UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
Amendment No. 1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2010
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 333-147225
MAXRAY OPTICAL TECHNOLOGY CO. LTD.
(Exact name of Registrant as specified in its charter)
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Delaware (State or other jurisdiction of incorporation or organization) | N/A (I.R.S. Employer Identification No.) |
5618 Tenth Line West, Unit #9
Mississauga, Ontario, CANADA, L5M 7L9
(Address of principal executive offices, including zip code)
(905) 824-6200
(Registrant's telephone number, including area code)
Check 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The number of shares of the Registrant's common stock issued and outstanding at September 30, 2010, was 31,728,850.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
1
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
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Item 1. | Condensed Financial Statements | 4 |
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Item 2. | Managements Discussion And Analysis Of Financial Condition And Results Of Operations | 12 |
Item 3. Item 4. | Quantitative and Qualitative Disclosures About Market Risk Controls and Procedures | 15 15 |
PAGE
PART II
OTHER INFORMATION
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Item 1. | Legal Proceedings | 15 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 15 |
Item 3. | Defaults Upon Senior Securities | 15 |
Item 4. | Submission of Matters to a Vote of Security Holders | 15 |
Item 5. | Other Information | 15 |
Item 6. | Exhibits | 15 |
2
PART I - FINANCIAL INFORMATION
Statements in this Form 10-Q/A Quarterly Report may be forward-looking statements. Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on our current expectations, estimates and projections about our business based, in part, on assumptions made by our management. These assumptions are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those risks discussed in this Form 10-Q/A Quarterly Report, under Managements Discussion and Analysis of Financial Condition or Plan of Operation and in other documents which we file with the Securities and Exchange Commission.
In addition, such statements could be affected by risks and uncertainties related to our financial condition, factors that affect our industry, market and customer acceptance, changes in technology, fluctuations in our quarterly results, our ability to continue and manage our growth, liquidity and other capital resource issues, competition, fulfillment of contractual obligations by other parties and general economic conditions. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form 10-Q/A Quarterly Report, except as required by law.
ITEM 1. CONDENSED FINANCIAL STATEMENTS PAGE
Condensed Consolidated Balance Sheets 5
Condensed Consolidated Statements of Operations (Three Month Periods) 6
Condensed Consolidated Statements of Income and
Comprehensive Income
(Three Month Periods) 7
Condensed Consolidated Statements of Cash Flow (Three Month Periods) 8
Notes to Condensed Consolidated Financial Statements 9
3
Consolidated Financial Statements of
MAXRAY OPTICAL TECHNOLOGY CO., LTD.
As of September 30, 2010
4
MaxRay Optical Technology Co., Ltd. |
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Consolidated Balance Sheets |
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| September 30, 2010 | June 30, 2010 |
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Current assets: |
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Cash and Cash equivalents |
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| $ 5,605,331 | $ 7,416,191 |
Restricted Cash |
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| 1,597,931 | 1,765,488 |
Accounts receivable |
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| 23,433,820 | 16,834,258 |
Prepayments |
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| 952,679 | 3,738,054 |
Inventory |
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| 5,224,222 | 4,777,396 |
Deferred expense |
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| 80,535 | 130,638 |
Other current assets |
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| 154,404 | 85,747 |
Total current assets |
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| 37,048,922 | 34,747,772 |
Property, plant and equipment, net |
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| 17,939,177 | 17,440,374 |
Land use right, net |
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| 931,908 | 920,051 |
Intangible assets, net |
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| 57,398 | 38,794 |
Licence Rights |
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| 570,375 | 578,625 |
Deferred assets |
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| 1,457,331 | 1,059,741 |
Total assets |
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| $ 58,005,111 | $ 54,785,357 |
Current liabilities: |
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Short-term loans |
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| $ 26,694,553 | $ 24,015,968 |
Accounts payable |
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| 7,161,972 | 4,203,358 |
Taxes payable |
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| 99,825 | - |
Other payables |
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| 160,030 | 3,346,466 |
Long-term debt - current portion |
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| 3,732,402 | 3,671,827 |
Total current liabilities |
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| 37,848,782 | 35,237,619 |
Non-current liabilities: |
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Due to related parties |
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| 1,098,438 | 1,171,433 |
Total liabilities |
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| 38,947,220 | 36,409,052 |
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Common stock, $0.001 par value, 50 million authorized |
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31,728,850 and 8,000,000 shares issued and outstanding |
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respectively at September 30, 2010 and June 30, 2010 |
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| 31,729 | 31,729 |
Paid-in capital |
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| 14,672,908 | 14,672,908 |
Retained earnings |
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| 3,034,451 | 2,651,055 |
Accumulated other comprehensive income |
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| 1,318,803 | 1,020,613 |
Total Stockholders' equity |
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| 19,057,891 | 18,376,305 |
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Total liabilities and stockholders' equity |
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| $ 58,005,111 | $ 54,785,357 |
The accompanying notes are an integral part of these financial statements.
