Attached files
file | filename |
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EXCEL - IDEA: XBRL DOCUMENT - BTX HOLDINGS INC | Financial_Report.xls |
EX-10.2 - DEBT REMIT AGREEMENT - BTX HOLDINGS INC | f10q1211ex10ii_rebornne.htm |
EX-32.1 - CERTIFICATION - BTX HOLDINGS INC | f10q1211ex32i_rebornne.htm |
EX-31.1 - CERTIFICATION - BTX HOLDINGS INC | f10q1211ex31i_rebornne.htm |
EX-10.3 - EQUITY AND ASSETS TRANSFER AGREEMENT - BTX HOLDINGS INC | f10q1211ex10iii_rebornne.htm |
EX-10.1 - AGREEMENT TO WITHDRAW REBORNNE COLOSTUMS PRODUCTS DISTRIBUTOR RIGHT FROM HAINAN GUOJIAN HIGH-TECH MILK INDUSTRY COMPANY LIMITED - BTX HOLDINGS INC | f10q1211ex10i_rebornne.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 10-Q
_____________________
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2011
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______to______.
Commission File Number: 333-110324
REBORNNE (USA) INC.
(Exact name of registrant as specified in its charter)
Florida
|
90-0515106
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employee Identification No.)
|
|
Level 23, 120 Albert Street
Auckland City, Aukland
New Zealand
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1010
|
|
(Address of principal executive offices)
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(Zip Code)
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(+0064) 9-909-8886
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark 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 o No x
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
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o
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Accelerated filer
|
o
|
|
Non-accelerated filer
(Do not check if a smaller reporting company)
|
o
|
Smaller reporting company
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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 March 6, 2011 there were 60,191,928 shares of common stock, par value $0.001 per share, issued and outstanding.
REBORNNE (USA), INC.
FORM 10-Q
December 31, 2011
TABLE OF CONTENTS
PART I— FINANCIAL INFORMATION
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Page
|
|
Item 1.
|
Financial Statements.
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1
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
20 |
Item 3.
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Quantitative and Qualitative Disclosures About Market Risk.
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23 |
Item 4.
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Controls and Procedures.
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23 |
PART II— OTHER INFORMATION
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||
Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds.
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23 |
Item 5.
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Other Information.
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23 |
Item 6.
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Exhibits.
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24 |
SIGNATURES
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25 |
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
Rebornne (USA), Inc.
Unaudited Consolidated Financial Statements
December 31, 2011 and March 31, 2011
(Stated in US Dollars)
Rebornne (USA), Inc.
Contents
|
Pages
|
Report of Independent Registered Public Accounting Firm
|
1
|
Consolidated Balance Sheets
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2 - 3
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Consolidated Statements of Income
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4
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Consolidated Statements of Changes in Stockholder’s Equity
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5
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Consolidated Statements of Cash Flows
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6 - 7
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Notes to Consolidated Financial Statements
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8 – 19
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Report of Independent Registered Public Accounting Firm
To: | The Stockholder and Board of Directors |
Rebornne (USA), Inc.
|
We have reviewed the accompanying interim consolidated Balance Sheets of Rebornne (USA), Inc. (“the Company”) as of December 31, 2011 and March 31, 2011, and the related statements of income, changes in stockholder’s equity, and cash flows for the three and nine months periods ended December 31, 2011. These interim consolidated financial statements are the responsibility of the Company's management.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying interim consolidated financial statements for them to be in conformity with U.S. generally accepted accounting principles.
San Mateo, California | Samuel H. Wong & Co., LLP |
February 11, 2012 | Certified Public Accountants |
1
Rebornne (USA), Inc.
Consolidated Balance Sheets
As of September 30, 2011 and March 31, 2011
(Stated in US Dollars)
ASSETS
|
Notes
|
12/31/2011
|
03/31/2011
|
|||||||||
Current Assets
|
||||||||||||
Cash and Cash Equivalents
|
$ | 691,441 | $ | 592,086 | ||||||||
Accounts Receivable
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815,239 | 74,984 | ||||||||||
Other Receivable
|
133,318 | 80,190 | ||||||||||
Inventories
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3 | 767,214 | 1,401,273 | |||||||||
Advance to Suppliers
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1,080,096 | 952,865 | ||||||||||
Related Parties Receivable
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4 | 450,543 | 380,096 | |||||||||
Prepaid Expenses
|
8,307 | 1,075 | ||||||||||
Total Current Assets
|
3,946,158 | 3,482,569 | ||||||||||
Non-Current Assets
|
||||||||||||
Property, Plant & Equipment, net
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5 | 2,220,426 | 2,506,049 | |||||||||
Intangible Assets
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6 | 726,637 | 152,437 | |||||||||
Other asset deposit
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1,100 | - | ||||||||||
Long-term Investment
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7 | 29,970 | 29,970 | |||||||||
TOTAL ASSETS
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6,924,291 | $ | 6,171,025 | |||||||||
LIABILITIES
|
||||||||||||
Current Liabilities
|
||||||||||||
Accounts Payable
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$ | 317,503 | $ | 330,947 | ||||||||
Taxes Payable
|
8 | 1,828,249 | 1,224,411 | |||||||||
Other Payable
|
368,856 | 168,464 | ||||||||||
Current Portion of Long-term Debt
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9 | 17,763 | 15,987 | |||||||||
Note Payable
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10 | 294,092 | 106,706 | |||||||||
Related Party Payable
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566,710 | 732,239 | ||||||||||
Customer Deposits
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272,168 | 1,154,280 | ||||||||||
Total Current Liabilities
|
3,665,341 | $ | 3,733,034 | |||||||||
Non-Current Liabilities
|
||||||||||||
Long-term Debt
|
9 | 32,675 | 45,328 | |||||||||
TOTAL LIABILITIES
|
3,698,016 | $ | 3,778,362 |
See Notes to Consolidated Financial Statements and Accountant’s Report
2
Rebornne (USA), Inc.
Consolidated Balance Sheets
As of September 30, 2011 and March 31, 2011
(Stated in US Dollars)
STOCKHOLDER’S EQUITY
|
||||||||
Preferred Stock ($0.001 par value, 10,000,000 shares authorized, 0 share issued and outstanding at December 31, 2011 and March 31, 2011)
Common Stock ($0.001 par value, 100,000,000 shares authorized, 60,191,928 and 52,546,997 shares issued and outstanding at December 31, 2011 and March 31, 2011 respectively)
|
$ | 60,192 | $ | 52,547 | ||||
Additional Paid in Capital
|
2,419,935 | 468,288 | ||||||
Retained Earnings
|
652,319 | 1,756,932 | ||||||
Accumulated Other Comprehensive Income
|
93,829 | 114,896 | ||||||
TOTAL STOCKHOLDER’S EQUITY
|
3,226,275 | 2,392,663 | ||||||
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY
|
$ | 6,924,291 | $ | 6,171,025 |
See Notes to Consolidated Financial Statements and Accountant’s Report
3
Rebornne (USA), Inc.
