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EX-32.2 - EXHIBIT 32.2 - CHINA SHIANYUN GROUP CORP., LTD.ex322.htm
EX-31.2 - EXHIBIT 31.2 - CHINA SHIANYUN GROUP CORP., LTD.ex312.htm
EX-32.1 - EXHIBIT 32.1 - CHINA SHIANYUN GROUP CORP., LTD.ex321.htm
EX-31.1 - EXHIBIT 31.1 - CHINA SHIANYUN GROUP CORP., LTD.ex311.htm


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2015

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF T SECURITIES
EXCHANGE ACT OF 1934

Commission File No. 333-147084

CHINA SHIANYUN GROUP CORP., LTD.
(Exact name of Registrant as specified in its charter)

Nevada
83-0506099
(State or Other Jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

18/F., Development Centre Building,
South of Renmin Rd. LuoHu District, Shenzhen,
  
  
Guandong Province, China
  
n/a
(Address of principal executive offices)
  
(Zip Code)

86-755-23998799
(Registrant’s telephone number, including area code)

Indicate by check mark whether the issuer (1) 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 o

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Ruble 12b-2 of the Exchange Act.
   
Large accelerated filer o
Accelerated filer o
Non-accelerated filer  o (Do not check if a smaller reporting company)
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 o    No x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of August 11, 2015, are as follows:
   
Class of Securities
Shares Outstanding
Common Stock, $0.001 par value
776,837 shares

 
 

 

CHINA SHIANYUN GROUP CORP., LTD.



     
  
Part I – Financial Information
 
  
  
  
  
     
 
Part II – Other Information
 
     
     



INTRODUCTORY NOTE
 
Except as otherwise indicated by the context, references in this Quarterly Report on Form 10-Q (this “Form 10-Q”) to the “Company,” “China Shianyun” “we,” “us” or “our” are references to the combined business of China Shianyun Group Corp., Ltd. and its consolidated subsidiaries.  References to “Plenty Fame” are references to our wholly-owned BVI subsidiary, Plenty Fame Holding, Limited”; references to “Prospect” are references to our wholly-owned Hong Kong subsidiary, Prospect Hong Kong Development Limited; references to “Jiangxi Jien” are references to our wholly-owned PRC subsidiary, Jiangxi Jien Industries Limited.; references to “Shenzhen Jien” are to our wholly-owned PRC subsidiary, Shenzhen Jien Electronic Commerce Company Limited. References to “China” or “PRC” are references to the People’s Republic of China.  References to “BVI” are reference to British Virgin Islands. References to “Hong Kong” or “HK” are references to Hong Kong Special Administrative Region of China. References to “RMB” are to Renminbi, the legal currency of China, and all references to “$” and dollar are to the U.S. dollar, the legal currency of the United States.
 
Special Note Regarding Forward-Looking Statements
 
This report contains forward-looking statements and information that are based on the beliefs of our management as well as assumptions made by and information currently available to us.  Such statements should not be unduly relied upon.  When used in this report, forward-looking statements include, but are not limited to, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and similar expressions, as well as statements regarding new and existing products, technologies and opportunities, statements regarding market and industry segment growth and demand and acceptance of new and existing products, any projections of sales, earnings, revenue, margins or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements regarding future economic conditions or performance, uncertainties related to conducting business in China, any statements of belief or intention, and any statements or assumptions underlying any of the foregoing.  These statements reflect our current view concerning future events and are subject to risks, uncertainties and assumptions.  There are important factors that could cause actual results to vary materially from those described in this report as anticipated, estimated or expected, including, but not limited to: competition in the industry in which we operate and the impact of such competition on pricing, revenues and margins, volatility in the securities market due to the general economic downturn; Securities and Exchange Commission (the “SEC”) regulations which affect trading in the securities of “penny stocks,” and other risks and uncertainties.  Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward- looking statements, even if new information becomes available in the future.  Depending on the market for our stock and other conditional tests, a specific safe harbor under the Private Securities Litigation Reform Act of 1995 may be available.  Notwithstanding the above, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) expressly state that the safe harbor for forward-looking statements does not apply to companies that issue penny stock.  Because we may from time to time be considered to be an issuer of penny stock, the safe harbor for forward-looking statements may not apply to us at certain times.



PART I – FINANCIAL INFORMATION

CHINA SHIANYUN GROUP CORP., LTD. AND SUBSIDIARIES
 
   
June 30,
2015
   
December 31,
2014
 
   
(Unaudited)
   
(Audited)
 
Assets
           
Current assets
           
      Cash and cash equivalents
  $ 584,146     $ 35,324  
      Accounts receivable
    916,126       378,298  
      Inventories
    9,022       31,865  
Amount due from a director
    55,965          
Prepaid expenses and other receivables
    10,921       809,652  
Total current assets
    1,576,180       1,255,139  
                 
Property, plant and equipment, net
    2,122,487       2,177,348  
Land use rights, net
    94,903       95,805  
                 
Total assets
  $ 3,793,570     $ 3,528,292  
                 
Liabilities and stockholders’ equity
           
Liabilities
           
Current liabilities
 
 
       
Accounts payable
  $ 110,993     $ 111,853  
Accrued expenses and other payables
    2,314,764       2,266,692  
Receipt in advance
    292,558       465,837  
Taxes payable
    2,131,933       2,098,507  
Amount due to a director
    43,549       797,919  
                 
Total liabilities
  $ 4,893,797     $ 5,740,808  
                 
Stockholders’ equity
               
Common stock: Par value $0.001 per share; 400,000,000 shares authorized, 776,837 shares issued and outstanding
    777       777  
Additional paid in capital
    3,435,412       3,435,412  
Accumulated deficits
    (4,588,815 )     (5,699,503 )
Accumulated other comprehensive income
    52,399       50,798  
Total stockholders’ equity
  $ (1,100,227 )   $ (2,212,516 )
                 
