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years, did own) 10% or more of a corporation's voting stock. The statute could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts to acquire our company even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price.

Control Share Acquisitions

The “control share” provisions of Sections 78.378 to 78.3793, inclusive, of the NRS, which apply only to Nevada corporations with at least 200 stockholders, including at least 100 stockholders of record who are Nevada residents, and which conduct business directly or indirectly in Nevada, prohibit an acquirer, under certain circumstances, from voting its shares of a target corporation's stock after crossing certain ownership threshold percentages, unless the acquirer obtains approval of the target corporation's disinterested stockholders. The statute specifies three thresholds: one-fifth or more but less than one-third, one-third but less than a majority, and a majority or more, of the outstanding voting power. Once an acquirer crosses one of the above thresholds, those shares in an offer or acquisition and acquired within 90 days thereof become “control shares” and such control shares are deprived of the right to vote until disinterested stockholders restore the right. These provisions also provide that if control shares are accorded full voting rights and the acquiring person has acquired a majority or more of all voting power, all other stockholders who do not vote in favor of authorizing voting rights to the control shares are entitled to demand payment for the fair value of their shares in accordance with statutory procedures established for dissenters’ rights.

Transfer Agent And Registrar

 

Our independent stock transfer agent is Quicksilve Stock Transfer, 6623 Las Vegas Blvd. South #225 Las Vegas, Nevada 89119, telephone (702) 629-1883; fax (702) 562-9791. 

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 78.138 of the NRS provides that a director or officer will not be individually liable unless it is proven that (i) the director's or officer's acts or omissions constituted a breach of his or her fiduciary duties, and (ii) such breach involved intentional misconduct, fraud or a knowing violation of the law.

Section 78.7502 of NRS permits a company to indemnify its directors and officers against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with a threatened, pending or completed action, suit or proceeding if the officer or director (i) is not liable pursuant to NRS 78.138 or (ii) acted in good faith and in a manner the officer or director reasonably believed to be in or not opposed to the best interests of the corporation and, if a criminal action or proceeding, had no reasonable cause to believe the conduct of the officer or director was unlawful.

Section 78.751 of NRS permits a Nevada company to indemnify its officers and directors against expenses incurred by them in defending a civil or criminal action, suit or proceeding as they are incurred and in advance of final disposition thereof, upon receipt of an undertaking by or on behalf of the officer or director to repay the amount if it is ultimately determined by a court of competent jurisdiction that such officer or director is not entitled to be indemnified by the company. Section 78.751 of NRS further permits the company to grant its directors and officers additional rights of indemnification under its articles of incorporation or bylaws or otherwise.

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Section 78.752 of NRS provides that a Nevada company may purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee or agent of the company, or is or was serving at the request of the company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out of his status as such, whether or not the company has the authority to indemnify him against such liability and expenses.

Our Articles of Incorporation provide that no director or officer of the Company will be personally liable to the Company or any of its stockholders for damages for breach of fiduciary duty as a director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer (i) for acts or omissions which involve intentional misconduct, fraud or knowing violation of law, or (ii) the payment of dividends in violation of Section 78.300 of NRS. In addition, our bylaws permit for the indemnification and insurance provisions in Chapter 78 of the NRS.

Insofar as indemnification by us for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling the company pursuant to provisions of our articles of incorporation and bylaws, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification by such director, officer or controlling person of us in the successful defense of any action, suit or proceeding is asserted by such director, officer or controlling person in connection with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

At the present time, there is no pending litigation or proceeding involving a director, officer, employee or other agent of ours in which indemnification would be required or permitted. We are not aware of any threatened litigation or proceeding, which may result in a claim for such indemnification.

Further, in the normal course of business, we have in our contracts indemnification clauses, written as either mutual where each party will indemnify, defend, and hold each other harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain parties; or single where we have agreed to hold certain parties harmless against losses etc.  We have entered into indemnification agreements with two of our officers and all directors, and our bylaws contain similar indemnification obligations to our agents. Remaining officers will be required to signed indemnification agreements in the near future.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 5.06

CHANGE IN SHELL COMPANY STATUS

As a result of the consummation of the Share Exchange described in Item 2.01 of this Current Report on Form 8-K, we believe that we are no longer a “shell company”, as that term is defined in Rule 405 under the Securities Act and Rule 12b-2 under the Exchange Act.

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ITEM 9.01

FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements of Business Acquired

Filed herewith are:

• Audited financial statements of Million Place Investments Ltd. for the years ended December 31, 2013 and December 31, 2012.
• Unaudited financial statements of Million Place Investments Ltd. for the period ended March 31, 2014.
• Audited financial statements of Inner Mongolia Yulong Pump and Boiler Production Company Limited for the years ended December 31, 2013 and December 31, 2012.
• Unaudited financial statements of Inner Mongolia Yulong Pump and Boiler Production Company Limited for the period ended March 31, 2014.
• Pro-forma financials for the acquisition of Million Place Investments Ltd.

 

 

 

 

 

 

 

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 (d) Exhibits

 

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: August 29, 2014

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Directors and Stockholders of

Million Place Investments Limited.

