UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q/A

Amendment No. 3

 

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

For the quarterly period ended  October 31, 2013

 

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 325,000,000 shares of common stock, $0.001 par value outstanding at October 31, 2013. 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 10Q/A”) to its Quarterly Report on Form 10-Q for the period October 31, 2013, originally filed on December 16, 2013, as amended on November 12, 2014, (the “Original Form 10-Q”) to reflect the restatement of its consolidated financial statements for the period ended October 31, 2013, and related disclosures described below. The restatement of the Original Form 10-Q reflected in this Amendment corrects errors principally related to our omission of subscription receivable in the aggregate amount of $317,000 in the consolidated financial statements, and revises the disclosure of acquisitions and consolidation of variable interest entity. 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, 2014, as well as Quarterly Report on Form 10-Q for the second and third quarters in the fiscal year ended July 31, 2014, and first three fiscal quarters in the fiscal year ended July 31, 2015 to reflect the restatement of our consolidated financial statements as of and for the fiscal year and the rest of the 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. Other disclosures in the Original Form 10-Q remain unchanged.

 

We have also updated the signature page, the certifications of our Chief Executive Officer and Acting Principal Financial Officer in Exhibits 31.1, 31.2, 32.1 and 32.2.

 

No other sections were affected, but for the convenience of the reader, this report on Form 10-Q/A restates in its entirety, as amended, our Original Form 10-Q. This report on Form 10- Q/A is presented as of the filing date of the Original Form 10-Q and does not reflect events occurring subsequent to the date of the Original Form 10-Q.

 

Background of Restatement

 

In August 2015, the board of directors of the Company, based on the discussion 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, 2014 and the first three quarters of fiscal 2015, the Company would restate its previously issued financial statements of these periods.

 

The Company noted that there was an omission of subscription receivable in the consolidated financial statements as of July 31, 2014, and necessity of revision for the footnotes of acquisitions and consolidation of variable interest entity to reflect a more accurate disclosure. The corrections are reflected in the restated consolidated financial statements contained in the Form 10-Q/A to be filed.

 

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 period ended July 31, 2014 and period ended January 31, 2015. 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, internal control matters, and as otherwise specifically indicated. Specifically, the following items included in the Original Form 10-Q are amended by this Amendment:

 

-

Part I, Item 1, Financial Statements

 

-

Part I, Item 4, Controls and Procedures

 

Internal Control Considerations

 

In connection with the restatement and the Audit Committee’s review, management has re-evaluated the effectiveness of our disclosure controls and procedures as of October 31, 2013 and the effectiveness of the Company’s internal control over financial reporting as of October 31, 2013 based on the framework in “Internal Control—Integrated Framework (1992 framework)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on such re-evaluation, management has determined that the Company had material weaknesses in its internal control over financial reporting as of October 31, 2013 related to consolidation procedures. As a result, management has determined that the Company’s disclosure controls and procedures and internal control over financial reporting were not effective as of October 31, 2013. 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 the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The existence of one or more material weaknesses precludes a conclusion by management that a corporation’s internal control over financial reporting is effective. We are currently in the process of remediating the weaknesses in internal control over financial reporting referred to above by designing and implementing new procedures and controls throughout the Company and its subsidiaries. For a discussion of management’s consideration of our disclosure controls and procedures and the material weaknesses identified, see Part I, Item 4, “Controls and Procedures” of this Amendment.

 

 

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
	Consolidated Balance Sheets as of October 31, 2013and July 31, 2013 (Unaudited)	4
	Consolidated Statements of Operations for the Three Months Ended October 31, 2013 and 2012 (Unaudited)	5
	Consolidated Statements of Cash Flows for the Three Months Ended October 31, 2013 and 2012 (Unaudited)	6
	Notes to Consolidated Financial Statements (Unaudited)	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3. Quantitative and Qualitative Disclosures About Market Risk		13
Item 4. Controls and Procedures		14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		14
Item 1A. Risk Factors		14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		15
Item 3. Defaults Upon Senior Securities		15
Item 4. Mine Safety Disclosures		15
Item 5. Other Information		15
Item 6. Exhibits		15
Signatures		16

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Xiangtian (USA) Air Power Co., Ltd.

