AJ Acquisition Corp. V, Inc. - FORM 10-Q/A

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EX-32.1 - CERTIFICATION - AJ Acquisition Corp. V, Inc.	f10q1210a1ex32i_chinaalum.htm
EX-31.1 - CERTIFICATION - AJ Acquisition Corp. V, Inc.	f10q1210a1ex31i_chinaalum.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________

FORM 10-Q /A

Amendment #1

_______________

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

For the quarterly period ended December 31, 2010

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

For the transition period from ______to______.

CHINA ALUMINUM FOIL, INC.

(Exact name of registrant as specified in Charter)

Nevada		000-53890		27-1805188
(State or other jurisdiction of incorporation or organization)		(Commission File No.)		(IRS Employee Identification No.)

195 Route 9 South

Suite 204

Manalapan, New Jersey 07726

(Address of Principal Executive Offices)

_______________

(732)409-1212

(Issuer Telephone number)

_______________

AJ ACQUISITION CORP V, INC.

(Former Name or Former Address if Changed Since Last Report)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer o Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.

Yes o No x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of January 13, 2011: 10,100,000 shares of common stock.

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.

Yes o No o

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

10,100,000 common shares issued and outstanding as of February 14, 2010

Amendment Explanatory Note:

The purpose of the Amendment No. 1 on Form 10–Q/A to China Aluminum Foil, Inc.’s (the “Company”) quarterly report of Form 10–Q for the quarterly period ended December 31, 2010 filed with the U.S. Securities and Exchange Commission on February 14, 2011 (the “Original Form 10–Q”), is to revise and update disclosure under Item 4: Controls and Procedures and immaterial clerical errors throughout the filing.

Other than these changes, the remainder of the document is unch anged from the Original Form 10-Q. This amendment does not reflect events occurring after the filing of the Original Form 10-Q or modify or update the disclosures therein in any way other than as required to reflect the changes described in this explanatory note.

CHINA ALUMINUM FOIL, INC.

FORM 10-Q

December 31, 2010

INDEX

PART I-- FINANCIAL STATEMENTS

Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis and Results of Operations	8
Item 3	Quantitative and Qualitative Disclosures About Market Risk	12
Item 4T	Controls and Procedures	12

PART II-- OTHER INFORMATION

Item 1	Legal Proceedings	13
Item 1A	Risk Factors	13
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	13
Item 3.	Defaults Upon Senior Securities	13
Item 4.	(Removed & Reserved)	13
Item 5.	Other Information	13
Item 6.	Exhibits	14

SIGNATURE

PART I – FINANCIAL STATEMENTS

Item 1. Financial Statements

Our unaudited interim financial statements for the three month and six month periods ended December 31, 2010 form part of this quarterly report. They are stated in United States Dollars ($US) and are prepared in accordance with United States generally accepted accounting principles.

China Aluminum Foil Inc.
Consolidated Balance Sheets
(Stated in US dollars)

	December 31, 2010		June 30, 2010
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	2,399,102	$	136,742
Accounts receivable		228,248		5,003,961
Advances for inventory purchase		164,716		1,412,365
Advances for services		163,884		-
Other receivables		208,881		301,113
Deferred Tax Asset - Current		236,946		-
Inventories		3,991,715		3,308,935
Notes receivable		92,409		214,738
Total Current Assets		7,485,901		10,377,854
Prepayments for office building		1,311,246		1,278,768
Property, plant and equipment, net		4,444,665		4,207,210
Other assets, net		253,559		269,759
TOTAL ASSETS	$	13,495,371	$	16,133,591
LIABILITIES & SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	624,420	$	356,216
Customer deposits		57,062		-
Accrued expenses and other liabilities		24,444		102,966
Taxes payable		126,576		62,015
Due to related parties		3,396,135		8,059,244
Total Current Liabilities		4,228,637		8,580,441
TOTAL LIABILITIES	$	4,228,637	$	8,580,441

