Shiner International, Inc. - FORM 10-Q

Attached files

file	filename
EX-31.2 - EXHIBIT 31.2 - Shiner International, Inc.	exhibit31-2.htm
EX-32.2 - EXHIBIT 32.2 - Shiner International, Inc.	exhibit32-2.htm
EX-31.1 - EXHIBIT 31.1 - Shiner International, Inc.	exhibit31-1.htm
EX-32.1 - EXHIBIT 32.1 - Shiner International, Inc.	exhibit32-1.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[ X ] Quarterly report pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2015

[_] Transition report pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _______to _______.

001-33960
(Commission file number)

SHINER INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

Nevada	98-0507398
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

19/F, Didu Building, Pearl River Plaza,
No. 2 North Longkun Road Haikou,
Hainan Province
China 570125
(Address of principal executive offices)

011-86-898-68581104
(Issuer’s telephone number)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [_]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)
Yes [ X ] No [_]

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [_]	Accelerated filer [_]
Non-accelerated filer [_]	Smaller reporting company [ X ]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [_] No [ X ]

The number of shares outstanding of each of the issuer’s classes of common stock, as of November 16, 2015 is as follows:

Class of Securities	Shares Outstanding
Common Stock, $0.001 par value	27,541,491

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	27

PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

		September 30,			December 31,
		2015			2014
		(Unaudited)
ASSETS

CURRENT ASSETS:
Cash and equivalents	$	8,029,054		$	5,710,373
Restricted cash		1,264,017			7,972,290
Accounts receivable, net		9,477,862			7,656,456
Other receivables		11,816,186			20,563,087
Advances to suppliers		27,601,705			23,529,482
Notes receivable		783,065			35,794
Inventory, net		13,071,410			9,983,143
Prepaid expenses and other current assets		210,730			238,317

Total current assets		72,254,029			75,688,942

Property and equipment, net		22,562,002			25,872,633
Construction in progress		7,547,245			7,007,576
Advance for purchase of equipment		495,360			727,764
Other non-current receivables		10,685,389			18,797,707
Intangible assets, net		999,912			1,051,243

TOTAL ASSETS	$	114,543,937		$	129,145,865

LIABILITIES AND EQUITY

CURRENT LIABILITIES:
Accounts payable	$	7,153,195		$	8,968,199
Other payables		10,252,660			18,177,999
Unearned revenue		1,268,829			272,135
Accrued payroll		110,904			139,274
Short-term loans		37,065,819			38,744,022
Long-term loan, currently in default		12,592,000			19,524,000

Total current liabilities		68,443,407			85,825,629

Long-term loans		6,768,200			7,321,500

Total liabilities		75,211,607			93,147,129

Commitments and contingencies

EQUITY:
Shiner stockholders' equity:
Common stock, par value $0.001; 75,000,000 shares authorized, 27,603,336 shares issued and 27,541,491 shares outstanding		27,603			27,603
Additional paid-in capital		14,336,456			14,336,456
Treasury stock (61,845 shares)		(58,036	)		(58,036	)
Other comprehensive income		5,422,811			6,611,234
Statutory reserve		4,183,876			4,085,752
Retained earnings		15,077,306			11,229,373

Total Shiner stockholders' equity		38,990,016			36,232,382

Noncontrolling interest		342,314			(233,646	)

Total equity		39,332,330			35,998,736

TOTAL LIABILITIES AND EQUITY	$	114,543,937		$	129,145,865

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME (LOSS)
(Unaudited)

		Three Months Ended September 30,						Nine Months Ended September 30,
		2015			2014			2015			2014


Net revenue	$	24,958,212		$	20,006,848		$	59,646,341		$	69,470,699
Cost of goods sold		19,171,448			17,797,028			46,565,648			61,643,938
Gross profit		5,786,764			2,209,820			13,080,693			7,826,761

Operating expenses:
Selling		820,563			1,138,772			2,590,857			3,412,455
General and administrative		262,600			3,285,551			5,232,364			6,858,150
Total operating expenses		1,083,163			4,424,323			7,823,221			10,270,605

Income (loss) from operations		4,703,601			(2,214,503	)		5,257,472			(2,443,844	)

Non-operating income (expense):
Other income, net		349,100			3,744,255			906,570			4,403,679
Interest income		540,487			559,105			1,775,220			1,363,169
Interest expense		(806,508	)		(960,292	)		(2,933,713	)		(2,712,641	)
Exchange loss		(105,581	)		(2,852	)		(132,226	)		(6,253	)
Total non-operating income (expense)		(22,502	)		3,340,216			(384,149	)		3,047,954

Income before income tax		4,681,099			1,125,713			4,873,323			604,110

Income tax expense		552,563			246,927			974,107			560,856

Net income		4,128,536			878,786			3,899,216			43,254
Net income (loss) attributed to noncontrolling interest		(18,176	)		5,919			(46,841	)		3,563
Net income attributed to Shiner	$	4,146,712		$	872,867		$	3,946,057		$	39,691

Comprehensive income (loss):
Net income	$	4,128,536		$	878,786		$	3,899,216		$	43,254
Foreign currency translation loss		(1,426,810	)		(254,405	)		(1,200,152	)		(254,405	)
Comprehensive income (loss)	$	2,701,726		$	624,381		$	2,699,064		$	(211,151	)

Weighted average shares outstanding :
Basic		27,541,491			27,541,491			27,541,491			27,541,491
Diluted		27,541,491			27,541,491			27,541,491			27,541,491

Earnings per share attributed to Shiner common stockholders:
Basic	$	0.15		$	0.03		$	0.14		$	0.00
Diluted	$	0.15		$	0.03		$	0.14		$	0.00

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

		Nine Months Ended September 30,
		2015			2014

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,899,216		$	43,254
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		2,979,224			3,085,942
Amortization		17,586			17,662
Gain on sale and write off of assets
Change in working capital components:
Accounts receivable		(2,130,740	)		3,580,512
Other receivables		1,050,086			(2,640,206	)
Inventory		(3,512,121	)		(4,566,048	)
Notes receivable		(770,310	)		617,965
Advances to suppliers		(4,893,491	)		7,812,868
Other assets		80,403			125,276
Accounts payable		(1,639,816	)		755,984
Unearned revenue		1,010,480			78,829
Other payables		(2,464,580	)		5,793,728
Accrued payroll		(24,531	)		7,665
Net cash provided by (used in) operating activities		(6,398,594	)		14,713,431

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for property and equipment		(1,014,176	)		(1,172,910	)
Increase (decrease) in restricted cash		6,637,032			(198,221	)
Increase in other payables		(5,104,933	)		-
Issuance of other receivables		(12,079,789	)		(37,189,874	)
Payment on other receivable		27,042,126			161,073
Net cash provided by (used in) investing activities		15,480,260			(38,399,932	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of short-term loans		(50,062,955	)		(41,633,519	)
Proceeds from short-term loans		49,634,690			44,212,259
Repayment of long-term loans		(6,804,000	)		(1,301,600	)
Proceeds from long-term loans		-			19,524,000
Contribution by non-controlling interest		631,800			-
Net cash provided by (used in) financing activities		(6,600,465	)		20,801,140

Effect of exchange rate changes on cash and equivalents		(162,520	)		(72,403	)

NET DECREASE IN CASH AND EQUIVALENTS		2,318,681			(2,957,764	)

CASH AND EQUIVALENTS, BEGINNING BALANCE		5,710,373			9,135,988

CASH AND EQUIVALENTS, ENDING BALANCE	$	8,029,054		$	6,178,224

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	2,807,365		$	3,156,568
Income taxes paid	$	-		$	62,785

The accompanying notes are an integral part of these consolidated financial statements.