Total liabilities and stockholders’ equity
  $ 3,793,570     $ 3,528,292  
                 

See accompanying notes to condensed consolidated financial statements


CHINA SHIANYUN GROUP CORP., LTD. AND SUBSIDIARIES
AND COMPREHENSIVE INCOME
(UNAUDITED)
 
   
For the three months
 ended June 30,
   
For the six months
ended June 30,
 
   
2015
   
2014
   
2015
   
2014
 
                         
Revenues
  $ 24,382       57,630       806,799       158,597  
                                 
Cost of sales and services
    24,382       -       528,657       -  
                                 
Selling and distribution
    5,586       40,567       11,357       59,829  
                                 
General and administrative expense (inclusive of depreciation and allowances)
    255,999       260,739       408,478       1,057,244  
                                 
Operating loss
    (261,585 )     (243,676 )     (141,693 )     (958,476 )
                                 
Other income/(expenses)
                               
Other income
    -       4,634               9,343  
Recovery of bad debt
    1,260,660       -       1,260,660       -  
Interest expense
    (8,279 )     -       (8,279 )     -  
Total other income/(expenses)
    1,252,381       4,634       1,252,381       9,343  
                                 
Income/(loss) from operations before provision for income taxes
    990,796       (239,042 )     1,110,688       (949,133 )
                                 
Provision for income taxes
    -       -       -       -  
                                 
Net income/(loss) for the period
  $ 990,796       (239,042 )     1,110,688       (949,133 )
                                 
Other comprehensive income
                               
Gain/(loss) on foreign currency translation
    4,545       (2,497 )     1,601       29,067  
                                 
Total comprehensive income/(loss) for the period
  $ 995,341       (241,539 )     1,112,289       (920,066 )
                                 
                                 
Earnings per share, basic and diluted
  $ 1.28       (0.31 )     1.43       (1.22 )
                                 
Weighted average number of shares outstanding, basic and diluted
    776,837       776,837       776,837       776,837  
 
See accompanying notes to condensed consolidated financial statements



CHINA SHIANYUN GROUP CORP., LTD. AND SUBSIDIARIES
(UNAUDITED)
 
   
Six months ended June 30,
 
   
2015
   
2014
 
             
Cash flows from operating activities
           
Net income/(loss)
  $ 1,110,688       (949,133 )
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation expense
    60,521       92,604  
Loss on disposal of property, plant and equipment
    -       41,862  
Amortization expense of land use rights
    1,018       1,024  
Amortization expense of other intangible assets
    -       4,589  
Interest income
    -       (9,343 )
Recovery of bad debt
    (1,260,660 )     -  
Changes in operating assets and liabilities:
               
Decrease in accounts receivable
    722,832       222,535  
Decrease in inventories
    22,843       (46,640 )
Decrease/(increase) in prepaid expenses and other receivables
    798,731       80,221  
(Increase)/decrease in amount due from a director
    (55,965 )     90,351  
Decrease in accounts payable
    (860 )     (3,171 )
Increase/(decrease) in accrued expenses and other payables
    48,072       (5,910 )
Decrease in receipt in advance
    (173,279 )     66,312  
Increase/(decrease) in taxes payable
    33,426       (67,565 )
                 
Net cash provided by /(used in) operating activities
  $ 1,307,367     $ (482,264 )
                 
Cash flows from investing activities
               
Additions to property, plant and equipment
  $ (3,132 )     (304 )
Proceeds from disposal of property, plant and equipment
  $ -       149,166  
                 
Net cash (used in)/provided by investing activities
  $ (3,132 )   $ 148,862  
                 
Cash flows from financing activities
               
(Decrease)/increase in amount due to a director
    (754,370 )     162,094  
                 
Net cash (used in)/provided by financing activities
  $ (754,370 )   $ 162,094  
                 
Net increase/(decrease) cash and cash equivalents
  $ 549,865     $ (171,308 )
                 
Effect of foreign exchange rate changes
  $ (1,043 )   $ 116,750  
                 
Cash and cash equivalents at January 1
  $ 35,324     $ 97,920  
                 
Cash and cash equivalents at June 30
  $ 584,146     $ 43,362  
                 
Supplement disclosure of cash flows information:
               
Cash paid for interest
  $ -     $ -  
Cash paid for income taxes
  $ -     $ -  
 
See accompanying notes to condensed consolidated financial statements


CHINA SHIANYUN GROUP CORP., LTD. AND SUBSIDIARIES
June 30, 2015


NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES

China Shianyun Group Corp., Ltd and its subsidiaries (collectively known as the “Company”) are principally engaged in the distribution of consumer goods in the People’s Republic of China (“China” or the “PRC”).

As of June 30, 2015, the details of the Company’s major subsidiaries are summarized as follows:

Name
 
Domicile and date of incorporation
 
Effective ownership
 
Principal activities
             
Jiangxi Jien Industries Limited
 (“Jiangxi Jien”)
 
The PRC
April 8, 1997
 
100%
 
Distribution of consumer goods in the PRC.
             
Shenzhen Jien Electronic Commerce Company Limited
(“Shenzhen Jien”)
 
The PRC
April 13, 2009
 
100%
 
Distribution of consumer goods in the PRC, and provision of online customer services
             

NOTE 2 – PRINCIPLES OF CONSOLIDATION

The unaudited interim financial statements of the Company and the Company’s subsidiaries (see Note 1) for the three months and six months ended June 30, 2015 and 2014 have been prepared pursuant to the rules & regulations of the SEC. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the following disclosures are adequate to make the information presented not misleading.  All significant intercompany balances and transactions have been eliminated. The functional currency for the majority of the Company’s operations is the Renminbi (“RMB”), while the reporting currency is the US Dollar.

In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the Company’s financial position as of June 30, 2015, the results of its operations and cash flows for the six months ended June 30, 2015 and 2014.

The results of operations for the three months and six months ended June 30, 2015 are not necessarily indicative of the results for a full year period.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
(a)  Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.  The Company maintains bank accounts in China and Hong Kong.