SHAREHOLDERS’ EQUITY
Preferred stock: $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding	$	-	$	-
Common Stock (par value $0.001 per share; 100,000,000 shares authorized; 10,100,000 and 100,000 shares issued and outstanding as of December 31, 2010 and June 30, 2010 respectively)		10,100		100
Additional paid in capital		8,047,988		7,798,387
Retained earnings /(deficits)		535,411		(390,518	)
Accumulated other comprehensive income		673,235		145,181
TOTAL SHAREHOLDERS’ EQUITY		9,266,734		7,553,150

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		13,495,371	$	16,133,591

The accompanying notes are an integrated part of these consolidated financial statements

China Aluminum Foil Inc.

Consolidated Statements of Operations and Comprehensive Income

(Stated in US dollars)

	Three Months Ended						Six Months Ended
	December 31, 2010			December 31, 2009			December 31, 2010			December 31, 2009
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Sales revenue	$	20,420,619		$	11,436,759		$	37,445,221		$	18,313,528
Cost of goods sold		19,715,715			9,816,130			36,232,888			16,933,814
Gross Profit		704,904			1,620,629			1,212,333			1,379,714

Operating expenses
Selling expenses		31,809			122,108			65,827			223,185
General and administrative expenses		135,621			194,074			192,097			266,888
Total operating expenses		167,430			316,182			257,924			490,073

Income (loss) from operations		537,474			1,304,447			954,409			889,641
Interest income		403			206			700			462
Bank charges		(83	)		(345	)		(1,211	)		(615	)

Income (loss) before income tax		537,794			1,304,308			953,898			889,488

Current Income Tax Expense		156,650			-			260,944			-
Deferred Income Tax Benefit		(129,681	)		-			(233,975	)		-

Net Income (Loss)	$	510,825		$	1,304,308		$	926,929		$	889,488

Other comprehensive income
Foreign currency translation adjustments		264,664			(391,108	)		527,086			262,237
Total Comprehensive Income (Loss)	$	775,489		$	913,200		$	1,454,015		$	1,151,725


Earnings per share - basic and diluted		0.09			13.04			0.31			8.89
Weighted average shares outstanding - basic and diluted		5,969,565			100,000			3,034,783			100,000

The accompanying notes are an integrated part of these consolidated financial statements

China Aluminum Foil Inc.

Consolidated Statements of Cash Flows

(Stated in US dollars)

	Six Months Ended
	December 31, 2010			December 31, 2009
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		926,929		$	889,488
Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation expense		171,249			144,659
Changes in operating assets and liabilities:
Accounts receivable		4,902,801			(1,068,285	)
Advances to suppliers		1,121,691			(231,008	)
Other receivables		99,880			(163,833	)
Inventories		(598,741	)		(1,431,796	)
Prepaid expense		23,051			-
Deferred tax asset		(236,946	)		-
Accounts payable		259,157			(604,452	)
Customer deposits		57,062			(128,283	)
Other payables		(78,061	)		(4,608	)
Taxes payable		62,986			15,417
Due to/from related party		(4,830,301	)		3,542,798
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		1,880,757			960,097

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(10,272	)		(142,962	)
Prepayments for office building		-			(515,898	)
Note receivable		127,783			(185,554	)
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		117,511			(844,414	)

CASH FLOWS FROM FINANCING ACTIVITIES
Capital contribution		128,880			-
CASH PROVIDED BY FINANCING ACTIVITIES		128,880			-

Effect of exchange rate changes on cash and cash equivalents		135,212			34,023
NET INCREASE (DECREASE) IN CASH		2,262,360			149,706
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		136,742		$	111,725
CASH AND CASH EQUIVALENTS AT END OF YEAR		2,399,102		$	261,431

Supplementary Disclosures for Cash Flow Information:
Income taxes paid		185,612		$	-

NON-CASH INVESTING AND FINANCING ACTIVITIES
Imputed interest to the related party		90,515		$	36,603

The accompanying notes are an integrated part of these consolidated financial statements

China Aluminum Foil, Inc.

