Annual Reports

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Volkswagen 20-F 2009
Unassociated Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, D.C. 20549
 
FORM 20-F/A
(Amendment No. 1)
 (Mark One)
 
¨
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

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

For the fiscal year ended December 31, 2008
 
OR

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

OR

¨
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Date of event requiring this shell company report _________________________
 
For the transition period from ___________ to ___________.
 
Commission file number: 000-53594
 
GOLDEN GREEN ENTERPRISES LIMITED
(Exact name of Registrant as specified in its charter)
 
Not Applicable
(Translation of Registrant’s name into English)
 
British Virgin Islands
(Jurisdiction of incorporation or organization)
 
No. 69 Huaibei Street, Longhai Middle Road
Zhengzhou, China, 451191
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

None

Securities registered or to be registered pursuant to Section 12(g) of the Act.


Units
Ordinary Shares, no par value
Warrants to Purchase Ordinary Shares
(Title of Class)
 
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.


None
 
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report (December 31, 2008): 100 ordinary shares.
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 ¨Yes   x No
 
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 ¨Yes  x No
 
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.
xYes ¨ 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 (§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 ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
 
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x
 
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP x 
International Financial Reporting
Standards as issued by the
International Accounting Standards
Board o
Other ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

¨ Item 17
¨ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
oYes       x No



 
 

 
EXPLANATORY NOTE

Golden Green Enterprises Limited (the “Company”) filed its Annual Report on Form 20-F for the fiscal year ended December 31, 2008 (the “Annual Report”) with the Securities and Exchange Commission on July 15, 2009.  This Amendment No. 1 to the Annual Report (the “Amendment”) is filed solely to address the following items:

 
·
to disclose as a related party transaction under Item 7 Major Shareholders and Related Party Transactions, the obligations of the Company to pay two of the Companys original shareholders an aggregate $5 million if 75% of the Companys outstanding warrants are exercised at a price of at least $5.00 per share, pursuant to an Agreement of Merger and Plan of Reorganization, or the Merger Agreement, with China Opportunity Acquisition Corporation;

 
·
to supplement Item 15T of the Annual Report to include disclosure as to why the management believed that the Company properly omitted from the Annual Report a report of management’s assessment regarding internal control over financial report or an attestation report of the Company’s registered public accounting firm; and

 
·
to correct a clerical error which resulted in the misplacement of certain numbers in the balance sheets of Henan Green Complex Materials Co., Ltd. as of December 31, 2006. 

As required by Rule 12b-15 under the Exchange Act of 1934, as amended, or the Exchange Act, updated certifications of our principal executive officer and our principal financial officer are being filed as exhibits to this Amendment.  This Amendment also includes a new Exhibit 15.1, which contains the consent of PricewaterhouseCoopers LLP with respect to this Amendment.  This Amendment speaks as of the date of the initial filing of the Annual Report, except for the certifications referenced above.  Other than as described above, this Amendment does not, and does not purport to, amend, update or restate the information in the Annual Report or reflect any events that have occurred after the Annual Report was filed.

PART II

ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 
A. Major Shareholders

Please refer to Item 6.E “Directors, Senior Management and Employees — Share Ownership.”

B. Related Party Transactions

Prior Issuances

In August 2006, COAC issued 1,500,000 shares of its common stock, or the Original Shares, to the individuals set forth below for an aggregate of $25,000 in cash, at a purchase price of approximately $0.009 per share, as follows:

Shareholders
 
Number of
Shares
 
Relationship to COAC
 
Harry Edelson
 
1,130,000
 
Chairman of the Board and Chief Executive Officer
 
Nicholas Puro
 
70,000
 
President, Secretary and Director
 
Barry M. Shereck
 
70,000
 
Chief Financial Officer and Director
 
Rose-Marie Fox
 
70,000
 
Director
 
Bailin Zheng
 
60,000
 
Special Advisor
 
Daxi Li
 
60,000
 
Special Advisor
 
China Investment Group LLC
 
40,000
 
Special Advisor
 
 
 
1

 

In November 2006, Mr. Zheng transferred 60,000 Original Shares to Shengyun Qiu, our former special advisor, for $0.0167 per share (for a purchase price of $1,000).  Mr. Zheng is no longer our special advisor.  In February 2007, Mr. Edelson transferred 30,000 Original Shares to Ms. Fox for $0.0167 per share (for a purchase price of $500).
 
Initial Shareholder Warrant Purchase

In connection with the closing of COAC’s initial public offering, or IPO, COAC sold 2,266,667 warrants, or Insider Warrants, to the individuals set forth below for $1,360,000 in cash, at a purchase price of $0.60 per warrant as follows:

Name of Holder
 
Number of Warrants
Harry Edelson
 
1,666,667
Nicholas Puro
 
200,000
Barry M. Shereck
 
50,000
Rose-Marie Fox
 
100,000
Daxi Li
 
150,000
Eliot Clauss(1)
 
50,000
John Allen(1)
 
50,000

(1)Messrs. Clauss and Allen are members of China Investment Group LLC, one of our special advisors.

These purchases took place on a private placement basis simultaneously with the consummation of the IPO.  The Insider Warrants are identical to our other warrants except that if we call the warrants for redemption, the Insider Warrants will not be redeemable by us so long as they are held by these purchasers or their affiliates.  The Insider Warrants will be redeemable, at our option, at a price of $.01 per warrant upon 30 days’ notice after the Insider Warrants become exercisable, only in the event that the last sale price of our ordinary shares is at least $8.50 per share for any 20 trading days within a 30 trading day period ending on the third day prior to the date on which notice of redemption is given.

Lock-Up Agreement with Pre-Merger Shareholders

In connection with our merger with COAC, each of the Original Shareholders agreed not to sell its ordinary shares for 12 months (in the case of Oasis Green Investments Limited) and six months (in the case of the other two shareholders) after the closing of the merger, subject to limited exceptions (including transfer to family, transfer after death, transfer to entities control by the transferor).

 
2

 
 
Other Transactions

Oasis Green Investments Limited and Plumpton Group Limited are also entitled under the Merger Agreement to receive an aggregate of $5 million in the event at least 75% of our outstanding warrants are exercised at an exercise price not less than $5.00 per share.  In such an event, we would receive approximately $86 million and we would be obligated to pay $5 million in the aggregate to Oasis Green Ivnestments Limited, which is owned by Ms. Yuying Lu, the daughter of our Chairman and CEO, Mr. Mingwang Lu, and Plumpton Group Limited, one of our Original Shareholders.

Other than reimbursable out-of-pocket expenses payable to the officers and directors of COAC in connection with our merger transaction, no compensation or fees of any kind, including finder’s fees, consulting fees or other similar compensation, has been or will be paid to any of our officers, directors or substantial shareholder, or to any of their respective affiliates, except for a $7,500 monthly fee paid to Edelson Technology Inc., an affiliate of Mr. Edelson, for office space and secretarial and administrative services.  This arrangement and payment of the fee terminated upon consummation of the merger. A total of $180,000 was paid to Edelson Technology Inc. pursuant to such arrangement.