(b)  Inventories

Inventories consisting of trading goods, packing and other materials are stated at the lower of cost or net realizable value. Inventory costs are calculated using a weighted average method of accounting.

(c) Fair Value of Financial Instruments

The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, prepaid expenses and other receivables, amount due from/(to) directors, receipt in advance, debts, accounts payable, accrued expenses and other payables, and taxes payable.
 
 

The estimated fair value amounts have been determined by the Company, using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.
 
As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented, due to the short maturities of these instruments and the fact that the interest rates on the borrowings approximate those that would have been available for loans of similar remaining maturity and risk profiles at respective period ends.

(d)  Revenue Recognition

The Company generates revenues mainly from sale of consumer products and also revenue from regional distribution rights.

The Company recognizes revenue when products are delivered and customers take ownership and assume risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and selling price is fixed or determinable.

Revenues from regional distribution rights include brand usage fee and continuing management fee income. All amounts received will be initially recognized as receipt in advance, and will be recognized as revenues when the following criteria are met:

(i)  
Initial admission fee income is generally recorded upon completion of admission procedures, when the rights to use the “GEN+Me” trademarks are granted to the users, and when collectability is reasonably assured.  
(ii)  
Continuing management fee income represent regular contractual payments received for our supporting services, which are recognized as revenue when earned, generally on a straight line basis.

(e)  
Earnings Per Share

Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. As of June 30, 2015 and 2014, there were no dilutive securities outstanding.

(f) Foreign Currency Translation

The accompanying consolidated financial statements are presented in United States Dollars (US$). The functional currency of the Company is the Renminbi (RMB). Capital accounts of the consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the period.  The translation rates are as follows:

   
June 30,
2015
   
December 31,
2014
   
June 30,
2014
 
 
                 
Period/year end RMB : US$ exchange rate
    0.1611       0.1609       0.1610  
Average yearly RMB : US$ exchange rate
    0.1606       0.1620       0.1616  
                         
On July 21, 2005, the PRC changed its foreign currency exchange policy from a fixed RMB/US$ exchange rate into a flexible rate under the control of the PRC’s government.

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions.  No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

(g)  Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which is included in ASC 606, Revenue from Contracts with Customers. This ASU is a comprehensive new revenue recognition model that creates a single source of revenue guidance for all companies in all industries. The model is more principles-based than current guidance, and is primarily based on recognizing revenue at an amount that reflects consideration to which the entity expects to be entitled to in exchange for transferring goods or services to a customer. The guidance will be effective for the Company's interim and annual reporting periods beginning January 1, 2017. The standard allows the Company to transition to the new model using either a full or modified retrospective approach, and early adoption is not permitted. The Company is currently evaluating the impact this standard will have on its business practices, financial condition, results of operations, and disclosures.
 
 

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. This ASU provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments are effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company does not intend to early adopt this standard. The Company does not expect the adoption of this standard to have an impact on its financial statements.

On January 9, 2015, FASB published ASU 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The ASU applies to all entities and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company does not expect the adoption of ASU 2015-01 to have material impact on the Company's consolidated financial statement.

In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This ASU requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying value of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this ASU. The amendments in this ASU are effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. The Company does not expect the impact of adopting this ASU to be material to the Company’s financial statements and related disclosures.

In May 2015, the FASB issued ASU 2015-07, Fair Value Measurement (Topic 820), Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (ASU 2015-07), which removes the requirement to categorize within the fair value hierarchy investments for which fair value is measured using the net asset value per share practical expedient. The amendments also remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Instead, such disclosures are restricted only to investments that the entity has decided to measure using the practical expedient. This standard is effective for interim and annual periods beginning after December 15, 2015. PGE will adopt the amendments contained in ASU 2015-07 on January 1, 2016, which is not expected to have an impact on the Company’s consolidated financial position, consolidated results of operations, or consolidated cash flows.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory (ASU 2015-11), which changes the measurement principle for inventory from the lower of cost or market tolower of cost and net realizable value. Net realizable value is defined as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.” ASU 2015-11 eliminates the guidance that entities consider replacement cost or net realizable value less an approximately normal profit margin in the subsequent measurement of inventory when cost is determined on a first-in, first-out or average cost basis. The provisions of ASU 2015-11 are effective for public entities with fiscal years beginning after December 15, 2016, or January 1, 2017 for PGE, and interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of evaluating the impact to its consolidated financial position, consolidated results of operations, and consolidated cash flows of the adoption of ASU 2015-11.

The Company does not expect the adoption of these guidance to have a material impact on its consolidated financial statements.

NOTE 4 – ACCOUNTS RECEIVABLE

As of the balance sheet dates, the Company’s accounts receivable are summarized as follows:
 
 
 
   
June 30,
2015
   
December 31,
 2014
 
             
Beijing Shanghan International Trading Limited (“Beijing Shanghan”)
  $ 4,730,783     $ 5,987,925  
Others
    916,126       378,298  
Less: Allowance for doubtful accounts
    (4,730,783 )     (5,987,925 )
Total
  $ 916,126     $ 378,298  

Beijing Shanghan was a related party at initial recognition because one of its director held more than 5% of shares of issued and outstanding Common Stock during 2008 and 2009. However, during the year ended 31 December 2012, such shareholder’s holding was decreased to less than 5%. As a result, we no longer consider Beijing Shanghan as a related party for the period ended June 30, 2015.  The Company collected certain outstanding receivables amounting to $1,260,660 from Beijing Shanghan and recognized as a recovery of bad debts in other income during the period ended June 30, 2015.


NOTE 5 – PREPAID EXPENSES AND OTHER RECEIVABLES

As of the balance sheet dates, the Company’s prepaid expenses and other receivables are summarized as follows:

   
June 30,
2015
   
December 31,
 2014
 
             
Prepaid expenses– (i)
  $ -     $ 522,181  
Other receivables– (i)
    10,921       -  
Amount due from Shu Jian– (ii)
    -       287,471  
                 
Total
  $ 10,921     $ 809,652  
                 
(i)  
The Company evaluates prepaid expenses and other receivables on a periodic basis and records a charge to the current operations of the Company when the related expense has been incurred or when the amounts reported as other receivables is no longer deemed to be collectible by the Company.