Notes to Consolidated Financial Statements

(Stated in US dollars)

NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS

Zhengzhou Shenli Aluminum Foil Co., Ltd. (“Shenli”, formerly “Zhengzhou Shensheng Aluminum Foil Co., Ltd.”) was incorporated on February 4, 2008 in Zhengzhou City, Henan Province, People's Republic of China (the “PRC”) with registered capital of RMB 60 million ($8,342,255). Mr. Congfu Li is the controlling shareholder of Zhengzhou Aluminum Co., Ltd., (“Zhengzhou Aluminum”) and 100% of equity interest of Shenli is held by Zhengzhou Aluminum. Shenli is primarily engaged in manufacturing and sales of aluminum foil products in China. China Aluminum Foil Inc. (“China Aluminum”, or “the Company”, formerly “AJ Acquisition Corp V, Inc.”) was incorporated in the State of Nevada on January 29, 2010. The business purpose of the Company is to seek the acquisition of or merger with an existing company.

Prior to the incorporation on February 4, 2008, Shenli was a division of Zhengzhou Aluminum. On January 22, 2008, the shareholders of Zhengzhou Aluminum consented to separate the division from the Group and incorporate into a new company. Zhengzhou Aluminum transferred its equipments to Shenli and the assets transferred were recorded at historical costs as it was a transfer between entities under common control.

Lucky Express (China) Limited (“Lucky”) was incorporated under laws of Hong Kong, PRC, on April 22, 2010 to serve as the intermediate holding company. Mr. Congfu Li, the controlling interest holder of Shenli acquired 100% of the outstanding shares of the company on September 20, 2010.

Zhengzhou Shentong Investment Consulting Co., Ltd. (“Shentong”) was incorporated on August 10, 2010 in Zhengzhou City, Henan Province, PRC, and is a wholly owned foreign enterprise (“WOFE”) of the Company.

On August 12, 2010, prior to the reverse acquisition, Shentong entered into a series of variable interest entity (“VIE”) agreements with Zhengzhou Aluminum and Shenli. Pursuant to the VIE agreements, Shenli became Shentong's variable interest entity. The use of VIE agreements is a common structure used to acquire PRC corporations, particularly in certain industries in which foreign investment is restricted or forbidden by the PRC government. The VIE agreements include:

· A Consultation Agreement, pursuant to which Shentong has the exclusive right to provide to Shenli general business operation services, including advice and strategic planning, as well as consulting services related to human resources, staffing and training (the “Services”). Under this agreement, Shentong owns the intellectual property rights developed or discovered through research and development, in the course of providing the Services, or derived from the provision of the Services.

· An Operating Agreement, pursuant to which Shentong provides guidance and instructions on Shenli' daily operations, financial management and employment issues. The Shenli Shareholder must designate the candidates recommended by Shentong as their representatives on the boards of directors of Shenli. Shentong has the right to appoint senior executives of Shenli. In addition, Shentong agrees to guarantee Shenli's performance under any agreements or arrangements relating to Shenli's business arrangements with any third party. Shenli, in return, agrees to pledge their accounts receivable and all of their assets to Shentong. Moreover, Shenli agrees that without the prior consent of Shentong, Shenli will not engage in any transactions that could materially affect their respective assets, liabilities, rights or operations, including, without limitation, incurrence or assumption of any indebtedness, sale or purchase of any assets or rights, incurrence of any encumbrance on any of their assets or intellectual property rights in favor of a third party or transfer of any agreements relating to their business operations to any third party.

· A Share Pledge Agreement, under which the Shenli Shareholder pledged all of their equity interests in Shenli to Shentong to guarantee Shenli's performance of their obligations under the Consultation Agreement.

· An Option Agreement, under which the Shenli Shareholder irrevocably granted Shentong or its designated person an exclusive option to purchase, to the extent permitted under the PRC law, all or part of the equity interests in Shenli for the cost of the initial contributions to the registered capital or the minimum amount of consideration permitted by applicable PRC law. Shentong or its designated person has sole discretion to decide when to exercise the option, whether in part or in full.