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015 (Unaudited)

Note 1 - Organization and Basis of Presentation

The unaudited consolidated financial statements were prepared by Shiner International, Inc. (the “Company” or “Shiner”), pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) were omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K filed with the SEC on April 20, 2015. The results for the nine months ended September 30, 2015, are not necessarily indicative of the results to be expected for the year ending December 31, 2015.

Organization and Line of Business

The Company was incorporated in the State of Nevada on November 12, 2003. The Company, through its subsidiaries manufactures Biaxially Oriented Polypropylene (“BOPP”) tobacco film, coated films, color printing products, advanced film, and water based coatings selling to customers throughout the People’s Republic of China (“China” or “PRC”), Asia, Australia, Europe, the Middle East and North America. Our products are sold to companies in the following industries: food, tobacco, chemical, agribusiness, medical, pharmaceutical, personal care, electronics, automotive, construction, graphics, music and video publishing and other consumer goods.

Except as otherwise indicated by the context, all references in this report to “Shiner,” “Company,” “we,” “us” or “our” are to Shiner International, Inc. and its direct and indirect subsidiaries: (i) Hainan Shiner Industrial Co., Ltd., or “Hainan Shiner,” (ii) Hainan Shiny-Day Color Printing Packaging Co., Ltd., or “Shiny-Day,” (iii) Hainan Modern Hi-Tech Industrial Co., Ltd., or “Hainan Modern,” (iv) Zhuhai Modern Huanuo Packaging Material Co., Ltd., or “Zhuhai Modern,” (v) Shimmer Sun Ltd., or “Shimmer Sun,” (vi) Hainan Jingyue New Material Co., Ltd., or “Jingyue,” (vii) Hainan Shunhao New Material Co., Ltd., or “Shunhao,” (viii) Hainan Yongxin Environmental Co., Ltd., or “Yongxin,” (ix) Hainan Runhai Color Printing Packaging Co., or “Hainan Runhai,” (x) Hainan Saihang Photoelectric Co. Ltd., or “Hainan Saihang, ” (xi) Hainan Juneng Functional Film Co., or “Hainan Juneng” and (xii) Ningbo Neisuoer Latex Co., Ltd., or “Ningbo.”

The Company has historically advanced minimal funds to customers and other unrelated third parties that are non-interest bearing and payable upon demand. However, in 2014 the Company decided to temporarily expand its advances to unrelated third parties. On April 17, 2014, Hainan Shiner, the Company’s primary operating subsidiary, drew down entirely on a RMB120 million (approximately $19.5 million) credit facility collateralized by the common stock of Hainan Shiner, buildings and land use rights. The facility bears interest at 7.35% per annum and is due and payable on April 17, 2017. Under the terms of the credit facility agreement, the proceeds of the funds borrowed under the credit facility are to be used solely for the construction of an office building and research facility at the Hainan Xiandai Packaging Industrial Park, and for the purchase of research and development equipment. However, on April 30, 2014, the Company loaned the entire proceeds of the credit facility to unrelated third parties (See Note 3). The business purpose for these loans was for the Company to make the spread between the amount of interest it pays on the credit facility and the amount of interest it can charge. Such parties have not provided the Company with significant collateral on such loans, other than a written guarantee from each of the borrowers and an unrelated fourth party. We do not consider this practice of lending money to third parties to be a new business segment as we deem this practice to be temporary.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Shiner and its subsidiaries as follows:

	Place	Percentage
Subsidiary	Incorporated	Owned	Parent
Shiner International, Inc.	Nevada, USA		-
Hainan Shiner	China	100%	Shiner International, Inc.
Shiny-Day	China	100%	Shiner International, Inc.
Hainan Modern	China	100%	Shiny-Day/Hainan Shiner
Zhuhai Modern	China	100%	Hainan Shiner/Shiner International, Inc.
Shimmer Sun	China	100%	Shiner International, Inc.
Jingyue	China	100%	Shimmer Sun Limited
Shunhao	China	100%	Jingyue
Yongxin	China	100%	Shunhao
Hainan Runhai	China	100%	Shiny-Day
Hainan Saihang	China	100%	Hainan Shiner
Hainan Juneng	China	50%	Hainan Shiner
Ningbo	China	65%	Yongxin

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015 (Unaudited)

The accompanying consolidated financial statements were prepared in conformity with US GAAP. The Company’s functional currency is the Chinese Yuan Renminbi (“RMB”); however, the accompanying consolidated financial statements were translated and presented in United States Dollars (“$” or “USD”).

Noncontrolling Interest

On May 2, 2011, Shiner acquired 100% of the stock of Shimmer Sun for $3.2 million. The Company paid $1.3 million in cash and the remaining $1.9 million was recorded as “other payables’ which was paid by September 30, 2011. The acquisition gave Shiner a 65% controlling interest in Shimmer Sun’s subsidiary, Ningbo. The transaction was accounted for under the acquisition method of accounting, with the purchase price allocated based on the fair value (“FV”) of the individual assets acquired and liabilities assumed.

In the fourth quarter of 2014, the Company set up a new subsidiary, Hainan Juneng, originally owned 70% by Hainan Shiner and 30% by an unrelated third party. During the quarter ended March 31, 2015 another unrelated third party purchased additional stock from Hainan for RMB 3,900,000 ($634,530). As of September 30, 2015, the Company owns 50% of Hainan Juneng and two other parties own the remaining 50%. The 50% owned by the third parties is presented as noncontrolling interest.

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation,” which governs the accounting for and reporting of non-controlling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance. This standard also required changes to certain presentation and disclosure requirements.

The net income attributed to the NCI is separately designated in the accompanying consolidated statements of income and other comprehensive income (loss). Losses attributable to the NCI in a subsidiary may exceed the NCI’s interests in the subsidiary’s equity. The excess attributable to the NCI is attributed to those interests. The NCI shall continue to attribute its share of losses even if that attribution results in a deficit NCI balance.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Shiner International, Inc. and its subsidiaries. All significant intercompany transactions and balances were eliminated in consolidation.

Foreign Currency Translation

The accounts of the Company’s Chinese subsidiaries are maintained in RMB and the accounts of the US parent company are maintained in USD. The accounts of the Chinese subsidiaries are translated into USD in accordance with FASB ASC Topic 830, “Foreign Currency Matters,” with the RMB as the functional currency. According to FASB ASC Topic 830, all assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders’ equity is translated at historical rates and statement of income items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with FASB ASC Topic 220, “Comprehensive Income.” Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the consolidated statement of income and other comprehensive income (loss).

