UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q/A

Amendment No. 1

 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2014

 

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the transition period from ______________ to ______________

 

Commission File Number 333-161997

 

XIANGTIAN (USA) AIR POWER CO., LTD.

(Exact name of registrant as specified in its charter)

 

DELAWARE	98-0632932
(State or other jurisdiction of	(IRS Employer Identification No.)
Incorporation or organization)

 

Unit 602 Causeway Bay CommBldg 1

 Sugar Street, Causeway Bay

Hong Kong, People’s Republic of China

(Address of principal executive offices)

 

86 10 859 10 261

(Registrant’s telephone number)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No x

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

 

Indicate the number of outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: The registrant had 258,000,000 shares of common stock, $0.001 par value outstanding at March 13, 2014. The registrant has no other class of common equity.

 

 

Explanatory Note

 

Xiangtian (USA) Air Power Co., Ltd(together with its subsidiaries, the “Company” sometimes referred to as “we”, “us” or “our”) is filing this amendment (this “Amendment” or “Form 10-Q/A”) to its Quarterly Report on Form 10-Q for the period ended January 31, 2014, originally filed on March 17, 2014 (the “Original Form 10-Q”) to reflect the restatement of its consolidated financial statements for the period ended January 31, 2014 and 2013, and Period From September 2, 2008 (inception) to January 31, 2014, and related disclosures described below. The restatement of the Original Form 10-Q reflected in this Amendment corrects error principally related to our omission of a subsidiary in the consolidated financial statements. Concurrently with the filing of this Amendment, we are also filing an amendment to our Annual Report on Form 10-K for the fiscal year ended July 31, 2013, as well as Quarterly Report on Form 10-Q for the first and third fiscal quarters in the fiscal year ended July 31, 2014 to reflect the restatement of our consolidated financial statements as of and for the fiscal year and two fiscal quarters, which reflects the correction of the same type of error with respect to such period. Original Form 10-Q as listed in “Items Amended by this Filing” below, as a result of the restatement of our financial statements.

 

Background of Restatement

As previously disclosed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on July 29, 2014, the board of directors of the Company, based on the recommendation of the consultants and in consultation with management and the Company’s independent registered public accounting firm Jimmy P. Lee, CPA, P.C., concluded that, because of errors identified in the Company’s previously issued financial statements for the fiscal year ended July 31, 2013 and the first three quarter of fiscal 2014, the Company would restate its previously issued financial statements of these periods.

 

The errors were discovered by the Company’s consultants during the course of the preparation of the Annual Report for the fiscal year ended July 31, 2014 that: 1) one of the Company’s wholly owned subsidiary, Luck Sky Holdings Limited (“Luck Sky Holdings”) which was incorporated on June 26, 2013, was not consolidated into the Company’s consolidated financial statements. There was no operation under this subsidiary since its incorporation which led to negligence by the Company during its consolidation process and financial statement preparation. Consequently, the Company determined to correct the accounting treatment by consolidating Luck Sky Holdings in accordance with ASC 810 Consolidation; 2) one of the Company’s wholly owned subsidiary, Luck Sky (Hong Kong) Shares Limited (“HK Shares”) which was incorporated on September 24, 2013, was overstated. There were limited operations under this subsidiary since its incorporation, besides, because of its poor accounting quality, the financials were overstated since its incorporation. Consequently, the Company determined to correct the accounting treatment to make sure the financials were booked properly and fairly. The corrections are reflected in the restated consolidated financial statements contained in this Form 10-Q/A.