· A Proxy Agreement, pursuant to which the Shenli Shareholder agreed to irrevocably grant a person to be designated by Shentong with the right to exercise the Shenli Shareholder's voting rights and their other rights, including the attendance at and the voting of the Shenli Shareholder's shares at shareholders' meetings (or by written consent in lieu of such meetings) in accordance with applicable laws and its Articles of Association, including but not limited to the rights to sell or transfer all or any of their equity interests of Shenli, and appoint and vote for the directors and Chairman as the authorized representative of the Shenli Shareholder.

Through the above agreements entered, the Company's wholly owned subsidiary, Shentong, controls the significant transactions of Shenli and is deemed the primary beneficiary of the VIE - Shenli.

On September 2, 2010, Congfu Li acquired a total of 99,000 shares of AJ Acquisition Corp. V, Inc., (the “Company”) from Gregg Jaclin and Richard Anslow, in a private transaction for a total consideration of $40,000. After the acquisition, Mr. Li owned 99% of the issued and outstanding stock of the Company.

On November 8, 2010, Lucky Express completed a reverse acquisition through a share exchange with the Company whereby the Company acquired 100% of the issued and outstanding common stock of Lucky Express in exchange for 10,000,000 shares of the Company. As a result of the reverse acquisition, Lucky Express became the Company's wholly-owned subsidiary and the former shareholders of the Lucky Express became controlling stockholders of the Company. The share exchange transaction was treated as a reverse acquisition, with Lucky Express as the accounting acquirer and the Company as the acquired party.

On August 1, 2011, Zhengzhou Shensheng Aluminum Foil Co., Ltd. changed its name to Zhengzhou Shenli Aluminum Foil Co., Ltd.

The acquisition of Shenli's controlling interest has been treated as a recapitalization with no adjustment to the historical basis of their assets and liabilities.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

The unaudited interim financial statements of China Aluminum Foil, Inc. as of December 31, 2010 and for the six month periods ended December 31, 2010 and 2009 have been prepared in accordance with U.S. generally accepted accounting principles. In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of such periods. The results of operations for the six month period ended December 31, 2010 are not necessarily indicative of the results to be expected for the full fiscal year ending June 30, 2011.

Certain information and disclosures normally included in the notes to financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission, although the Company believes the disclosure is adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements of the Company for the year ended June 30, 2010

(b) Basis of consolidation

The consolidated financial statements include the financial statements of the Company, its wholly owned subsidiaries and its VIE - Shenshi. All significant inter-company transactions and balances have been eliminated in consolidation.

Because of the contractual arrangements as described in Business-Organization, which assigned all of Shenli`s equity owners' rights and obligations to Shentong Investment, resulting in the equity owners lacking the ability to make decisions that have a significant effect on Shenli's operations and because of Shentong Investment's ability to extract profits from the operation of Shenli and assume Shenli's residual benefits, Shentong Investment becomes the primary beneficiary of Shenli. Accordingly, the results of Shenli have been included in the accompanying consolidated financial statements for six months ended December 31, 2010 and 2009.

The Company uses the asset and liability method of accounting for income taxes pursuant to ASC 740 “Income Taxes”. ASC 740 requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances are provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The provision for income taxes represents current taxes payable net of the change during the period in deferred tax assets and liabilities.

(d) Comprehensive income

The Company has adopted the provisions of ASC 220 “Reporting Comprehensive Income” which establishes standards for the reporting and display of comprehensive income, its components and accumulated balances in a full set of general purpose financial statements. During the periods presented, other comprehensive income includes cumulative translation adjustment from foreign currency translation.

NOTE 3 – ADVANCE FOR SERVICES

As of December 31, 2010, the Company prepaid approximately $163,884 for consulting services provided for assisting the Company listed on US stock market.