 

We have audited the balance sheets of Million Place Investment Limited as of December 31, 2013 and 2012 and the related statements of operations and comprehensive loss, stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits 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 audits include consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,  assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012 and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

 

The financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the financial statements, the Company has incurred an accumulated deficit of $86,953 from inception to December 31, 2013. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this matter are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/Anton & Chia, LLP

August 8, 2014

Newport Beach, CA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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___________________________________________________________________________________________________________

MILLION PLACE INVESTMENTS LIMITED

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements

 

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__________________________________________________________________________________

MILLION PLACE INVESTMENTS LIMITED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements

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__________________________________________________________________________________

MILLION PLACE INVESTMENTS LIMITED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are as integral part of these financial statements

 

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_________________________________________________________________________________

MILLION PLACE INVESTMENTS LIMITED

STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements

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_____________________________________________________________________________

MILLION PLACE INVESTMENTS LIMITED

NOTES TO FINANCIAL STATEMENTS

 

NOTE 1 – BUSINESS ORGANISATION AND DESCRIPTION

 

Million Place Investment Limited (the “company”, “we”, or “us”) was incorporated on April 30, 2012 under the laws of the British Virgin Island (BVI) to engage in any lawful corporate undertaking, including but not limited to mergers and acquisitions.

 

On December 1, 2012, the company purchased from Mr. Gong Chin Ong, the President and CEO of the Company, 14.7 million shares at RMB 1.00 per ordinary share in the share capital of this company, Messrs Inner Mongolia Yulong Pump Production Company Limited (Yulong Pump) thus acquiring an equity interest of 49% into Yulong Pump.

 

On July xx, 2014, we entered into and closed a share exchange agreement with Million Place Investments Ltd. and the shareholders of Million Place.  Pursuant to the terms of the share exchange agreement, we agreed to acquire all 10,000 of the issued and outstanding shares of Million Place’s common stock in exchange for the issuance by our company of 7,500,000 shares of our common stock to the shareholders of Million Place.  As a result of the acquisition, Million Place became our wholly owned subsidiary and we have adopted its business.

 

NOTES 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The accompanying financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). The financial statements and notes are representations of management.

 

The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods.

 

Use of estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Concentration of risks

 

Inner Mongolia Yulong Pump Production Company Limited transacts all of its business in Renminbi (“RMB”), which is not freely convertible into foreign currencies. All foreign exchange transactions continue to take place either through the People’s Bank of China (the “PBOC”) or other banks authorised to buy and sell foreign currencies at the exchange rates quoted by PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts. The value of the RMB is subject to change as a result of central government policies and international economic and political developments affecting supply and demand in the PRC foreign trading system market.

 

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Foreign currency exchange rate risk

 

Starting July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. The depreciation of the U.S. dollar against RMB was approximately 2.38% and 2.55% during the years 2012 and 2013 respectively. While the international reaction to the RMB appreciation has generally been positive, there remains significant international pressure to the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the RMB against the U.S. dollar.

 

Foreign currency translation

 

The reporting currency is the U.S. dollars. The functional currency of our major investment in Inner Mongolia Yulong Pump Production Company Limited is in RMB.

 

Cash and cash equivalent

 

Cash and cash equivalents include all cash, deposits in banks and other highly liquid investments with initial maturities of three months or less. As of December 31 2013, and 2012, the company does not have any cash or cash equivalents.

 

Going concern

The accompanying financial statements have been prepared assuming that we will continue as a going concern.  We have not generated any revenue, have suffered losses from investment since our inception and have an accumulated deficit of $86,953 as of December 31, 2013.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary should we be unable to continue our existence.

 The company’s continuation as going concern is dependent on management’s ability to develop profitable operations and /or obtain additional financing from its stockholders and /or other third parties.

Investments

 

The Company has a 49% interest in Yulong Pump, a pump and boiler production company in Inner Mongolia. We use the equity method to account for investments in Inner Mongolia Yulong Pump and Boiler Production Company Limited; accordingly, the results of operations of Yulong Pump are included in equity in earnings of equity method investees on the Company’s statements of operation. Our net income includes the Company’s proportionate share of the net income or loss of Yulong Pump. Our judgment regarding the level of influence over each equity method investment includes considering key factors such as our ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions.

 

The  carrying value of the Company’s investment  in Inner Mongolia Yulong Pump Production Company Limited is stated at historical cost of  RMB 14,700,000 ($2,227,273 USD) less its share of loss for Yulong Pump of amount US$86,953 from inception to December 31, 2013.

 

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Income Taxes

 

We have implemented provisions of ASC 740, Income Taxes (“ASC740”), which clarifies the accounting and disclosure for uncertain positions, as defined. ASC 740 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. Deferred tax assets and liabilities are recognized for the future consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. We adopted the provisions of ASC 740 and have analysed filing positions in each of the jurisdiction where we are required to file income tax returns, as well as all open tax years in these jurisdictions. We have identified the BVI as our “major” tax jurisdiction. Generally we remain subject to BVI examinations of our income tax returns annually.

 

We believe that our income tax filing positions and deductions will be sustained by an audit and do not anticipate any adjustments that will result in a material change to our financial position. Therefore no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. In addition, we did not record a cumulative effect adjustment related to adoption of ASC 740. Our policy for recording interest and penalties is to record such items as a component of income taxes.