 

Items Amended by this Filing

 

This Amendment reflects the results of the work described above and includes the restatement of our consolidated financial statements for the fiscal period ended January 31, 2014. For the convenience of the reader, this Amendment sets forth the Original Form 10-Q, as modified and superseded where necessary to reflect the restatement and other related adjustments, and as otherwise specifically indicated. Specifically, the following items included in the Original Form 10-Qare amended by this Amendment:

 

•

Part I, Item 1, Financial Statements

 

•

Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

 

The correction of the errors described above is further discussed in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Other than this Amendment, the 10-K Amendment of the fiscal year 2013, and the 10-Q Amendment for the first and third quarters of the fiscal year 2014, we do not intend to file any other amended Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q for periods affected by the restatement, and the financial statements, related financial information, and internal controls disclosures and assessments contained in other reports for those periods should no longer be relied upon. All of our future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q will reflect the restated information included in this Amendment, the 10-K Amendment of the fiscal year 2013,and the 10-Q Amendment for the first and third quarters of the fiscal year 2014, as applicable.

 

 

TABLE OF CONTENTS

 

		Page
PART I. FINANCIAL INFORMATION		5
Item 1. Financial Statements		5
	Consolidated Balance Sheets as of January 31, 2014and July 31, 2013(Unaudited)	5
	Consolidated Statements of Operations for the Three and Six Months Ended January 31, 2014 and 2013 (Unaudited)	6
	Consolidated Statements of Cash Flows for the Three and Six Months Ended January 31, 2014 and 2013 (Unaudited)	7
	Notes to Consolidated Financial Statements (Unaudited)	8 - 13
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3. Quantitative and Qualitative Disclosures About Market Risk		16
Item 4. Controls and Procedures		16
PART II. OTHER INFORMATION		17
Item 1. Legal Proceedings		17
Item 1A. Risk Factors		17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		17
Item 3. Defaults Upon Senior Securities		17
Item 4. Mine Safety Disclosures		17
Item 5. Other Information		17
Item 6. Exhibits		17
Signatures		18

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Xiangtian (USA) Air Power Co., Ltd.

(A Development Stage Company)

Consolidated Balance Sheets

January 31,2014

 

		January 31,				July 31,
		2014 (Unaudited) (Restated)				2013 (Audited) (Restated)
ASSETS
Current assets
Cash		$	18,632			$	4,430
Total assets		$	18,632			$	4,430
LIABILITIES AND STOCKHOLDERS’ DEFICIT
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities			-				1,500
Advances from related parties			275,691				94,530
Amount due to director			2,118				1,838
Total liabilities			277,809				97,868
STOCKHOLDERS’ DEFICIT
Preferred stock: $0.001 par value, 100,000,000 shares authorized, none issued and outstanding			-				-
Common stock: $0.001 par value, 1,000,000,000 shares authorized, 258,000,000 and 8,000,000 shares issued and outstanding			258,000				8,000
Additional paid-in capital			(172,040	)			74,960
Deficit accumulated during the development stage			(345,142	)			(176,398	)
Accumulated other comprehensive income			5				-
Total stockholders’ deficit			(259,177	)			(93,438	)
Total liabilities and stockholders’ deficit		$	18,632			$	4,430

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

Xiangtian (USA) Air Power Co., Ltd.

(A Development Stage Company)

Consolidated Statements of Operations

(Unaudited)

 

		For the Three Months								For the Six								Period From  September 2,
		Months Ended								Months Ended								2008 (inception) to
		January 31,								January 31,								January 31,
		2014				2013				2014				2013				2014
		(Restated)								(Restated)								(Restated)
Operating expenses:
General and administrative		$	71,665				27,157			$	168,746				48,597			$	341,044
Loss from continuing operations			(71,665	)			(27,157	)			(168,746	)			(48,597	)			(341,044	)
Loss from discontinued operations																			(4,099	)
Net loss		$	(71,665	)			(27,157	)		$	(168,746	)			(48,597	)		$	(345,143	)
Net loss per common share - basic and diluted
Continuing operations		$	-				-			$	-							$	-
Discontinued operations			-				-				-								-
Total		$	-				-			$	-							$	-
Weighted average number of common shares outstanding - basic and diluted			258,000,000				8,000,000				184,630,435				8,000,000

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

Xiangtian (USA) Air Power Co., Ltd.