NOTE 4 – INVENTORIES

As of December 31, 2010 and June 30, 2010, inventories consisted of the following:

	As of December 31, 2010		As of June 30, 2010

WIP	$	2,294,713	$	2,087,754
Finished goods		1,696,979		1,220,499
Auxiliaries (Spare parts)		23		682
Total	$	3,991,715	$	3,308,935

NOTE 5 – PRIVATE PLACEMENT

On October 29, 2010, the Company completed a private placement transaction (the “Private Placement”) pursuant to which, the Company received gross proceeds in the amount of approximately $128,000.

NOTE 6 – INCOME TAXES

The Company’s PRC subsidiary Shenli and VIE Shensheng were incorporated in the PRC and are governed by the Enterprise Income Tax Law of the PRC (“EIT Law”). The Company is subject to tax at a statutory rate of 25% on income reported in the statutory financial statements after tax adjustments for the three and six month periods ended December 31, 2010 and 2009 respectively. The effective tax rates for the Company are as follows:

	Three months ended December 31, 2010			Three months ended December 31, 2009			Six months ended December 31, 2010			Six months ended December 31, 2009
U.S. Federal income tax statutory rate		35	%		35	%		35	%		35	%
PRC Statutory income tax rate (25%) difference		-10	%		-10	%		-10	%		-10	%
Changes of valuation allowance of deferred tax assets		-20	%		-25	%		-22	%		-25	%
		5	%		0	%		3	%		0	%

NOTE 7 – EARNINGS PER SHARE

Basic net income per share is computed by dividing net income by the weighted-average number of shares outstanding during the period. Diluted net income per share is computed by using the weighted-average number of ordinary shares outstanding and, when dilutive, potential shares from warrants to purchase ordinary shares, using the treasury stock method. For the three and six months ended December 31, 2010 and 2009, the Company had no common stock equivalents that could potentially dilute future earnings per share.

NOTE 8 – RELATED PARTY TRANSACTIONS

The company has undertaken business transactions in the ordinary course of business with Zhengzhou Aluminum (“ZA”), the main related party of the Company. During the three and six months ended December 31, 2010 and 2009, the transactions were summarized as follows:

	Three Months Ended				Six Months Ended
	12/31/2010		12/31/2009		12/31/2010		12/31/2009
Sales to ZA	$	3,914,453	$	1,711,998	$	10,286,662	$	3,290,650
Purchase of raw materials from ZA		22,521,241		10,723,696		39,338,165		19,815,653
Purchase of utility from ZA		215,854		209,499		450,707		423,762
Other purchases from ZA		138,831		86,963		344,553		87,104
Salary paid by ZA		103,175		164,257		201,739		258,763
Processing fee to ZA		19,503		62,483		32,922		124,770
Repair services provided by ZA		-		-		-		125,781
Imputed rental expense for use of offices, plants, and equipments of ZA		12,425		177,755		12,425		177,755

Item 2. Management’s Discussion and Analysis and Results of Operations

This report contains forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Description of Business,” “Risk Factors,” and “Management's Discussion and Analysis of Financial Condition and Results of Operations.” These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described in the section captioned “Risk Factors” below. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements include, among other things, statements relating to:

·	our anticipated growth strategies and our ability to manage the expansion of our business operations effectively;

·	our ability to maintain or increase our market share in the competitive markets in which we do business;

·	our ability to keep up with rapidly changing technologies and evolving industry standards, including our ability to achieve technological advances;

·	our dependence on the growth in demand for the end applications that are powered by our products;

·	our ability to diversify our product offerings and capture new market opportunities;

·	our ability to source our needs for skilled labor, machinery and raw materials economically;

·	the loss of key members of our senior management; and

·	Uncertainties with respect to the People’s Republic of China (“China”) legal and regulatory environment.

Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference and filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "US$" refer to United States dollars and all references to "common shares" refer to the common shares in our capital stock.

As used in this quarterly report, the terms "we", "us", "our company", mean China Aluminum Foil, Inc. a Nevada corporation, unless otherwise indicated.