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015 (Unaudited)

Note 2 - Summary of Significant Accounting Policies

Going Concern

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of September 30, 2015 and December 31, 2014, the Company was in violation of certain loan covenants which required the entire loan amount to be shown as a current liability. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

On April 17, 2014, Hainan Shiner drew down entirely on a RMB120 million (approximately $19.5 million) credit facility collateralized by the common stock of Hainan Shiner, buildings and land use rights. The facility bears interest at 7.35% per annum and is due and payable on April 17, 2017. During the nine months ended September 30, 2015, the Company repaid RMB 40 million (approximately $6.8 million) of this credit facility. Under the terms of the credit facility agreement, the proceeds of the funds borrowed under the credit facility are to be used solely for the construction of an office building and research facility at the Hainan Xiandai Packaging Industrial Park, and for the purchase of research and development equipment. However, on April 30, 2014, the Company loaned the entire proceeds of the credit facility to unrelated third parties. Such parties have not provided the Company with significant collateral on such loans, other than a written guarantee from each of the borrowers and an unrelated fourth party. The use of the proceeds from the credit facility to provide such loans constitutes a breach under the credit facility agreement. The Company has not obtained a waiver from the lender for such use of proceeds and the lender has the right to declare a breach of the trust agreement and enforce its right to ownership of the stock, buildings and land use rights of Hainan Shiner. Furthermore, if the borrowers are unable to fulfill their obligations under the Company’s loans to them and their guarantees fail, the Company will be obligated to repay the credit facility in its entirety. If the Company is unable to repay this debt in full by the due date it could lose control of Hainan Shiner, certain buildings and land use rights. Finally, the Company’s inability to obtain a waiver for the violation of the loan agreement resulted in the amount due under this credit facility being shown as a current liability. If the lender calls the loan due to the violation of the trust agreement, the Company will attempt to negotiate a waiver from the current lender or request additional time to repay the loan to allow the Company time to collect the amounts due from the unrelated third parties, or to obtain other financing to repay this lender.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Equivalents

Cash and equivalents include cash on hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

Restricted Cash

Restricted cash consists of monies restricted by the Company’s lenders related to its outstanding debt obligations.

Accounts Receivable, net

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. Based on historical collection activity, the Company had allowances of $1,525,027 and $1,576,952 (audited) at September 30, 2015 and December 31, 2014, respectively.

Other Receivables

Other receivables consist of amounts due from customers that are non-interest bearing and payable ranging from on demand to up to one year and amounts due from other unrelated third parties that bear interest and have specific repayment dates (See Note 3).

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015 (Unaudited)

Advances to Suppliers

To ensure a steady supply of raw materials, the Company is required from time to time to make cash advances when placing its purchase orders. Management determined no reserve was necessary for advances to suppliers. The advances to suppliers are interest free and unsecured.

Notes Receivable

Notes receivable consist of bank notes received from customers as payment of their accounts receivable. The notes are guaranteed by banks and bear no interest. The notes are generally due within twelve months from the date of issuance.

Inventory, net

Inventory is valued at the lower of the inventory’s cost (weighted average basis) or the current market price of the inventory. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower.

Property and Equipment, net

Property and equipment are stated at cost. Expenditures for maintenance and repairs are expensed as incurred; additions, renewals and improvements are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives as follows:

Operating equipment	10 years
Vehicles	8 years
Office equipment	5 years
Buildings and improvements	20 years

Construction in Progress and Government Grants

Construction in progress mainly consists of amounts expended to build a manufacturing workshop in Hainan, including a product line for a BOPP tobacco line. The costs incurred and capitalized as construction in progress at September 30, 2015 and December 31, 2014 include facility and equipment. Once the project is completed, it will be transferred from “Construction in progress” to “Property and equipment.” The total cost of the new Hainan manufacturing workshop and the BOPP tobacco line is expected to be $25.1 million. The first phase of the project was completed during 2010.

In October 2009, the Company received a government grant for the above project of RMB29.1 million (or $4.3 million based on the exchange rate at December 31, 2009) from the Hainan Province Finance Bureau (“HPFB”). The Company is required to provide detailed expenses of the construction project to the HPFB. At the end of the project, the government will determine if the funds were used in accordance with the grant. At September 30, 2015 and December 31, 2014 respectively, RMB18.7 million ($2.9 million based on the exchange rate at September 30, 2015) and RMB20.8 million ($3.4 million (audited) based on the exchange rate at December 31, 2014) was recorded as “Other payables” in the accompanying consolidated financial statements (Note 7). The government grant is being amortized into other income over the useful life of the asset on the same basis used to depreciate the asset. For the nine months ended September 30, 2015 and 2014, the Company amortized $353,565 and $355,093, respectively, into “Other income.”

In December 2011, the Company received a government grant of RMB14.0 million (or $2.2 million (audited) based on the exchange rate as of December 31, 2011) from the Haikou Finance Bureau (“HFB”) for the adjustment and expansion of our operations and related capital expenditures for construction and equipment purchases. The Company is required to provide detailed expenses of the construction project to HFB. At the end of the project, the government will determine if the funds were used in accordance with the grant. At September 30, 2015 and December 31, 2014, respectively, RMB9.0 million ($1.4 million based on the exchange rate at September 30, 2015) and RMB10.0 million ($1.6 million (audited) based on the exchange rate at December 31, 2014) was recorded as “Other payables” in the accompanying consolidated financial statements (Note 7). The government grant is being amortized into other income over the useful life of the asset on the same basis used to depreciate the asset. For the nine months ended September 30, 2015 and 2014, the Company amortized $170,100 and $170,835, respectively, into “Other income.”

In January 2012, the Company received a government grant of RMB1.8 million (or $0.3 million based on the exchange rate as of January 31, 2012) from the HFB for the adjustment and expansion of our operation and related capital expenditures for construction and equipment purchase. The Company is required to provide detailed expenses of the construction project to the HFB. At the end of the project, the government will determine if the funds were used in accordance with the grant. At September 30, 2015 and December 31, 2014, the grant was recorded as “Other payables” in the accompanying consolidated financial statements (Note 7). If the government determines the funds were used for their intended purpose, the government grant is then amortized into “Other income” over the useful life of the asset on the same basis to be used to depreciate the asset.

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015 (Unaudited)

A rollforward of the construction in progress (“CIP”) from December 31, 2014 to September 30, 2015 is below:

CIP at December 31, 2014 (Audited)	$	7,007,576

Transfers to property and equipment		-

Additions during 2015		790,258

Foreign currency translation		(250,589	)

CIP at September 30, 2015	$	7,547,245

Long-Lived Assets

The Company applies FASB ASC Topic 360, “Property, Plant, and Equipment,” which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. FASB ASC Topic 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the FV of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that FVs are reduced to recognize the cost of disposal. Based on its review, the Company believes that as of September 30, 2015 and December 31, 2014 (audited), respectively, there was no significant impairment of its long-lived assets.

Intangible Assets

Intangible assets consist of rights to use three plots of land in Haikou City granted by the Municipal Administration of China for state-owned land. For two of these plots, the Company’s rights run through January 2059 and, for the third, through October 2060. The Company also acquired a patent with the acquisition of Shimmer Sun that is being amortized over 10 years. The Company evaluates intangible assets for impairment, at least on an annual basis and whenever events or changes in circumstances indicate the carrying value may not be recoverable from its estimated future cash flows. Recoverability of intangible and other long-lived assets is measured by comparing their net book value to the related projected undiscounted cash flows from these assets, considering a number of factors including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss. No impairment adjustment was required at September 30, 2015 or December 31, 2014 (audited).

Fair Value of Financial Instruments

For certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, advances to suppliers, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their FVs due to their short maturities. In addition, the Company has long-term debt with financial institutions. The carrying amounts of the line of credit and other long-term liabilities approximate their FVs based on current rates of interest for instruments with similar characteristics.

FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the FV of financial instruments held by the Company. FASB ASC Topic 825, “Financial Instruments,” defines FV, and establishes a three-level valuation hierarchy for disclosures of FV measurement that enhances disclosure requirements for FV measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their FVs because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

	•	Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
	•	Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
	•	Level 3 inputs to the valuation methodology us one or more unobservable inputs which are significant to the FV measurement.