(ii)  
The amount represents temporary advances to Shu Jian, an independent third party, which is unsecured and repayable within a year.


NOTE 6 – PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment of the Company consist primarily of manufacturing facilities and equipment in the PRC. As of the balance sheet dates, property, plant and equipment are summarized as follows:

 
Depreciable
lives
 
June 30,
2015
   
December 31,
 2014
 
               
At cost:
             
Plant
40 years
  $ 2,188,258     $ 2,185,541  
Machinery
15 years
    219,030       218,758  
Motor vehicle
10 years
    84,593       84,488  
Office equipment
5 years
    253,676       250,222  
Leasehold Improvement
2 years
    865,267       864,194  
        3,610,824       3,603,203  
                   
Less: Accumulated depreciation
      (1,488,337 )     (1,425,855 )
                   
Property, plant and equipment, net
    $ 2,122,487     $ 2,177,348  
                   
 
 
 
 
Depreciation expense for the six months ended June 30, 2015 and 2014 was $ 60,521 and $92,604, respectively.

Loss on disposal of property, plant and equipment for the six months ended June 30, 2015 and 2014 was nil and 41,862, respectively.

NOTE 7 – LAND USE RIGHTS, NET

The Company’s land use rights represent the cost of purchasing the rights to use the leasehold land in the PRC for the production facilities of Jiangxi Jien. According to the law of the PRC, the government owns all the land in the PRC. Companies or individuals are only authorized to possess and use the land through land use rights granted by the PRC government.

As of the balance sheet dates, the Company’s land use rights are summarized as follows:

 
Useful lives
 
June 30,
2015
   
December 31,
 2014
 
At cost:
             
Land use rights
59 – 60 years
  $ 122,484     $ 122,332  
                   
Less: Accumulated amortization
      (27,581 )     (26,527 )
                   
Land use rights, net
    $ 94,903     $ 95,805  
                   
Amortization expense of land use rights for the six months ended June 30, 2015 and 2014 was $1,018 and $1,024, respectively.

NOTE 8 – AMOUNT DUE FROM/(TO) DIRECTORS

As of the balance sheet dates, the Company’s current accounts with the directors are summarized as follows:

   
June 30,
2015
   
December 31,
 2014
 
             
             
Ye Xin Zhang
  $ 55,965       (161,446 )
                 
Chen Xing Hua
  $ (43,549 )     (636,473 )
                 

The amount due to the directors represents temporary advances from the director for the Company’s working capital use. The balance is unsecured, interest free, and has no fixed terms of repayment.

NOTE 9 – ACCRUED EXPENSES AND OTHER PAYABLES

As of the balance sheet dates, the Company’s accrued expenses and other payables are summarized as follows:

   
June 30,
2015
   
December 31,
 2014
 
             
Accrued interest expense
    274,441       274,100  
Amount due to Shenzhen Hanhong – (i)
    877,995       876,905  
Other accrual and payables – (ii)
    1,162,328       1,115,687  
    $ 2,314,764     $ 2,266,692  
                 

 
 
 
(i)  
The amount mainly represents consultancy fee payable to Shenzhen Hanhong. Shenzhen Hanhong is a related party as Mr. Chen Xing Hua is a common director of the Company and Shenzhen Hanhong. The amount is interest free, unsecured and has no fixed terms of repayment.

(ii)  
Included in other payable as of June 30, 2015, there are an amount payable for office decoration in the amount of $257,760, and an amount payable for marketing and promotional expenses of $434,993. The remaining balance consists of amounts owed by the Company to various entities that are incurred by the Company in daily business operations other than trading nature.  These liabilities and accrued operating expenses are non-interest bearing and are payable within one year.

NOTE 10 – RECEIPT IN ADVANCE

Receipt in advance mainly consists of money received from customers for regional distribution rights which are yet to be performed. Revenues from regional distribution rights include initial fees and continuing management fee income. All amounts received will be initially recognized as receipt in advance, and will be recognized as revenues when the following criteria are met:

(i)
Initial admission fee income is generally recorded upon completion of admission procedures, when the rights to use the trademarks are granted to the users, and when collectability is reasonably assured.
(ii)
Continuing management fee income represent regular contractual payments received for the use of the “GEN+Me” trademarks plus our supporting services, which is recognized as revenue when earned, generally on a straight line basis.

NOTE 11 – TAXES PAYABLE

As of the balance sheet dates, the Company’s taxes payable are summarized as follows:

   
June 30,
2015
   
December 31,
 2014
 
             
Income tax payables
  $ 343,803     $ 343,376  
Value added tax payables
    1,716,441       1,697,172  
Other tax payables
    71,689       57,959  
Total
  $ 2,131,933     $ 2,098,507  

NOTE 12– COMMON STOCK

As of the balance sheet dates, the Company has authorized 400,000,000 shares of common stock, par value $0.001 per share.   In addition, the Company has authorized 10,000,000 shares of preferred stock, none of which has been issued as of June 30, 2015.

On November 20, 2013, we effected a reverse stock split at 1:200 to reduce our issued and outstanding shares of common stock from 155,350,052 to approximately 776,837.

NOTE 13 – SEGMENT REPORTING

The Company’s reportable segments of business include sale of consumer products and regional distribution rights.  Each of these segments is conducted in a separate corporation and each functions independently of the others. The Company has no sales between segments.