Consolidated Statements of Income
For the three and nine months ended December 31, 2011 and 2010
(Stated in US Dollars)
Three Months
|
Nine Months
|
Three Months
|
Nine Months
|
|||||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
|||||||||||||
12/31/2011
|
12/31/2011
|
12/31/2010
|
12/31/2010
|
|||||||||||||
Revenue
|
||||||||||||||||
Sales
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$ | 1,200,192 | $ | 3,574,461 | $ | 938,901 | $ | 3,666,365 | ||||||||
Cost of Goods Sold
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671,389 | 1,905,687 | 168,400 | 1,520,002 | ||||||||||||
Gross Profit
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528,803 | 1,668,774 | 770,501 | 2,146,363 | ||||||||||||
Operating Expenses
|
||||||||||||||||
Selling Expenses
|
22,777 | 250,392 | 209,043 | 530,283 | ||||||||||||
General & Administrative Expenses
|
364,722 | 2,354,691 | 480,751 | 1,372,748 | ||||||||||||
Total Operating Expenses
|
387,499 | 2,605,083 | 689,794 | 1,903,031 | ||||||||||||
Operating Income (Loss)
|
141,304 | (936,309 | ) | 80,707 | 243,332 | |||||||||||
Other Income (Expenses)
|
||||||||||||||||
Other Income
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258 | 1,589 | 308 | 321 | ||||||||||||
Other Expenses
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(2,578 | ) | (2,549 | ) | - | (3,547 | ) | |||||||||
Interest Income
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6,020 | 34 | - | 105 | ||||||||||||
Interest Expense
|
(17,049 | ) | (49,405 | ) | (2,064 | ) | (3,447 | ) | ||||||||
Total Other Income (Expenses)
|
(13,349 | ) | (50,331 | ) | (1,756 | ) | (6,568 | ) | ||||||||
Earnings (Loss) before Tax
|
127,955 | (986,640 | ) | 78,951 | 236,764 | |||||||||||
Income Tax
|
(63,989 | ) | (117,973 | ) | (38,469 | ) | (38,469 | ) | ||||||||
Net Income (Loss)
|
$ | 63,966 | $ | (1,104,613 | ) | $ | 40,482 | $ | 198,295 |
Earnings per share
|
||||||||||||||||
- Basic
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$ | 0.00 | $ | (0.02 | ) | $ | 0.00 | $ | 0.00 | |||||||
- Diluted
|
$ | 0.00 | $ | (0.02 | ) | $ | 0.00 | $ | 0.00 | |||||||
Weighted average shares outstanding
|
||||||||||||||||
- Basic
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60,191,928 | 58,077,312 | 52,546,997 | 52,546,997 | ||||||||||||
- Diluted
|
60,191,928 | 58,077,312 | 52,546,997 | 52,546,997 |
See Notes to Consolidated Financial Statements and Accountant’s Report
4
Rebornne (USA), Inc.
Consolidated Statements of Changes in Stockholder’s Equity
As of December 31, 2011 and March 31, 2011
(Stated in US Dollars)
Accumulated
|
||||||||||||||||||||||||
Number
|
Additional
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Other
|
||||||||||||||||||||||
Of
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Common
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Paid in
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Retained
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Comprehensive
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||||||||||||||||||||
Shares
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Stock
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Capital
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Earnings
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Income
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Total
|
|||||||||||||||||||
Balance at April 1, 2010
|
26,546,997 | $ | 26,547 | $ | 835 | $ | 1,634,480 | $ | (2,160 | ) | $ | 1,659,702 | ||||||||||||
Issuance of common stock
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26,000,000 | 26,000 | 467,453 | - | - | 493,453 | ||||||||||||||||||
Net Income
|
- | - | - | 122,452 | - | 122,452 | ||||||||||||||||||
Foreign Currency Translation Adjustment
|
- | - | - | - | 117,056 | 117,056 | ||||||||||||||||||
Balance at March 31, 2011
|
52,546,997 | 52,547 | 468,288 | 1,756,932 | 114,896 | 2,392,663 | ||||||||||||||||||
Balance at April 1, 2011
|
52,546,997 | $ | 52,547 | $ | 468,288 | $ | 1,756,932 | $ | 114,896 | $ | 2,392,663 | |||||||||||||
Issuance of common stock
|
2,260,035 | 2,260 | 239,250 | - | - | 241,510 | ||||||||||||||||||
Value of stocks grant to distributors
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3,584,896 | 3,585 | 1,139,997 | - | - | 1,143,582 | ||||||||||||||||||
Value of stocks to acquire intangible asset
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1,800,000 | 1,800 | 572,400 | - | - | 574,200 | ||||||||||||||||||
Net Income/(Loss)
|
- | - | - | (1,104,613 | ) | - | (1,104,613 | ) | ||||||||||||||||
Foreign Currency Translation Adjustment
|
- | - | - | - | (21,067 | ) | (21,067 | ) | ||||||||||||||||
Balance at December 31, 2011
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60,191,928 | 60,192 | 2,419,935 | 652,319 | 93,829 | 3,226,275 |
Comprehensive Income
|
||||||||||||
12/31/2011
|
03/31/2011
|
Accumulated Total
|
||||||||||
Net Income/(Loss)
|
$ | (1,104,613 | ) | $ | 122,452 | $ | (982,161 | ) | ||||
Foreign Currency Translation Adjustment
|
(21,067 | ) | 117,056 | 95,989 | ||||||||
$ | (1,125,680 | ) | $ | 239,508 | $ | (886,172 | ) |
See Notes to Consolidated Financial Statements and Accountant’s Report
5
Rebornne (USA), Inc.