Overview

We were incorporated in the State of Nevada on January 29, 2010 as AJ Acquisition V, Inc. Since inception we have been engaged in organizational efforts and obtaining initial financing. Our business purpose was to seek the acquisition of or merger with, an existing company.

Effective November 1, 2010 we changed our name from AJ Acquisition Corp. V, Inc. to China Aluminum Foil, Inc., by way of a merger with our wholly owned subsidiary China Aluminum Foil, Inc., which was formed solely for the change of name.

On November 8, 2010 we entered into and closed a share exchange agreement with Lucky Express (China) Ltd., a company incorporated under the laws of Hong Kong and the shareholders of 100% of the share capital of Lucky Express, including our director, Congfu Li. According to the terms of the share exchange agreement, we agreed to acquire 1,000,000 issued and outstanding shares of Lucky Express, being all of the issued and outstanding shares of Lucky Express, from the selling shareholders in exchange for 10,000,000 shares of our common stock.

Lucky Express’s wholly owned subsidiary, Zhengzhou Shentong Investment Consulting Co., Ltd., a wholly owned foreign enterprise organized under the laws of China entered into a number of contracts with Zhengzhou Shenli Aluminum Foil Co., Ltd., a company organized under the laws of China, which is engaged in the production of aluminum foil, and Zhengzhou Aluminum Co., Ltd., the sole shareholder of Shenli.

We had 100,000 shares of our common stock issued and outstanding before the closing of the transactions contemplated by the share exchange agreement. Upon the closing of the transactions, we issued 10,000,000 shares of our common stock to the Lucky Express shareholders. The shares were issued in reliance upon an exemption from registration pursuant to Regulation S promulgated under the Securities Act of 1933, as amended. As of the filing of this Current Report on Form 10-Q there were 10,100,000 shares of our common stock issued and outstanding.

Our principal offices are located at Building No.35, No.1 Cui Zhu Street, High-tech Development Area, Zhengzhou City, Henan Province, China. Our telephone number is (86) 371-67539696. Our fiscal year is June 30.

Liquidity and Capital Resources

Working Capital
	At December 31, 2010		At June 30, 2010
Current Assets	$	7,485,901	$	10,377,854
Current Liabilities	$	4,228,637	$	8,580,441
Working Capital	$	3,257,264	$	1,797,413

Cash Flows
	Six Months Ended		Six Months Ended
	December 31, 2010		December 31, 2009
Net Cash Provided by (Used in) Operating Activities	$	1,880,757	$	960,097
Net Cash Provided by (Used In) Investing Activities	$	117,511	$	(844,414	)
Net Cash Provided by Financing Activities	$	128,880	$	-
Effect of Exchange Rate Changes	$	135,212	$	34,023
Increase (Decrease) In Cash During The Period	$	2,262,360	$	149,706

During the six month period ended December 31, 2010 we received net cash of $1,880,757 from operating activities, compared to net cash received of $960,097 from operating activities during the six month period ended December 31, 2009. The increase in cash from operating activities during the six month period ended December 31, 2010 was primarily due to cash received from accounts receivable.

During the six month period ended December 31, 2010 we received net cash of $117,511 from investing activities, including $127,783 received from notes receivable and $10,272 in purchase of property, plant and equipment. During the six month period ended December 31, 2009 we spent net cash of $844,414 on investing activities, including $185,554 paid for notes receivable, $515,898 in prepayment for an office building and $142,962 in purchases of property, plant and equipment.

During the six month period ended December 31, 2010 we received net cash of $128,880 from financing activities, compared to net cash spending of $0 from financing activities during the six month period ended December 31, 2009. The net received from financing activities in the period in 2010 was entirely the result of capital contributions.

During the six month period ended December 31, 2010 we recognized a gain of $135,212 due to the effect of exchange rates on our cash, compared to a gain of $34,023 due to the same effect during the six month period ended December 31, 2009. Our net cash increased by $2,262,360 during the six month period ended December 31, 2010, compared to a net cash increase of $149,706 during the six month period ended December 31, 2009.