(A Development Stage Company)

Consolidated Statements of Cash Flows

(Unaudited)

 

										Period From
		For the Six				For the Six				Sptember2, 2008
		Months Ended				Months Ended				(inception) to
		January 31,				January 31,				January 31,
		2014				2013				2014
		(Restated)								(Restated)
Cash flows from operating activities:
Net loss			(168,746	)		$	(48,597	)		$	(345,143	)
Net loss from discontinued operation			-				-				4,099
Net loss from continuing operation, net of income taxes			(168,746	)		$	(48,597	)		$	(341,044	)
Adjustments to reconcile net loss to net cash used in operating activities:
Donated rent			3,000				3,000				10,500
Changes in operating assets and liabilities:
Prepaid expense			-				21,826				-
Accounts payable and accrued liabilities			(1,500	)			9,189				16,361
Net cash used in operating activities			(167,246	)			(14,582	)			(314,183	)
Cash flows from financing activities:
Proceeds from issuances of common stock											55,000
Advances from related parties			181,162				14,545				275,692
Amount due to director			281				-				2,118
Net cash provided by financing activities			181,443				14,545				332,810
Net change in cash			14,197				(37	)			18,627
Foreign exchange gain/(loss)			5				-				5
Cash - beginning of period from continued operations			4,430				97				-
Cash - end of period from continued operations		$	18,632			$	60			$	18,632
Discontinued operations:
Net cash used in operating activities		$	-			$				$	(10,393	)
Net cash provided by  financing activities			-								10,393
Net change in cash from discontinued operations			-
Cash - beginning of period from discontinued operations			-
Cash - end of period from discontinued operations		$	-			$	-			$
Supplemental cash flows information:
Cash paid for interest		$	-			$	-			$	-
Cash paid for income tax			-				-				-
Non-cash investing and financing transactions:
Debt forgiveness from sale of Goa Excursion		$	-			$				$	20,460

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

Xiangtian (USA) Air Power Co., Ltd.

(A Development Stage Company)

Notes to Consolidated Financial Statements

 

NOTE 1 - NATURE OF OPERATIONS

 

Xiangtian (USA) Air Power Co., Ltd. (the “Company”) was incorporated in the State of Delaware on September 2, 2008 as Goa Sweet Tours Ltd. The Company was originally formed to provide personalized concierge tour packages to tourists who visit the State of Goa, India. On April 17, 2012, the Company entered into Share Purchase Agreements, by and among, Luck Sky International Investment Holdings Limited (“Lucky Sky”), an entity owned and controlled by Zhou Deng Rong, and certain of our former stockholders who owned, in the aggregate, 7,200,000 shares of the Company’s common stock (90% of the at then outstanding shares). Luck Sky purchased all 7,200,000 shares for an aggregate of $235,000. The sale was completed on May 15, 2012.

 

On May 1, 2012, the Company sold its Indian subsidiary, Goa Excursion Private Limited (“Goa Excursion”), to Iqbal Boga for a total value of $10. Both the purchaser and the seller fully released, discharged, waived, and held harmless the subsidiary’s debts and liabilities, including related party’s debts.

 

On May 25, 2012, the Company formed a corporation under the laws of the State of Delaware called Xiangtian (USA) Air Power Co., Ltd. ("Merger Sub") and on the same day, acquired one hundred shares of Merger Sub's common stock for cash. As such, Merger Sub became a wholly-owned subsidiary of the Company.

 

Effective as of May 29, 2012, Merger Sub was merged with and into the Company. As a result of the merger, the Company’s name was changed to “Xiangtian (USA) Air Power Co., Ltd.” Prior to the merger, Merger Sub had no liabilities and nominal assets and, as a result of the merger, the separate existence of the Merger Sub ceased. The Company was the surviving corporation in the merger and, except for the name change provided for in the Agreement and Plan of Merger, there was no change in the directors, officers, capital structure or business of the Company.

 

On June 26, 2013, Luck Sky Holdings Limited was incorporated as a BVI Business Company in the British Virgin Islands, with 100% of shares being held by Xiangtian (USA) Air Power Co., Ltd. Luck Sky Holdings Limited is authorized to issue a maximum of 50,000 shares of a single class each with a par value of USD1.00, of which none are held in the form of bearer shares.