Consolidated Statements of Cash Flows
For the three and nine months ended December 31, 2011 and March 31, 2011
(Stated in US Dollars)
Three Months
|
Nine Months
|
Three Months
|
Nine Months
|
|||||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
|||||||||||||
12/31/2011
|
12/31/2011
|
12/31/2010
|
12/31/2010
|
|||||||||||||
Cash flows from operating activities
|
||||||||||||||||
Net Income/(Loss)
|
$ | 63,966 | $ | (1,104,613 | ) | $ | 40,482 | $ | 198,295 | |||||||
Depreciation
|
90,809 | 285,623 | 78,294 | 214,645 | ||||||||||||
Loss on Disposal of Property, Plant and
Equipment
|
- | - | - | 3,271 | ||||||||||||
Finance charges on obligations under financial
leases
|
1,543 | 7,863 | - | - | ||||||||||||
Stock compensation
|
- | 1,143,582 | - | - | ||||||||||||
Decrease/(Increase) in Accounts Receivable
|
(241,187 | ) | (740,255 | ) | (55,099 | ) | (78,904 | ) | ||||||||
Decrease/(Increase) in Other Receivable
|
8,361 | (53,128 | ) | (11,071 | ) | (43,917 | ) | |||||||||
Decrease/(Increase) in inventory
|
386,785 | 625,426 | 364,994 | (710,678 | ) | |||||||||||
Decrease/(Increase) in Advance to Suppliers
|
(50,412 | ) | (127,231 | ) | (878,113 | ) | (899,155 | ) | ||||||||
Decrease/(Increase) in Related Party
Receivable
|
(60,055 | ) | (70,447 | ) | 41,636 | (398,842 | ) | |||||||||
Decrease/(Increase) in Prepaid Expenses
|
2,396 | 1,401 | - | - | ||||||||||||
Increase/(Decrease) in Note Payable
|
(177,581 | ) | (4,580 | ) | - | - | ||||||||||
Increase/(Decrease) in Accounts Payable
|
46,718 | (13,444 | ) | (592,277 | ) | 207,214 | ||||||||||
Increase/(Decrease) in Taxes Payable
|
216,247 | 603,838 | 196,483 | 414,077 | ||||||||||||
Increase/(Decrease) in other payable
|
162,377 | 200,391 | 32,682 | 514,359 | ||||||||||||
Increase/(Decrease) in related party payable
|
(142,932 | ) | (165,528 | ) | (82,761 | ) | (299,350 | ) | ||||||||
Increase/(Decrease) in Customer Deposits
|
(290,548 | ) | (882,112 | ) | 96,883 | 571,222 | ||||||||||
Cash Sourced/(Used) in Operating Activities
|
16,487 | (293,214 | ) | (767,867 | ) | (307,763 | ) | |||||||||
Cash Flows from Investing Activities
|
||||||||||||||||
Purchase of Intangible Assets
|
||||||||||||||||
Purchase of Property, Plant, and Equipment
|
- | - | (35,391 | ) | (89,478 | ) | ||||||||||
Proceeds from Disposal of Property, Plant and Equipment
|
- | - | - | 3,100 | ||||||||||||
Disposal (Purchase) of Other Assets
|
(1,100 | ) | (1,100 | ) | - | (5,334 | ) | |||||||||
Cash Used/(Sourced) in Investing Activities
|
(1,100 | ) | (1,100 | ) | (35,391 | ) | (91,712 | ) | ||||||||
Cash Flows from Financing Activities
|
||||||||||||||||
Issuance of Common Stock
|
- | 241,510 | 520,000 | 520,000 | ||||||||||||
Payment of Long-term Debt
|
186,133 | 173,226 | (11,256 | ) | (13,443 | ) | ||||||||||
Principal repayments of obligation under finance lease
|
- | - | - | - | ||||||||||||
Cash Sourced/(Used) in Financing Activities
|
186,133 | 414,736 | 508,744 | 506,557 | ||||||||||||
See Notes to Consolidated Financial Statements and Accountant’s Report
6
Rebornne (USA), Inc.
Consolidated Statements of Cash Flows
For the three and nine months ended December 31, 2011 and March 31, 2011
(Stated in US Dollars)
Net Increase/(Decrease) in Cash & Cash Equivalents for the Period
|
201,520 | 120,422 | (294,514 | ) | 107,082 | |||||||||||
Effect of Other Comprehensive Income
|
6,227 | (21,067 | ) | 30,874 | 94,052 | |||||||||||
Cash & Cash Equivalents at Beginning of Period
|
483,694 | 592,086 | 850,219 | 385,445 | ||||||||||||
Cash & Cash Equivalents at End of Period
|
691,441 | 691,441 | 586,579 | 586,579 | ||||||||||||
Non-cash Investing Activity
|
||||||||||||||||
Purchase of Intangible Asset by Way of Issue Share
|
- | 574,200 | - | - | ||||||||||||
Purchase of Motor Vehicle by Way of Long-term Debt
|
- | - | - | 66,628 |
See Notes to Consolidated Financial Statements and Accountant’s Report
7
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of December 31, 2011 and March 31, 2011
1. The Company and Principal Business Activities
Rebornne (USA), Inc. (the “Company”), formerly BTX Holdings, Inc., is a holding company whose primary business operations are conducted through its operating subsidiaries Rebornne New Zealand Ltd. (“Rebornne NZ”), Rebornne (Guangzhou) Diary Company (“Rebornne Guangzhou”), Rebornne (Shenzhen) Dairy Company (“Rebornne Shenzhen”) and Shenzhen Xin Sheng Advertising and Strategy Ltd. (“Shenzhen Xin Sheng”).
Rebornne NZ is principally engaged in formulation and production of milk powder and colostrums tablets for infants. Rebornne NZ markets its products under the Rebornne brand name. The Company sells to distributors in New Zealand and China. Rebornne Guangzhou has production facilities in Guangzhou, China. It blends and produces mainly milk powder by using Rebornne NZ’s formulations. It packages the final milk powder products and sells them throughout China under the Rebornne brand name. Rebornne Shenzhen operates a retail store in Shenzhen, China. It mainly sells packaged milk powder products as well as health food. It also has a warehouse in Shenzhen to stock its inventories. Shenzhen Xin Sheng was set up by the Company on July 16, 2010 and it is in the business of providing advertising services.
.
The Company was formed under the laws of the State of Florida on April 24, 2003. On May 28, 2010, the Company entered into a share exchange agreement with Rebornne NZ. Rebornne NZ wholly owns Rebornne Guangzhou and Rebornne Shenzhen. Pursuant to the share exchange agreement, the Company issued 26,546,997 shares in exchange for all of Rebornne NZ’s issued and outstanding shares. Rebornne NZ became a wholly owned subsidiary of the Company and Rebornne NZ became the Company’s controlling stockholder.
The share exchange transaction has been accounted for as a recapitalization of Rebornne NZ where the Company (the legal acquirer) is considered the accounting acquiree and Rebornne NZ (the legal acquiree) is considered the accounting acquirer. As a result of this transaction, the Company is deemed to be a continuation of the business of Rebornne NZ.
Accordingly, the financial data included in the accompanying consolidated financial statements is that of the accounting acquirer (Rebornne NZ). The historical stockholders’ equity of the accounting acquirer prior to the share exchange has been retroactively restated as if the share exchange transaction occurred as of the beginning of the first period presented.
8
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of December 31, 2011 and March 31, 2011
2. Summary of Significant Accounting Policies
(A)
|
Method of Accounting
|
The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements.