5
MaxRay Optical Technology Co., Ltd. |
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Consolidated Statements of Operation and Comprehensive Income |
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(unaudited) |
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| FOR THE THREE MONTHS ENDED | |
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| SEPTEMBER 30, | |
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| 2010 | 2009 |
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Net Sales |
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| $ 27,190,850 | $ 13,683,980 |
Cost of sales |
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| (26,004,975) | (12,507,626) |
Gross Profit |
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| 1,185,875 | 1,176,354 |
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Other Operating Income |
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| 14,050 | 9,243 |
Operating expenses |
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| (67,745) | (41,641) |
General and Administrative expenses |
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| (541,233) | (505,355) |
Financial expenses |
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| (336,819) | (134,631) |
Total Operating Income |
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| 254,128 | 503,970 |
Subsidy income |
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| 183,832 | 9,383 |
Non-operating expenses, net |
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| (4,769) | (107,613) |
Net Income before income taxes |
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| 433,191 | 405,740 |
Income taxes |
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| (49,795) | - |
Net Income |
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| $ 383,396 | $ 405,740 |
Other Comprehensive Income |
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| 262,771 | 20,038 |
Comprehensive Income |
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| $ 646,167 | $ 425,778 |
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Earnings per share - Basic and diluted |
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| $ 0.01 | $ 0.02 |
Weighted Average number of shares outstanding |
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| 31,728,850 | 25,728,850 |
The accompanying notes are an integral part of these financial statements.
6
MaxRay Optical Technology Co., Ltd. |
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Consolidated Statements of Cash Flow |
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(unaudited) |
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| FOR THE THREE MONTHS ENDED | ||
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| SEPTEMBER 30, | |
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| 2010 | 2009 |
Cash Flows from Operating Activities: |
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| Net income |
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| $ 383,396 | $ 405,740 | |
| Adjustments to reconcile net income to |
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| net cash provided by operating activities: |
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| Depreciation and amortization |
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| 480,977 | 295,541 | |
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| Changes in operating assets and liabilities: |
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| Accounts receivable |
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| (6,599,562) | (6,184,358) |
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| Inventories |
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| (446,825) | (3,282,990) |
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| Prepayments |
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| 2,785,376 | (855,515) |
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| Deferred expense |
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| 50,103 | - |
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| Other current assets |
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| (68,658) | (271,960) |
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| Notes payable |
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| - | (1,071,353) |
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| Accounts payable |
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| 2,958,614 | 4,454,974 |
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| Advances from customers |
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| - | (56,476) |
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| Other payable |
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| (3,186,436) | (463,604) |
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| Taxes payable |
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| 99,825 | - |
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| Deferred assets |
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| (419,801) | (161,607) |
Net Cash Provided by(Used in) Operating Activities |
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| (3,962,991) | (7,191,608) | ||
Cash Flows from Investing Activities: |
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| Changes in restricted cash |
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| 167,557 | 421,149 | |
| Acquisition of property, plant and equipment |
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| (498,803) | (557,267) | |
Net Cash Used in Investing Activities |
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| (331,246) | (136,118) | ||
Cash Flows from Financing Activities: |
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| Inception of bank loans, net |
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| 2,678,584 | 3,588,324 | |
| Capital contribution |
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| - | 1,350,000 | |
| Due to related parties |
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| (72,996) | 1,431,548 | |
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Net Cash Provided by Financing Activities |
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| 2,605,588 | 6,369,872 | ||
Net Change in Cash and Cash Equivalents |
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| (1,688,649) | (957,854) | ||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
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| (122,211) | 88,918 | ||
Cash and cash equivalents, beginning of period |
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| 7,416,191 | 2,150,605 | ||
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Cash and cash equivalents, end of period |
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| $ 5,605,331 | $ 1,281,669 | ||
Supplementary Cash Flows Disclosures |
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| Interest paid |
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| $ 223,740 | $ 76,961 | |
| Income taxes paid |
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| $ - | $ - |
The accompanying notes are an integral part of these financial statements.