In connection with the IPO, Mr. Edelson entered into an agreement with EarlyBirdCapital, which is intended to comply with Rule 10b5-1 under the Exchange Act, pursuant to which he placed limit orders for $3 million of our ordinary shares commencing November 26, 2008 which, pursuant to such agreement, was ten business days after COAC filed its Current Report on Form 8-K announcing our execution of the merger agreement. Mr. Edelson purchased an aggregate of 509,521 shares of COAC ordinary shares in accordance with such agreement at an average price of $5.89 per share. Mr. Edelson may vote these shares any way he chooses. Mr. Edelson has agreed that he will not sell or transfer any ordinary shares purchased by him pursuant to this agreement until one year after COAC has completed the merger. It is intended that these purchases will comply with Rule 10b-18 under the Exchange Act. These purchases were made by EarlyBirdCapital in such amounts and at such times as EarlyBirdCapital determined, in its sole discretion. As a result of EarlyBirdCapital’s interest in our consummation of a business combination, it may not be deemed to be independent for purposes of this agreement.

Our director, Dr. J.P. Huang, was paid a total of $35,000 for his consulting services for the period from April through October 2008 as a consultant to COAC in connection with potential merger transactions and was reimbursed $4,158 for travel expenses in connection with his consulting activities.

Before 2007, Zhengzhou No. 2 Iron and Steel Company Limited was one of the owners of Henan Green with 76.93% of the total ownership.  In December 2006, Zhengzhou No. 2 Iron and Steel Company Limited sold all of its ownership to our Chairman and CEO, Mingwang Lu and others, whereby Mr. Lu became a major owner holding 40% of the total ownership.  In 2008, the holders transferred their ownership interests in Henan Green to Golden Green.  Mingwang Lu was a common owner of Henan Green and Zhengzhou No. 2 Iron and Steel Company Limited. Zhengzhou No. 2 Iron and Steel Company Limited engaged in the same type of industry as Henan Green but ceased its processing and selling of steel operation in 2003. Zhengzhou No. 2 Iron and Steel Company Limited’s principal business activity after the cessation of its steel operations is receiving rental income from its investments.

In 2004, Henan Green entered into a rental agreement for land use rights with Zhengzhou No. 2 Iron and Steel Company Limited with the term from January 1, 2005 to December 30, 2014.  In December 2008, we entered into a new lease with the related party lessor, which replaces the 2004 rental agreement.  The new lease term commenced on January 1, 2008 and terminates on December 31, 2027.  Rental paid to Zhengzhou No. 2 Iron and Steel Company Limited for the fiscal year ended December 31, 2008 was $8,781.  Rent payable under the lease in 2009 will be the same as in 2008, and will increase by 10% annually beginning in 2010.

Zhengzhou No. 2 Iron and Steel Company Limited guarantees our obligations under short term bank loans.  We do not pay any consideration to this related guarantor for guaranteeing our obligations.
 
C. Interests of Experts and Counsel

Not applicable.

ITEM 15T. 
CONTROLS AND PROCEDURES
 
Disclosure Controls and Procedures

As required by Rule 13a-15(e) and 15d-15(e) under the Exchange Act, our management has carried out an evaluation, with the participation and under the supervision of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2008.

 
3

 

Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.  In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.

Management conducted its evaluation of disclosure controls and procedures under the supervision of our chief executive officer and our chief financial officer.  Based upon, and as of the date of this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for our company, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.  Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation and presentation and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

We excluded management’s report on internal control over financial reporting for fiscal year ended December 31, 2008 from this Annual Report on From 20-F because of the following reasons:

On March 17, 2009, China Acquisition Opportunity Corporation, or COAC, completed a merger transaction in which it merged with and into Golden Green Enterprises Limited, or Golden Green.

Prior to its merger with COAC on March 17, 2009, Golden Green was a private, non-reporting company and was not subject to the Exchange Act, particularly the requirement to provide management’s assessment of internal control over financial reporting as required by Item 308(a) of Regulation S-K.  Accordingly, no such report had been prepared by Golden Green’s management for the fiscal year ended December 31, 2008 which is the subject of this Annual Report on Form 20-F.

For the entire 2008 fiscal year and until the merger with Golden Green, COAC was a special purpose acquisition company which engaged in limited business operations as its primary business objective was focused on finding a business combination partner.  Even though COAC was subject to the reporting requirements of the Exchange Act during the fiscal year ended December 31, 2008, its assets, liabilities and operations materially changed when it merged on March 17, 2009 with Golden Green, an operating company with considerable assets, liabilities and ongoing operations.

 
4

 

Accordingly, we have excluded from this Annual Report on Form 20-F management’s report on internal control over financial reporting for fiscal year ended December 31, 2008 because such report, if applicable only to COAC as of the end of the 2008 fiscal year, could be misleading to readers as it would not reflect the combined business enterprise with its current business operations.  Moreover, due to the relatively short time frame between the March 17, 2009 merger of COAC and Golden Green and the date on which this Annual Report was due (June 30, 2009), it was not possible for management to undertake a meaningful assessment of internal control over financial reporting in a manner that would be useful to readers.  Because our current accounting department is relatively new to U.S. GAAP and the related internal control procedures required of U.S. public companies, we believe it would have taken at least six months if we had undertaken such an assessment in accordance with the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework.  Accordingly, for the foregoing reasons, we have excluded management’s assessment of internal control over financial reporting consistent with the guidance set forth in Section 215.02 of the SEC’s Compliance and Disclosure Interpretations for Regulation S-K.

Attestation Report of the Independent Registered Public Accounting Firm

This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during the year ended December 31, 2008, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART III

ITEM 18. FINANCIAL STATEMENTS

The following consolidated financial statements are included in this annual report:
 
(1) Audited Consolidated Financial Statements for the Years Ended December 31, 2008 and 2007 of Golden Green Enterprises Limited; and
 
(2) Audited Financial Statements for the Years Ended December 31, 2008, 2007 and 2006 of Henan Green Complex .
 
ITEM 19.               EXHIBITS
 
Number
 
Description
     
1.1*
 
Amended and Restated Memorandum and Articles of Association, adopted on March 17, 2009
     
2.1**
 
Specimen Unit Certificate
     
2.2**
 
Specimen Ordinary Share Certificate
     
2.3**
 
Specimen Warrant Certificate
     
4.1**
 
Form of Escrow Agreement by and among Golden Green, Oasis Green Investments Limited and Continental Stock Transfer & Trust Company
     
4.2**
 
Form of Voting Agreement
 
 
5

 

4.3**
 
Form of Lock-Up Agreement
     
4.4**
 
English Translation of Short-Term Loan Agreement, dated July 23, 2008, between Sub-branch of Zhengzhou Branch of Shanghai Pudong Development Bank and Henan Green.
     