(B)
|
Consolidation
|
The consolidated financial statements include all the accounts of the Company and its four wholly-owned subsidiaries. Inter-company transactions, such as sales, cost of sales, due to/due from balances, investment in subsidiary, and subsidiary’s capitalization have been eliminated.
As of December 31, 2011, the detailed identities of the consolidated subsidiaries are as follows:
Name of Entity
|
Date of Incorporation
|
Place of Incorporation
|
Attributable Equity Interest
|
Registered Capital
|
Rebornne New Zealand Ltd.
|
December 17, 2001
|
New Zealand
|
100%
|
NZD $2,000
|
Rebornne (Guangzhou) Dairy Company
|
July 10, 2006
|
PRC
|
100%
|
USD $1,380,000
|
Rebornne (Shenzhen) Dairy Company
|
January 18, 2010
|
PRC
|
100%
|
USD $100,000
|
Shenzhen Xin Sheng Advertising and Strategy Ltd.
|
July 16, 2010
|
PRC
|
100%
|
RMB $500,000
|
(C)
|
Use of Estimates
|
In the preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting years. These accounts and estimates include, but are not limited to, the valuation of accounts receivable, inventories, and the estimation on useful lives of property, plant and equipment. Actual results could differ from those estimates.
9
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of December 31, 2011 and March 31, 2011
(D)
|
Cash and Cash Equivalents
|
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
(E)
|
Accounts Receivable
|
Accounts receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for doubtful accounts is made when recovery of the full amount is doubtful.
(F)
|
Inventories
|
Inventories are stated at the lower of cost or market value. Cost is computed using the first-in, first-out method and includes all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Market value is determined by reference to the sales proceeds of items sold in the ordinary course of business or estimates based on prevailing market conditions.
(G)
|
Advances to Suppliers
|
Advances to suppliers represent the cash paid in advance for the purchase of goods. The advances to suppliers are interest free and unsecured.
(H)
|
Property, Plant, and Equipment, net
|
Property, plant, and equipment, net are stated at cost. Repairs and maintenance to these assets are charged to expense as incurred. When items are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gains or losses arising from such transactions are recognized.
Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives of the property, plant and equipment are as follows:
Property and Leasehold Improvements | 10 years |
Equipment and Furniture | 2.5 years to 10 years |
Motor Vehicles | 4 years |
10
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of December 31, 2011 and March 31, 2011
(I)
|
Intangible Assets
|
Intangible assets that are acquired individually or as part of a group of assets, other than those acquired in a business combination, are initially recorded at their fair value. The cost of a group of assets acquired in a transaction is allocated to the individual assets based on their relative fair values. Goodwill does not arise in such a transaction. Intangible assets that are acquired in a business combination are accounted for in accordance with ASC Topic 805, Business Combinations. The costs of intangible assets that are developed internally, as well as the costs of maintaining or restoring intangible assets that have indeterminate lives or that are inherent in a continuing business and related to the entity as a whole, are expensed as incurred.
The accounting for intangible assets, other than goodwill, subsequent to acquisition is based on the asset’s useful life. The useful life of the intangible asset is the period over which the asset is expected to contribute directly or indirectly to the entity’s future cash flows. An asset for which no legal, regulatory, contractual, competitive, economic, or other factors limit its useful life is considered to have an indefinite useful life.
(J)
|
Long-Term Investment
|
Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Under the equity method of accounting, an investee company’s accounts are not reflected within the Company’s consolidated balance sheets and statements of operations; however, the Company’s share of the earnings or losses of the investee company is reflected in the consolidated statements of operations. The Company’s carrying value in an equity method investee company is reflected in the Company’s consolidated balance sheets.
When the Company’s carrying value in an equity method Investee company is reduced to zero, no further losses are recorded in the Company’s consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized.
Investee companies not accounted for under the consolidation or the equity method of accounting are accounted for under the cost method of accounting. Under this method, the Company’s share of the earnings or losses of such investee companies is not included in the consolidated balance sheet or statement of operations. However, impairment charges are recognized in the consolidated statement of operations. If circumstances suggest that the value of the investee company has subsequently recovered, such recovery is not recorded.
11
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of December 31, 2011 and March 31, 2011
(K)
|
Customer Deposits
|
Customer deposits represent the money the Company has received from customers in advance for the purchase of goods. The Company considers customer deposits as a liability until the title of goods have been transferred at which point the balance will be credited to sales revenue.
(L)
|
Comprehensive Income
|
In accordance with SFAS No. 130, “Reporting Comprehensive Income”, comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. The Company’s current components of other comprehensive income are unrealized gain or loss in investment and the foreign currency translation adjustment.
(M)
|
Revenue Recognition
|
Revenue from product sales is recognized net of discounts and trade allowances when the goods are shipped and title has passed.
(N)
|
Cost of Goods Sold
|
Cost of goods sold is primarily comprised of cost of goods.
(O)
|
Selling Expenses
|
Selling expenses include outbound freight, wages of the sales force, commissions, and advertising.
(P)
|
General & Administrative Expenses
|
General and administrative expenses are comprised of executive compensation, wages of administrative and factory staff, professional fees, depreciation, travel and lodging, meals and entertainment, utilities, and rental.
(Q)
|
Advertising Expenses
|
Costs related to advertising and promotion expenditures are expensed as incurred during the year. Advertising costs are charged to selling expenses.
12
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of December 31, 2011 and March 31, 2011
(R)
|
Retirement Plan
|
The employees of the Company participate in the defined contribution retirement plans managed by the local government authorities whereby the Company is required to contribute to the schemes at fixed rates of the employees’ salary. The Company’s contributions to this plan are charged to profit or loss when incurred. The Company has no obligations for the payment of retirement and other post-retirement benefits of staff other than the contributions described above.
(S)
|
Income Tax
|
The Company uses the accrual method of accounting to determine and report its taxable reduction of income taxes for the year in which they are available. In accordance with SFAS No. 109 “Accounting for Income Taxes”, the Company accounts for income tax using an asset and liability approach and allows for recognition of deferred 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. A valuation allowance is provided for deferred tax assets if it is more likely than not that such items will either expire before the Company is able to realize their benefits, or that future realization is uncertain.