 

NOTE 3 – RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUNCEMENTS

 

The Company adopted ASU No.2011-04,”Amendments To Achieve Common Fair Value Management and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”) of Fair Value Management-Topic 820 (ASU 2-11-04)” ASU 2011-04 represents the converged guidance of the Financial Accounting Standards Board (“FASB”) and the International  Accounting Standards Board (“IASB”) on fair value measurement. A variety of measures are included in the update intended to either clarify existing fair value measurement requirements ,change particular principles requirements for measuring fair value or for disclosing information about fair value measurements. For many of the requirements, the FASB does not intend to change the application of existing requirements under Accounting Standards Codification (“ASC”) Topic 820. Fair Value Measurements ASU 2011-04 was effective for interim and annual periods beginning after December 31 2011. The adoption of this update did not have a material impact on the financial statements and related disclosures.

 

In February 2013, the FASB issued Accounting Standards Update (“ASU”) 2013-02 “Comprehensive Income (Topic 220)”. Under the amendments in this update, an entity that reports the existence of accumulated other comprehensive income must report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income, and cross-reference other disclosures if the reclassification is to the balance sheet. The amendments are effective prospectively for reporting periods beginning after December 15, 2013. The adoption of ASU 2013-02 by the Company did not have a material impact on the Company’s financial statements.

 

In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders' equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 during the years ended December 31, 2013 and 2012, thereby no longer presenting or disclosing any information required by Topic 915. 

 

NOTE 4 - INVESTMENT

 

The carrying value for the Company’s investment  in Inner Mongolia Yulong Pump Production Company Limited is stated at historical cost of  $2,227,273 less its share of loss for Yulong Pump of amount $70,974 and $9,400 for the years ended December 31, 2013 and 2012, respectively.

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NOTE 5 – SHAREHOLDERS’ EQUITY

 

As of December 31, 2013, the Company has authorized to issue a maximum of 50,000 shares of one class with a par value of US $1.00 each.

 

As of December 31, 2013 and 2012, the Company has 10,000 shares issued and outstanding.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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MILLION PLACE INVESTMENTS LIMITED

FINANCIAL STATEMENTS

For The Three Months Ended March 31, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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___________________________________________________________________________

MILLION PLACE INVESTMENT LIMITED

 

INDEX TO FINANCIAL STATEMENTS

  

 

Balance Sheet as at March 31, 2014 (Unaudited) and December 31, 2013                                                             

 

Statements of Operations For The Three Months Ended March 31, 2014 and 2013 (Unaudited)                  

 

Statements of Cash Flows For The Three Months Ended March 31, 2014 and 2013 (Unaudited)                                                                                           

 

Notes to Unaudited Financial Statements                                                                                    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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The accompanying notes are an integral part of these financial statements

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______________________________________________________________________

MILLION PLACE INVESTMENTS LIMITED

                                                                                                                                                   

 

                                                                                                                                             

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements

 

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___________________________________________________________________________

MILLION PLACE INVESTMENTS LIMITED

STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2014 and 2013

Unaudited
___________________________________________________________________________ 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements

 

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NOTE 1 – BUSINESS ORGANISATIONAND DESCRIPTION

 

Million Place Investment Limited (the “company”, “we”, or “us”) was incorporated on April 30, 2012 under the laws of the British Virgin Island (BVI) to engage in any lawful corporate undertaking, including but not limited to mergers and acquisitions.

 

On December 1, 2012, the company acquired an equity interest of 49% of Inner Mongolia Yulong Pump Production Company Limited (“Yulong Pump”) by making an investment of $2,227,273 (RMB 14,700,000)

 

Further on February 14, 2014, the company signed a Letter Of Intent (LOI) with Asia Pacific Boilers Corp, an US listed, OTCBB to sell all of its 49% shareholding in Inner Mongolia Yulong Pump Production Company Limited to Asia Pacific Boilers Corp.

 

NOTES 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The accompanying financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”)

 

The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods.

 

Use of estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Concentration of risks

 

Inner Mongolia Yulong Pump Production Company Limited transacts all its business in Renminbi (“RMB”), which is not freely convertible into foreign currencies. All foreign exchange transactions continue to take place either through the People’s Bank of China (the “PBOC”) or other banks authorised to buy and sell foreign currencies at the exchange rates quoted by PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices , shipping documents and signed contracts. The value of the RMB is subject to change as a result of central government policies and international economic and political developments affecting supply and demand in the PRC foreign trading system market.

 

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Foreign currency exchange rate risk

 

Starting July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. The depreciation of the U.S. dollar against RmMB was approximately 4.53%, 2.38% and 2.55% during the years 2011, 2012, and 2013, respectively. While the international reaction to the RMB appreciation has generally been positive, there remains significant international pressure to the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the RMB against the U.S. dollar.

 

Foreign currency translation

 

The reporting currency is the U.S. dollars. The functional currency of our major investment in Inner Mongolia Yulong Pump Production Company Limited is in RMB.

 

Cash and cash equivalent

 

Cash and cash equivalents include all cash, deposits in banks and other highly liquid investments with initial maturities of three months or less. As of March 31, 2014 and December 31, 2013, the Company does not have any cash or cash equivalents.

 

Going concern

 

The accompanying financial statements have been prepared assuming that we will continue as a going concern. We have not generated any revenue, have suffered losses from investment since our inception and have an accumulated deficit of $90,897 as of March 31, 2014. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or classifications of liabilities that might be necessary should we be unable to continue our existence.

 

The Company’s continuation as a going concern is dependent on management’s ability to develop profitable operations and/or obtain additional financing from its stockholders and/or other third parties.