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015 (Unaudited)

The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, “Distinguishing Liabilities from Equity,” and FASB ASC Topic 815, “Derivatives and Hedging.” As of September 30, 2015 and December 31, 2014 (audited), respectively, the Company did not identify any assets and liabilities required to be presented on the balance sheet at FV.

Revenue Recognition

The Company’s revenue recognition policies comply with FASB ASC Topic 605, “Revenue Recognition.” Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Sales revenue consists of the invoiced value of goods, which is net of value-added tax (“VAT”). All of the Company’s products sold in the PRC are subject to Chinese VAT of 17% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing their end product. The Company recorded VAT payable and VAT receivable net of payments in the financial statements. The VAT tax return is filed offsetting the payables against the receivables. Sales and purchases are recorded net of VAT collected and paid. VAT taxes are not affected by the income tax holiday.

There were no sales returns and allowances for the nine months ended September 30, 2015 and 2014. The Company does not provide unconditional right of return, price protection or any other concessions to its dealers or other customers.

Other Income

The Company recognizes other income in the period it has earned the revenue and collectability is reasonably assured. Other income for the nine months ended September 30, 2015 and 2014 consists primarily of subsidy income received from Chinese Government Agencies for developing technology, research and development and constructing certain buildings and production lines. The Company must manage the funds according to government requirements. The Company recognizes the income over the useful life of the asset for which the subsidy was received.

Advertising Costs

The Company expenses the cost of advertising as incurred. Advertising costs for the nine months ended September 30, 2015 and 2014 were not significant.

Research and Development

The Company expenses its research and development (“R&D”) costs as incurred. R&D costs included in general and administrative expenses for the nine months ended September 30, 2015 and 2014 were $2,127,809 and $2,160,992, respectively.

Stock-Based Compensation

The Company records stock-based compensation in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation.” FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at FV at the grant date and recognize the expense over the employee’s requisite service period. The Company recognizes in the consolidated statement of operations and other comprehensive income the grant-date FV of stock options and other equity-based compensation issued to employees and non-employees. There were 60,000 options outstanding as of September 30, 2015 and December 31, 2014 (audited).

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC Topic 740, “Income Taxes.” ASC Topic 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015 (Unaudited)

Under FASB ASC Topic 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is more than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

Basic and Diluted Earnings (Loss) Per Share

Earnings (loss) per share is calculated in accordance with FASB ASC Topic 260, “Earnings Per Share.” Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS is based on the assumption that all dilutive convertible shares and stock warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. There were 60,000 options and 0 warrants outstanding as of September 30, 2015 with weighted-average exercise price of $0.80. There were 60,000 options and 0 warrants outstanding as of September 30, 2014 with weighted-average exercise prices of $0.80. All options and warrants were excluded from the diluted loss per share for 2015 and 2014 due to the dilutive effect. The following is a reconciliation of the number of shares (denominator) used in the basic and diluted EPS computations for the three and nine months ended September 30, 2015 and 2014:

	2015			2014
			Per			Per
			Share			Share
	Shares		Amount	Shares		Amount

Basic earnings (loss) per share	27,541,491	$	0.15	27,541,491	$	0.03
Effect of dilutive stock options and warrants	-		-	-		-

Diluted earnings (loss) per share	27,541,491	$	0.15	27,541,491	$	0.03

	Nine Months Ended September 30,
	2015			2014
			Per			Per
			Share			Share
	Shares		Amount	Shares		Amount

Basic loss per share	27,541,491	$	0.14	27,541,491	$	0.00
Effect of dilutive stock options and warrants	-		-	-		-

Diluted loss per share	27,541,491	$	0.14	27,541,491	$	0.00

Foreign Currency Transactions and Comprehensive Income

US GAAP requires recognized revenue, expenses, gains and losses to be included in net income. Certain statements, however, require entities to report specific changes in assets and liabilities, such as gain or loss on foreign currency translation, as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. The functional currency of the Company’s Chinese subsidiaries is the RMB. Translation gains of $5,422,811 and $6,611,234 at September 30, 2015 and December 31, 2014 (audited), respectively, are classified as an item of other comprehensive income in the stockholders’ equity section of the consolidated balance sheets.

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015 (Unaudited)

Statement of Cash Flows

In accordance with FASB ASC Topic 230, “Statement of Cash Flows,” cash flows from the Company’s operations are calculated based on the local currencies using the average translation rates. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

Segment Reporting

FASB ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company determined it has five reportable segments (See Note 13).

Dividends

The Company's Chinese subsidiaries have restrictions on the payment of dividends to the Company. China has currency and capital transfer regulations that may require the Company's Chinese subsidiaries to comply with complex regulations for the movement of capital. These regulations include a public notice issued in October 2005 by the State Administration of Foreign Exchange (“SAFE”) requiring PRC residents, including both legal and natural persons, to register with the competent local SAFE branch before establishing or controlling any company outside of China. Although the Company believes its Chinese subsidiaries are in compliance with these regulations, should these regulations or the interpretation of them by courts or regulatory agencies change, the Company may not be able to pay dividends outside of China.

Reclassifications

Certain prior period amounts were reclassified to conform to the manner of presentation in the current period. These reclassifications had no effect on the net income or stockholders’ equity.

Note 3 – Other Receivables

Other receivables at September 30, 2015 and December 31, 2014 consisted of the following:

		September 30,		December 31,
		2015		2014
				(Audited)
Due from various unrelated customers, non-interest bearing and due upon demand	$	208,069	$	1,289,628
Due April 30, 2015 from Hainan Jinhong, an unrelated third party, with interest at 5%		-		4,335,598

Due April 30, 2015 from Hainan Modern Construction Company, an unrelated third party, with interest at 10%		-		7,990,197
Due April 30, 2015 from Dingfeng, an unrelated third party, with interest at 5%		-		6,947,664
Due April 21, 2017 from Rixin Hotel Management, an unrelated third party, with interest at 12%*		2,917,566		3,015,807
Due April 17, 2017 from Xiandai Meiju, an unrelated third party, with interest at 16%		8,971,800		15,781,900
Due May 1, 2016 from Ningbo Jiangbeijinhui Trading Co., an unrelated third party, with interest at 0%		1,416,600		-
Due May 1, 2016 from Nainan Bikai, an unrelated third party, with interest at 0%		787,000		-
Due May 1, 2016 from Zhuahai Sutong Trading, an unrelated third party, with interest at 0%		771,260		-
Due May 1, 2016 from Hainan Dingfeng Trading Co., an unrelated third party, with interest at 0%		1,259,200		-
Due May 1, 2016 from Hainan Jinhong, an unrelated third party, with interest at 0%		346,280		-
Due August 1, 2016 from Hainan Dingfeng Trading Co., an unrelated third party, with interest at 0%		2,203,600		-
Due August 1, 2016 from Hainan Jinhong Trading Co., an unrelated third party, with interest at 0%		2,518,400		-
Due August 1, 2016 from Hainan Richang Trading Co., an unrelated third party, with interest at 0%		1,101,800		-
Total other receivables		22,501,575		39,360,794
Current portion		11,816,186		20,563,087
Non-current portion	$	10,685,389	$	18,797,707

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015 (Unaudited)

* At the time this transaction was entered into, Rixin Hotel Management was an unrelated third party; however, in the fourth quarter of 2014, the Company formed a new subsidiary, Hainan Juneng, that is owned 50% by the Company, 22% by Rixin Hotel Management and 28% by an unrelated third party.