(A Development Stage Company)

Consolidated Balance Sheets

October 31,2013

 

		October 31,				July 31,
		2013 (Unaudited) (Restated)				2013 (Audited) (Restated)
ASSETS
Current assets
Cash		$	5,820			$	4,430
Total assets		$	5,820			$	4,430
LIABILITIES AND STOCKHOLDERS’ DEFICIT
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities		$	-			$	1,500
Advances from related parties			192,718				94,530
Amount due to director			2,121				1,838
Total liabilities			194,839				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, 325,000,000 and 8,000,000 shares issued and outstanding as of October 31, 2013 and July 31, 2013  respectively			325,000				8,000
Additional paid-in capital			76,460				74,960
Subscription receivable			(317,000	)			-
Deficit accumulated during the development stage			(273,477	)			(176,398	)
Accumulated other comprehensive loss			(2	)			-
Total stockholders’ deficit			(189,019	)			(93,438	)
Total liabilities and stockholders’ deficit		$	5,820			$	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 Three				Period From September 2,
		Months Ended				Months Ended				2008 (inception) to
		October 31,				October 31,				October 31,
		2013				2012				2013
		(Restated)								(Restated)
Revenue:		$	-			$	-			$	-
General and administrative		$	97,081			$	21,440			$	269,378
Loss from continuing operations			(97,081	)			(21,440	)			(269,378	)
Loss from discontinued operations											(4,099	)
Net loss		$	(97,081	)		$	(21,440	)		$	(273,477	)
Net loss per common share - basic and diluted
Continuing operations		$	-			$	-			$	-
Discontinued operations			-				-				-
Total		$	-			$	-			$	-
Weighted average number of common shares outstanding - basic and diluted			142,380,435				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  September 2,
		For the Three				For the Three				2008
		Months Ended				Months Ended				(inception) to
		October 31,				October 31,				October 31,
		2013				2012				2013
		(Restated)								(Restated)
Cash flows from operating activities:
Net loss			(97,081	)		$	(21,440	)		$	(273,477	)
Net loss from discontinued operation			-								4,099
Net loss from continuing operation, net of income taxes			(97,081	)			(21,440	)			(269,378	)
Adjustments to reconcile net loss to net cash used in operating activities:
Donated rent			1,500				1,500				9,000
Changes in operating assets and liabilities:
Prepaid expense			-				12,913				-
Accounts payable and accrued liabilities			(1,500	)			2,945				16,361
Net cash used in operating activities			(97,081	)			(4,082	)			(244,017	)
Cash flows from financing activities:
Proceeds from issuances of common stock							-				55,000
Advances from related parties			98,187				4,045				192,718
Amount due to director			284				-				2,121
Net cash provided by financing activities			98,471				4,045				249,839
Net change in cash			1,390				(37	)			5,822
Foreign exchange gain/(loss)			-				-				(2	)
Cash - beginning of period from continued operations			4,430				97				-
Cash - end of period from continued operations		$	5,820			$	60			$	5,820
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 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 15, 2013, the Company entered into an acquisition agreement by means of a merger of Luck Sky (Hong Kong) Shares Limited (“HK Shares”), a Hong Kong corporation, for 250,000,000 shares of common stock of the Company. As a result of the acquisition, HK Shares was merged into the Company.

 

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, Luck sky (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 October 31, 2013 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 October 31, 2013 or 2012.

 

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

 

The Company corrected the accounting treatment regarding the omission of subscription receivables in the consolidated financial statements in the aggregate amount of $317,000, and the made revision for the footnotes of acquisitions made with related parties whose identity and stock ownership had been previously disclosed and the consolidation of a variable interest entity to reflect a more accurate disclosure. 

 

In addition to the restatement of our consolidated financial statements, we have also restated the following items to reflect certain changes noted above. 

 

Note 1 - NATURE OF OPERATIONS

 

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

 

Note 4 - ACQUISITIONS

 

Note 7 - RELATED PARTY TRANSACTIONS

 

Note 8 - CAPITAL STOCK AND EQUITY TRANSACTIONS

 

Note 9 - CONTINGENCIES

 

The following tables present the effect of the correction discussed above and other adjustments on selected line items of our previously reported consolidated financial statements as of and for the period ended October 31, 2013 .