We anticipate that we will meet our ongoing cash requirements by retaining income as well as through equity or debt financing. We plan to cooperate with various individuals and institutions to acquire the financing required to manufacture and distribute our products and anticipate this will continue until we accrue sufficient capital reserves to finance all of our expansion efforts independently.

We intend to meet our cash requirements for the next 12 months through retained earnings and a combination of debt financing and equity financing by way of private placements. We currently do not have any arrangements in place to complete any private placement financings and there is no assurance that we will be successful in completing any private placement financings. However, there is no assurance that any such financing will be available or if available, on terms that will be acceptable to us. We may not raise sufficient funds to fully carry out our business plan.

Results of Operations

Three month Summary ending December 31, 2010 and 2009

	Three Months Ended
	December 31
	2010		2009
Revenue	$	20,420,619	$	11,436,759
Cost of Goods Sold	$	19,715,715	$	9,816,130
Operating Expenses	$	167,430	$	316,182
Net Income	$	510,825	$	1,304,308

Expenses

Our operating expenses for the three month periods ended December 31, 2010 and 2009 are outlined in the table below:

	December 31, 2010		December 31, 2009
Selling	$	31,809	$	122,108
General and administrative	$	135,621	$	194,074

Operating expenses for the three months ended December 31, 2010, decreased $148,752 as compared to the comparative period in 2009 primarily as a result of more efficient use of our sale channels and internal administration. However, we experienced a significant increase in the cost of goods sold from the three month period in 2009 to the same period in 2010. This increase had a significant impact on our net profit which was $793,483 lower during the period in 2010 compared to 2009.

Revenues

During the three month period ended December 31, 2010 we generated $20,420,619 in revenues, compared to revenues of $11,436,759 during the three month period ended December 31, 2009. Our cost of revenues increased from $9,816,130 to $19,715,715 from the three month period ended December 31, 2009 to December 31, 2010. The increase in sales revenue is driven by the increased customer base and demand for our products.

Net Income

For the three month period ended December 31, 2010 we generated net income of $510,825, compared to net income of $1,304,308 for the three month period ended December 31, 2009.

Six month Summary ending December 31, 2010 and 2009

	Six Months Ended
	December 31
	2010		2009
Revenue	$	37,445,221	$	18,313,528
Cost of Goods Sold		36,232,888		16,933,814
Operating Expenses	$	257,924	$	490,073
Net Income	$	926,929	$	889,488

Expenses

Our operating expenses for the six month periods ended December 31, 2010 and 2009 are outlined in the table below:

	December 31, 2010		December 31, 2009
Selling	$	65,827	$	223,185
General and administrative	$	192,097	$	266,888

Operating expenses for the six months ended December 31, 2010, decreased $232,149 as compared to the comparative period in 2009 primarily as a result of more efficient use of our sale channels and internal administration. However, we experienced a significant increase in the cost of goods sold from the six month period in 2009 to the same period in 2010. This increase had a significant impact on our net profit which was only $37,441 higher during the period in 2010 despite a $19,131,693 increase in revenues.

Revenues

During the six month period ended December 31, 2010 we generated $37,445,221 in revenues, compared to revenues of $18,313,528 during the six month period ended December 31, 2009. Our cost of revenues increased from $16,933,814 to $36,232,888 from the six month period ended December 31, 2009 to December 31, 2010. The increase in sales revenue is driven by the increased customer base and demand for our products.

Net Income

For the six month period ended December 31, 2010 we generated net income of $926,929 compared to net income of $889,488 for the six month period ended December 31, 2009.

Critical Accounting Policies

We have identified the policies outlined below as critical to our business operations and an understanding of our results of operations. The list is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management's judgment in their application.

Basis of preparation

Basis of consolidation

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a "smaller reporting company", we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company’s management, including our Chairman, Congfu Li, and our Chief Executive Officer, President and our Chief Financial Officer, Chuanhong Xie, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of December 31, 2010. Based upon that evaluation, our management concluded that the material weakness in our disclosure controls and procedures, lack of sufficient accounting personnel with appropriate understanding of U.S. GAAP and SEC reporting requirements still exists.