4.5**
 
English Translation of Agreement for Established of Bank Payable Bills, dated October 14, 2008, between Shanghai Pudong Development Bank and Henan Green.
     
4.6**
 
English Translation of Renminbi Loan Agreement, dated July 16, 2008, between Zhengzhou Branch of China CITIC Bank and Henan Green.
     
4.7**
 
English Translation of Loan Agreement, dated November 9, 2007, between Commodity World Branch of Commercial Bank of Zhengzhou and Henan Green.
     
4.8**
 
English Translation of Real Estate Maximum Mortgage Agreement, dated March 26, 2007, between Zhengzhou Branch of Shanghai Pudong Development Bank and Henan Green.
     
4.9**
 
English Translation of Maximum Mortgage Agreement, dated April 21, 2008, between Xiangyang Credit Union of Zhengzhou Rural Credit Cooperatives and Henan Green.
     
4.10**
 
English Translation of Credit Granting Agreement, valid from July 21, 2008, between Guangdong Development Bank Zhengzhou Huanghe Road Sub-branch and Henan Green.
     
4.11**
 
English Translation of Agreement, dated September 16, 2003, between Xinzheng City Longhu Town People’s Government and Henan Green.
     
4.12**
 
English Translation of Lease Agreement for Land Use Right and Buildings, dated November 10, 2008, between Zhengzhou the Second Iron & Steel Co., Ltd. and Henan Green.
     
4.13**
 
English Translation of Agreement for the Repayment, dated March 30, 2008, between Lu Mingwang, Lu Baiwang, Ren Shouze, Yue Tiansui, Bai Zhengsheng, Lu Yi, Zhang Qihong, Lu Mingwang, Chen Zheyu, Zhang Shuiping, Liu Bingshen, and Henan Green.
     
4.14**
 
English Translation of Bank Payable Bills Agreement, dated October 14, 2008, between Huang Sub-Branch of Zhengzhou Branch of Guangfa Bank, Da Sub-Branch of Zhengzhou Branch of Pufa Bank, and Henan Green.
     
4.15***
 
English Translation of Form of Labor Contract for all employees of Henan Green, including executive officers.
     
8.1***
 
List of Subsidiaries
     
11.1***
 
Code of Ethics
     
12.1
 
CEO Certification Pursuant to Rule 13a-14(a) (17 CFR 240.13a-14(a)) (17 CFR 240.13a-14(a)) or Rule 15d-1(a) (17 CFR 240.15d-14(a))
     
12.2
 
CFO Certification Pursuant to Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-1(a) (17 CFR 240.15d-14(a))
     
13.1
 
CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
13.2
  
CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 

* Incorporated by reference to our Amendment No. 1 to Form 20-F filed with the Securities and Exchange Commission on March 23, 2009.

 
6

 

** Incorporated by reference to our Registration Statement on Form S-4 (File No. 333-155312-01) filed with the Securities and Exchange Commission, as declared effective on February 17, 2009.
*** Incorporated by reference to our Annual Report on Form 20-F filed with the Securities and Exchange Commission on July 15, 2009.

 
7

 

SIGNATURE
 
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
 
 
GOLDEN GREEN ENTERPRISES LIMITED
   
 
/s/ Mingwang Lu
 
 
Mingwang Lu
October 20, 2009
Chief Executive Officer
 
8

 
GOLDEN GREEN ENTERPRISES LIMITED
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
 
CONTENTS

   
Pages
     
Report of Independent Registered Public Accounting Firm
 
F-2
     
Consolidated Balance Sheets
 
F-3
     
Consolidated Statements of Income
 
F-4
     
Consolidated Statements of Changes in Stockholders’ Equity
 
F-5
     
Consolidated Statements of Cash Flows
 
F-6  F-7
     
Notes to the Consolidated Financial Statements
 
F-8  F-23
 
 
F-1

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
GOLDEN GREEN ENTERPRISES LIMITED

We have audited the accompanying consolidated balance sheets of Golden Green Enterprises Limited (the “Company”) as of December 31, 2008 and 2007, and the related consolidated statements of income, consolidated statements of changes in stockholders’ equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Golden Green Enterprises Limited as of December 31, 2008 and 2007, and the consolidated results of its operations and its cash flows for the years ended December 31, 2008 and 2007, in conformity with accounting principles generally accepted in the United States of America.

/s/ UHY VOCATION HK CPA LIMITED

Hong Kong, the People’s Republic of China,
July 13, 2009
 
F-2

 
GOLDEN GREEN ENTERPRISES LIMITED
CONSOLIDATED BALANCE SHEETS
(IN US DOLLARS)

   
December 31
   
December 31
 
   
2008
   
2007
 
Assets
           
Current assets
           
Cash
  $ 42,622,404     $ 218,351  
Restricted cash
    24,712,349       19,226,551  
Accounts receivable, net
    10,304,724       10,176,454  
Inventories
    3,554,313       8,660,623  
Due from former owners
          25,126,394  
Prepayments and other deposits
    11,558,937       10,609,492  
Other receivables
    1,266,097       635,718  
Total current assets
    94,018,824       74,653,583  
                 
Non-current assets
               
Property, plant and equipment, net
    19,941,521       15,816,962  
Land use right, net
    1,416,220       1,346,895  
                 
Total non-current assets
    21,357,741       17,163,857  
Total assets
  $ 115,376,565     $ 91,817,440  
                 
Liabilities and stockholders’ equity
               
Current liabilities
               
Accounts payable
  $ 5,339,350     $   5,886,523  
Notes payable
    26,910,956       20,480,903  
Term loans
    30,677,903       17,355,303  
Income tax payable
    2,188,677       2,596,687  
Customers deposits
    17,484,708       8,448,965  
Accrued liabilities and other payables
    6,294,406       5,289,171  
Dividend payable
    9,601,549        
Due to former minority owners
    4,310,087        
Due to former owners
          61,688  
Total current liabilities
    102,807,636       60,119,240  
Non-current liabilities
               
Land use right payable, net
    28,521       154,125  
Total non-current liabilities
    28,521       154,125  
Total liabilities
    102,836,157       60,273,365  
Minority interest
          14,188,390  
                 
Stockholders’ equity
               
Common stock, 100,000,000 authorized shares with no par value, 30,000,000 shares issued and outstanding
    300       300  
Additional paid in capital
    6,930,944       1,834,940  
Retained earnings
    7,515,704       14,462,559  
Subscription receivable
    (4,310,087 )      
Accumulated other comprehensive income
    2,403,547       1,057,886  
Total stockholders’ equity
    12,540,408       17,355,685  
Total liabilities and stockholders' equity
  $ 115,376,565     $ 91,817,440  

See notes to financial statements.
 