In respect of the Company and its subsidiaries domiciled and operated in New Zealand and the People’s Republic of China, the taxation of these entities is summarized below:
Entities
|
Countries of Domicile
|
Income Tax Rate
|
|||
Rebornne (USA), Inc.
|
United States
|
15.00% - 35.00 | % | ||
Rebornne New Zealand Limited
|
New Zealand
|
30.00 | % | ||
Rebornne (Guangzhou) Dairy Company
|
PRC
|
25.00 | % | ||
Rebornne (Shenzhen) Dairy Company
|
PRC
|
25.00 | % | ||
Shenzhen Xin Sheng Advertising and Strategy Ltd.
|
PRC
|
25.00 | % |
(T)
|
Foreign Currency Translation
|
The Company and its operating subsidiaries Rebornne New Zealand Limited, Rebornne (Guangzhou) Dairy Company, Rebornne (Shenzhen) Dairy Company and Shenzhen Xin Sheng Advertising and Strategy Ltd. maintain their financial statements in their functional currencies, which are the New Zealand dollar and the Renminbi (RMB) respectively. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.
13
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of December 31, 2011 and March 31, 2011
For financial reporting purposes, the financial statements of Rebornne NZ, Rebornne Guangzhou, Rebornne Shenzhen and Shenzhen Xin Sheng Advertising and Strategy Ltd., which are prepared using their respective functional currencies, have been translated into United States dollars. Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates, and stockholders’ equity is translated at historical exchange rates. Translation adjustments are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity.
Exchange Rates
|
12/31/10
|
03/31/11
|
12/31/10
|
|||||||||
Period end RMB : US$ exchange rate
|
6.3647 | 6.5601 | 6.6118 | |||||||||
Average period RMB : US$ exchange rate
|
6.4356 | 6.7087 | 6.7600 | |||||||||
Period end NZD : US$ exchange rate
|
1.2920 | 1.3165 | 1.3009 | |||||||||
Average period NZD : US$ exchange rate
|
1.2465 | 1.3658 | 1.3806 |
(U)
|
Financial Instruments
|
The Company’s financial instruments are cash and cash equivalents, accounts receivable, other receivable, advances to suppliers, related parties receivable, accounts payable, other payable, notes payable, related party payable and long-term debt. The recorded values of these financial instruments approximate their fair values due to their short-term nature. The difference between the carrying and fair values of long-term debt is not significant.
(V)
|
Impairment of Intangible Assets
|
The Company evaluates the recoverability of identifiable intangible assets whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. Such circumstances could include, but are not limited to (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset. The Company measures the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future net cash flows be less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its fair value. The fair value is measured based on quoted market prices, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows. The evaluation of asset impairment requires the Company to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts.
14
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of December 31, 2011 and March 31, 2011
(W)
|
Recent Accounting Pronouncements
|
In January 2010, the FASB issued ASU 2010-02, Consolidation (Topic 810) — Accounting and Reporting for Decreases in Ownership of a Subsidiary — A Scope Clarification. ASU 2010-02 clarifies that the scope of previous guidance in the accounting and disclosure requirements related to decreases in ownership of a subsidiary apply to (i) a subsidiary or a group of assets that is a business or nonprofit entity; (ii) a subsidiary that is a business or nonprofit entity that is transferred to an equity method investee or joint venture; and (iii) an exchange of a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity. ASU 2010-02 also expands the disclosure requirements about deconsolidation of a subsidiary or derecognition of a group of assets to include (i) the valuation techniques used to measure the fair value of any retained investment; (ii) the nature of any continuing involvement with the subsidiary or entity acquiring a group of assets; and (iii) whether the transaction that resulted in the deconsolidation or derecognition was with a related party or whether the former subsidiary or entity acquiring the assets will become a related party after the transaction. The provisions of ASU 2010-02 will be effective for the first reporting period beginning after December 13, 2009. The adoption of this standard did not have a material impact on the financial position, results of operations or cash flows of the Company.
In January 2010 the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820) —Improving Disclosures About Fair Value Measurements. ASU 2010-06 clarifies the requirements for certain disclosures around fair value measurements and also requires registrants to provide certain additional disclosures about those measurements. The new disclosure requirements include (i) the significant amounts of transfers into and out of Level 1 and Level 2 fair value measurements during the period, along with the reason for those transfers, and (ii) separate presentation of information about purchases, sales, issuances and settlements of fair value measurements with significant unobservable inputs. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of this standard did not have a material impact on the financial position, results of operations or cash flows of the Company.
15
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of December 31, 2011 and March 31, 2011
(X)
|
Subsequent Events
|
The Company evaluates subsequent events that have occurred after the consolidated balance sheet date but before the consolidated financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (2) nonrecognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date. The Company has evaluated subsequent events, and based on this evaluation, the Company did not identify any recognized or nonrecognized subsequent events that would have required adjustments to the consolidated financial statements.
3. Inventories
12/31/2011
|
03/31/2011
|
|||||||
Raw materials
|
$ | 154,728 | $ | 156,213 | ||||
Finished goods
|
612,486 | 1,245,060 | ||||||
$ | 767,214 | $ | 1,401,273 | |||||
4. Related Parties Receivable
12/31/2011
|
03/31/2011
|
|||||||
Rebornne Trading Company Limited
|
$ | 49,293 | $ | 47,825 | ||||
Rebornne Dairy Dongying Company
|
137,472 | 133,377 | ||||||
Pai Cun (Guangzhou) Health Limited
|
263,778 | 198,894 | ||||||
$ | 450,543 | $ | 380,096 |
The Company, Pai Cun (Guangzhou) Health Limited and Rebornne Trading Company Limited have common shareholders, whereas Rebornne NZ has an ownership interest in Rebornne Dairy Dongying Company. The amounts due from these related parties have no specific terms of repayent and are non-interest bearing and unsecured.
16
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of December 31, 2011 and March 31, 2011
5. Property, Plant, and Equipment
Accumulated
|
||||||||||||
12/31/2011
|
Cost
|
Depreciation
|
Net
|
|||||||||
Property and Leasehold Improvements
|
$ | 800,697 | $ | 323,489 | $ | 477,208 | ||||||
Equipment and Furniture
|
2,048,006 | 581,069 | 1,466,937 | |||||||||
Motor Vehicles
|
396,653 | 120,372 | 276,281 | |||||||||
$ | 3,245,356 | $ | 1,024,930 | $ | 2,220,426 |
Accumulated
|
||||||||||||
03/31/2011
|
Cost
|
Depreciation
|
Net
|
|||||||||
Property and Leasehold Improvements
|
$ | 800,697 | $ | 254,500 | $ | 546,197 | ||||||
Equipment and Furniture
|
2,048,006 | 407,066 | 1,640,940 | |||||||||
Motor Vehicles
|
396,653 | 77,741 | 318,912 | |||||||||
$ | 3,245,356 | $ | 739,307 | $ | 2,506,049 |
6. Intangible Assets
Intangible assets consist of the exclusive right to distribute the Rebornne Colostrums products and the related customer contracts. Pursuant to the distributor right agreement dated December 1, 2010 between Rebornne NZ and Hainan Guo Jian High-tech Milk Industry Company Limited (“Hainan), Rebornne NZ agreed to purchase the exclusive distribution network of the Rebornne Colostrums products and related customers from Hainan by issuing 1.8 million common stock of Rebornne (USA), Inc. and paying RMB $3 million in cash as consideration. As of December 31, 2011, Rebornne NZ paid $152,437 in cash (RMB $1 million) and 1.8 million common stock of Rebornne (USA), Inc. The remaining cash payment of RMB $2 million will be issued by December 2011 as agreed between both parties. As there are no legal, regulatory, contractual, competitive, economic or other factors limiting the useful life of these intangible assets, they are considered to have an indefinite useful life and no amortization is taken. Instead, they will be tested for impairment annually.