Financial information of the Company’s business segments is as follows:
 
 

   
Six months ended June 30,
 
   
2015
   
2014
 
             
Revenues from:
        $    
Sale of consumer products
    806,799       -  
Regional distribution rights
    -       158,597  
      806,799       158,597  
                 
Segment profit/(loss) from:
               
Sale of consumer products
    1,350,457       (477,563 )
Regional distribution rights
    (11,357 )     (59,829 )
Corporate
    (228,412 )     (411,741 )
      1,110,688       (949,133 )
                 

NOTE 14 – PROVISION FOR INCOME TAXES

A reconciliation of the expected tax with the actual tax expense is as follows:

   
Six months ended June 30,
 
   
2015
    2014  
   
Amount
   
Amount
 
             
Profit/(loss) before provision for income taxes
  $ 1,110,688       (949,133 )
                 
Expected PRC income tax expense at statutory tax rate of 25%
    277,672       (237,283 )
Utilization of tax loss brought forward
    (277,672 )     -  
Tax losses not recognized as deferred tax assets
    -       (237,283 )
Provision for Income Taxes
  $ -     $ -  

(i)  
Both Jiangxi Jien and Shenzhen Jien are subject to PRC tax. The provision for PRC income tax is based on a statutory rate of 25% of the assessable income of the PRC subsidiaries as determined in accordance with the relevant income tax rules and regulations of the PRC.
(ii)  
The Company and other immediate holding companies did not generate any taxable income in their jurisdiction during the six months ended June 30, 2015 and 2014, respectively.

NOTE 15 – CAPITAL COMMITMENT

Capital Commitment:

As of the balance sheet dates, the Company’s capital commitment are summarized as follows:

   
June 30,
2015
   
December 31,
 2014
 
             
Construction-in-progress:
           
Contracted but not provided for
  $ 1,649,306     $ 1,647,259  

NOTE 16 – GOING CONCERN

As of June 30, 2015, the Company has accumulated deficits of $4,588,815, a negative working capital of $3,317,617. The Company may need additional cash resources to operate during the upcoming 12 months, and the continuation of the Company may be dependent upon the continuing financial support of investors, directors and/or stockholders of the Company. However, there is no assurance that equity or debt offerings will be successful in raising sufficient funds to assure the eventual profitability of the Company. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

 
This Form 10−Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of financial condition and results of operations relates to the operations and financial condition reported in the financial statements of China Shianyun Group Corp., Ltd for the periods ended June 30, 2015 and 2014 and should be read in conjunction with such financial statements and related notes included in this report and the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events.
 
Overview and Recent Developments

We are currently formulating and distributing consumer goods and acting as a service provider for building of sales platform and distribution channels in China. We enter into contracts with factories in China to produce the products with our design, formula, and standards to satisfy our customer needs and demands, and distribute those products under our registered brand names. All our registered brands have obtained nation-wide product certifications. We monitor the trends of market needs for healthy products in China and adjust our product portfolio on yearly basis. During the past fiscal year, we used general brand “GEN + ME” for our own product and used various sub brands under “GEN+ME” for our different product lines. During the period ended June 30, 2015, our top sale products include red wine using grape grown in original ecological environment in Xinjiang province, natural eggs and cured meat and noodle with extracted tomato carotenes. We sell products under our registered brand name primarily through our regional independent third-party distributors in the PRC to customers mainly in Beijing, Shandong, Zhejiang, Fujian and Guangdong Provinces. To keep up in such a competitive industry, we constantly adjust our manufacture and distribution strategies in China according to current economic conditions, consumer preference, government policy and social climate in the marketplace.

In addition to the sales of consumer products, we also grant regional distribution rights for the use of our trademarks and provide continuing support services to our distributors. Observing the potential opportunity of the huge market for online shopping in China, as a part of our new business strategies, we established the “Shianyun” online shopping platform based on our existing internet platform to develop the online-to-offline commerce, link up the online sales and offline stores and embed our internal production system and logistics management. The application of the new platform greatly optimizes our online sales and delivery system.

Recent Developments—New Business Focus

The Internet of Things, or IoT, emerged as the third wave of internet development and is gradually merging the physical and online worlds. The Internet of Things is the network of physical objects or "things" embedded with electronics, software, sensors, and connectivity to enable objects to exchange data with the manufacturer, operator and/or other connected devices based on the infrastructure of International Telecommunication Union's Global Standards Initiative.(  Source: "Internet of Things Global Standards Initiative". ITU. Retrieved 26 June 2015.)  The Internet of Things allows objects to be sensed and controlled remotely across existing network infrastructure (Source:https://hbr.org/resources/pdfs/comm/verizon/18980_HBR_Verizon_IoT_Nov_14.pdf)  creating opportunities for more direct integration between the physical world and computer-based systems, and resulting in improved efficiency, accuracy and economic benefit. (Source:http://www.internet-of-things-research.eu/pdf/Converging_Technologies_for_Smart_Environments_and_Integrated_Ecosystems_IERC_Book_Open_Access_2013.pdf;http://www.cisco.com/web/solutions/trends/iot/introduction_to_IoT_november.pdf; http://cordis.europa.eu/fp7/ict/enet/documents/publications/iot-between-the-internet-revolution.pdf; ) Each thing is uniquely identifiable through its embedded computing system but is able to interoperate within the existing Internet infrastructure. Experts estimate that the IoT will consist of almost 50 billion objects by 2020.(Source: Philip N. Howard (8 June 2015). "How big is the Internet of Things and how big will it get?". The Brookings Institution. Retrieved 26 June 2015.)

Seeing the prospect of the Chinese IoT market, during the second quarter of 2015, we concentrate all our resources on the research of IoT market and devices. We plan to develop our IoT business based on the “GEN + ME” chips and the accompanying IoT system. We are at the final stage of completing this self-driven innovation. Once new IoT system is completed, it will be connected to the internet, mobile internet and optical subnetwork, and fall across all areas of peoples’ lives, including food, smart home devices, shopping, entertainment, travelling, microfinance services, delivery and storages services, smart communities and even starting own business etc.
 