7
MaxRay Optical Technology Co., Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Period Ended September 30, 2010
(Unaudited)
1)
ORGANIZATION AND PRINCIPAL ACTIVITIES
MAXRAY OPTICAL TECHNOLOGY (FUJIAN) CO., LTD., (formerly Amber Optoelectronics Inc.) (the Company) is a Delaware corporation organized on January 25, 2007. The Company conducts its business through its subsidiary named as MAXRAY OPTICAL TECHNOLOGY (FUJIAN) CO. LTD., and the reverse merger was completed on December 15, 2009.
MAXRAY OPTICAL TECHNOLOGY (FUJIAN) CO., LTD., was established in Photoelectric Park, Rongqiao Economic and Technological Development Zone Fuqing, Fujian, China on March 8th, 2007.
The Company and its subsidiary are mainly engaged to develop, design, produce on new flat panel display devices, liquid crystal display products, including modules and parts. The Company has won credit from world leading manufactures on LCM assembly services including backlight module assembling for LCD TV and monitors, and its related parts.
Their major customers such as JIELIAN Electronics Co., Ltd,, HUAYING Video Co., Ltd, and HENGSHENG electric Co., Ltd, whose parent are publicly listed companies in Hong Kong or Taiwan.
2)
BASIS OF PRESENTATION
The Company is responsible for the unaudited condensed financial statements included in this document, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and include all normal and recurring adjustments that management of the Company considers necessary for a fair presentation of its financial position and operating results. The Company prepared these statements following the requirements of the U.S. Securities and Exchange Commission (the SEC) for interim reporting. As permitted under those rules, the Company condensed or omitted certain footnotes or other financial information that are normally required by GAAP for annual financial statements. These statements should be read in conjunction with the financial statements for the years ended June 30, 2010 and 2009.
Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim unaudited condensed consolidated financial statements may not be the same as those for the full year.
3)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America 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 revenue and expenses during the reporting period. Actual results may differ from those estimates.
4)
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In February 2010, FASB issued ASU 2010-09 Subsequent Event (Topic 855) Amendments to Certain Recognition and Disclosure Requirements. ASU 2010-09 removes the requirement for an SEC filer to disclose a date in both issued and revised statements. Revised financial statements include financial statements revised as a result of either correction of an error or retroactive application of GAAP. All of the amendments in ASU 2010-09 are effective upon issuance of the final ASU, except for the use of the issued date for conduit debt obligors. That amendment is effective
8
for interim or annual periods ending after June 15, 2010. Adoption of ASU 2010-09 did not have a material effect on the Companys financial statements.
In May 2009, the FASB issued ASC 855-10 (Prior authoritative literature: SFAS 165, "Subsequent Events"). ASC 855-10 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Specifically, ASC 855-10 provides (i) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and (iii) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date ASC 855-10 is effective for interim or annual financial periods ending after June 15, 2009 and shall be applied prospectively. As such, the Company is required to adopt this standard in the current period. Adoption of ASC 855-10 did not have a significant effect on the Companys financial statements.