7. Long-Term Investment
In April 2008, Rebornne NZ entered into an agreement to acquire 60% interest in Rebornne Dairy Dongying Company (“Rebornne Dongying”). Rebornne Dongying is located is Shandong, PRC. Rebornne Dongying’s primary business activity is production of fresh milk. As consideration for the 60% interest, Rebornne NZ committed to contribute $2,303,945 (RMB$15,750,000) in capital by April 29, 2010. As of March 31, 2011, the Company has contributed $29,970 in cash. The Company has also contributed a milk powder formulation to Rebornne Dongying. The milk powder formulation has been appraised at $841,123 (RMB$5,750,000).
17
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of December 31, 2011 and March 31, 2011
The Company has not recognized an intangible asset on its balance sheet related to the milk powder formulation; the Company believes there is a difference in accounting recognition between PRC GAAP and US GAAP for the milk powder formulation. Under PRC GAAP, the milk powder formulation can be recognized as an intangible asset; however, the Company, from a conservative interpretation of US GAAP, has accounted for the milk powder formulation as research and development costs that have been expensed to the statements of operations in prior periods that are not presented herein.
The cash contribution made by Rebornne NZ does not exceed 20% of the net assets of Rebornne Dongying. Neither the Company nor Rebornne NZ has not been able to exert significant influence over Rebornne Dongying in terms of management of the finances and business operations for the periods presented; therefore, in light of the foregoing circumstance, the Company, at December 31, 2011 and March 31, 2011, has accounted for its investment in Rebornne Dongying using the cost method. If in the future the Company is able to exert more significant influence or increase its capital contribution, the Company would change the method for which it accounts for its investment in Rebornne Dongying.
8. Taxes Payable
12/31/2011
|
03/31/2010
|
|||||||
Value Added Tax
|
$ | 1,533,482 | $ | 1,042,213 | ||||
Other Tax
|
4,966 | 12,263 | ||||||
Income Tax Payable
|
289,801 | 169,935 | ||||||
$ | 1,828,249 | $ | 1,224,411 |
9. Note Payable
The note is payable to an unrelated individual. It is unsecured, due on demand and bears interest at 5% per month.
10. Related Party Payable and Transactions
Related party payable relates to amounts owing to the shareholder of the Company. It has no specific terms of repayment and is non-interest bearing.
In addition, the sole shareholder received $150,000 and $103,725 in remuneration from its wholly owned subsidiaries for the nine-month periods ended December 31, 2011 and 2010 respectively.
18
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of December 31, 2011 and March 31, 2011
11. Long-term Debt
12/31/2011
|
03/31/2011
|
|||||||
Motor Vehicle Loan
|
$ | 50,438 | $ | 61,315 | ||||
Less: Current Portion
|
(17,763 | ) | (15,987 | ) | ||||
$ | 32,675 | $ | 45,328 |
Long-term debt relates to a motor vehicle loan. It matures in July 2014, is secured by the motor vehicle, bears interest at 12% per annum and is repayable at NZ$ 2,443 per month.
12. Economic, Political, and Legal Risks
The Company’s operations in China are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the economic, political, legal environment, and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in China, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, restriction on international remittances, and rates and methods of taxation, among other things.
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the results of operations and financial condition of the Company for the period ended December 31, 2011 and 2010 should be read in conjunction with its financial statements. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Special Note Regarding Forward-Looking Statements and Business sections in our Form 10-K for the year ended March 31, 2011 as filed with the Securities and Exchange Commission. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
COMPANY OVERVIEW
We operate our business through Rebornne NZ, which was incorporated in Auckland, New Zealand in 2001 by its sole shareholder and owner Dairy Global. Rebornne NZ is a growing dairy product company in New Zealand with subsidiaries in the PRC. We produce, market, and sell our products under the “Rebornne” brand name. We focus on selling New Zealand produced colostrums and infant formula products in China, which included both premium and a more affordable series, targeted towards the general masses. In order to sell our products, we have established an extensive sales and distribution network nationwide throughout China.
RESULTS OF OPERATIONS
Results of Operations for the Three-Month Ended December 31, 2011 As Compared to the Three-Month Ended December 31, 2010
The following tables set forth key components of our results of operations for the period indicated, in US dollars, and key components of our revenue for the period indicated, in US dollars. The discussion following the table is based on the audited results. Percentage of difference is calculated for better comparison.
For three months ended
|
||||||||||||||||||||
31/12/2011
|
31/12/2010
|
Difference
|
||||||||||||||||||
USD
|
%
|
USD
|
%
|
%
|
||||||||||||||||
Revenues
|
||||||||||||||||||||
Sales
|
1,200,192 | 100.0 | 938,901 | 100.0 | 27.83 | |||||||||||||||
Cost of Goods Sold
|
671,389 | 55.94 | 168,400 | 17.94 | 298.69 | |||||||||||||||
Gross profit
|
528,803 | 44.06 | 770,501 | 82.06 | (31.37 | ) | ||||||||||||||
Operating Expenses
|
||||||||||||||||||||
Selling Expenses
|
22,777 | 1.90 | 209,043 | 22.30 | (89.12 | ) | ||||||||||||||
General & Administrative Expenses
|
364,722 | 30.39 | 480,751 | 51.20 | (24.13 | ) | ||||||||||||||
Total Operating Expenses
|
387,499 | 32.29 | 689,794 | 73.47 | (43.82 | ) | ||||||||||||||
Operating Income
|
141,304 | 11.77 | 80,707 | 8.60 | 75.08 | |||||||||||||||
Other Income (Expenses)
|
||||||||||||||||||||
Other Income
|
258 | 0.02 | 308 | 0.03 | (16.23 | ) | ||||||||||||||
Other Expenses
|
(2,578 | ) | (0.21 | ) | - | - | - | |||||||||||||
Interest Income
|
6,020 | 0.50 | - | - | - | |||||||||||||||
Interest Expense
|
(17,049 | ) | (1.42 | ) | (2,064 | ) | (0.22 | ) | 800.97 | |||||||||||
Total Other Income/ (Expenses)
|
(13,349 | ) | (1.11 | ) | (1,756 | ) | (0.19 | ) | 660.19 | |||||||||||
Earnings before Tax
|
(127,955 | ) | 10.66 | 78,951 | 8.41 | 62.07 | ||||||||||||||
Income Tax
|
(63,989 | ) | (5.33 | ) | (38,469 | ) | (4.10 | ) | 66.34 | |||||||||||
Net Income
|
63,966 | 5.33 | 40,482 | 4.31 | 58.01 |
Net Revenue
Net revenue for the three-month ended December 31, 2011 increased by $261,291 or 27.8% from $938,901 for the three-month ended December 31, 2010 to $1,200,192. The revenue during this period improved is because there an order arrived to distribute into China market to earn profit. When compared to the result during the same period in 2010, the revenue was made through inventories from previous order, and neither manufacture nor import order happened during the three months, hence the cost of goods sold was low.