Note 4 – Inventory, net

Inventory at September 30, 2015 and December 31, 2014 consisted of the following:

		September 30,			December 31,
		2015			2014
					(Audited)
Raw Material	$	6,436,254		$	3,544,464
Work in process		1,700,590			1,220,588
Finished goods		5,596,731			5,968,467
		13,733,575			10,733,519
Less: Obsolescence
reserve		(662,165	)		(750,376	)
Inventory, net	$	13,071,410		$	9,983,143

Note 5 – Property and Equipment, net

Property and equipment at September 30, 2015 and December 31, 2014 consisted of the following:

		September 30,			December 31,
		2015			2014
					(Audited)
Operating equipment	$	25,423,708		$	25,856,799
Vehicles		669,448			691,990
Office equipment		146,656			146,193
Buildings		12,299,529			12,700,884
		38,539,341			39,395,866
Less accumulated depreciation		(15,977,339	)		(13,523,233	)
Property and equipment, net	$	22,562,002		$	25,872,633

Note 6 - Intangible Assets, net

Intangible assets at September 30, 2015 and December 31, 2014 consisted of rights to use land as follows:

		September 30,			December 31,
		2015			2014
					(Audited)
Right to use land	$	1,154,168		$	1,193,031
Less: Accumulated amortization		(154,256	)		(141,788	)
Intangible assets, net	$	999,912		$	1,051,243

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015 (Unaudited)

Pursuant to the regulations, the PRC government owns all land. The Company has recognized the amounts paid for the acquisition of rights to use the land as an intangible asset and amortizes such rights over the period the Company has use of the land, which range from 54 to 57 years.

Note 7 – Other Payables

Other payables at September 30, 2015 and December 31, 2014 consisted of the following:

		September 30,		December 31,
		2015		2014
				(Audited)
Government grant for Shi Zi Ling workshop	$	2,939,052	$	3,393,109
Government grant for structure and equipment		1,413,977		1,632,423
Government grant for expansion and equipment		280,959		290,420
Taxes Payable		2,284,173		1,985,966
Due to Rixin Hotel Management*		3,137,407		3,243,050
Due to Hainan Dingfeng		-		5,126,991
Miscellaneous payables		197,092		2,506,040
	$	10,252,660	$	18,177,999

The $2,939,052, $1,413,977 and $280,959 payables at September 30, 2015 are liabilities recorded pursuant to the funds received as part of government grants. See “Construction in Progress and Government Grants” in Note 2.

Note 8 - Short-term Loans

Short-term loans at September 30, 2015 and December 31, 2014 consisted of the following:

		September 30,		December 31,
		2015		2014
				(Audited)
Due February 14, 2015 with interest of 4.5%	$	-	$	332,766
Due February 20, 2015 with interest of 4.5%		-		56,635
Due March 8, 2015 with interest of 4.5%		-		499,998
Due March 28, 2015, with interest of 6.0%		-		1,627,000
Due March 28, 2015, with interest of 6.6%		-		3,254,000
Due April 28, 2015 with interest of 6.6%		-		3,254,000
Due April 30, 2015 with interest of 6.72%		-		2,928,600
Due May 30, 2015 with interest of 6.6%		-		1,627,000
Due June 25, 2015 with interest of 6.6%		-		1,627,000
Due June 25, 2015 with interest of 6.16%		-		1,545,650
Due June 30, 2015 with interest of 6.16%		-		1,301,600
Due August 28, 2015 with interest of 7.2%		-		3,254,000
Due October 23, 2015 with interest of 4.5%*		238,320		-
Due October 27, 2015 with interest of 4.5% *		119,160		-
Due November 13, 2015 with interest of 4.5%*		75,056		-
Due November 24, 2015 with interest of 4.5%		235,518		-
Due November 25, 2015 with interest of 6.72%		-		813,500
Due November 28, 2015 with interest of 6.72%		-		3,254,000
Due December 17, 2015 with interest of 10%		3,935,000		4,067,500
Due December 19, 2015 with interest of 10%		2,361,000		2,440,500
Due December 22, 2015 with interest of 5.6%		2,833,200		2,928,600
Due December 23, 2015 with interest of 4.5%		3,036,107		-
Due December 29, 2015 with interest of 6.2%		850,629		-
Due December 31, 2015 with interest of 6.2%		716,319		-
Due February 10, 2016 with interest of 6.2%		787,000		-
Due February 15, 2016 with interest of 6.7%		3,148,000		-
Due March 9, 2016 with interest of 5.8%		1,495,300		-
Due March 13, 2016 with interest of 5.9%		787,000		-
Due March 19, 2016 with interest of 5.9%		2,361,000		-
Due April 10, 2016 with interest of 5.9%		3,148,000		-
Due May 20, 2016 with interest of 5.9%		1,574,000		-
Due June 8, 2016 with interest of 5.9%		1,574,000		-
Due June 8, 2016 with interest of 5.9%		1,574,000		-
Due June 17, 2016 with interest of 5.9%		1,574,000		-
Various bank acceptance bills payable on various dates through December 12, 2015		4,643,210		3,931,673
	$	37,065,819	$	38,744,022

* These loans were paid when due.

All short-term loans are collateralized by Company buildings and equipment.

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015 (Unaudited)

Note 9 - Long-term Loans

Long-term loans at September 30, 2015 and December 31, 2014 consisted of the following:

		September 30,			December 31,
		2015			2014
					(Audited)
Due January 24, 2018, with interest of 6.60%	$	6,768,200		$	7,321,500
Credit line due April 18, 2017, with interest of 7.35% (see Note 3)		12,592,000			19,524,000
		19,360,200			26,845,500
Long-term loans, currently in default		(12,592,000	)		(19,524,000	)
Long-term loans	$	6,768,200		$	7,321,500

All long-term loans are collateralized by Company buildings and land use rights. The credit line due April 18, 2017 is also collateralized by all the capital stock of Hainan Shiner. Aggregate future maturities of long-term loans at September 30, 2015 are as follows:

Year ending September 30,
2015	$	-
2016		-
2017		12,592,000
2018		6,768,200
	$	19,360,200

The weighted average interest rate on long-term loans is 7.08% .

On August 2, 2010, Hainan Shiner entered into a credit facility with the Hainan Branch of the Bank of China. It is a secured revolving credit facility of RMB70 million (or $11.1 million based on the exchange rate on December 31, 2010) for seven years. Under the credit facility, Hainan Shiner may only use the loan proceeds to improve the technology of its BOPP film and to purchase certain equipment necessary for this improvement. Proceeds under the facility not used for these purposes would be subject to a misappropriation penalty interest rate that is 100% of the current interest rate on the loan.

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015 (Unaudited)

The initial interest rate on each withdrawal from the facility is the 5-year benchmark lending rate announced by the People’s Bank of China on the date of such withdrawal, and is subject to adjustment every 12 months based upon the benchmark. Additional interest is paid on an overdue loan under this credit facility at 50% of the current interest rate on the loan. Hainan Shiner and certain of its affiliates, including the Company, have provided guarantees and certain land use rights, buildings, and property as collateral under this facility.

The credit facility includes covenants that prohibit Hainan Shiner from making distributions to the Company, its sole shareholder, if (a) its after-tax net income for the fiscal year is zero or negative, (b) its after-tax net income is insufficient to make up its accumulated loss, (c) its income before tax is not utilized in paying off the capital, interest and expense of the lender, or (d) its income before tax is insufficient to pay the capital, interest and expense of the lender.