 

On September 5, 2013, the Company entered into a business combination by means of merger of LuckSky (Hong Kong) Shares Limited (“HK Shares”), a Hong Kong corporation, for 250,000,000 shares of common stock of the Company. Prior to the merger, HK Shares had no liabilities and nominal assets. On September 23, 2013, the Company issued 250,000,000 shares of common stock to the shareholders of HK Shares. Effectively on September 24, 2013, the shareholders of HK Shares accepted the shares from the Company and surrendered its control of HK Shares to the Company in exchange of 250,000,000 shares of HK Shares to be issued to its shareholders. On October 16, 2013, HK Shares completed the issuance of its 250,000,000 shares accordingly. As of the date of this report, HK Shares is a surviving, although dormant, company, and the management is expected to cancel HK Shares in October 2014.

 

The Company is a development stage company as defined by ASC 915 and since inception the Company has not generated consistent revenues and has incurred a cumulative net loss as reflected in the consolidated financial statements. The Company has minimal assets and has incurred losses since inception. The Company's limited start-up operations have consisted of the formation of the Company business plan and identification of the Company's target market.

 

 

NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. The Company’s consolidated financial statements are expressed in U.S. dollars.

 

Use of Estimates and Assumptions

 

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires 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 period. Actual results could differ from those estimates.

 

Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Lucksky (Hong Kong) Shares Limited and Luck Sky Holdings Limited. All significant intercompany balances and transactions have been eliminated in consolidation.

 

Reclassification

 

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses.

 

Discontinued Operations

 

The Company sold out its Indian subsidiary, Goa Excursion, on May 1, 2012. Goa Excursion has been reflected as discontinued operations for periods presented in the Company’s consolidated financial statements. Accordingly, the revenues, costs, expenses, assets, and liabilities of the Goa Excursion have been reported separately in the consolidated statements of operations and consolidated balance sheets for all periods presented. The results of discontinued operations do not reflect any allocation of the Company’s general and administrative expenses.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

 

General and Administrative Expense

 

The expense was related to legal and professional fees, and the payment was recorded as an amount due to entity director.

 

Income Taxes

 

A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. At January 31, 2014 and July 31, 2013, a full deferred tax asset valuation allowance has been provided and no deferred tax asset benefit has been recorded.

 

 

Foreign Currency Translation

 

The Company’s functional currency is United States (“U.S.”) dollars as substantially all of the Company’s operations use this denomination. The consolidated financial statements are presented in U.S. dollars. Foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at the exchange rates prevailing at the transaction date. Revenues and expenses are translated at average rates of exchange during the year. Gains or losses resulting from foreign currency transactions are included in results of operations.

 

Earnings (Loss) per Share

 

Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per common share gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Earnings per share exclude all potential dilutive shares of common stock if their effect is anti-dilutive. There were no potential dilutive securities outstanding during the three months ended January 31, 2014 or 2013.

 

Recent Accounting Pronouncements

 

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flows. 

 

NOTE 3 - RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended January 31, 2014, the Company did not consolidate Luck Sky Holdings Limited (“Luck Sky Holdings”), a wholly owned entity which was incorporated on June 26, 2013, into its consolidated financial statements. Luck Sky Holdings is a non-operating entity with general and administrative expenses only.

 

For the six months ended January 31, 2014, the financial of Luck Sky (Hong Kong) Shares Limited (“HK Shares”), a wholly owned entity which was incorporated on September 30, 2013, was overstated in the consolidated financial statements. HK Shares is a non-operating entity with general and administrative expenses only.

 

There were no material impacts to the statements of cash flows for the items above other than to increase operating cash flows and decrease financing cash flows for $1,540 and $3,350 for the three and six months ended January 31, 2014. The results of the adjustments to the Company’s previously filed consolidated statements of operations detailed above are summarized in the tables below. The tax effect of the adjustments is estimated based on the Company’s effective tax rate.