F-3

 
GOLDEN GREEN ENTERPRISES LIMITED
CONSOLIDATED STATEMENTS OF INCOME
(IN US DOLLARS)

   
For the year ended December 31
 
   
2008
   
2007
 
Revenue
  $ 196,264,731     $ 139,649,209  
                 
Cost of revenue
    (142,407,995 )     (100,577,079 )
                 
Gross profit
    53,856,736       39,072,130  
                 
Operating expenses:
               
General and administrative expenses
    (3,431,745 )     (2,766,623 )
Selling and marketing expenses
    (831,108 )     (534,468 )
Total operating expenses
    (4,262,853 )     (3,301,091 )
                 
Operating income
    49,593,883       35,771,039  
                 
Other income and (expense):
               
Interest income
    1,395,121       1,432,019  
Interest expense
    (3,769,423 )     (2,147,451 )
Sundry income
    155,687       16,165  
                 
Net income before income taxes and minority interest
    47,375,268       35,071,772  
                 
Income tax expense
    (11,869,735 )     (11,421,638 )
                 
Net income before minority interest
  $ 35,505,533       23,650,134  
                 
Net income attributable to minority interest
    (13,920,944 )     (10,637,830 )
                 
Net income
  $ 21,584,589     $ 13,012,304  
                 
Earnings per share
               
- Basic
  $ 0.72     $ 0.43  
- Diluted
  $ 0.72     $ 0.43  
                 
Weighted average common shares outstanding
               
- Basic
    30,000,000       30,000,000  
- Diluted
    30,000,000       30,000,000  
 
See notes to financial statements.

F-4


GOLDEN GREEN ENTERPRISES LIMITED
CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS’ EQUITY

   
Common Stock, with no
         
 
   
Accumulated
             
   
Par Value
   
Additional
   
 
   
Other
   
Total
       
   
Number of
         
Paid-in
   
Subscription
   
Comprehensive
   
Retained
   
Stockholders'
 
   
Shares
   
Amount
   
Capital
   
receivable
   
Income
   
Earnings
   
Equity
 
Balance, December 31, 2006
    30,000,000     $ 300     $ 1,834,940     $     $ 240,963     $ 10,327,427     $ 12,403,630  
                                                         
Net income
                                  13,012,304       13,012,304  
Foreign currency translation gain
                            816,923             816,923  
Dividend declared
                                  (16,134,445 )     (16,134,445 )
Dividend allocated to minority interest
                                  7,257,273       7,257,273  
                                                         
Balance, December 31, 2007
    30,000,000       300       1,834,940             1,057,886       14,462,559       17,355,685  
                                                         
Net income
                                  21,584,589       21,584,589  
Foreign currency translation gain
                            1,345,661             1,345,661  
Subscription for ordinary shares
                4,310,087                         4,310,087  
Subscriptions receivable
                      (4,310,087 )                 (4,310,087 )
Contribution to capital on purchase of minority interest
                785,917                         785,917  
Dividend declared
                                  (51,856,496 )     (51,856,496 )
Dividend allocated to minority interest
                                  23,325,052       23,325,052  
                                                         
Balance, December 31, 2008
    30,000,000     $ 300     $ 6,930,944     $ (4,310,087 )   $ 2,403,547     $ 7,515,704     $ 12,540,408  

See notes to financial statements.
 
F-5

 
GOLDEN GREEN ENTERPRISES LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN US DOLLARS)

   
For the year ended December 31
 
    
2008
   
2007
 
             
Cash flows from operating activities:
           
Net income
  $ 21,584,589     $ 13,012,304  
                 
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
               
Depreciation of property, plant and equipment
    2,447,626       2,156,130  
Amortization of land use right
    30,280       27,641  
Gain on disposal of property, plant and equipment
          (16,133 )
Net income attributable to minority interest
    13,920,944       10,637,830  
                 
Changes in assets and liabilities:
               
Accounts receivable, net
    (128,270 )     (4,400,574 )
Inventories
    5,106,310       (149,620 )
Prepayments and other deposits
    (949,445 )     (2,482,968 )
Other receivables
    (630,379 )     (479,174 )
Accounts payable
    (547,173 )     (76,729 )
Income tax payable
    (408,010 )     648,030  
Customers deposit
    9,035,743       3,146,217  
Accrued liabilities and other payables
    1,005,235       (517,004 )
 
               
Net cash provided by operating activities
    50,467,450       21,505,950  
                 
Cash flows from investing activities:
               
Capital expenditures for addition of property, plant and equipment
    (6,572,185 )     (2,277,378 )
Changes in restricted cash
    (5,485,798 )     8,335,884  
Proceeds from/(to) former owners
    25,126,394       (7,203,669 )
                 
Net cash provided by/(used in) investing activities
    13,068,411       (1,145,163 )

F-6

 
GOLDEN GREEN ENTERPRISES LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS (.../Cont'd)
(IN US DOLLARS)

   
For the year ended December 31
 
   
2008
   
2007
 
             
Cash flows from financing activities:
           
Proceeds from common stock issued
          300  
Repayment of  term loans
    (26,662,742 )     (5,887,615 )
Proceeds from term loans
    39,985,342       15,093,356  
Proceeds from notes payable
    6,430,053       (15,006,853 )
Dividends paid
    (42,254,947 )     (16,134,445 )
Land use right payable
    (125,604 )     (304,465 )
Due to former owners
    (61,688 )     (60,683 )
                 
Net cash used in financing activities
    (22,689,586 )     (22,300,405 )
                 
Net increase/(decrease) in cash
    40,846,275       (1,939,618 )
                 
Effect on change of exchange rates
    1,557,778       1,353,809  
                 
Cash as of January 1
    218,351       804,160  
                 
Cash as of December 31
  $ 42,622,404     $ 218,351  
                 
Supplemental disclosures of cash flow and non-cash information:
               
                 
Cash paid during the year:
               
Interest paid
  $ 3,769,423     $ 2,147,451  
Income tax paid
  $ 12,277,745     $ 10,930,112  
                 
Non - cash item:
               
Transfer of prepayments and other deposits to property, plant and equipment
  $ 2,288,337     $  
Acquisition of minority interest with subscription receivable
  $ 4,310,087     $  

See notes to financial statements.

F-7

 
GOLDEN GREEN ENTERPRISES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(IN US DOLLARS)

1.
DESCRIPTION OF BUSINESS AND ORGANIZATION

Golden Green Enterprises Limited (“the Company” or “Golden Green”) was established in the British Virgin Islands ("BVI") on March 11, 2008 as a limited liability Company, for the purpose of effectuating a reorganization and merger with Wealth Rainbow Development Limited (“Wealth Rainbow”) and Henan Green Complex Materials Co., Ltd (“Henan Green”) as discussed in Note 2.

Golden Green’s holdings are comprised of Wealth Rainbow, also a holding company and Henan Green, an operating company. Through its investment in these entities, Golden Green is involved with the processing and sales of steel mill flat-rolled products which are extensively used in the manufacturing industry throughout mainland China.  Henan Green conducts business directly with its customers in the People's Republic of China (PRC).