As of September 30, 2015, the outstanding balance under this credit facility was RMB45 million or $7.4 million.

The Company also has a RMB120 million (approximately $19.5 million) credit facility that it drew down in its entirety on April 17, 2014. The credit facility is collateralized by the stock of Hainan Shiner, bears interest at 7.35% per annum and is due on April 17, 2017. Under the terms of the credit facility agreement, the proceeds of the funds borrowed under this credit facility are to be used solely for the construction of an office building and research facility at the Hainan Xiandai Packaging Industrial Park and for the purchase of research and development equipment, however, the Company has loaned the entire proceeds of the credit facility to unrelated third parties who have no collateral on such loans other than a guarantee from each of the borrowers and an unrelated fourth party (See Note 3). During the nine months ended September 30, 2015, some of the loans made to unrelated third parties were repaid. The Company has not been able to obtain a waiver for the violation of the loan agreement, therefore the amount due under this credit facility is being shown as a current liability, as the lender will retain the right to declare a breach of the credit agreement and enforce its right to ownership of the stock, buildings and land use rights of Hainan Shiner, the Company’s primary operating subsidiary. Except as set forth above, as at September 30, 2015 and December 31, 2014, the Company is in compliance with all its obligations under the foregoing loan commitments. During the nine months ended September 30, 2015, the Company repaid approximately $6.8 million of this credit facility.

Note 10 - Stock Options

The following is a summary of the Company’s stock option activity for the nine months ended September 30, 2015:

			Weighted
			Average
			Exercise		Aggregate
	Options		Price		Intrinsic
	Outstanding		Price		Value
Outstanding at December 31, 2014 (Audited)	60,000	$	0.80	$	-
Granted	-
Canceled/ Expired	-
Exercised	-
Outstanding at September 30, 2015	60,000	$	0.80	$	-
Exercisable at September 30, 2015	60,000	$	0.80	$	-

The number and weighted average exercise prices of all options outstanding as of September 30, 2015, are as follows:

Options Outstanding
				Weighted
			Weighted	Average
			Average	Remaining
Range of	Number Outstanding		Exercise	Contractual Life
Exercise Price	September 30, 2015		Price	(Years)
$0.80	60,000	$	0.80	1.20
	60,000

The number and weighted average exercise prices of all options exercisable as of September 30, 2015, are as follows:

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015 (Unaudited)

Option Exerciseable
				Weighted
			Weighted	Average
			Average	Remaining
Range of	Number Outstanding		Exercise	Contractual Life
Exercise Price	September 30, 2015		Price	(Years)
$0.80	60,000	$	0.80	1.20
	60,000

Note 11 - Employee Welfare Plans

The expense for employee common welfare was $69,868 and $87,291 for the nine months ended September 30, 2015 and 2014, respectively.

Note 12 - Statutory Common Welfare Fund

As stipulated by the Company Law of the PRC, net income after taxation can only be distributed as dividends after appropriation has been made for the following:

	i.	Making up cumulative prior years’ losses, if any;

	ii.	Allocations to the “statutory surplus reserve” of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the reserve reaches 50% of the Company’s registered capital;

	iii.	Allocations of 5% to 10% of income after tax, as determined under PRC accounting rules and regulations, to the Company’s “statutory common welfare fund,” which is established for the purpose of providing employee facilities and other collective benefits to the Company’s employees; and

	iv.	Allocations to the discretionary surplus reserve, if approved in the stockholders’ general meeting.

The Company appropriated $98,124 and $80,899 as reserve for the statutory surplus reserve and statutory common welfare fund for the nine months ended September 30, 2015 and 2014, respectively.

Note 13 - Current Vulnerability Due to Certain Concentrations

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC and by the general state of the PRC’s economy. The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Note 14 – Commitments and Contingencies

At September 30, 2015, the Company was contingently liable to banks for discounted notes receivable and to vendors for endorsed notes receivable of 2,876,240.

Note 15 – Segment Information

The Company has five segments: BOPP tobacco films, water-based latex, coated film, color printed packaging and advanced film. The water-based latex is one of the raw materials used in coated film to make the packaging more environmental friendly and the barrier property better.

The following tables summarize the Company’s segment information for the three and nine months ended September 30, 2015 and 2014:

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015 (Unaudited)

		Three Months Ended September 30,						Nine Months Ended September 30,
		2015			2014			2015			2014
Revenues from unrelated entities
Tobacco film	$	14,485,496		$	9,250,197		$	31,274,617		$	37,907,073
Water-based latex		170,783			192,475			388,438			421,995
Coated film		7,635,867			8,386,408			21,151,270			23,186,963
Color printing		976,788			694,733			2,992,049			3,390,907
Advanced film		1,689,278			1,483,035			3,839,967			4,563,761
	$	24,958,212		$	20,006,848		$	59,646,341		$	69,470,699

Intersegment revenues
Tobacco film	$	856,169		$	83,333		$	2,252,128		$	977,597
Water-based latex		(347	)		(26	)		43,200			43,387
Coated film		399,370			90,948			1,523,131			597,975
Color printing		47,899			(4,915	)		215,461			87,449
Advanced film		97,698			12,159			276,521			117,696
	$	1,400,789		$	181,499		$	4,310,441		$	1,824,104

Total revenues
Tobacco film	$	15,341,665		$	9,333,530		$	33,526,745		$	38,884,670
Water-based latex		170,436			192,449			431,638			465,382
Coated film		8,035,237			8,477,356			22,674,401			23,784,938
Color printing		1,024,687			689,818			3,207,510			3,478,356
Advanced film		1,786,976			1,495,194			4,116,488			4,681,457
Less Intersegment revenues		(1,400,789	)		(181,499	)		(4,310,441	)		(1,824,104	)
	$	24,958,212		$	20,006,848		$	59,646,341		$	69,470,699

Income (loss) from operations
Tobacco film	$	3,984,023		$	(1,546,565	)	$	4,616,944		$	(740,347	)
Water-based latex		114,074			56,543			154,269			109,979
Coated film		569,295			(395,271	)		954,376			(687,545	)
Color printing		(53,163	)		(120,715	)		(457,088	)		(732,656	)
Advanced film		115,992			(187,486	)		87,040			(322,226	)
Holding Company		(26,620	)		(21,009	)		(98,069	)		(71,049	)
	$	4,703,601		$	(2,214,503	)	$	5,257,472		$	(2,443,844	)

Interest income
Tobacco film	$	324,264		$	297,174		$	892,794		$	704,261
Water-based latex		4,091			4,261			11,089			7,840
Coated film		151,040			199,973			603,804			430,782
Color printing		20,621			20,952			85,414			62,998
Advanced film		40,471			36,745			109,619			84,788
Holding Company		-			-			72,500			72,500
	$	540,487		$	559,105		$	1,775,220		$	1,363,169

Interest expense
Tobacco film	$	487,661		$	580,485		$	1,773,693		$	1,639,853
Water-based latex		5,073			6,038			18,450			17,058
Coated film		193,433			230,251			703,544			650,455
Color printing		39,137			46,587			142,347			131,606
Advanced film		81,883			97,469			297,820			275,347
Holding Company		(679	)		(538	)		(2,141	)		(1,678	)
	$	806,508		$	960,292		$	2,933,713		$	2,712,641

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015 (Unaudited)