 

The effects of the restatement on the Company’s condensed consolidated income statement for the three months ended January 31, 2014 are as follows:

 

		For the Three Months Ended January 31, 2014
		Previously Reported				Adjustments				Restated
Operating expenses:
General and administrative		$	70,125			$	1,540			$	71,665
Loss from continuing operations			(70,125	)			(1,540	)			(71,665	)
Discontinued operations (net of taxes):
Loss from discontinued operations			-				-				-
Net loss		$	(70,125	)		$	(1,540	)		$	(71,665	)
Net loss per common share - basic and diluted
Continuing operations		$	-			$	-			$	-
Discontinued operations			-				-				-
Total		$	-			$	-			$	-
Weighted average number of common shares outstanding - basic and diluted			174,666,667				83,333,000				258,000,000

 

 

The effects of the restatement on the Company’s condensed consolidated income statement for the six months ended January 31, 2014 are as follows:

 

		For the Six Months Ended January 31, 2014
		Previously Reported				Adjustments				Restated
Operating expenses:
General and administrative		$	165,396			$	3,350			$	168,746
Loss from continuing operations			(165,396	)			(3,350	)			(168,746	)
Discontinued operations (net of taxes):
Loss from discontinued operations			-				-				-
Net loss		$	(165,396	)		$	(3,350	)		$	(168,746	)
Net loss per common share - basic and diluted
Continuing operations		$	-			$	-			$	-
Discontinued operations			-				-				-
Total		$	-			$	-			$	-
Weighted average number of common shares outstanding - basic and diluted			174,666,667				9,562,841				184,630,435

 

The effects of the restatement on the Company’s condensed consolidated income statement for the period from September 2, 2008 (Inception) to January 31, 2014 are as follows:

 

		Period from September 2, 2008 (Inception) to January 31, 2014
		Previously Reported				Adjustments				Restated
Operating expenses:
General and administrative		$	325,611			$	15,433			$	341,044
Loss from continuing operations			(325,611	)			(15,433	)			(341,044	)
Discontinued operations (net of taxes):
Loss from discontinued operations			(4,099	)			-				(4,099	)
Net loss		$	(329,710	)		$	(15,433	)		$	(345,143	)
Net loss per common share - basic and diluted
Continuing operations		$	-			$	-			$	-
Discontinued operations			-				-				-
Total		$	-			$	-			$	-

 

 

The effects of the restatement on the Company’s condensed consolidated balance sheet as of January 31, 2014 are as follows:

 

		As of January 31, 2014
		Previously Reported				Adjustments				Restated
ASSETS
Current assets
Cash		$	34,731			$	(16,099	)		$	18,632
Prepaid expense			-				-				-
Total assets			34,731				(16,099	)			18,632
LIABILITIES AND STOCKHOLDERS’ DEFICIT
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities		$	-			$	-			$	-
Advances from related parties			280,189				(4,498	)			275,691
Amount due to director			-				2,118				2,118
Total liabilities			280,189				(2,380	)			277,809
Commitments and contingencies
STOCKHOLDERS’ DEFICIT
Preferred stock: $0.001 par value, 100,000,000 shares authorized, none issued and outstanding
Common stock: $0.001 par value, 1,000,000,000 shares authorized, 258,000,000 and 8,000,000 shares issued and outstanding			258,000			$	-			$	258,000
Additional paid-in capital			(173,750	)			1,710				(172,040	)
Deficit accumulated during the development stage			(329,708	)			(15,434	)			(345,142	)
Accumulated other comprehensive income			-				5				5
Total stockholders’ deficit			(245,458	)			(13,719	)			(259,177	)
Total liabilities and stockholders’ deficit		$	34,731			$	(16,099	)		$	18,632

 

NOTE 4- GOING CONCERN

 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred losses since its inception resulting in an accumulated deficit of $345,142 as of January 31, 2014 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

 

Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and/or the private placement of the Company’s common stock.

 

NOTE 5- DISCONTINUED OPERATIONS

 

For the six months ended January 31, 2014 and 2013 and the period from September 2, 2008 (inception) to January 31, 2014, the amounts reported in loss from discontinued operations comprised operating expenses of $0, $0 and $4,099, respectively.