 

Investments

 

The Company has a 49% interest in Yulong Pump, a pump and boiler production company in Inner Mongolia since December 1, 2012. We use the equity method to account for investments in Yulong Pump; accordingly, the results of operations of Yulong Pump are included in equity in earnings of equity method investees on the Company’s statements of operation. Our results of operations include the Company’s proportionate share of the net income or loss of Yulong Pump. Our judgment regarding the level of influence over each equity method investment includes considering key factors such as our ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions.

 

As of March 31, 2014. the carrying value of the Company’s investment in Yulong Pump amounted to $2,143,833 which equals historical cost of $2,227,273 (RMB 14,700,000) less its share of loss for Yulong Pump of amount $83,440 from inception to March 31, 2014..

 

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Recently Issued Accounting Pronouncements

 

In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders' equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 during the quarter ended March 31, 2014, thereby no longer presenting or disclosing any information required by Topic 915.

 

NOTE 3 – INVESTMENT

 

As of March 31, 2014. the carrying value of the Company’s investment in Yulong Pump amounted to $2,143,833 which equals historical cost of $2,227,273 (RMB 14,700,000) less its share of loss for Yulong Pump of amount $83,440 from inception to March 31, 2014.

 

NOTE 4 – SHAREHOLDERS’ EQUITY

 

As of March 31, 2014, the Company has authorized to issue a maximum of 50,000 shares of one class with a par value of US $1.00 each.

 

As of March 31, 2014, the Company has 10,000 shares issued and outstanding.

 

 

 

 

 

 

 

 

 

 

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Inner Mongolia Yulong Pump and boiler PRODuCTION COMPANY LIMITED

FINANCIAL STATEMENTS

 

December 31, 2013 and 2012

 

 

 

 

 

 

 

 

 

 

 

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index to financial statements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Directors and Stockholders of

Inner Mongolia Yulong Pump & Boiler Production Company Limited.

 

We have audited the balance sheets of Inner Mongolia Yulong Pump & Boiler Production Company Limited (the “Company”) as of December 31, 2013 and 2012 and the related statements of operations and comprehensive loss, stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits 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 audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in 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 include examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012 and the result of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

 

The financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the financial statements, the Company has incurred an accumulated deficit of $2,903,311 from inception to December 31, 2013. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this matter are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/Anton & Chia, LLP

August 8, 2014

Newport Beach, CA

 

 

 

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The accompanying notes are an integral part of these financial statements

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The accompanying notes are an integral part of these financial statements

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The accompanying notes are an integral part of these financial statements

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NOTE 1 – BUSINESS Organization and description

 

Inner Mongolia Yulong Pump & Boiler Production Company Limited (the "Company," “We,” or “Us.”)  was incorporated on 6^th  October 1998 under the laws of the Peoples Republic Of China to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions.

 

In 2008, the Company transformed itself from a local resident China company to a foreign joint venture company with Million Place Investment Limited of the British Virgin Islands (“BVI”). As a result, the Company has become an entity with the status of a foreign joint venture company with registered capital of Rmb 30 million, which consists of 30 million shares of authorized, issued and outstanding voting common stock with a par value of Rmb 1.0 per share.

 

Further in 2013, the Company applied to the Foreign Investment Committee of Inner Mongolia Autonomous Region to raise the registered capital from RMB 30 million to RMB 600 million. This was approved in November 2013. During the year 2013, the Company already raised RMB 188,355,325 ($31,114,083 USD) as a contribution to the Company from Mr. Qin, the President and CEO.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The accompanying financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”).

 

The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods.

 

Use of estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Concentrations of risks

 

Credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, trade receivables and advances to suppliers. As of December 31, 2013 and December 31^st 2012, with respect to trade receivables and advances to suppliers, the Company extends credit based on evaluations of the customers' and suppliers' financial position and business history with the Company. The Company generally is required to make advances to supplier

 

Currency convertibility risk

 

Inner Mongolia Yulong Pump & Boiler Production Company Limited transacts all of its business in Renminbi (“RMB”), which is not freely convertible into foreign currencies. All foreign exchange transactions continue to take place either through the People’s Bank of China (the “PBOC”) or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts. The value of the RMB is subject to change as a result of central government policies and international economic and political developments affecting supply and demand in the PRC foreign exchange trading system market.

 

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Foreign currency exchange rate risk

Starting July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. The depreciation of the U.S. dollar against RMB was approximately 2.38% and 2.55% during the years 2012 and 2013, respectively. While the international reaction to the RMB appreciation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the RMB against the U.S. dollar.

 

Foreign currency translation and other comprehensive income

 

The reporting currency of the company is the US dollar. The Company uses the local currency, Renminbi (RMB), as its functional currency. Assets and liabilities are translated at the unified exchange rate as quoted by the Peoples’ Bank of China at the end of the period. The statement of operations accounts are translated at the average translation rates and the equity accounts are translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

 

Translation adjustments included in the accumulated other comprehensive income amounted to $408,674 and $13,876 as of December 31 2013 and 2012, respectively. The balance sheet amounts, with the exception of equity at December 31 2013 and 2012 were translated at 6.2 RMB and 6.31 RMB to $1 USD, respectively. Cash flows are also translated at average translation rates for the periods, therefore, amounts reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

 

The PRC government imposes significant restrictions on fund transfer out of PRC that are not related to business operations. These restrictions have not had a material impact on the Company because it has not engaged in any significant transactions that are subject to the restrictions.

 

Financial instruments

 

The accounting standards regarding fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by the Company.