Wealth Rainbow was formed on March 1, 2007 by Lu Mingwang's family as the Company. On October 21, 2008, Wealth Rainbow acquired 100% of the outstanding shares of Henan Green pursuant to a stock transfer agreement. Subsequent to the stock transfer, Wealth Rainbow became the sole shareholder of Henan Green. The change of ownership was approved by the Chinese Government on October 21, 2008. The principal activity of Wealth Rainbow is to hold its interest in Henan Green.

The consolidated financial statements include the financial statements of Golden Green and its subsidiaries (together referred to as the "Group"). The Company owns 100% equity interests directly and indirectly, in two subsidiaries, namely Wealth Rainbow and Henan Green. The organization chart of the Group is as follows:
 

F-8

 

GOLDEN GREEN ENTERPRISES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(IN US DOLLARS)

2.
REORGANIZATION AND ACQUISITION OF MINORITY INTEREST 

On October 21, 2008, Wealth Rainbow acquired the minority interest in Henan Green for $4,310,087 with the issuance of a promissory note to the minority stockholders. This amount represented the fair value of Henan Green as determined by and independent valuation which was performed during August 2008. On the effective acquisition date, October 21, 2008, the fair value of Henan Green exceeded the agreed purchase price by $785,917. Such amount has been recorded as a contribution of capital by Henan Green.

The net assets of Henan Green were recorded by Wealth Rainbow at historical cost to the extent of the common control group’s 55.02% ownership of Henan Green. The remaining 44.98% of Henan Green shares acquired were accounted for as a purchase (fair value) of the minority interest, as contemplated by Statement of Financial Accounting Standards “SFAS No.141”, Business Combinations.

The common control group comprised of three direct relatives of the Lu family which held approximately 55.02% of the shares of Henan Green on the date it was acquired by Wealth Rainbow. Wealth Rainbow was wholly owned by another direct relative of the Lu family. Under the common control reporting rules, the control group’s 55.02% interest of Henan Green that was acquired by Wealth Rainbow constitutes an exchange of equity interests between entities under common control.

Subsequent to the Henan Green acquisition, Wealth Rainbow entered into a reorganization and capitalization agreement with the Company during November 2008 in which all of the shares of Wealth Rainbow were exchanged with shares of the Company. As a result of these transactions, Wealth Rainbow and Henan Green became wholly owned subsidiaries of the Company. These transactions have been accounted for as a reorganization under common control with the purchase of a minority interest.

Accordingly, based on the above transactions, the results of Henan Green’s operations have been included in the consolidated financial statements of the Company for the years ended December 31, 2008 and 2007. The controlling interest of Henan Green was effectively acquired on December 25, 2006. However, the Company has elected not to present such one week period since it was determined not to be material or meaningful to the presentation and understanding of these financial statements.

During March 2009, the Company amended its memorandum of association by increasing its authorized number of ordinary shares from 50,000 with a $1 par value to 100,000,000 with no par value.  Simultaneously with the amendment, the Company effected a stock split by an additional 29,999,900 shares to the current shareholders.  Accordingly, immediately after the amendment and prior to the merger with China Opportunity Acquisition Corp. (“COAC”), the Company had 30,000,000 ordinary shares outstanding. On March 17, 2009, the Company consummated a merger with COAC.

In connection with the merger, the Company issued 2,245,723 shares of its ordinary shares in exchange for all the outstanding shares of COAC. The Company is deemed to be the surviving entity and registered its shares pursuant to a registration statement filed with the U.S Securities and Exchange Commission.  Accordingly, after the merger, the former shareholders of COAC own approximately 6.5% of the Company’s ordinary shares.

The Company has reserved approximately 16,066,667 ordinary shares in connection with the exercise of warrants and unit purchase options outstanding at the date of the merger.

3.
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 
(a)
Basis of consolidation

The consolidated financial statements include the accounts of Golden Green and all entities in which a direct or indirect controlling interest exists. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

 
F-9

 

GOLDEN GREEN ENTERPRISES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(IN US DOLLARS)

3.
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (…/Cont’d)

 
(a)
Basis of consolidation (…/Cont’d)

The Group’s consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP").  The preparation of the consolidated financial statements in accordance with US GAAP requires management of the Group to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported  amounts  of  revenues  and   expenses  during  the  year.   Significant items  subject  to  such estimates and assumptions include the recoverability of the carrying amount and the estimated useful lives of long-lived assets; valuation allowances for receivables, realizable values for inventories. Actual results could differ from those estimates.

Net income is reduced by the portion attributable to minority interests. The minority interests are disclosed separately in the consolidated statements of income and in the consolidated balance sheets. Minority interests consist of the amount of those interests at the date the controlling interest was established and the minority’s share of changes in equity since that date.

 
(b)
Foreign currency translation

Assets and liabilities of foreign operations are translated at the rate of exchange in effect on the balance sheet date; income and expenses are translated at the average rate of exchange prevailing during the year. The year-end rates for December 31, 2008 and 2007 of Renminbi to one US dollar were 6.8225 and 7.2946 respectively; average rates for the year-end December 31, 2008 and 2007 were 6.9351 and 7.5973 respectively. The related translation adjustments are reflected in "Accumulated other comprehensive income" in the stockholders’ equity section of the balance sheet, net of the amount attributable to the minority interest. As of December 31, 2008 and 2007, the accumulated foreign currency translation gain was $2,403,547 and $1,057,886 respectively. Foreign currency gains and losses resulting from transactions are included in earnings.

 
(c)
Cash

Cash represents cash in bank and cash on hand.

The Group considers all highly liquid investments with original maturities of three months or less to be cash.  The Group maintains bank accounts in the PRC.

 
(d)
Accounts receivable

Accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts sales returns and trade discounts.  The allowance for doubtful accounts is the Group’s best estimate of the amount of probable credit losses in the Group’s existing accounts receivable.  Management determines the allowance based on historical write-off experience, customer specific facts and economic conditions.  The Group has historically been able to collect all of its receivable balances, and accordingly, 2% allowance has been provided for doubtful accounts.

Outstanding account balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Group does not have any off-balance-sheet credit exposure to its customers.

 
F-10

 

GOLDEN GREEN ENTERPRISES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(IN US DOLLARS)

3.
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (…/Cont’d)

 
(e)
Inventories

Inventories are stated at the lower of cost or market and consist primarily of flat rolled steel.  Cost is determined using the weighted average cost method.  In the case of work in process and finished goods, such costs comprise of direct materials, direct labor and an appropriate proportion of overheads.

 
(f)
Property, plant and equipment

Property, plant and equipment are recorded at cost less accumulated depreciation.  Expenditures for major additions and betterments are capitalized.  Maintenance and repairs are charged to general and administrative expenses as incurred. Depreciation of property, plant and equipment is computed by the straight-line method over the assets estimated useful lives ranging from five to fifty years. Building improvements, if any, are amortized on a straight-line basis over the estimated useful life.