 

We expect the design of our new IoT system will be completed and distributed to the communities in the third quarter of 2015. The sales of “GEN + ME” chips and the accompanying IoT system with the related supporting services will be our core business in the future. We believe that our IoT system is the link in an evolutionary chain that began with the ability to “connect” online, developing since then to the point where people can use that connectedness to innovate and do business more efficiently. We expect that the IoT system generate increased sales revenue resulting from technological change. As we are about to complete our innovation of our IoT system and at an early stage of promoting and distributing our new product and technology, we cannot assure you that this new business model will be successful and profitable and when we will be able to generate revenue from this model if any at all.
 
Results of Operations

Results of Operations – Three Months Ended June 30, 2015 as Compared to Three Months Ended June 30, 2014

                         
   
Three months ended
             
   
June 30
   
Increase/
   
%
 
   
2015
   
2014
   
(decrease)
   
change
 
                         
Revenue
  $ 24,382     $ 57,630     $ (33,248 )     (57.7 )
Cost of sales and services
    24,382       -       24,382       N/A  
Selling and distribution expenses
    5,586       40,567       (34,981 )     (86.2 )
General and administrative expenses
    255,999       260,739       (4,740 )     (1.8 )
Recovery of bad debt
    1,260,660       -       1,260,660       N/A  
Income/(loss) before income taxes
    990,796       (239,042 )     1,229,838       N/A  
Provision for income taxes
    -       -       -       -  
Net income/(loss)
  $ 990,796     $ (239,042 )   $ 1,229,838       N/A  

Revenues

Revenue for the three months ended June 30, 2015 amounted to $24,382, represents a substantial decrease of $33,248 or 57.7% compared to $57,630 for the same period in 2014.  Revenue for the three months ended June 30, 2015 and 2014 are analyzed as follows:

                         
   
Three months ended
June 30,
   
Increase/
   
%
 
   
2015
   
2014
   
(decrease)
   
change
 
                         
Sale of consumer products
  $ 24,382     $ -       24,382       N/A  
Regional distribution rights
    -       57,630       (57,630 )     N/A  
      24,382       57,630       (33,248 )     (57.7 )
                                 

(a)  Sale of consumer products

Our sales of consumer products consist of sales of red wine, natural eggs, growing and producing in the farm in Xinjiang Province, which are all produced by ecologically breeding methods. We temporarily suspended our sales of consumer products in first half of 2014 to adjust our product portfolio to find the consumer preference. The sale of consumer product of  $24,382 during the three months ended June 30, 2015 was because that we cleared out the remaining inventories for the new IoT business during the three months ended June 30, 2015.

(b)  Regional distribution rights

Since third quarter of 2010, the Company has granted regional distribution rights in the PRC for using “GEN+Me” trademark.

Revenues from regional distribution rights include initial fees and continuing management fee income. All amounts received will be initially recognized as receipt in advance, and will be recognized as revenues when the following criteria are met:
 
 

(i)
Initial admission fee income is generally recorded upon completion of admission procedures, when the rights to use the “GEN+ME” trademarks are granted to the users, and when collectability is reasonably assured.  
(ii)
Continuing management fee income represent regular contractual payments received for our supporting services, which are recognized as revenue when earned, generally on a straight line basis.

The continuing supporting services included adverting campaign, band promotion activities and training services provided to the distributor for the next three years after distribution rights granted. The continuing management fee will be recognized on a yearly basis. During the three months ended June 30, 2015, we did not recruit any new distributor or provide any supporting services to our existing distributors as we were experiencing a transitional period to clearing out our inventories and setting up the IoT business.

Cost of sales and services

Cost of sales and services amounted $24,382 and nil for three months ended June 30, 2015 and 2014, respectively. Cost of sales and services represents cost of consumer products sold and operation cost incurred for the cost for regional distribution rights business. The operation cost for services mainly included the expenses for recruiting new distributors, maintaining the relations with regional distributors, and research and development cost for our on-line nationwide platform which can link up the whole custom food industrial chain including producer, distributors and end-users. The cost of sales and services incurred $24,382 during the three months ended June 30, 2015 was due to that we sold the remaining inventories at cost for the new IoT business during this period. We did not incur any cost of sales and services during three months ended June 30, 2014 was due to the fact that we did not have any sale of consumer goods at that period.

Selling and distribution expenses

Selling and distribution expenses for the three months ended June 30, 2015 and 2014 amounted to $5,586 and $40,567, respectively. The decrease of $34,981 or 86.2% was mainly attributable to less advertising campaigns and product promotions in the three months ended June 30, 2015 according to recent adjustment of our business focus.

General and administrative expenses

General and administrative expenses decreased by $4,740 or 1.8% from $260,739 for the second quarter of 2014 to $255,999 for the same period in 2015. The slight reduction of general and administrative expenses was mainly due to the cost control plan carrying out in this period.

Recovery of bad debt

During the three months ended June 30, 2015, Beijing Shanghan International Trading Limited repaid the outstanding receivables of $1,260,660, which had previously been provided as a part of our allowance for bad debts. The amount was reversed from the allowance of bad debt and recorded as other income.

Income/(loss) before income taxes and provision for income taxes

The Company recorded a pretax income of $990,796 for the three months ended June 30, 2015, compared to a pretax loss of $239,042 for the three months ended June 30, 2014. The substantial change was mainly attributable to the recovery of bad debts amounted to $1,260,660 during the period.

There was no PRC income tax provision for the second quarter of 2015 as substantial amount of taxable income were absorbed by accumulated losses incurred in previous years.  The Company did not recognize deferred tax assets in the three months ended June 30, 2014 for net operating loss based on that no sufficient future taxable profits will be available to allow all or part of the deferred tax asset to be utilized.