Cost of Sales
Our cost of sales increased by $502,989 or 298.69% from $168,400 for the three-month ended December 31, 2010 to $671,389 for the three-month ended December 31, 2011. The reason of the huge increase is because there was manufacturing and import order happened during the three month ended 2011.
20
Gross Profit
Gross profit is decreased by $241,698 or 31.37% from $770,501 for the three-month ended December 31, 2010 to $528,803 for the three-month ended December 31, 2011. The decrease of Gross Profit is due to the high cost of goods sold.
Operating Expenses
The total operating expenses decreased by $302,295 or 43.82% from $689,794 for the three-month ended December 31, 2010 to $387,499 for the three-month ended December 31, 2011. The Selling Expenses have decreased to $22,777, which decreased 89.1% compared to same period in 2010. General & Administrative (G&A) also decreased during the three-month ended December 31, 2011 with $116,029 or 24.1%. Since there is no any project or big promotion activities running, therefore all the expenses have reduced.
Operating Income
The operating income was $141,304 for the three-month ended December 31, 2011 compared to $80,707 for three-month ended December 31, 2010, there is an increase in the total of 60,597 or 75.08%. The increase of operating income is due to the decrease of total operating expenses.
Net Income
The net income was $40,482 for the three-month ended December 31, 2010 compared to $63,966 for the three-month ended December 31, 2011. The net income in the three-month ended 2011 increased $23,484 or 58% which result from the increase of net revenue and total operating expenses reduced.
Results of Operations for the Nine-Month Ended December 31, 2011 As Compared to the Nine-Month Ended December 31, 2010
The following tables set forth key components of our results of operations for the period indicated, in US dollars, and key components of our revenue for the period indicated, in US dollars. The discussion following the table is based on the audited results. Percentage of difference is calculated for better comparison.
For the Nine Months Ended
|
||||||||||||||||||||
31/12/2011
|
31/12/2010
|
Difference
|
||||||||||||||||||
USD
|
%
|
USD
|
%
|
%
|
||||||||||||||||
Revenues
|
||||||||||||||||||||
Sales
|
3,574,461 | 100.0 | 3,666,365 | 100.0 | (2.51 | ) | ||||||||||||||
Cost of Goods Sold
|
1,905,687 | 53.31 | 1,520,002 | 41.46 | 25.37 | |||||||||||||||
Gross profit
|
1,668,774 | 46.69 | 2,146,363 | 58.54 | (22.25 | ) | ||||||||||||||
Operating Expenses
|
||||||||||||||||||||
Selling Expenses
|
250,392 | 7.01 | 530,283 | 14.46 | (52.78 | ) | ||||||||||||||
General & Administrative Expenses
|
2,354,691 | 65.88 | 1,372,748 | 37.44 | 71.53 | |||||||||||||||
Total Operating Expenses
|
2,605,083 | 72.88 | 1,903,031 | 51.91 | 36.89 | |||||||||||||||
Operating Income
|
(936,309 | ) | (26.19 | ) | 243,332 | 6.64 | (484.8 | ) | ||||||||||||
Other Income (Expenses)
|
||||||||||||||||||||
Other Income
|
1,589 | 0.04 | 321 | 0.008 | 395.02 | |||||||||||||||
Other Expenses
|
(2,549 | ) | (0.07 | ) | (3,547 | ) | (0.097 | ) | 104.37 | |||||||||||
Interest Income
|
34 | 0.001 | 105 | 0.003 | (67.62 | ) | ||||||||||||||
Interest Expense
|
(49,405 | ) | (1.38 | ) | (3,447 | ) | (0.094 | ) | 1333.28 | |||||||||||
Total Other Income/ (Expenses)
|
(50,331 | ) | (1.41 | ) | (6,568 | ) | (0.18 | ) | 666.31 | |||||||||||
Earnings before Tax
|
(986,640 | ) | (27.60 | ) | 236,764 | 6.46 | (516.72 | ) | ||||||||||||
Income Tax
|
(117,973 | ) | (3.30 | ) | (38,469 | ) | (1.05 | ) | 306.67 | |||||||||||
Net Income
|
(1,104,613 | ) | (30.9 | ) | 198,295 | 5.41 | (657.06 | ) |
Net Revenue
Net revenue for the nine-month ended December 31, 2011 decreased by $91,904 or 2.51% from $3,666,365 for the nine-month ended December 31, 2010 to $3,574,461 in December 31, 2011. The net revenue of 2011 period only decrease very slightly due to the increase of cost of goods sold.
Cost of Sales
The cost of sales increased by $385,685 or 25.37% from $1,520,002 for the nine-month ended December 31, 2010 to $1,905,687 for the nine-month ended December 31, 2011. The cost of goods getting higher may due to the result that base powder and other raw materials prices inflated from year 2010 to 2011.
Gross Profit
Gross profit decreased by $477,589 or 22.25% from $2,146,363 for the nine-month ended December 31, 2010 to $1,668,774 for the nine-month ended December 31, 2011. The Gross Profit decreased in the nine-month ended 2011 is affected by the cost of goods sold mark up.
21
Operating Expenses
The Total Operating Expenses increased by $702,052 or 36.89% from $1,903,031 for the nine-month ended December 31, 2010 to $2,605,083 for the nine-month ended December 31, 2011. The Total Operating Expenses in nine-month ended 2011 increased is because of the General & Administrative Expenses increased which contributed 71.53% from the total. The main reason of the huge increase of G&A Expenses in nine-month ended 2011 is due to the share registration to China regional distributors in July 2011.
Operating Income
The operating income is ($936,309) for the nine-month ended December 31, 2011 compared to $243,332 for the nine-month ended December 31, 2010, result the decrease of $1,179,641 or 484.79%. The main factor that brings the large decrease has the same reason stated in Total Operating Expenses
Net Income
The net income was $198,295 for the nine-month ended December 31, 2010 compared to ($1,104,613) for the nine-month ended December 31, 2011, a decrease of $1,302,908 or 657.06%. The main reason of the decrease is due to the huge General & Administration Expenses happened in the nine-month ended 2011.