Upon sale or retirement of property, plant and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in operations.

Construction in progress represents the costs of property, plant and equipment under construction or installation. Depreciation commences when the asset is placed in service. The accumulated costs are reclassified as property, plant and equipment when installation or construction is completed. Government subsidies received reduce the cost of construction.

The estimated useful lives of the assets are as follows:

   
 Years
     
Land use right
 
 50
Leasehold land improvement
 
 46.5
Buildings
 
 10 - 20
Machinery and equipment
 
 5 - 20
Vehicles
 
 5
Furniture fixtures and office equipment
 
 5

 
(g)
Land use right

Land use right is recorded at cost less accumulated amortization. Under Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets", land use right classified as definite lived intangible assets and are amortized over its useful life.  According to the laws of the PRC, the government owns all of the land in the PRC. Companies or individuals are authorized to possess and use the land only through land use rights granted by the PRC government.  Land use right is amortized using the straight-line method over the lease term of 50 years.

 
F-11

 

GOLDEN GREEN ENTERPRISES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(IN US DOLLARS)

3.
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (…/Cont’d)

 
(h)
Impairment of long-lived assets

Long-lived assets, including property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale are presented separately in the appropriate asset and liability sections of the balance sheet.

No impairment was recognized as at December 31, 2008 and 2007.

 
(i)
Fair value accounting

Statement of Financial Accounting Standards (SFAS) No. 157, "Fair Value Measurements", defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and states that a fair value measurement should be determined based on assumptions that market participants would use in pricing an asset or a liability. In February 2008, the FASB issued FASB Staff Position No. FAS 157-2 ("FSP 157-2") Effective Date of FASB Statement No. 157, which amended SFAS 157 to defer the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis, at least annually, including goodwill and trademarks. In accordance with FSP 157-2, the Group will delay application of SFAS 157 for non-financial assets and non-financial liabilities, until January 1, 2009. The application of SFAS 157 in situations where that market for a financial asset is not active was clarified by the issuance of Financial Accounting Standards Board Staff Position 157-3. Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active ("FSP 157-3") in October 2008. FSP 157-3 became effective immediately and did not significantly impact the methods by which the Group determines the fair values of its financial assets.

 
(j)
Revenue recognition

The Group generates revenue primarily from sales of steel mill flat-rolled products.

Revenue is recognized when products have been delivered to the buyer and title and risk of ownership has passed to the buyer, the sales price is fixed and determinable and collectability is reasonably assured.

In the PRC, value added tax (“VAT”) of 17% on the invoice amount is collected in respect of the sales of goods on behalf of tax authorities. The VAT collected is not revenue of the Group; instead, the amount is recorded as a liability on the balance sheet until such VAT is paid to the authorities.

 
(k)
Income taxes

The Group accounts for income taxes under Financial Accounting Standards Board (FASB) No. 109, "Accounting for Income Taxes". Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be effective when the differences are expected to reverse.

 
F-12

 

GOLDEN GREEN ENTERPRISES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(IN US DOLLARS)

3.
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (…/Cont’d)

 
(k)
Income taxes (…/Cont’d)

Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of income in the period that includes the enactment date.

Management has elected to defer the application of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, in accordance with FASB Staff Position No. 48-3, Effective Date of FASB Interpretation No. 48 for Certain Nonpublic Companies. The Group will continue to evaluate uncertain tax positions in accordance with FASB Statement No. 5 Accounting for Contingencies. Under that Statement, if it is probable that an uncertain tax position will result in a material liability and the amount of the liability can be estimated, then the estimated liability is accrued. As of December 31, 2008 and 2007, there were no amounts that had been accrued with respect to uncertain tax positions.

 
(l)
Comprehensive income

The Group has adopted Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income".  This statement establishes rules for the reporting of comprehensive income and its components.  Comprehensive income consists of net income and foreign currency translation adjustments.

Comprehensive income consists of the following for the year ending December 31:

   
2008
   
2007
 
   
USD
   
USD
 
             
Net income
  $ 21,584,589     $ 13,012,304  
Other comprehensive income - Foreign currency translation adjustments
    1,345,661       816,924  
Total comprehensive income
  $ 22,930,250     $ 13,829,228  

(m) 
Commitments and contingencies

In the normal course of business, the Group is subject to contingencies, including legal proceedings and claims arising out of the normal course of businesses that relate to a wide range of matters, including among others, product liability. The Group records accruals for such contingencies based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider many factors in making these assessments including past history, scientific evidence and the specifics of each matter. As management has not become aware of any product liability claims arising from any incident over the year, the Group has not recognized a liability for product liability claims.

 
F-13

 


GOLDEN GREEN ENTERPRISES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(IN US DOLLARS)

3.
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (…/Cont’d)

(n)
Segment information

Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosure About Segments of an Enterprise and Related Information" establishes standards for reporting information on operating segments in interim and annual financial statements.  The Group has only one segment, all of the Group's operations and customers are in the PRC and all income are derived from the sales of steel mill flat-rolled products. Accordingly, no geographic information is presented.

(o)
Recently issued accounting standards

In April 2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position No. 142-3 ("FSP 142-3") "Determination of the Useful Life of Intangible Assets." FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FAS 142, "Goodwill and Other Intangible Assets," to include an entity's historical experience in renewing or extending similar arrangements, adjusted for entity-specific factors, even when there is likely to be "substantial cost or material modifications." FSP FAS 142-3 states that in the absence of historical experience an entity should use assumptions that market participants would make regarding renewals or extensions, adjusted for entity-specific factors. The guidance for determining the useful life of intangible assets included in this FSP will be applied prospectively to intangible assets acquired after the effective date of January 1, 2009. The Group does not expect FSP 142-3 to have a material impact on our financial statements.

In May 2008, the Financial Accounting Standards Board (FASB) issued Financial Accounting Standard No. 162 ("FAS 162"), “The Hierarchy of Generally Accepted Accounting Principles”. Under FAS 162, the GAAP hierarchy will now reside in the accounting literature established by the Financial Accounting Standards Board. FAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements in conformity with GAAP. FAS 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles." FAS 162 will not impact the Group’s financial statements.

In December 2008, the Financial Accounting Standards Board (FASB) issued Financial Staff Position  No. 132(R)-1 ("FSP No. 132(R)-1"), "Employers’ Disclosures about Postretirement Benefit Plan Assets,” FSP No. 132(R)-1 amends the Financial Accounting Standards Board (FASB) No. 132 to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. The additional disclosures required focus on disclosures of fair value by category of plan assets. This Financial Staff Position is effective for fiscal years ending after December 15, 2009. The Group does not expect a material impact on its financial statements when these additional provisions are adopted.