 

 
Six Months Ended June 30, 2015 as Compared to Six Months Ended June 30, 2014

   
Six months ended
             
   
June 30,
   
Increase/
   
%
 
   
2015
   
2014
   
(decrease)
   
change
 
                         
Revenue
  $ 806,799       158,597       648,202       408.7  
Cost of sales
    528,657       -       528,657       N/A  
Selling and distribution expenses
    11,357       59,829       (48,472 )     (81.0 )
General and administrative expenses
    408,478       1,057,244       (648,766 )     (61.4 )
Recover of bad debt
    1,260,660       -       1,260,660       N/A  
Loss before income taxes
    1,110,688       (949,133 )     2,059,821       N/A  
Provision for income taxes
    -       -       -       -  
Net loss
  $ 1,110,688       (949,133 )     2,059,821       N/A  

Revenues
Revenue for the six months ended June 30, 2015 amounted to $806,799, which represents a remarkable increase of $648,202 or 408.7% when compared to $158,597 for the same period last year. Revenues for the six months ended June 30, 2015 and 2014 are analyzed as follows:

                         
   
Six months ended June 30,
   
Increase/
   
%
 
   
2015
   
2014
   
(decrease)
   
change
 
                         
Sale of consumer products
  $ 806,799       -       806,799       100  
Regional distribution rights
    -       158,597       (158,597 )     N/A  
      806,799       158,597       648,202       408.7  
                                 

(a)  Sale of consumer products

We modified our sales strategies in the six months ended June 30, 2014. After adjusting our product portfolio in accordance with consumers’ preference in 2014 and clearing out of our inventories for new IoT business, the sales of consumer products amounted $806,799 during the six months ended June 30, 2015. In the first half of 2015, we observing the fast growth of the IoT market in China, we have been focusing on designing “GEN+Me”chip and accompanying IoT system and expect to complete our innovation and distribution of our IoT system in the third quarter of 2015.
 
(b)  Regional distribution rights

Revenue arising from the regional distribution rights operations for the six months ended June 30, 2014 amounted to $158,597, compared to Nil during the six months ended June 30, 2015. The amount represented continuing management fee recognized in the six months ended June 30, 2014. During the first half of 2015, we did not recruit any new distributor nor provided any supporting service to our existing distributors because we were focusing on setting up the IoT business. As a result, we did not generate any revenue from regional distribution rights.

Cost of sales
Cost of sales and services for the six months ended June 30, 2015 and 2014 amounted to $528,657 and nil, respectively. Cost of sales represents cost of consumer products sold and operation cost in regional distribution rights business. The increase of cost of sales and services during the six months ended June 30, 2015 reflected the increasing sales of consumer products in the first half of 2015.
 
Selling and distribution expenses
Selling expenses for the six months ended June 30, 2015 and 2014 amounted to $11,357 and $59,829, respectively. The increase in selling and distribution expenses of $10,163 or 20.5% was primarily attributed to less marketing event incurred during our transitional period.

General and administrative expenses
General and administrative expenses decreased by $648,766 or 61.4% from $1,057,244 for the six months ended June 30, 2014 to $408,478 for the same period in 2015. The reduction of general and administrative expenses was mainly due to additional cost incurred in the six months ended June 30, 2014, which represented the travelling expenses and conference fee for group meeting amounted to approximately $460,000 and disposal loss on equipment amounting to $41,862.

 
 
Income/(loss) before income taxes and provision for income taxes
The Company recorded a pretax gain of $1,110,688 for the six months ended June 30, 2015, compared to a pretax loss of $949,133 for the six months ended June 30, 2014.  The difference was mainly due to the recovery of bad debts and the growing revenue from sales of consumer products.

There was no PRC income tax provision for the six months ended June 30, 2015 as the pretax income were absorbed by accumulated losses incurred in previous years.

Cash and cash equivalents

As of June 30, 2015, the Company had a total cash and cash equivalents of $ 584,146, compared to $35,324 as of December 31, 2014. The cash was mainly used to fund our operations. The Company’s cash flows for the three months ended June 30, 2015 are analyzed as follows:

Cash Flow from Continuing Operations

   
Three months ended
 
   
June 30,
 
   
2015
   
2014
 
             
Net cash provided by /(used in) operating activities
  $ 1,307,367     $ (482,264 )
Net cash (used in)/provided by investing activities
    (3,132 )     148,862  
Net cash (used in)/provided by financing activities
    (754,370 )     162,094  
Net decrease in cash and cash equivalents
  $ 549,865     $ (171,308 )

During the six months ended June 30, 2015, we had net cash provided by operating activities of $1,307,367, as compared to net cash used in operating activities of $482,264 for the same period in 2014. The change in cash inflow from operating activities was primarily due to the cash inflow from the collection of long outstanding balances during the period.

Our cash flow used in investing activities for the six months ended June 30, 2015 amounted to $3,132 as compared to net cash provided by investing activities of $148,862 for six months ended June 30, 2014. The net cash used in investing activities mainly represented purchase of equipment and machinery. The net cash provided by investing actives in the six months ended June 30, 2014 mainly contributed by the proceeds from disposal of equipment.

Our cash flows used in financing activities for the six months ended June 30, 2015 amounted to $754,370, as compared to net cash provided by financing activities for the same period of 2014 amounted to $162,094. The cash used in financing activities in the six months ended June 30, 2015 mainly represented the repayment of temporary advances to a director.

Working Capital

As of June 30, 2015, the Company recorded a working capital deficit of $3,317,617, compared to a deficit of $4,485,669 as of December 31, 2014. The increase in working capital was mainly due to the substantial improvement of revenue from sale of consumer products and the recovery of bad debts in the six months ended June 30, 2015. We are exploring sources of additional financing, including short-term financing from our distributors and other parties. In addition, we are closely monitoring cash balances, cash needs and expense levels.

Going Concern

As of June 30, 2015, the Company has accumulated deficits of $4,588,815, a negative working capital of $3,317,617. The Company may need additional cash resources to operate during the upcoming 12 months, and the continuation of the Company may be dependent upon the continuing financial support of investors, directors and/or stockholders of the Company. However, there is no assurance that equity or debt offerings will be successful in raising sufficient funds to assure the eventual profitability of the Company. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

 

 
Off-Balance Sheet Transactions
We do not maintain any off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities or others that are reasonably likely to have a material current or future effect on our financial condition, cash flows, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates
 
Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("US GAAP"). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
 
We believe the following is among the most critical accounting policies that impact our consolidated financial statements. We suggest that our significant accounting policies, as described in our consolidated financial statements in the Summary of Significant Accounting Policies, be read in conjunction with this Management's Discussion and Analysis of Financial Condition and Results of Operations.
 