In June 2009, the FASB issued ASC 105-10 (Prior authoritative literature: SFAS 168, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles). ASC 105-10 establishes the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. ASC 105-10 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. Adoption of ASC 105-10 did not have a material effect on the Companys financial statements.
5)
INVENTORIES
The Companys inventories as at September 30, 2010 are summarized as follows:
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| September 30, | June 30, |
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| 2010 | 2010 |
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Raw materials |
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| $ 3,380,537 | $ 3,058,206 | |
Finished goods |
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| 1,843,685 | 1,719,190 | |
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Total Inventories |
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| $ 5,224,222 | $ 4,777,396 | |
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6)
DUE FROM (TO) RELATED PARTIES AND RELATED PARTY TRANSACTIONS
a)
Due to Related Parties
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| September 30, | June 30, | ||
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| 2010 | 2010 |
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Max Great Technology Co., Ltd. |
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| $ 653,050 | $ 435,194 | ||
Shareholders |
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| 119,048 | 415,195 | |
Max Chance Limited |
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| 326,340 | 321,044 | |
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Total Due to Related Parties |
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| $ 1,098,438 | $ 1,171,433 | ||
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b)
Purchases from Related Parties
The Companys purchases from related parties included equipment and raw materials from Max Great Technology Co., Ltd., as per below for the three month period ended September 30, 2010 and 2009, respectively.
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| THREE MONTHS ENDED | |
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| SEPTEMBER 30, | |
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| 2010 | 2009 |
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Max Great Technology Co., Ltd. |
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| $ 137,565 | $ 321,825 | ||
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Purchases from Related Parties |
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| $ 137,565 | $ 321,825 |
7)
PROPERTY, PLANT AND EQUIPMENT NET
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| September 30, | June 30, |
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| 2010 | 2010 |
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Property, plant and equipment, cost |
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| Buildings |
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| $ 12,421,755 | $ 12,220,156 |
| Plant and machinery |
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| 7,868,362 | 7,237,686 | |
| Office equipment and furnishings |
| 186,280 | 181,415 | ||
| Motor vehicles |
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| 136,947 | 121,178 | |
| Others |
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| 161,426 | 140,962 |
| Total cost |
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| $ 20,774,770 | $ 19,901,397 |
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Less: Accumulated depreciation |
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| Buildings |
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| $ 977,032 | $ 824,086 |
| Plant and machinery |
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| 1,676,374 | 1,477,793 | |
| Office equipment and furnishings |
| 76,145 | 67,019 | ||
| Motor vehicles |
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| 51,354 | 45,067 | |
| Others |
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| 54,688 | 47,058 |
| Total accumulated depreciation |
| $ 2,835,593 | $ 2,461,023 | ||
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Property, plant and equipment, net |
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| $ 17,939,177 | $ 17,440,374 |
The Company recorded depreciation expense of $463,124 and $282,040 for the three month periods ended September 30, 2010 and 2009, respectively.
8)
LICENSE RIGHTS - NET
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| September 30, | June 30, |
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| 2010 | 2010 |
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License rights, cost |
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| $ 630,000 | $ 630,000 | |
Less: Accumulated amortization |
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| 59,625 | 51,375 | ||
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Total License Rights, net |
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| $ 570,375 | $ 578,625 |
The Company recorded amortization expense of $8,250 for both of the three month periods ended September 30, 2010 and 2009, respectively.
9)
LAND USE RIGHTS - NET
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| September 30, | June 30, |
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| 2010 | 2010 |
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Land use rights, cost |
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| $ 996,693 | $ 976,416 | |
Less: Accumulated amortization |
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| 64,785 | 56,365 | ||
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Land Use Rights, net |
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| $ 931,908 | $ 920,051 |
The Company recorded amortization expense of $9,603 and $5,251for the three month periods ended September 30, 2010 and 2009, respectively.