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

 
F-14

 

GOLDEN GREEN ENTERPRISES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(IN US DOLLARS)

4.
CASH

Cash represents cash in bank and cash on hand. Cash as of December 31, 2008 and 2007 consist of the following:
 
   
2008
   
2007
 
   
USD
   
USD
 
             
Bank balances and cash
  $ 67,334,753     $ 19,444,903  
Less: Restricted cash
    (24,712,349 )     (19,226,551 )
    $ 42,622,404     $ 218,352  
 
Renminbi is not a freely convertible currency and the remittance of funds out of the PRC is subject to the exchange restrictions imposed by the PRC government.

As at December 31, 2008 and 2007, the Group’s cash of approximately $24,712,349 and $19,226,551, were restricted and deposited in certain banks as guarantee deposits for the benefit of issuance of notes payable granted by the banks.

The restricted cash guaranteed $26,910,956 and $20,480,903 of notes payable for the years ended December 31, 2008 and 2007 respectively.  It can only be released at the expiration date of corresponding notes payable.

5.
ACCOUNTS RECEIVABLE

The Group performs ongoing credit evaluations of its customers' financial conditions. The Group generally encourages its customers to use its products and settle the outstanding balance within credit terms. As of December 31 2008 and 2007, the provision on accumulated allowance for doubtful accounts were $126,790 and $86,384 respectively.

6. 
INVENTORIES

Inventories as of December 31, 2008 and 2007 consist of the following:
 
   
2008
   
2007
 
   
USD
   
USD
 
             
Raw materials
  $ 936,280     $ 4,763,939  
Work-in-process
    1,378,067       1,310,691  
    1,239,966       2,585,993  
    $ 3,554,313     $ 8,660,623  

7.
DUE FROM/(TO) FORMER OWNERS

Amounts due from/(to) former owners are unsecured, non-interest bearing and with no fixed repayment terms. As at December 31, 2008, the balance of due from/(to) former owners was zero as amounts were fully settled in the fourth quarter of 2008.

 
F-15

 

GOLDEN GREEN ENTERPRISES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(IN US DOLLARS)

8.
PREPAYMENTS AND OTHER DEPOSITS

Prepayments and other deposits as of December 31, 2008 and 2007 consist of the following:

   
2008
   
2007
 
   
USD
   
USD
 
             
Prepaid purchases
  $ 10,896,840     $ 10,609,492  
Prepaid machinery deposit
    637,882        
Prepaid general expenses
    24,215        
    $ 11,558,937     $ 10,609,492  

Prepaid purchases represent amounts prepaid for the purchases of raw materials and accessories to suppliers.

9. 
OTHER RECEIVABLES

Other receivables as of December 31, 2008 and 2007 consist of the following:

   
2008
   
2007
 
   
USD
   
USD
 
             
Other receivables
           
- Advances to staff
  $ 381,224     $ 156,404  
- Others
    884,873       479,314  
    $ 1,266,097     $ 635,718  

Other receivables represent advances to staff and petty cash to department staff for daily expenditures. These amounts are interest free and with no fixed repayment terms.

10.
PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of December 31, 2008 and 2007 consist of the following:

   
2008
   
2007
 
   
USD
   
USD
 
             
Buildings
  $ 5,000,219     $ 2,525,743  
Leasehold land improvement
    20,183       18,877  
Plant machinery and equipment
    22,769,678       20,232,099  
Vehicles
    1,615,780       842,294  
Office equipment
    139,189       223,123  
Construction in progress
    1,233,938       364,666  
      30,778,987       24,206,802  
                 
Accumulated depreciation
    (10,837,466 )     (8,389,840 )
    $ 19,941,521     $ 15,816,962  

 
F-16

 

GOLDEN GREEN ENTERPRISES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(IN US DOLLARS)

10.
PROPERTY, PLANT AND EQUIPMENT (…/Cont’d)

Depreciation charged to earnings for the years ended December 31, 2008 and 2007 were $2,447,626 and $2,156,130 respectively.

Construction in progress consists of the construction of a research and development centre ("R&D centre") and buildings of staff accommodation on 300 acres land. The total construction in progress as at December 31, 2008 was $1,233,938. $474,703 was the cost incurred net of government subsidies of $230,710 of R&D centre during the period from July 2008 to December 2008. The R&D centre is estimated to be completed in 2009 with total estimated cost of $2,198,608.

Buildings of staff accommodation consist of the constructions of drainage system and related facilities, side pavement and building of stores and building management centre. $494,790 was the cost incurred during the period from July 2008 to December 2008.  These buildings of staff accommodation are estimated to be completed in 2009 with total estimated cost of $879,443.

$264,445 was the cost incurred to install a production line during the period from July 2008 to December 2008, the installation of production line is estimated to be completed in 2009 with total estimated cost of $3,078,051.

No depreciation has been provided for construction in progress.

11.
LAND USE RIGHT

Land use right as of December 31, 2008 and 2007 consist of the following:

   
2008
   
2007
 
   
USD
   
USD
 
             
  $ 1,416,220     $ 1,346,895  

Land use right represents prepaid lease payments to the local government for land use right held for a period of 50 years from July 9, 2004 to June 30, 2054 in Zhengzhou, People's Republic of China. Land use right payable as at December 31, 2008 and 2007 were $28,521 and $154,125 respectively.

Land use right is amortized using the straight-line method over the lease term of 50 years. The amortization expense for the years ended December 31, 2008 and 2007 were $30,280 and $27,641 respectively.

 
F-17

 

GOLDEN GREEN ENTERPRISES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(IN US DOLLARS)

12.
NOTES PAYABLES

Notes payable as of December 31, 2008 and 2007 consist of the following:

   
2008
   
2007
 
   
USD
   
USD
 
             
Classified by financial institutions: -
           
China Citic Bank
  $ 5,862,953     $ 3,194,143  
Commercial Bank of Zhengzhou
    2,711,616       411,263  
Guangdong Development Bank
    6,903,628       2,330,491  
Shanghai Pudong Development Bank
    10,260,169       8,842,157  
China Merchants Bank
    1,172,590       5,702,849  
    $ 26,910,956     $ 20,480,903  
                 
Additional information: -
               
Maximum balance outstanding during the year
  $ 44,902,894     $ 55,568,497  
Finance cost
  $ 1,333,746     $ 1,133,708  
Finance charge per contract (basis points)
 
5pt
   
5pt
 
Weighted average interest rate
    2.03 %     1.56 %

All the above notes payable are secured by either 50% or 100% corresponding restricted cash.  As at December 31, 2008 and 2007, the Group’s cash of approximately $24,712,349 and $19,226,551 were restricted on the such purpose. All the notes payable have terms of six months. Commercial Bank of Zhenzhou had imposed covenant on the Company that not more than 10% of the net profit could be distributed as dividend.  Shanghai Pudong Development Bank imposed covenant on the Company that any transaction which is over 10% of the Company’s net assets must notify the Bank.  For facilities obtained from both banks, 100% of corresponding restricted cash had been pledged.  In the management’s point of view, covenants of both banks do not apply to the Company.
 