 

NOTE 6- RELATED PARTY TRANSACTIONS

 

From time to time, the Company receives advances from its related parties. As of January 31, 2014 and July 31, 2013, the Company had advances from related parties and director of $277,809 and $96,367, respectively, and used the funds for its operation. These advances are due on demand, unsecured and non-interest bearing.

 

NOTE 7- CAPITAL STOCK AND EQUITY TRANSACTIONS

 

Common Stock

 

The total number of common shares authorized that may be issued by the Company is 1,000,000,000 shares with a par value of $0.001 per share.

 

During the year ended July 31, 2009, the Company issued 5,000,000 shares of common stock for total cash proceeds of $25,000 to the Company’s sole director and officer.

 

During the year ended July 31, 2010, the Company sold 3,000,000 shares of common stock for total cash proceeds of $30,000.

 

Effective as of September 24, 2013, Lucksky (Hong Kong) Shares Limited was merged with and into the Company. As a result of the merger, Lucksky (Hong Kong) Shares Limited shareholders received one share of common stock for every share of Lucksky (Hong Kong) Shares Limited common stock they owned for a total of 250,000,000 shares of the Company common stock.

 

Preferred Stock

 

The total number of preferred shares authorized that may be issued by the Company is 100,000,000 shares with a par value of $0.001 per share. The preferred stock may be issued in one or more series, from time to time, with each series to have such designation, relative rights, preference or limitations, as adopted by the Company’s Board of Directors. No preferred shares have been issued.

 

Item 2.Management's Discussion and Analysis of Financial Conditions and Results of Operations.

 

Overview

 

Xiangtian (USA) Air Power Co., Ltd., was originally incorporated as Goa Sweet Tours Ltd. in the State of Delaware on September 2, 2008. We were formed to provide personalized concierge tour packages to tourists who visit the State of Goa, India.

 

 

On April 17, 2012, Goa Sweet Tours, Ltd. entered into Share Purchase Agreements (the “Purchase Agreements”), with Luck Sky International Investment Holdings Limited, an entity owned and controlled by Zhou Deng Rong, and certain of our former stockholders who owned, in the aggregate, 7,200,000 shares of our common stock (90% of the outstanding shares). Luck Sky International Investment Holdings Limited purchased such shares for an aggregate of $235,000. The sale of such shares closed on May 15, 2012.

 

On May 25, 2012, Goa Sweet Tours Ltd, formed a corporation under the laws of the State of Delaware called Xiangtian (USA) Air Power Co., Ltd. ("Merger Sub") and on the same day, acquired one hundred percent of the total outstanding shares of Merger Sub's common stock for cash. As such, Merger Sub became our wholly-owned subsidiary.

 

Effective as of May 29, 2012, Merger Sub was merged with and into the Company. As a result of the merger, the Company’s corporate name was changed to “Xiangtian (USA) Air Power Co., Ltd.” Prior to the merger, Merger Sub had no liabilities and nominal assets and, as a result of the merger, the separate existence of the Merger Sub ceased. The Company was the surviving corporation in the merger and, except for the name change provided for in the Agreement and Plan of Merger, there was no change in the directors, officers, capital structure or business of the Company.

 

On June 26, 2013, Luck Sky Holdings Limited was incorporated as a BVI Business Company in the British Virgin Islands, with 100% of shares being held by Xiangtian (USA) Air Power Co., Ltd. Luck Sky Holdings Limited is authorized to issue a maximum of 50,000 shares of a single class each with a par value of USD1.00, of which none are held in the form of bearer shares.