 

The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures. The three levels are defined as follow:

·         Level 1- inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

·         Level 2- inputs to the valuation methodology include quote price for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

·         Level 3- inputs to the valuation methodology are unobservable and significant to the fair value.

 

The Company considers the carrying amount of cash, accounts receivable, other receivables, accounts payable and accrued liabilities, to approximate their fair values because of the short period of time between the origination of such instruments and their expected realization. For short term loans and other payables, the Company concluded the carrying values are a reasonable estimate of fair values because of the short period of time between the origination and repayment and as their stated interest rates approximate current rates available.

 

Cash and cash equivalents

 

Cash and cash equivalents include all cash, deposits in banks and other highly liquid maturities of three months or less. As of December 31, 2013, and 2012, all of our cash was denominated in RMB and was partially held on hand. RMB is not freely convertible into foreign currencies and the remittance of these funds out of PRC is subject to exchange control restrictions imposed by the PRC government. As of December 31 2013 and 2012, the Company did not have any cash equivalents.

 

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Inventory

 

Inventory is stated at the lower of cost or market. Cost is determined on a weighted average basis. The Company estimates net realizable value based on intended use, current market value and inventory aging analysis. The Company writes down the inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of the inventory and the estimated market value based upon assumptions about the future demand and market conditions. 

 

Construction in process

 

The Company purchased three levels of real property in a building, and the total acquisition cost of the purchase recorded as construction in process.

 

Plant and equipment

 

Plant and equipment are stated at cost less accumulated depreciation. Cost represents the purchase price of the assets and other costs incurred to bring the asset into its existing use. Depreciation is provided on a straight line basis over the assets’ estimated useful lives with no salvage value. The useful lives are as follows:

·         Building and improvements: 10-40 Years

·         Machinery:10-30 Years

·         Other equipment: 5 Years

·         Transportation equipment: 5 Years

 

Maintenance or repairs are charged to expenses as incurred. Upon sale or disposition, the historically recorded asset cost and accumulated depreciation are removed from the accounts and the net amount less proceeds from disposal is charged or credited to other income/expenses.

 

Land use rights

 

All land in the PRC is owned by the government. However, the grants “land use rights “. The Company acquired land use rights in 1998 for a total of $131,985 (RMB 799,000). The land use rights are for 50 years and expire in 2048. The Company amortizes the land use rights over the fifty-year term.

 

Impairment of long-lived assets

 

We evaluate long-lived assets for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate their net book value may not be recoverable. When these events occur, we compare the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. There can be no assurance, however, that market conditions will not change or demand for the Company’s products will continue. Either of these could result in the future impairment of long-lived assets.

 

Revenue recognition

 

Sales revenue is recognized at the date of shipment to customers when formal arrangement exists, the price is fixed or determinable, the delivery is completed, the Company has no other significant obligations and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are recorded as customer deposits. Sales revenue represents the invoiced value of goods, net of value-added tax (VAT).All of the Company’s products sold in the PRC are subject to a Chinese value-added tax at a rate of 14% or 17% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing the finished goods.

 

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Allowance for sales returns

 

On a case-by-case basis, we accept returns of products from our customers, without restocking charges, when they can demonstrate an acceptable cause for the return. Requests by a distributor to return products purchased for its own inventory generally are not included under this policy. We will, on a case-by-case basis, accept returns for products upon payment for a restocking fee, which is generally 10% of the net sales price. We will not accept returns of any products that were special-ordered by a customer or that otherwise are not generally included in our inventory. There was no allowance for sales returns reserved at December 31, 2013 and 2012.

 

Cost of revenue

 

Cost of revenue consists primarily of the purchase price of pump products and content sold by us, inbound shipping charges, and packing supplies. Shipping charges to receive products from our suppliers are included in inventory cost, and recognized as “cost of revenue” upon the sale of products to our customers. Payment processing and related transaction costs including those associated with seller transactions are classified in “selling expenses” on our consolidated statements of operations. Any write downs of inventory to lower of cost or market value are also recorded in cost of revenue.

 

Income taxes

 

We have implemented certain provisions of ASC 740, Income Taxes (“ASC 740”), which clarifies the accounting and disclosure for uncertain tax positions, as defined. ASC 740 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. We adopted the provisions of ASC 740 and have analyzed filing positions in each PRC jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. We have identified the PRC as our “major” tax jurisdiction. Generally, we remain subject to PRC examination of our income tax returns annually.

 

We believe that our income tax positions and deductions will be sustained by an audit and do not anticipate any adjustments that will result in a material change to our financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. In addition, we did not record a cumulative effect adjustment, related to the adoption of ASC 740. Our policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes.

 

Comprehensive loss

 

Comprehensive loss is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, SC 220, Comprehensive Income requires that all items are required to be recognized under current accounting standards as components of comprehensive loss are reported in a financial statement that is displayed with the same prominence as other financial statements. For the periods presented, the Company’s comprehensive loss includes net loss and foreign currency translation adjustments and is presented in the statements of operations and comprehensive loss.

 

Going concern

 

The Company has sustained accumulative loss of $2,903,311 since inception. The Company’s continuation as a going concern is dependent on management’s ability to develop profitable operations, and/or obtain additional financing from its stockholders and/or other third parties. However, there is no assurance of such development or additional funding being available.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

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NOTE 3 – RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUCEMENTS

 

In July 2013, the FASB issued Accounting Standards Update (“ASU”) 2013-11 “Income Taxes (Topic 740). The objective of the amendments in this Update is to eliminate the diversity in practice relative to financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amendments are effective prospectively for reporting periods beginning after December 15, 2013.  The Company does not believe the adoption of ASU 2013-011 will have a material impact on the Company’s financial statements.