 
F-18

 

GOLDEN GREEN ENTERPRISES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(IN US DOLLARS)

13.
TERM LOANS

In order to provide working capital for operations, the Group entered into the following short term loan agreements as of December 31, 2008 and 2007:

   
2008
   
2007
 
   
USD
   
USD
 
             
Classified by financial institutions: -
           
China Citic Bank
  $ 3,664,345     $ 2,056,315  
China Development Bank
    4,397,216        
China Merchants Bank
    4,397,216       1,370,877  
Commercial Bank of Zhengzhou
    7,328,691       6,854,385  
Guangdong Development Bank
    2,198,607       1,782,140  
Minsheng Bank of China Branch in Zhengzhou
    1,465,739        
Shanghai Pudong Development Bank
    5,862,953       4,112,631  
Zhengzhou City Rural Credit Cooperative
    806,156       1,178,955  
Zhengzhou City Urban Credit Cooperative
    556,980        
    $ 30,677,903     $ 17,355,303  
                 
Additional information: -
               
Maximum balance outstanding during the year
  $ 31,117,626     $ 17,355,303  
Interest paid during the year
  $ 2,430,590     $ 974,940  
Range of interest rate (basis points)
 
48.67 - 96.5pt
   
52.2 - 96.0pt
 
Weighted average interest rate
    4.04 %     4.14 %

All of the above short terms loans are fixed term loans with a period of 12 months or less. These short terms loans are either guaranteed and secured by the Group’s fixed assets, including its machinery and land use right, or guaranteed and secured by a related party, Zhengzhou No.2 Iron and Steel Company Limited's land and plant properties, or guaranteed by the Group’s owners or other third parties.

14.
ACCRUED LIABILITIES AND OTHER PAYABLES

Accrued liabilities and other payables as of December 31, 2008 and 2007 consist of the following:

   
2008
   
2007
 
   
USD
   
USD
 
             
Accrued expenses
  $ 1,142,668     $ 989,030  
Other payables
    4,278,620       4,140,392  
Other tax payables
    873,118       159,749  
    $ 6,294,406     $ 5,289,171  
 
Other tax payables represent payables other than income tax which consist of value added tax and city maintenance and construction tax.

 
F-19

 
 
GOLDEN GREEN ENTERPRISES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(IN US DOLLARS)

15.
STOCKHOLDERS’ EQUITY

(a)
Capital

The Company was established in the British Virgin Islands ("BVI") on March 11, 2008 as a limited liability company.  Authorized common stock of the Company included 50,000 ordinary shares with a $1.00 par value.  Prior to the stock split described below, the Company has 100 shares outstanding. During March 2009, the Company amended its memorandum of association by issuing an additional 29,999,900 increasing the authorized shares to 100,000,000 with no par value.  Additionally prior to the merger with COAC, the Company effected a stock split increasing the total number of shares outstanding to 30,000,000.

 
(b)
Retained earnings

Retained earnings as of December 31, 2008 and 2007 consist of the following:

   
2008
   
2007
 
   
USD
   
USD
 
             
Retained earnings
  $ 5,932,802     $ 12,879,657  
Statutory surplus reserves
    1,582,902       1,582,902  
    $ 7,515,704     $ 14,462,559  

In accordance with PRC Company Law, the Group is required to allocate at least 10% of the profit of its PRC operating Company to the statutory surplus reserve.  Appropriation to the statutory surplus reserve by the Group is based on profit arrived at under PRC accounting standards for business enterprises for each year.

The profit arrived at must be set off against any accumulated losses sustained by the Group in prior years, before allocation is made to the statutory surplus reserve.  Appropriation to the statutory surplus reserve must be made before distribution of dividends to shareholders.  The appropriation is required until the statutory surplus reserve reaches 50% of the owners’ equity.  This statutory surplus reserve is not distributable in the form of cash dividends.

As the statutory surplus reserve has reached 50% of the owners' equity in 2005, the Group ceased to allocate.

 
F-20

 

GOLDEN GREEN ENTERPRISES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(IN US DOLLARS)

16.
DIVIDENDS DECLARED

 
 
2008
   
2007
 
   
USD
   
USD
 
Dividend in respect of the previous financial year declared
  $ 24,501,225     $ 16,134,445  
Interim dividend in respect of the current financial year declared
    17,680,106        
Final dividend in respect of the current financial year declared
    9,675,165        
Total dividends declared
  $ 51,856,496     $ 16,134,445  
                 
Less: dividends allocated to minority interests
    23,325,052       7,257,273  
   
 
   
 
 
    $ 28,531,444     $ 8,877,172  
   
 
   
 
 
Dividend paid
  $ 42,254,947     $ 16,134,445  
                 
Less: dividends paid to minority interests
    19,006,275       7,257,273  
    $   23,248,672     $   8,877,172  

17.
INCOME TAXES

All of the Group’s income is generated in the PRC.

   
2008
   
2007
 
   
USD
   
USD
 
             
Current income tax expense
  $ 11,869,735     $ 11,421,638  

The Group’s income tax provision in respect of operations in PRC is calculated at the applicable tax rates on the estimated assessable profits for the year based on existing legislation, interpretations and practices in respect thereof. The standard tax rate applicable to the Group changed from 33% to 25%, effective on January 1, 2008.

A reconciliation of the expected income tax expense to the actual income tax expense for the years ended December 31, 2008 and 2007 are as follows:-

   
2008
   
2007
 
   
USD
   
USD
 
             
Income before tax
  $ 47,375,268     $ 35,071,772  
                 
Expected PRC income tax expense at statutory tax rate of 25% (2007: 33%)
  $ 11,843,817     $ 11,573,684  
Income not subject to tax
    77,518        
Effect on exchange rate
    (51,600 )     (152,046 )
Actual income tax expense
  $ 11,869,735     $ 11,421,638  

The PRC tax system is subject to substantial uncertainties and has been subject to recently enacted changes, the interpretation and enforcement of which are also uncertain. There can be no assurance that changes in PRC tax laws or their interpretation or their application will not subject the Group to substantial PRC taxes in the future.

No deferred taxation has been provided as the effect of all temporary differences is immaterial.

 
F-21

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(IN US DOLLARS)

18.
SUNDRY INCOME

Sundry income as of December 31, 2008 and 2007 consists of the following:-

   
2008
   
2007
 
   
USD
   
USD
 
             
Local government subsidy
  $ 79,365     $  
Transferred from receipts in advance and accounts payable
    71,605       16,165  
Others
    4,717        
    $ 155,687     $ 16,165  

During the year of 2008, the Group received a special one time subsidy from local government amounting to $79,365 as a subsidy for its advance technology in manufacturing precision steel mill flat-rolled products. This subsidy is not a continuing nature, it depends on the local government's policy announced within a valid period.  $71,605 was the waived miscellaneous balance of receipts in advance and accounts payable. The balance was not refunded or paid and was agreed by both parties.