10)
SHORT TERM LOANS
At September 30, 2010 and June 30, 2009, the Company had short-term loans from banks in the amounts of $26,694,553 and $24,015,968 respectively, bearing interest rates ranging from 2.43% to 5.85% per annum. The loans are secured with the pledge of certain fixed assets, land use rights and accounts receivable. The Company had $2.51 million of unused secured line of credit at September 30, 2010.
11)
LONG-TERM DEBT DUE WITHIN ONE YEAR
The Company borrowed the loan from FUJIAN HAIXA BANK with the collaterals of the Companys building and land use rights on March 6, 2009.
The total amount of the loan was RMB 30 million ($4,379,562 United States dollars). RMB 5 million of the loan was repaid on March 6, 2010, and RMB 25 million, ($3,732,402 United States dollars), is due to be paid on December 27, 2010.
12)
COMMITMENTS AND CONTINGENCIES
None.
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13)
SUBSEQUENT EVENTS
On October 22, 2010, Maxray Optical Technology Co. Ltd. (Maxray) formerly Amber Optoelectronics Inc., negotiated a settlement with Visionary Investment Group Inc. (Visionary) whereby Visionary has agreed to accept 3,000,000 common shares of Maxray as settlement in full regarding $198,000, plus accumulated interest and costs, owed to Visionary, resulting from a contractual obligations entered into on January 9, 2007, June 9, 2007.
On October 22, 2010, Maxray also negotiated an additional debt settlement owed to Visionary, resulting from a contractual obligations entered into on June 7, 2010 whereby Visionary has agreed to accept 500,000 restricted common shares as settlement in full regarding $15,000, plus costs, owed to Visionary.
ITEM 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our financial statements and related notes appearing elsewhere herein. This discussion and analysis contains forward-looking statements including information about possible or assumed results of our financial conditions, operations, plans, objectives and performance that involve risk, uncertainties and assumptions. The actual results may differ materially from those anticipated in such forward-looking statements. For example, when we indicate that we expect to increase our product sales and potentially establish additional license relationships, these are forward-looking statements. The words expect, anticipate, estimate or similar expressions are also used to indicate forward-looking statements.
FORWARD-LOOKING STATEMENTS
To the extent that the information presented in this Quarterly Report on Form 10-Q/A for the three months ended September 30, 2010, discusses financial projections, information or expectations about our products or markets, or otherwise makes statements about future events, such statements are forward looking. We are making these forward-looking statements in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These risks and uncertainties are described, among other places in this Quarterly Report, in this Managements Discussion and Analysis of Financial Condition and Results of Operations.
Results of Operations
The following represents condensed consolidated pro forma revenue and earnings information for the three months ended September 30, 2010 and September 30, 2009, as if the recapitalization had occurred on the first day of each of the years.
12
| Unaudited Three Months Ended | ||||
| September 30, |
| September 30, | ||
| 2010 |
| 2009 | ||
Revenue | $ | 27,190,850 |
| $ | 13,683,980 |
Net Income | $ | 383,396 |
| $ | 405,740 |
Earnings per share | $ | 0.01 |
| $ | 0.02 |
|
|
|
|
|
|
Weighted Average |
|
|
|
|
|
Shares Outstanding |
| 31,728,850 |
|
| 25,728,850 |
THREE MONTHS PERIOD ENDED SEPTEMBER 30, 2010 COMPARED TO THE SAME PERIOD ENDED SEPTEMBER 30, 2009
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP). The preparation of our financial statements is in conformity with those accounting principles which require us to make judgments and estimates. The judgments and estimates could have a significant effect on the consolidated financial statements. Actual results could differ from those estimates. We periodically re-evaluate our judgments and estimates that are based upon historical experience and on various other assumptions that we believe to be reasonable under the circumstances.
We believe that the following critical accounting policies set forth below involve the most significant judgments and estimates used in the preparation of our consolidated financial statements. We evaluate these policies on an ongoing basis, based upon consultation with experts, trends and other methods we consider reasonable.