 

In March 2013, the FASB issued Accounting Standards Update (“ASU”) 2013-05 “Foreign Currency Matters (Topic 830). The objective of the amendments in this Update is to resolve the diversity in practice about whether Subtopic 810-10, Consolidation-Overall, or Subtopic 830-30, Foreign Currency Matters, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. The amendments are effective prospectively for reporting periods beginning after December 15, 2013.  The Company does not believe the adoption of ASU 2013-02 will have a material impact on the Company’s financial statements.         

 

In February 2013, the FASB issued Accounting Standards Update (“ASU”) 2013-02 “Comprehensive Income (Topic 220)”. Under the amendments in this update, an entity that reports the existence of accumulated other comprehensive income must report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income, and cross-reference other disclosures if the reclassification is to the balance sheet. The amendments are effective prospectively for reporting periods beginning after December 15, 2013.  The adoption of ASU 2013-02 by the Company did not have a material impact on the Company’s financial statements.         

 

In July 2012, the FASB issued Accounting Standards Update (“ASU”) 2012-02 “Intangibles-Goodwill and Other (Topic 350) Testing Goodwill for Impairment”. Under the amendments in this Update, an entity has the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with Subtopic 350-30. An entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. An entity will be able to resume performing the qualitative assessment in any subsequent period. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption of ASU 2012-02 by the Company did not have a material impact on the Company’s financial statements.

 

In December 2011, the FASB issued Accounting Standards Update (“ASU") 2011-11 “Balance Sheet (Topic 210) Disclosures about Offsetting Assets and Liabilities”. The amendments in this Update require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. This guidance is effective for interim and annual periods beginning after January 1, 2013. The adoption of ASU 2011-08 by the Company did not have a material impact on the Company’s financial statements.

 

NOTE 4 – INVENTORY, NET

 

Inventory consisted of the following at December 31:

 

 

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NOTE 5 – PLANT AND EQUIPMENT, NET

 

Plant and equipment consisted of the following at December 31:

 

  

Depreciation expenses for the years ended December 31, 2013 and 2012 were $17,340 and 16,905, respectively.

 

NOTE 6 – LAND USE RIGHTS, NET

 

Land use rights as of December 31, 2013 and 2012 amounted to $131,985 and $126,482, net of accumulated amortization of $41,795 and $37,523.

 

Amortization expenses for the years ended December 31, 2013 and December 31, 2012 were $2,640 and $2,528, respectively.

 

The Company has used 50 years as the useful life in compliance with the rule of the land use right in China published on May 19, 1990 (the twentieth rule), which 50 years for industrial uses.

 

NOTE 7 – STOCKHOLDERS’ EQUITY

 

The Company is an entity with status of foreign joint venture company with a registered capital of RMB 30 million, which consisted of 30 million shares of authorized, issued and outstanding voting common stock with a par value of RMB 1.0 per share. As of December 31, 2013 and 2012, the registered capital was fully paid-in.

 

As of December 31, 2013, Mr. Qin, the president and CEO of the Company has contributed additional capital of RMB 188,355,325 ($30,782,044USD) to purchase three levels of property in a building for future operating use; the property is recorded as construction in process.

 

NOTE 8 – RELATED PARTY TRANSACTIONS

 

a) Related party

 

b) The Company had the following related party transactions at December 31:

 

 

NOTE 9– INCOME TAXES

 

People’s Republic of China

 

The Company is subject to PRC tax laws. Prior to January 1, 2008, PRC enterprise income tax (“EIT”) was generally assessed at the rate of 33% of taxable income. In March 2007, a new enterprise income tax law (the “New EIT Law”) in the PRC was enacted which was effective on January 1, 2008. The New EIT Law generally applies a uniform 25% EIT rate to both foreign invested enterprises and domestic enterprises.

 

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NOTE 10 – CAPITAL COMMITMENT

 

To further prepare for the major expansion plan to construct a new boiler and pump production factories, the company had applied to the Foreign Investment Committee of Inner Mongolia Autonomous Region to increase its paid in capital from RMB 30 million to RMB 600 million. This application was granted and approved on November 27, 2013.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Inner Mongolia Yulong Pump PRODuCTION Company Limited

FINANCIAL STATEMENTS

For the Period Ended

March 31, 2014

 

index to financial statements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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The accompanying notes are an integral part of these financial statements

 

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The accompanying notes are an integral part of these financial statements

 

 

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The accompanying notes are an integral part of these financial statements

 

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NOTE 1 – BUSINESS Organization and description

 

Inner Mongolia Yulong Pump Production Company Limited (the "Company," “We,” or “Us.”)  was incorporated on  October 6, 1998, under the laws of the Peoples Republic Of China to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions.

 

In 2008, the Company transformed itself from a local resident China company to a foreign joint venture company with Million Place Investment Limited of the British Virgin Islands (“BVI”). As a result, the Company has become an entity with the status of a foreign joint venture company with registered capital of RMB 30 million, which consists of 30 million shares of authorized, issued and outstanding voting common stock with a par value of RMB 1.0 per share (USD $0.13946 per share).