The Company generates revenues mainly from sale of consumer products and also revenue from regional distribution rights.
 
The Company recognizes revenue when products are delivered and customers take ownership and assume risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and selling price is fixed or determinable.
 
Revenues from regional distribution rights include initial fees and continuing management fee income. All moneys received will be initially recognized as receipt in advance, and will be recognized as revenues when the following criteria are met:
 
 
(i) Initial admission fee income is generally recorded upon completion of admission procedures, when the rights to use the “GEN+ME” trademarks are granted to the users, and when collectability is reasonably assured.

 
(ii) Continuing management fee income represent regular contractual payments received for our supporting services, which are recognized as revenue when earned, generally on a straight line basis.
 
Recent Accounting Pronouncements
 
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which is included in ASC 606, Revenue from Contracts with Customers. This ASU is a comprehensive new revenue recognition model that creates a single source of revenue guidance for all companies in all industries. The model is more principles-based than current guidance, and is primarily based on recognizing revenue at an amount that reflects consideration to which the entity expects to be entitled to in exchange for transferring goods or services to a customer. The guidance will be effective for the Company's interim and annual reporting periods beginning January 1, 2017. The standard allows the Company to transition to the new model using either a full or modified retrospective approach, and early adoption is not permitted. The Company is currently evaluating the impact this standard will have on its business practices, financial condition, results of operations, and disclosures.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. This ASU provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments are effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company does not intend to early adopt this standard. The Company does not expect the adoption of this standard to have an impact on its financial statements.
 
 

On January 9, 2015, FASB published ASU 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The ASU applies to all entities and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company does not expect the adoption of ASU 2015-01 to have material impact on the Company's consolidated financial statement.

In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This ASU requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying value of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this ASU. The amendments in this ASU are effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. The Company does not expect the impact of adopting this ASU to be material to the Company’s financial statements and related disclosures.

In May 2015, the FASB issued ASU 2015-07, Fair Value Measurement (Topic 820), Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (ASU 2015-07), which removes the requirement to categorize within the fair value hierarchy investments for which fair value is measured using the net asset value per share practical expedient. The amendments also remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Instead, such disclosures are restricted only to investments that the entity has decided to measure using the practical expedient. This standard is effective for interim and annual periods beginning after December 15, 2015. PGE will adopt the amendments contained in ASU 2015-07 on January 1, 2016, which is not expected to have an impact on the Company’s consolidated financial position, consolidated results of operations, or consolidated cash flows.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory (ASU 2015-11), which changes the measurement principle for inventory from the lower of cost or market tolower of cost and net realizable value. Net realizable value is defined as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.” ASU 2015-11 eliminates the guidance that entities consider replacement cost or net realizable value less an approximately normal profit margin in the subsequent measurement of inventory when cost is determined on a first-in, first-out or average cost basis. The provisions of ASU 2015-11 are effective for public entities with fiscal years beginning after December 15, 2016, or January 1, 2017 for PGE, and interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of evaluating the impact to its consolidated financial position, consolidated results of operations, and consolidated cash flows of the adoption of ASU 2015-11.

The Company does not expect the adoption of these guidance to have a material impact on its consolidated financial statements.


Not applicable.
 
(a)  
Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a – 15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. This information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Management is responsible for establishing and maintaining adequate internal control over financial reporting.

We performed an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and our Acting Chief Financial Officer have concluded that our disclosure controls and procedures were ineffective in ensuring that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission, and were ineffective in providing reasonable assurance that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
 
 
 
 
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

For more information regarding our controls and procedures, including the deficiencies identified by our management and the remediation methods adopted by us, please refer to Item 9A. Controls and Procedures in our Annual Report on Form 10-K for fiscal year ended December 31, 2014, filed with the SEC on June 30, 2015.

(b) Changes in Internal Control Over Financial Reporting

In connection with the preparation of our financial statements for the fiscal year ended December 31, 2014, the management determined that our internal control environment is not properly designed due to the existence of certain material weaknesses and that it did not operate effectively to ensure that the Company’s financial statements (and related financial statement disclosures) were prepared in accordance with US generally accepted accounting principles (US GAAP).  In order to remediate the material weakness discussed above, we hired additional accounting staff who are familiar with PRC GAAP and US GAAP in the preparation of financial statements in accordance with US GAAP, and, once our cash flows from operations improves to a level where we are able to, we intend to recruit experienced professionals to augment our financial staff for sufficient US GAAP, financial reporting, which would improve our controls and procedures with the regard to financial statements preparation and improve the knowledge of U.S. accounting standards for our current accounting staff. As of the end of the period covered by the report, we continue the process of implementing and maintaining the remediation measures, but we cannot assure when or if we will be able to successfully implement these remedial measures.  For more information regarding our controls and procedures, please refer to Item 9A. Controls and Procedures in our Annual Report on Form 10-K for fiscal year ended December 31, 2014, filed with the SEC on June 30, 2015.

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter covered by this report that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



 
 
None.
 

None.
 

None.
 

None.
 
 
None.
 
 
Exhibits
 
Exhibit
Number
Description*
31.1
Certification of Chief Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification of Chief Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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 Labels Linkbase Document
 
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
 
   
   
* Filed herewith
 
   


 
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
   
   
   
   
 
CHINA SHIANYUN GROUP CORP., LTD.
   
   
Dated: August 14, 2015
/s/ Ye Xing Zhang
 
Ye Xing Zhang
 
Chief Executive Officer
   
   
   
Dated: August 14, 2015
/s/ Deng Lin
 
Deng Lin
 
Chief Financial Officer and Chief Accounting Officer
 
 
 
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