Liquidity and Capital Resources
The following table sets forth the summary of our cash flows stated in US Dollar for the three-month ended December 31, 2011 and 2010.
For the Three-Month Ended
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||||||||
December 31, 2011
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December 31, 2010
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|||||||
Cash Flows from Operating Activities
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16,486 | (767,867 | ) | |||||
Cash Flows from Investing Activities
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(1,100 | ) | (35,391 | ) | ||||
Cash Flows from Financing Activities
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186,133 | 508,744 | ||||||
Net Increase/(Decrease) in Cash & Cash Equivalents for the Period
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201,519 | (294,514 | ) | |||||
Effect of other Comprehensive Income
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6,227 | 30,874 | ||||||
Cash & Cash Equivalents at Beginning of Period
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483,694 | 850,219 | ||||||
Cash & Cash Equivalents at End of Period
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691,440 | 586,579 |
Operating Activities
During the three-month ended December 31, 2011, net cash provided by operating activities was $16,486 as compared to net cash used for operating activities of ($767,867) in the three-month ended December 31, 2010.
Investing Activities
The cash flows from investing activities is ($1,100) for the three-month ended December 2011 compared to ($37,391) for the three-month ended December 2010.
Our total cash and cash equivalents increased to $691,440 as December 31, 2011, as compared to $586,579 as of December 31, 2010.
RECENT ACCOUNTING PRONOUNCEMENTS
In January 2010, the FASB issued ASU 2010-02, Consolidation (Topic 810) — Accounting and Reporting for Decreases in Ownership of a Subsidiary — A Scope Clarification. ASU 2010-02 clarifies that the scope of previous guidance in the accounting and disclosure requirements related to decreases in ownership of a subsidiary apply to (i) a subsidiary or a group of assets that is a business or nonprofit entity; (ii) a subsidiary that is a business or nonprofit entity that is transferred to an equity method investee or joint venture; and (iii) an exchange of a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity. ASU 2010-02 also expands the disclosure requirements about deconsolidation of a subsidiary or derecognition of a group of assets to include (i) the valuation techniques used to measure the fair value of any retained investment; (ii) the nature of any continuing involvement with the subsidiary or entity acquiring a group of assets; and (iii) whether the transaction that resulted in the deconsolidation or derecognition was with a related party or whether the former subsidiary or entity acquiring the assets will become a related party after the transaction. The provisions of ASU 2010-02 will be effective for the first reporting period beginning after December 13, 2009. The adoption of this standard did not have a material impact on the financial position, results of operations or cash flows of the Company.
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In January 2010 the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820) —Improving Disclosures About Fair Value Measurements. ASU 2010-06 clarifies the requirements for certain disclosures around fair value measurements and also requires registrants to provide certain additional disclosures about those measurements. The new disclosure requirements include (i) the significant amounts of transfers into and out of Level 1 and Level 2 fair value measurements during the period, along with the reason for those transfers, and (ii) separate presentation of information about purchases, sales, issuances and settlements of fair value measurements with significant unobservable inputs. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of this standard did not have a material impact on the financial position, results of operations or cash flows of the Company.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).
Item 3. Quantitative and Qualitative Disclosures about Market Risks.
Not applicable because we are a smaller reporting company.
Item 4. Controls and Procedures.
Disclosure controls and procedures. Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective to ensure 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, and that such information is accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting. There have been no significant changes in our internal controls over financial reporting that occurred during the last fiscal quarter that has materially affected or is reasonably likely to materially affect our internal controls.
PART II - OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Reference is made to Item 5 of this Report.
The Company issued total 1,800,000 shares of restricted common shares to the shareholders of Hainan Guojian pursuant to certain agreements as the compensation for the withdrawal of the distribution right of Rebornne colostrums products. Such securities were not registered under the Securities Act. These securities qualified for exemption under Section 4(2) of the Securities Act since the issuance of securities by us did not involve a public offering.
Item 5. Other Information.
In January 2011, Rebornne New Zealand Limited (“Rebornne NZ”), a wholly owned subsidiary of the Company, withdrew the Rebornne colostums products distributor right from Hainan GuoJian High-Tech Milk Industry Company Limited (the “Hainan Guojian”) by entering into certain agreements on December 1, 2010 and January 5, 2011. Upon the above withdrawal of the distribution rights, the Company reclaimed its distribution rights of all Rebornne colostrums products. As compensation to Hainan Guojian, the Company issued a total 1,800,000 restricted shares to the beneficiary owners of Hainan Guojian. Rebornne NZ also agreed to pay a lump sum payment to the beneficiary owners of Hainan Guojian. On January 12, 2012, the above parties entered into a debt remit agreement pursuant to which Hainan Guojian forgave such lump sum payment.
On January 12, 2012, Rebornne NZ entered into an equity and assets transfer agreement with Guojian (Hong Kong) Group Limited Company (“Guojian-HK”) and Rebornne (GuangZhou) Dairy Limited Company, a wholly owned subsidiary of Rebornne NZ (“Rebornne-Guangzhou”), pursuant to which Rebornne NZ agreed to transfer all the equity, assets and license of Rebornne-Guangzhou to Guojian-HK (except Rebornne brands and products, market channels), for 9,500,000 RMB. Therefore, Rebornne-Guangzhou will be no longer our wholly-owned subsidiary.
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Item 6. Exhibits.
Exhibit No.
|
Description
|
|
10.1
|
Agreement to Withdraw Rebornne Colostums Products Distributor Right from Hainan Guojian High-Tech Milk Industry Company Limited *
|
|
10.2
|
Debt Remit Agreement *
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|
10.3
|
Equity and Assets Transfer Agreement *
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31.1
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
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32.1
|
Certification of Principal Executive Officer and Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
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101.INS
|
XBRL Instance Document
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101.SCH
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XBRL Taxonomy Schema
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101.CAL
|
XBRL Taxonomy Calculation Linkbase
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101.DEF
|
XBRL Taxonomy Definition Linkbase
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101.LAB
|
XBRL Taxonomy Label Linkbase
|
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101.PRE
|
XBRL Taxonomy Presentation Linkbase
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* Filed herewith.
** Furnished herewith (in accordance with SEC Release 33-8238, this exhibit is being furnished and not filed).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
REBORNNE (USA), INC.
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||
Date: March 22, 2012
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By:
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/s/ Dairy Global
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Dairy Global
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||
President, Chief Executive Officer and Chief Financial Officer
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||
(Duly Authorized Officer, Principal Executed Officer and Principal Financial Officer)
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