 

		As of and for the Period Ended October 31, 2013
		Previously Reported				Adjustments				Restated
Consolidated Balance Sheets
STOCKHOLDERS’ EQUITY
Common stock: $0.001 par value, 1,000,000,000 shares authorized, 325,000,000 and 8,000,000 shares issued and outstanding as of October 31, 2013 and July 31, 2013  respectively		$	258,000			$	67,000			$	325,000
Additional paid-in capital			(173,540	)			250,000				76,460
Subscription receivable			-				(317,000	)			(317,000	)
Consolidated Statement of Operations and Comprehensive Loss
For the three months ended October 31, 2013,
Weighted average number of common shares outstanding - basic and diluted			111,260,870				31,119,565				142,380,435

 

 

NOTE 4 – ACQUISITIONS

 

Acquisition of Luck Sky (Hong Kong) Shares Limited (“HK Shares”)

 

On September 15, 2013, the Company entered into an agreement to acquire HK Shares, a Hong Kong corporation, for 250,000,000 shares of common stock of the Company. Prior to the acquisition, HK Shares was majority owned (approximately 41%) by Mr. Zhou Deng Hua who is the brother of the former CEO of the Company and a director of the Company. On September 23, 2013, the Company issued 250,000,000 shares of common stock to the shareholders of HK Shares in exchange for 250,000,000 shares of HK Shares subscribed at $0.001 per share for a total amount of $250,000. At the completion of the acquisition, HK Shares was merged into the Company.

 

HK Shares was formed in September 24, 2013 and issued 250,000,000 shares at $0.001 to 24 shareholders for a total of $250,000. The shares subscribed were to be paid up within two years from the date of subscription. On the date of the merger acquisition HK Shares had no operations other than the subscription receivable; and accordingly, the transaction was accounted for as an acquisition from related party.

 

The Company valued the 250,000,000 shares of common stock issued at $250,000 as there was no market for the Company’s common stock and it has limited or no trading; and there is thought to be minimal value in the Company at the time, therefore the par value is thought to match the assumed market price of the Company’s common stock which is at $0.001 per share.

 

NOTE 5- 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 $273,477 as of October 31, 2013 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 6- DISCONTINUED OPERATIONS

 

For the three months ended October 31, 2013 and 2012 and the period from September 2, 2008 (inception) to October 31, 2013, the amounts reported in loss from discontinued operations comprised operating expenses of $0, $0 and $4,099, respectively.

 

NOTE 7- RELATED PARTY TRANSACTIONS

 

From time to time, the Company receives advances from its related parties. As of October 31, 2013 and July 31, 2013, the Company had advances from related parties of $194,839 and $96,367, respectively, and used the funds for its operation. These advances are due on demand, unsecured and non-interest bearing.

 

On September 15, 2013, the Company entered into an agreement to acquire HK Shares, a Hong Kong corporation, for 250,000,000 shares of common stock of the Company. Prior to the acquisition, HK Shares was majority owned (approximately 41%) by Mr. Zhou Deng Hua who is the brother of the former CEO of the Company and a director of the Company. On September 23, 2013, the Company issued 250,000,000 shares of common stock to the shareholders of HK Shares in exchange for 250,000,000 shares of HK Shares subscribed at $0.001 per share for a total amount of $250,000. At the completion of the acquisition, HK Shares was merged into the Company.

 

HK Shares was formed in September 24, 2013 and issued 250,000,000 shares at $0.001 to 24 shareholders for a total of $250,000. The shares subscribed were to be paid up within two years from the date of subscription. On the date of the merger acquisition HK Shares had no operations other than the subscription receivable; and accordingly, the transaction was accounted for as an acquisition from related party.

 

 

NOTE 8- 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, Luck sky (Hong Kong) Shares Limited was merged with and into the Company. As a result of the merger, Luck sky (Hong Kong) Shares Limited shareholders received one share of common stock for every share of Luck sky (Hong Kong) Shares Limited common stock they owned for a total of 250,000,000 shares of the Company common stock.