 

On September 5, 2013, the Company entered into a business combination by means of merger of LuckSky (Hong Kong) Shares Limited (“HK Shares”), a Hong Kong corporation, for 250,000,000 shares of common stock of the Company. Prior to the merger, HK Shares had no liabilities and nominal assets. On September 23, 2013, the Company issued 250,000,000 shares of common stock to the shareholders of HK Shares. Effectively on September 24, 2013, the shareholders of HK Shares accepted the shares from the Company and surrendered its control of HK Shares to the Company in exchange of 250,000,000 shares of HK Shares to be issued to its shareholders. On October 16, 2013, HK Shares completed the issuance of its 250,000,000 Shares accordingly. As of the date of this report, HK Shares is a surviving, although dormant, company, and the Company is expected to cancel HK Shares in October 2014.

 

We are a development stage company and since inception, we have not generated consistent revenues and have incurred a cumulative net loss as reflected in the financial statements. We have minimal assets and have incurred losses since inception. We have no employees and own no real estate or personal property. The purpose of the business is to see the acquisition of or merger with, an existing company in the air power industry or to develop such technologies and manufacturing capabilities ourselves. We are specifically seeking companies in the manufacturing, research and development of products which uses engines powered by compressed air, including transportation, electricity generation, etc. as suitable business combination candidates.

 

Restatement of Previously Issued Consolidated Financial Statements

 

As described further below and herein, this Form 10-Q/A reflects the restatement of our condensed consolidated financial statements as of and for the fiscal quarter ended January 31, 2014. The restatement reflected in this Amendment and the 2013 Form 10-K/A corrects errors principally related to our consolidation of Luck Sky Holdings, as well as the overstated financials of HK Shares. This Management’s Discussion and Analysis of Financial Condition and Results of Operations gives effect to the restatement adjustments in the fiscal quarter ended January 31, 2014. See Note 3 to our consolidated financial statements, which accompany the financial statements in Part I, Item 1 of this report, for further detail regarding the restatement adjustments. In addition, for further information regarding the matters leading to the restatement and related findings respect to our disclosure controls and procedures and internal control over financial reporting, see Part I, Item 4, “Controls and Procedures” of this Amendment.

 

 

Results of Operations

 

Revenue

 

Since inception on September 2, 2008 and for the six months ended January 31, 2014 we have not earned any revenues.  We are currently seeking business combination opportunities with companies in the air power industry or sources of capital to allow us to develop such technologies and manufacturing opportunities ourselves. We do not expect to realize any revenues until our business plan is implemented.

 

Operating Expenses

 

For the six months ended January 31, 2014, we incurred operating expenses in the amount of $168,746 compared to operating expenses of $48,597 for the six months ended January 31, 2013, an increase of 247%. The increase was substantially due to costs incurred in connection with regulatory compliance.

 

We incurred total operating expenses in the amount of $345,143 from inception on September 2, 2008 through January 31, 2014.

 

Liquidity and Capital Resources

 

As of January 31, 2014, we had a cash balance of $18,632.

 

Since inception, we have raised $55,000 through the sale of 8,000,000 shares of our common stock and received advances from related party and director of $277,809 as working capital for operation. We do not anticipate generating any revenue for the foreseeable future. No other source of capital has been identified or sought, except for advances from related parties that totaled $280,189 as of January 31, 2014. We have experienced a shortfall in operating capital.

 

Management intends to continue to finance operating costs over the next twelve months with existing cash on hand and loans from directors.

 

When additional funds become required, we expect to raise funds through equity financing from the sale of our common stock.  If we are successful in completing an equity financing, existing shareholders will experience dilution of their interest in our company. We do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our business plan. In the absence of such financing, our business will fail.

 

We anticipate to continue to incurring operating losses in the foreseeable future. We base this expectation, in part, on the fact that we are a development stage company.

 

Our future financial results are also uncertain due to a number of factors, some of which are outside our control. These risk factors are disclosed factors include, but are not limited to:

 

	·	our ability to raise additional funding;
	·	the results of our proposed operations

 

We are in dire need for injection of funds to execute our business, repay advances received and to continue meeting our reporting obligations with the SEC.

 

Going Concern Consideration

 

Our operations and financial results are subject to numerous various risks and uncertainties that could adversely affect our business, financial condition and results of operations.

 

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.