 

Further during the year, the Company applied to the Foreign Investment Committee of Inner Mongolia Autonomous Region to raise the registered capital from RMB 30 million to RMB 600 million. This was approved in November 2013, but has not been fully implemented as of March 31, 2014, the Company has received additional capital of RMB 30,782,044 for their property purchase as of March 31, 2014.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The accompanying financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”).

 

The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods.

 

Use of estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Concentrations of risks

 

Credit risk

 

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, trade receivables and advances to suppliers. As of March 31, 2014 and December 31, 2013, with respect to trade receivables and advances to suppliers, the Company extends credit based on evaluations of the customers' and suppliers' financial position and business history with the Company. The Company generally is required to make advances to suppliers.

 

Currency convertibility risk

 

Inner Mongolia Yulong Pump Production Company Limited transacts all of its business in Renminbi (“RMB”), which is not freely convertible into foreign currencies. All foreign exchange transactions continue to take place either through the People’s Bank of China (the “PBOC”) or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts. The value of the RMB is subject to change as a result of central government policies and international economic and political developments affecting supply and demand in the PRC foreign exchange trading system market.

 

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Foreign currency exchange rate risk

 

Starting July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. The depreciation of the U.S. dollar against RMB was approximately 4.53%, 2.38%, and 6.05% during the years 2011, 2012, and 2013, respectively. While the international reaction to the RMB appreciation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the RMB against the U.S. dollar.

 

Foreign currency translation and other comprehensive income

 

The reporting currency of the company is the US dollar. The Company uses the local currency, Renminbi (RMB), as its functional currency. Assets and liabilities are translated at the unified exchange rate as quoted by the Peoples’ Bank of China at the end of the period. The statement of operations accounts are translated at the average translation rates and the equity accounts are translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

 

Translation adjustments included in the accumulated other comprehensive income amounted to $(859,887) and $(587,563) for the three months ended March 31, 2014 and 2013, respectively. The balance sheet amounts, with the exception of equity at March 31, 2014 and December 31, 2013, were translated at 6.2 RMB and 6.31 RMB to $1.00 USD respectively. Cash flows are also translated at average translation rates for the periods, therefore, amounts reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

 

The PRC government imposes significant restrictions on fund transfer out of PRC that are not related to business operations. These restrictions have not had a material impact on the Company because it has not engaged in any significant transactions that are subject to the restrictions.

 

Cash and cash equivalents

 

Cash and cash equivalents include all cash, deposits in banks and other highly liquid maturities of three months or less. As of March 31, 2014, all of our cash was denominated in RMB and was partially held on hand. RMB is not freely convertible into foreign currencies and the remittance of these funds out of PRC is subject to exchange control restrictions imposed by the PRC government. As of March 31, 2014, and December 31, 2013, the Company did not have any cash equivalents.

 

Inventory

 

Inventory is stated at the lower of cost or market. Cost is determined on a weighted average basis. The Company estimates net realizable value based on intended use, current market value and inventory aging analysis. The Company writes down the inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of the inventory and the estimated market value based upon assumptions about the future demand and market conditions. The amount presented in the accompanying balance sheet is $204,765 and $210,268 at March 31, 2014 and December 31, 2013 respectively.

 

Plant and equipment

 

Plant and equipment are stated at cost less accumulated depreciation. Cost represents the purchase price of the assets and other costs incurred to bring the asset into its existing use. Depreciation is provided on a straight line basis over the assets’ estimated useful lives with no salvage value. The useful lives are as follows:

 

·         Building and improvements:  10-40 Years

·         Machinery: 10-30 Years

·         Other equipment:  5 Years

·         Transportation equipment: 5 Years

 

Maintenance or repairs are charged to expenses as incurred. Upon sale or disposition, the historically recorded asset cost and accumulated depreciation are removed from the accounts and the net amount less proceeds from disposal is charged or credited to other income/expenses.

 

 

 

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Construction in process

 

The Company purchased three levels of real property in a commercial building, and the total acquisition cost of the purchase is recorded as construction in process.

 

Land use rights

 

All land in the PRC is owned by the government. However, the grants “land use rights “. The Company acquired land use rights in 1998 for a total of $126,000 (RMB 799,000). The land use rights are for 50 years and expire in 2048. The Company amortizes the land use rights over the fifty-year term. The amortization expense for the three months ended March 31, 2014 and 2013 are $655 and $642, respectively.

 

Impairment of long-lived assets

 

We evaluate long-lived assets for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate their net book value may not be recoverable. When these events occur, we compare the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, and based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. There can be no assurance however, that market conditions will not change or demand for the Company’s products will continue. Either of these could result in the future impairment of long-lived assets.

 

Income taxes

 

We have implemented certain provisions of ASC 740, Income Taxes (“ASC 740”), which clarifies the accounting and disclosure for uncertain tax positions, as defined. ASC 740 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. We adopted the provisions of ASC 740 and have analyzed filing positions in each PRC jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. We have identified the PRC as our “major” tax jurisdiction. the PRC tax law provides a (3-5 years) statute of limitation and the Company’s income tax returns are subject to examination by tax authorities during that period. All penalties and interest are expensed as incurred. For the three months ended March 31, 2014 and 2013, there were no penalties and interest..

 

We believe that our income tax positions and deductions will be sustained by an audit and do not anticipate any adjustments that will result in a material change to our financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. In addition, we did not record a cumulative effect adjustment. Related to the adoption of ASC 740. Our policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes.