 

On September 23, 2013, the Company issued a total of 67,000,000 shares of restricted common stock at $0.001 per share, such that 60,000,000 shares were issued to Mr. Roy Thomas Phillips, who was then a consultant to the Company, and 7,000,000 shares were issued to two other non-related parties. The shares were issued in contemplation of a secondary offering. The Company takes the position that these shares should be cancelled since no secondary offering was consummated. The Company is taking steps to have these shares canceled. The Company valued the 67,000,000 shares of common stock issued at $67,000 as there was no market for the Company’s common stock and it has limited or no trading; and there is thought to be minimal value in the Company at the time of issuance, therefore the par value is thought to match the assumed market price of the Company’s common stock which is at $0.001 per share.

 

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.

 

NOTE 9 – CONTINGENCIES

 

On September 23, 2013, the Company issued 60,000,000 shares of restricted common stock at $0.001 per share to Mr. Roy Thomas Phillips, who was then a consultant to the Company, and two other non-related parties, obtained a total of 7,000,000 shares of restricted common stock. The shares were issued in contemplation of a secondary offering. The Company takes the position that these shares should be cancelled since no secondary offering was consummated. The Company is taking steps to have these shares canceled. The Company valued the 67,000,000 shares of common stock issued at $67,000 as there was no market for the Company’s common stock and it has limited or no trading; and there is thought to be minimal value in the Company at the time of issuance, therefore the par value is thought to match the assumed market price of the Company’s common stock which is at $0.001 per share. The issuance of these securities could result in further dilution to the Company’s stockholders which effects the earnings (loss) per share amount of the Company. The Company might incur additional expenses to have these shares canceled. For the period ended October 31, 2013, the dilutive effect of not canceling the 67,000,000 shares is incorporated in the consolidated financial statements as the Company recorded such shares as issued and outstanding. The loss per share remained $0.00 with the dilutive effect of not canceling such shares. If the shares are not voluntarily returned for cancellation, the Company will need to commence litigation in Delaware to obtain a judgment to cancel the shares for lack of consideration. At this time, the Company is unable to estimate the cost such litigation if it takes place.

 

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

 

Overview

 

Xiangtian (USA) Air Power Co., Ltd., was originally incorporated at 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 Luck Sky (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 date, HK shares is still a surviving company, and the management 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 October 31, 2013. The restatement reflected in this Amendment corrects errors principally related to our omission of subscription receivable in the aggregate amount of $317,000 in the consolidated financial statements, and revises the disclosure of acquisitions and consolidation of variable interest entity. 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 three months ended October 31, 2013 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 three months ended October 31, 2013, we incurred operating expenses in the amount of $97,081.

 

We incurred total operating expenses in the amount of $273,477 from inception on September 2, 2008 through October 31, 2013.

 

Liquidity and Capital Resources

 

As of October 31, 2013, we had a cash balance of $5,820.

 

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 $194,839 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. 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 December 2013, the Company’s management, including our then Chief Executive Officer and Chief Financial Officer (who resigned from the Company in July 2014), conducted an evaluation of the effectiveness of our internal control over financial reporting as of October 31, 2013 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 October 31, 2013, 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 our 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 October 31, 2013 and concluded that, because of the material weaknesses described below, our internal control over financial reporting was not effective as of October 31, 2013.

 

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 October 31, 2013:

 

-

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.

  

-

Errors occurred in the consolidated financial statements as of April 30, 2014 that the balances in the equity section was not correctly presented, and the footnotes of acquisitions and consolidation of variable interest entity was not properly disclosed.

 

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 October 31, 2013.

 

We are currently in the process of remediating the weaknesses in internal control over financial reporting referred to above by designing and implementing new procedures and controls. The Company has hired an external consultant with extensive experience in US GAAP and reports with the SEC who is responsible for assisting the Company with (i) reviewing the Company's accounting records (ii) the preparation of its financial statements in accordance with US GAAP, and (iii) its periodic reports with the SEC.

 

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 October 31, 2013 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)
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 and 31.2*		Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C.§ 1350, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002.
32.1 and 32.2 *		Certification of Principal Executive Officer and 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 and Acting Chief Financial Officer (Principal Executive Officer and Principal Financial Officer)
	Date: September 10, 2015