We are committed to remediating the material weakness identified above. Because this material weakness was related to a lack of sufficient technical accounting expertise and knowledge of U.S. GAAP that are relevant to the Company’s financial reporting requirements, we plan to hire financial consultant knowledgeable of U.S. GAAP to remediate this material weakness. We believe that the hiring of a financial advisor knowledgeable of U.S. GAAP will permit our senior financial management team, led by our CFO, to increase its focus on our compliance with U.S. GAAP. In addition we plan to conduct internal trainings for various members of our accounting staff relating to various subjects including understanding and application of US GAAP and communication skills such as English-language report writing. We believe our greater emphasis on the training of our internal accounting staff and our improved internal audit procedures will also improve the effectiveness and reliability of our internal control over financial reporting.

As a result of the material weakness described above, our CEO and CFO concluded that, as of December 31, 2010, our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, or that such information is accumulated and communicated to the Company’s management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in internal controls

During the period covered by this report, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors

As a "smaller reporting company", we are not required to provide the information required by this Item.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. [Removed & Reserved]

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit Number	Description
(2)	Plan of acquisition, reorganization, arrangement, liquidation or succession
2.1	Share Exchange Agreement with Lucky Express dated November 8, 2010 (incorporated by reference from our Form 8-K filed on November 10, 2010)
(3)	(i) Articles of Incorporation; and (ii) Bylaws
3.1	(i) Articles of Incorporation of China Aluminum Foil, Inc. (formerly AJ Acquisition V, Inc.) (incorporated by reference from our Form 8-K, filed on November 10, 2010)
3.2	(i) Articles of Merger filed with the Nevada Secretary of State on November 1, 2010 (incorporated by reference from our Form 8-K, filed on November 10, 2010)
3.3	(ii) Bylaws of China Aluminum Foil, Inc. (formerly AJ Acquisition V, Inc.) (incorporated by reference from our Form 8-K, filed on November 10, 2010)
(10)	Material contracts
10.1	Consultation Agreement between Shentong Investments and Shensheng dated August 12, 2010 (incorporated by reference from our Form 8-K filed on November 10, 2010)
	Operating Agreement between Shentong Investment, Shensheng, and the Shensheng Shareholder dated August 12, 2010 (incorporated by reference from our Form 8-K filed on November 10, 2010)
	Share Pledge Agreement between Shentong Investment, Shensheng, and the Shensheng Shareholder dated August 12, 2010 (incorporated by reference from our Form 8-K filed on November 10, 2010)
	Option Agreement between Shentong Investment, Shensheng, and the Shensheng Shareholder dated August 12, 2010 (incorporated by reference from our Form 8-K filed on November 10, 2010)
	Proxy Agreement between Shentong Investment, Shensheng, and the Shensheng Shareholder dated August 12, 2010 (incorporated by reference from our Form 8-K filed on November 10, 2010)
	Trademark License Agreement (incorporated by reference from our Form 8-K filed on November 10, 2010)
	Patent License Agreement (incorporated by reference from our Form 8-K filed on November 10, 2010)
(21)	Subsidiaries of registrant
21.1	List of Subsidiaries (incorporated by reference from our Form 8-K filed on November 10, 2010)
(31)	Rule 13a-14(a)/15d-14(a) Certifications
31.1*	Section 302 Certifications under Sarbanes-Oxley Act of 2002
(32)	Section 1350 Certifications
32.1*	Section 906 Certifications under Sarbanes-Oxley Act of 2002

* Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CHINA ALUMINUM FOIL, INC.
Date: October 3 , 2011	/s/ Chaunhong Xie
	Chaunhong Xie
	President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

AJ Acquisition Corp. V, Inc. - FORM 10-Q/A - October 3, 2011

Attached files

AJ Acquisition Corp. V, Inc. Reports