Revenue Recognition
Revenue is determined by combining the value of the invoice, following the sale of goods and services, net of any value-added tax (VAT), discounts and returns. The Company defines their net sales return in gross revenue, i.e., the revenue shown in the income statement is the net sales. Revenue is recognized when the risks and rewards of ownership of the product has transferred to the buyer. Factors determining ownership are realized when convincing evidence of an arrangement exists, final delivery has occurred, the selling price was fixed and determinable, and collectability is probable. The inventory of stock and raw materials are specific to purchase orders based on the manufacturing schedule and the delivery timetable of the sales agreement. Domestic sales are recognized upon shipment of goods. Export sales are recognized upon goods clearing the customs. Revenue is also affected by the product mix.
Warranties
There are no warrantees attached to products ordered by Maxray Optical Technology Co. Ltd. customers. The contracts accepted by Maxray are manufactured according to engineering specifications provided by the customer. Maxray only manufactures, or assembles, the parts according to the product specifications of the customer as detailed in the purchase order, or contract, without any exceptions or deviations allowed once accepted.
Product Returns
In order to prevent any defective goods-in-process, Maxray executes very precise inspections on the final product and exercises diligent quality control following every step in the production process. The internal quality control examinations are jointly conducted by Maxray specialists and customer trained inspectors prior to final shipment of
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the order. In general there are no returns once the products have been cleared for shipment. Maxray does not include a policy, regarding the return of defective products, into the sales contracts.
Revenues
During the three months ended September 30, 2010 the Company generated revenues of $27,190,850 compared to $13,683,980 in the period ended September 30, 2009. The increase of $13,506,870 was driven primarily by an increased demand for our LCD TV and Monitor products manufactured and made ready for sale. Customer demand was driven by significant technological improvements in quality and design.
Cost of Revenues
The Company incurred cost of revenues of $26,004,975 for the three month period ended September 30, 2010 and for the period September 30, 2009 was $12,507,626 which resulted in an increase of $13,497,349. The increase is comprised primarily by significant increase in demand for products due to market expansion and the write-off of research and development costs.
Gross Profit Margins
The Company recorded a gross profit margin of 4.4% for the three month period ended September 30, 2010 compared to an 8.8% margin for the three month period ended September 30, 2009. The decrease was due to additional costs and the expansion of operations. The management expects these margins to return to historical levels during the upcoming year.
Operating
Total operating expenses for the three months ended September 30, 2010 was $67,745 compared to $41,641 for the same period in 2009. The additional costs resulted in an increase in sales directly related to the expansion of our marketing campaign.
General and Administrative
In the three month period ended September 30, 2010, general and administrative expenses increased by $35,878 to $541,233 versus $505,355 incurred over the same period in 2009. The increase is primarily due to the expansion of operations and build-up of administration and finance departments.
Financial
Our financial expenses for the three month period ended September 30, 2010, increased over the same period in 2009 by $202,188. The increase is driven primarily due to our recent expansion and expanded marketing efforts.
Other Income/Expenses
In the three months ended September 30, 2010, the Company earned $183,883 in other operating income resulting in an increase of $174,450 over the same period in 2009.
Income Taxes
In the three months ended September 30, 2010, the company recorded a provision for income taxes of $49,795.
Net Income
The Company recorded a net income for the three month period ended September 30, 2010 of $383,396. The net income decreased slightly by $22,344 compared to the same period in 2009.
Liquidity and Capital Resources
As of September 30, 2010, the Company had cash and cash equivalents of $5,605,331.
Cash Flows from Operating Activities
Net cash used in operating activities was $3.9 million for the three months ended September 30, 2010, as compared to net cash used in operating activities of $7.1 million for the same period in the previous year. Net cash used in operating activities for the three months ended September 30, 2010 was mainly due to cash and cash equivalents of
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$7.4 million at the beginning of the year. The changes in working capital for the three month ended September 30, 2009 were primarily related to $3.1 million increase in other payables, $0.4 million decrease in accounts receivable, and a decrease of $2.8 million in inventories.