 

Our tax provision for interim periods is determined using an estimate of our annual effective tax rate based on rates established within the PRC and, adjusted for discrete items, if any, that are taken into account in the relevant period.  Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.

 

Comprehensive loss

 

Comprehensive loss is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, ASC 220, Comprehensive Income requires that all items are required to be recognized under current accounting standards as components of comprehensive loss be reported in a financial statement that is displayed with the same prominence as other financial statements. For the periods presented, the Company’s comprehensive loss includes net loss and foreign currency translation adjustments and is presented in the statements of operations and comprehensive loss.

 

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Going concern

 

The Company has sustained operating losses of $2,909,569 since inception.  The Company’s continuation as a going concern is dependent on management’s ability to develop profitable operations, and / or obtain additional financing from its stockholders and / or other third parties.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern; however, the above conditions raise substantial doubt about the Company’s ability to do so.  The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

 

NOTE 3 – RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUCEMENTS

 

In July 2013, the FASB issued Accounting Standards Update (“ASU”) 2013-11 “Income Taxes (Topic 740). The objective of the amendments in this Update is to eliminate the diversity in practice relative to financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amendments are effective prospectively for reporting periods beginning after December 15, 2013. The Company does not believe the adoption of ASU 2013-011 will have a material impact on the Company’s financial statements.

 

In March 2013, the FASB issued Accounting Standards Update (“ASU”) 2013-05 “Foreign Currency Matters (Topic 830). The objective of the amendments in this Update is to resolve the diversity in practice about whether Subtopic 810-10, Consolidation-Overall, or Subtopic 830-30, Foreign Currency Matters, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. The amendments are effective prospectively for reporting periods beginning after December 15, 2013. The Company does not believe the adoption of ASU 2013-02 will have a material impact on the Company’s financial statements.

 

In February 2013, the FASB issued Accounting Standards Update (“ASU”) 2013-02 “Comprehensive Income (Topic 220)”. Under the amendments in this update, an entity that reports the existence of accumulated other comprehensive income must report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income, and cross-reference other disclosures if the reclassification is to the balance sheet. The amendments are effective prospectively for reporting periods beginning after December 15, 2013. The adoption of ASU 2013-02 by the Company did not have a material impact on the Company’s financial statements.

 

In June 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-10 “Development Stage Entities (Topic 915)”. The objective of the amendments in this update is to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements for development stage entities. Users of financial statements of development stage entities told the Board that the development stage entity distinction, the inception-to-date information, and certain other disclosures currently required under U.S. GAAP in the financial statements of development stage entities provide information that has limited relevance and is generally not decision useful. As a result, the amendments in this update remove all incremental financial reporting requirements from US GAAP for development stage entities, thereby improving financial reporting by eliminating the cost and complexity associated with providing that information. The amendments are effective for annual reporting periods beginning after December 15, 2014, and interim reporting periods beginning after December 15, 2015. Early adoption is allowed, the adoption of ASU 2014-10 did not have a material impact on the Company’s financial statements.

 

NOTE 4 – INVENTORY, NET

 

Inventory consisted of the following at March 31:

 

 

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NOTE 5 – FIXED ASSETS, NET

 

Fixed assets consisted of the following at March 31:

 

 

The depreciation for the three months ended March 31, 2014 and 2013 was $4,378 and $4,295 respectively. 

 

NOTE 6 – STOCKHOLDERS’ EQUITY

 

Prior to the financial closing on December 31, 2012, the company increased its paid in capital from 12,000,000 ordinary shares at RMB 1.00 each to 30,000,000 ordinary shares at RMB 1.00 (USD $0.13946) as additional working capital.

 

Further, during the year ended December 31, 2013, the Company has received additional paid in capital for a total amount of 188,355,325 RMB (USD $30,782,044) for the purchase of three level of properties in a commercial building, which recorded as construction in process as of March 31, 2013 and December 31, 2013.

 

NOTE 7– RELATED PARTY TRANSACTION

 

a) Related parties

 

 

b) The Company had the following related party transactions at December 31:

 

             

 

NOTE 8– INCOME TAXES

 

People’s Republic of China

 

The Company is subject to PRC tax laws. Prior to January 1, 2008, PRC enterprise income tax (“EIT”) was generally assessed at the rate of 33% of taxable income. In March 2007, a new enterprise income tax law (the “New EIT Law”) in the PRC was enacted which was effective on January 1, 2008. The New EIT Law generally applies a uniform 25% EIT rate to both foreign invested enterprises and domestic enterprises.

 

NOTE 9 – CAPITAL COMMITMENT

 

To further prepare for the major expansion plan to construct a new boiler and pump production factories, the company had applied to the Foreign Investment Committee of Inner Mongolia Autonomous Region to increase its paid in capital from RMB 30 million to RMB 600 million (approximately $96,500,000 USD). This application was granted and approved on November 27, 2013.

 

NOTE 10 – SUBSEQUENT EVENT

 

PENDING……

 

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Pro Forma

 

The following tables present the unaudited pro-forma financial results, as if the reverse merger had been completed as of March 31, 2014, December 31, 2013, and December 31, 2012. The unaudited pro-forma balance sheets and results of operations are presented for information purposes only. The unaudited pro-forma balance sheets and results of operations are not intended to present actual results that would have been attained had the reverse merger been completed as of March 31, 2014, December 31, 2013 and December 31, 2012 or to project potential operating results as of any future date or for any future periods.

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