 

Forward Looking Statements

 

The information in this quarterly report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements involve risks and uncertainties, including statements regarding the Company’s capital needs, business strategy and expectations. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined from time to time, in other reports we file with the Securities and Exchange Commission (the “SEC”). These factors may cause our actual results to differ materially from any forward-looking statement. We disclaim any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

 

Item 3. Qualitative and Quantitative Disclosure about Market Risks

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

Item 4.Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

In connection with the preparation and filing of the Original Form 10-Q in March 2014, the Company’s management, including our then Chief Executive Officer and Chief Financial Officer (who subsequently resigned from the Company in July 2014) conducted an evaluation of the effectiveness of our internal control over financial reporting as of January 31, 2014 based on the framework set forth in “Internal Control—Integrated Framework (September 1992)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Based on its evaluation, the Company’s management concluded at that time that, as of January 31, 2014, the Company’s internal control over financial reporting was effective based on the COSO criteria.

 

In connection with the preparation and filing of the above-described restatement and this Form 10-Q/A, the Company’s management, including our current Chief Executive Officer and Acting Chief Financial Officer (who were not employed by the Company at the time of the filing of the Original Form 10-Q), have re-evaluated the effectiveness of our internal control over financial reporting as of January 31, 2014 and concluded that, because of the material weaknesses described below, our internal control over financial reporting was not effective as of January 31, 2014.

 

A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In connection with our management’s re-evaluation of our internal control over financial reporting described above, our management has identified the following deficiencies that it believes constituted individually, and in the aggregate, material weaknesses in our internal control over financial reporting as of January 31, 2014:

 

-

Errors occurred in our consolidation and financial reporting process. One of the Company’s wholly owned subsidiary, Luck Sky Holdings Limited (“Luck Sky Holdings”) which was incorporated on June 26, 2013, was not consolidated into the Company’s consolidated financial statements, the Company’s wholly subsidiary, Luck Sky (Hong Kong) Shares Limited (“ HK Shares”) ‘s financials were overstated.

 

 

Some or all of the material weaknesses described above resulted in material misstatements in our annual and interim consolidated financial statements. Because of the foregoing matters, our management has concluded that we did not maintain effective internal control over financial reporting as of January 31, 2014.

 

Controls and Procedures over Financial Reporting

 

Other than as described above, there have not been any changes in our internal control over financial reporting during the fiscal quarter ended January 31, 2014 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

Item 1.Legal Proceedings.

 

The Company currently is not a party to any legal proceedings and, to the Company’s knowledge; no such proceedings are threatened or contemplated.

 

Item 1A. Risk Factors

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

 

None

 

Item 3.Default Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5.Other Information.

 

None.

 

Item 6. Exhibits

 

Exhibit No.		Description
2.1		Agreement and Plan of Merger (incorporated by reference to exhibits to Current Report on 8-K filed May 29, 2012)
2.2		Amendment No. 3 to the Agreement and Plan of Merger dated as of February 24, 2014.*
3.1		Articles of Incorporation (incorporated by reference to exhibits to Registration Statement on Form S-1 filed on September 18, 2009)
3.2		Bylaws (incorporated by reference to exhibits to Registration Statement on Form S-1 filed on September 18, 2009)
3.3		Articles of Merger (incorporated by reference to exhibits to Current Report on 8-K filed May 29, 2012)
31.1 *		Certification of Principal Executive Officer pursuant to 18 U.S.C.§ 1350, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002.
31.2 *		Certification of Principal Financial Officer pursuant to 18 U.S.C.§ 1350, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002.
32.1 *		Certification of Principal Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002.
32.2 *		Certification of Principal Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

 

*  Filed herewith.

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	XIANGTIAN (USA) AIR POWER CO., LTD.
	By:	/s/ Zhiqi Zhang
	Zhiqi Zhang
	Chief Executive Officer
	(Principal Executive Officer)
	By:	/s/ Roy Thomas Phillips
	Roy Thomas Phillips
	Acting Chief Financial Officer
	(Principal Accounting Officer)
	Date: November 10, 2014