Income tax expense
Tobacco film	$	290,445		$	123,477		$	486,294		$	292,266
Water-based latex		-			-			-			-
Coated film		217,066			104,285			412,859			224,419
Color printing		-			-			-			-
Advanced film		45,052			19,165			74,954			44,171
Holding Company		-			-			-			-
	$	552,563		$	246,927		$	974,107		$	560,856

Net income (loss)
Tobacco film	$	3,478,604		$	716,889		$	3,672,514		$	861,873
Water-based latex		111,401			54,765			146,907			100,761
Coated film		486,376			369,622			800,697			238,528
Color printing		(87,333	)		(146,350	)		(514,021	)		(801,264	)
Advanced film		136,764			(95,669	)		(110,953	)		(287,273	)
Holding Company		(25,941	)		(20,471	)		(95,928	)		(69,371	)
	$	4,099,871		$	878,786		$	3,899,216		$	43,254

Provision for depreciation
Tobacco film	$	589,911		$	530,522		$	1,794,007		$	1,857,875
Water-based latex		8,597			10,012			28,406			30,073
Coated film		233,992			210,433			711,602			736,935
Color printing		47,344			42,576			143,978			149,103
Advanced film		99,052			89,080			301,231			311,956
Holding Company		-			-			-			-
	$	978,896		$	882,623		$	2,979,224		$	3,085,942

		As of		As of
		September 30,		December 31,
Total Assets		2015		2014
				(Audited)
Tobacco film	$	62,471,509	$	71,293,886
Water-based latex		657,568		657,568
Coated film		24,779,630		28,279,069
Color printing		5,013,641		5,721,679
Advanced film		10,489,580		11,970,944
Holding Company		11,132,009		11,222,719
	$	114,543,937	$	129,145,865

Note 16 - Geographical Sales

The geographical distribution of Shiner’s revenue for the three and nine months ended September 30, 2015 and 2014 is as follows:

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015 (Unaudited)

		Three Months Ended September 30,				Nine Months Ended September 30,
Geographical Areas		2015		2014		2015		2014
Chinese Mainland	$	22,170,735 $		17,124,739	$	52,014,805 $		61,546,276
Asia (outside Mainland China)		907,165		1,458,876		3,318,626		3,894,965
Australia		1,223,521		828,176		2,291,983		2,264,228
North America		306,888		196,551		1,100,754		680,920
Middle East		283,869		64,493		499,498		317,218
Europe		-		261,942		289,513		651,913
South America		66,034		72,071		131,162		115,179
	$	24,958,212	$	20,006,848	$	59,646,341	$	69,470,699

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; and any statements regarding future economic conditions or performance, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements. Potential risks and uncertainties include, among other things, the factors discussed in Item 1A, “Risk Factors” included in the Company annual report on Form 10-K filed on April 20, 2015.

Because the factors discussed in this report could cause our actual results or outcomes to differ materially from those expressed in any forward-looking statement made by us or on our behalf, you should not place undue reliance on any such forward-looking statement. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by law. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

Use of Terms

Except as otherwise indicated by the context, all references in this report to:

	•	“Shiner,” “Company,” “we,” “us” or “our” are to Shiner International, Inc., a Nevada corporation, and its direct and indirect subsidiaries: (i) Hainan Shiner Industrial Co., Ltd., or “Hainan Shiner,” (ii) Hainan Shiny-Day Color Printing Packaging Co., Ltd., or “Shiny-Day,” (iii) Hainan Modern Hi-Tech Industrial Co., Ltd., or “Hainan Modern,” (iv) Zhuhai Modern Huanuo Packaging Material Co., Ltd., or “Zhuhai Modern,” (v) Shimmer Sun Ltd., or “Shimmer Sun,” (vi) Hainan Jingyue New Material Co., Ltd., or “Jingyue,” (vii) Hainan Shunhao New Material Co., Ltd., or “Shunhao,” (viii) Hainan Yongxin Environmental Co., Ltd., or “Yongxin,” ,” (ix) Hainan Runhai Color Printing Packaging Co., or “Hainan Runhai,” (x) Hainan Saihang Photoelectric Co. Ltd., or “Hainan Saihang, ” (xi) Hainan Juneng Functional Film Co., or “Hainan Juneng” and (xii) Ningbo Neisuoer Latex Co., Ltd., or “Ningbo.”
	•	“SEC” are to the United States Securities and Exchange Commission;
	•	“Securities Act” are to the Securities Act of 1933, as amended; and “Exchange Act” are to the Securities Exchange Act of 1934, as amended;
	•	“RMB” are to Renminbi, the legal currency of China; and “US dollar,” “USD,” and “$” are to the legal currency of the United States; and
	•	“China,” “Chinese” and “PRC” are to the People’s Republic of China.

Overview

We were incorporated in Nevada in November 2003, but since July 2007, have been headquartered in Hainan, China. Through our operating subsidiaries, Hainan Shiner, Shiny-Day, Hainan Modern, Zhuhai Modern, Shimmer Sun, and Ningbo we manufacture and sell packaging and anti-counterfeit plastic film to manufacturers and producers in China. We sell anti-counterfeit film, coated film, and color printing, in international markets through a network of distributors and converters.

Our primary business consists of the manufacture and distribution of technology driven advanced packaging film products in five business segments: bi-axially oriented polypropylene, or BOPP, film for wrapping tobacco; water-based latex; coated film; color printed packaging; and advanced film. Our products are sold to customers in the food, tobacco, chemical, medical and pharmaceutical, personal care, electronics, automotive, construction, graphics, music and video publishing industries. Our current production capacity consists of: five coated film lines with a capacity of 15,000 tons a year; two BOPP tobacco film production lines with a capacity of 13,500 tons a year; one BOPP film production line with a capacity of 7,000 tons a year; three color printing lines; four anti-counterfeit film lines with a capacity of 2,500 tons a year; and two water-based latex reaction kettles with a capacity of 3,000 tons a year.

The table below shows the percentage of revenue by each of our business segments for the three and nine months ended September 30, 2015 and 2014:

	Percent of Revenue		Percent of Revenue
	Three Months Ended September 30,		Nine Months Ended September 30,
	2015	2014	Change	Change

BOPP tobacco film	58.0%	46.2%	52.4%	54.5%
Water-based latex	0.7%	1.0%	0.7%	0.6%
Coated film	30.6%	41.9%	35.5%	33.4%
Color printing	3.9%	3.5%	5.0%	4.9%
Advanced film	6.8%	7.4%	6.4%	6.6%
	100.0%	100.0%	100.0%	100.0%

We have 59 patents issued by the State Intellectual Property Office of China and have 13 patent applications relating to our products and manufacturing processes pending. Although our patents and processes provide us a competitive advantage, we do not believe the loss of any single patent would have a material adverse effect on our business.

While our primary business consists of manufacture and distribution of technology driven advanced packaging film products, we have historically advanced minimal funds to customers and other unrelated third parties that are non-interest bearing and payable upon demand. In 2014 we decided to temporarily expand our advances to unrelated third parties. On April 17, 2014, Hainan Shiner, our primary operating subsidiary, drew down entirely on a RMB120 million (approximately $19.5 million) credit facility collateralized by the common stock of Hainan Shiner, our buildings and our land use rights. The facility bears interest at 7.35% per annum and is due and payable on April 17, 2017. Under the terms of the credit facility agreement, the proceeds of the funds borrowed under the credit facility are to be used solely for the construction of an office building and research facility at the Hainan Xiandai Packaging Industrial Park, and for the purchase of research and development equipment. However, on April 30, 2014, we loaned the entire proceeds of the credit facility to unrelated third parties. The business purpose for these loans was for us to make the spread between the amount of interest we pay on the credit facility and the amount of interest we can charge. Such parties have not provided us with significant collateral on such loans, other than a written guarantee from each of the borrowers and an unrelated fourth party. We do not consider this practice of lending money to third parties to be a new business segment as we deem this practice to be temporary. See our disclosures under Liquidity and Capital Resources for more information regarding our lending activities. During the nine months ended September 30, 2015, approximately $27.1 million of these other receivables were repaid.