Cash Flows from Investing Activities
Net cash used in investing activities was $0.3 million for the three months ended September 30, 2010, as compared to net cash used in investing activities of $0.1 million for the same period in the previous year. Cash invested in purchases of property, plant and equipment was $0.4 million and $0.5 million for the three months ended September 30, 2010, and 2009, respectively. The decrease is mainly due to the completion of major investing projects in plant expansion and production equipment and materials to meet current and anticipated product demand, and to materially increase our production capacity to fulfill our customers current and future order requirements. Restricted cash decreased by $0.2 million for the three months ended September 30, 2010 due to the release of cash deposit pledged for certain short-term loans which were repaid during the period. Restricted cash represents cash deposited with banks as security against the issuance of bank notes, letters of credit for the import of raw materials and as pledges for certain short-term borrowings.
Cash Flows from Financing Activities
Net cash provided by financing activities was $2.6 million for the three months ended September 30, 2010, as compared to $6.3 million for the same period in the previous year. Cash provided by financing activities during the three months ended September 30, 2010 was primarily related to $2.6 million short-term loans from domestic banks in China.
The Company anticipates that its cash needs over the next 12 months will be met by primarily from a combination of ongoing profits, cash on hand, access to a negotiated in place line-of-credit of $15,000,000 United States dollars.
The line-of-credit is secured by a general pledge of the companys current assets. As at September 30, 2010, the company has not yet required the use of the line-of-credit.
Off-Balance Sheet Arrangement
We have no off-balance sheet arrangements.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
ITEM 4.
CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures. Our President and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934) as of the end of the period ended September 30, 2010. Based on this evaluation, our President and Chief Financial Officer have concluded that our controls and procedures are effective in providing reasonable assurance that the information required to be disclosed in this report is accurate and complete and has been recorded, processed, summarized and reported within the time period required for the filing of this report.
(b) Changes in internal controls. There was no change in our internal controls or in other factors that could affect these controls during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
The following exhibits are filed as a part of this report on Form 10-Q/A:
Exhibit No. Description
31.1
31.1 Rule 13(a)-14(a)/15(d)-14(a) Certification of President
31.2 Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer
32.2 Section 1350 Certification of President
32.3 Section 1350 Certification of Chief Financial Officer
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SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 17, 2010
MAXRAY OPTICAL TECHNOLOGY CO. LTD.
By: /s/
John Campana
President
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Exhibit 31.1
CERTIFICATIONS
I, JOHN CAMPANA, President, certify that:
1. I have reviewed this quarterly report on Form 10-Q/A of MAXRAY OPTICAL TECHNOLOGY CO. LTD.
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report.
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.
4. The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have;
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the period covered by this quarterly report (the registrants third fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions);
All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: November 17, 2010 /s/
John Campana
President
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Exhibit 31.2
CERTIFICATIONS
I, GEORGE PARSELIAS, Chief Financial Officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q/A of MAXRAY OPTICAL TECHNOLOGY CO. LTD.
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report.
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.
4. The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have;
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the period covered by this quarterly report (the registrants third fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions);
All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: November 17, 2010 /s/
George Parselias
Chief Financial Officer
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Exhibit 32.1
CERTIFICATE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of MAXRAY OPTICAL TECHNOLOGY CO. LTD., (the Company) on Form 10Q/A for the three month period ended September 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, John Campana, President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that;
1. The Report fully complies with the requirement of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/
Name: John Campana
Title: President
Date: November 17, 2010
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Exhibit 32.2
CERTIFICATE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of MAXRAY OPTICAL TECHNOLOGY CO. LTD., (the Company) on Form 10Q/A for the three month period ended September 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, George Parselias, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that;
1.
The Report fully complies with the requirement of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/
Name: George Parselias
Title: Chief Financial Officer
Date: November 17, 2010
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