Our principal executive offices are located at 19th Floor, Didu Building, Pearl River Plaza, No. 2 North Longkun Road, Haikou, Hainan Province, China 570125. Our telephone number is +86-898-68581104 and our website is www.shinerinc.com.

Principal Factors Affecting Our Financial Performance

We believe that the following factors will continue to affect our financial performance:

	•	*Global Economic Fragility* – The ongoing turmoil in the global economy may have an impact on our business and our financial condition, and we may face challenges if economic conditions do not improve. These economic conditions impact levels of consumer spending, which have deteriorated and may remain depressed for the foreseeable future. If demand for our products fluctuates as a result of these economic conditions or otherwise, our revenue and gross margin could be harmed.

	•	*Fuel Prices* – Significant fluctuations in fuel prices could have both a positive and negative effect on our business and operations. Significant fluctuations in world fuel prices could significantly increase the price of shipping or transporting our products which we may not be able to pass on to our customers.

Results of Operations

The following summary of our results of operations should be read in conjunction with our financial statements and the notes thereto for the nine months ended September 30, 2015 and 2014 included herein. The following tables set forth key components of our results of operations for the periods indicated, both in dollars and as a percentage of sales revenue and key components of our revenue for the periods indicated in dollars and percentages.

Comparison of Three months ended September 30, 2015 and 2014

The following table summarizes the results of our operations during the three months ended September 30, 2015 and 2014 and provides information regarding the dollar and percentage increase or (decrease) in such periods:

		Three Months Ended September 30,						$		%
		2015			2014			Change		Change

Revenues	$	24,958,212		$	20,006,848		$	4,951,364		24.7%
Cost of goods sold		19,171,448			17,797,028			1,374,420		7.7%
Gross profit		5,786,764			2,209,820			3,576,944		161.9%
Selling expenses		820,563			1,138,772			(318,209	)	-27.9%
General and administrative expenses		262,600			3,285,551			(3,022,951	)	-92.0%
Income (loss) from operations		4,703,601			(2,214,503	)		6,918,104		-312.4%
Other income (expense), net		349,100			3,744,255			(3,395,155	)	-90.7%
Interest income		540,487			559,105			(18,618	)	-3.3%
Interest expense		(806,508	)		(960,292	)		153,784		-16.0%
Exchange loss		(105,581	)		(2,852	)		(102,729	)	3602.0%
Income tax expense		552,563			246,927			305,636		123.8%
Net income (loss) attributed to noncontrolling interest		(18,176	)		5,919			(24,095	)	-407.1%
Net income (loss) attributed to Shiner	$	4,146,712		$	872,867		$	3,273,845		375.1%

Revenues

Revenues for the three months ended September 30, 2015 increased $5.0 million (or 24.7 %), to $25.0 million, compared to $20.0 million in 2014. The increase was primarily attributable to increased revenues generated from our BOPP tobacco segment. During the three months ended September 30, 2015, revenue from BOPP tobacco increased $5.2 million (or 56.6%) to $14.5 million, up from $9.3 million, revenue from color printing increased $0.3 million (or 40.6%) to $1.0 million, up from $.07 million, and revenue from advanced film increased $0.2 million (or 13.9%) to $1.7 million, up from $1.5 million; offset by a decrease in revenue from coated film of $0.8 million (or 8.9%) to $7.6 million, down from $8.4 million. During the third quarter of 2015, our domestic (China Mainland) sales increased as a percentage of total sales from 85.6% in 2014 to 88.8% in 2015. The increase in revenue for the three months ended September 30, 2015, compared to the same period in 2014, is a result of our expanding customer base as a result of increased marketing activities in the interim periods.

Cost of Goods Sold

For the three months ended September 30, 2015, cost of goods sold (“COGS”) increased $1.4 million (or 7.7 %), from $17.8 million in the 2014, to $19.2 million in 2015. COGS for the three months ended September 30, 2015 and 2014 were 76.8% and 89.0% of our revenues, respectively, a 12.2% decrease. The decrease in COGS as a percentage of revenues for the three months ended September 30, 2015, compared to the three months ended September 30, 2014, was a result of lower raw material costs caused by the decline in oil prices worldwide.

Gross Profit

Our gross profit for the three months ended September 30, 2015 was $5.8 million, with a profit margin of 23.2%, a 12.2% increase from 11.0% for the three months ended September 30, 2014. The increase in gross profit margin was a result of lower raw material costs caused by the decline in oil prices worldwide.

Selling Expenses

For the three months ended September 30, 2015, our selling expenses decreased by $0.3 million (or 27.9%) to $.08 million, compared to $1.1 million in 2014. The decrease in selling expenses was mainly due to a decrease in our logistic expenses.

General and Administrative (“G&A”) Expenses

For the three months ended September 30, 2015, our G&A expenses decreased by $3.0 million (or 92.0 %) to $0.3 million, compared to $3.3 million in 2014. G&A expenses include rent, management and staff salaries, insurance, accounting, legal, and R&D expenses.

The significant decrease in G&A expenses is due to the partial reversal of a previous allowance for advances to suppliers during the quarter ended September 30, 2015.

Other Income, net

For the three months ended September 30, 2015, other income decreased by $3.4 million (or 90.7 %), to $0.4 million in 2015, compared to other income of $3.8 million in 2014. The change in other income (expense) is mainly due to a decrease in subsidy income and a decrease in the sale of waste materials during the 2015 period.

Interest Income

For the three months ended September 30, 2015, interest income decreased by $18,618 (or 3.3 %) to $0.5 million, compared to $0.5 million in the 2014 period. The net decrease in interest income is primarily due to a significant increase in interest charged on other receivables during the last half of 2014 in connection with temporary loans to unrelated third parties. During 2014, we borrowed RMB120 million, or approximately $19.5 million, at a 7.35% interest under a line of credit agreement and then used these funds in loans to unrelated third parties, three of which were repayable at interest rates ranging from 12%-16%, and the remaining of which were repayable at zero interest. A large portion of these loans, including the interest-bearing loans, were repaid during the beginning of the 2015 second quarter and we earned no interest on additional interest-free loans totaling RMB 37 million, or approximately $5.8 million, made to unrelated third parties during the 2015 third quarter.

Interest Expense

For the three months ended September 30, 2015, interest expense decreased by $0.2 million (or 16.0 %) to $0.8 million, compared to $1.0 million in 2014. The decrease in interest expense is primarily due to the decrease in the amount of long-term loans outstanding. During 2014 we borrowed RMB120 million, or approximately $19.5 million, at a 7.35% interest under a line of credit agreement and then lent the funds to unrelated third parties, three of which were repayable at interest rates ranging from 12%-16%, and the remaining of which were repayable at zero interest. We repaid RMB 40 million, or approximately $6.8 million, of this loan payable in the first quarter of 2015.

Income Tax Expense

For the three months ended September 30, 2015, we recorded a tax provision of $0.5 million, compared to $0.3 million in the 2014 period. Our effective tax rates for 2015 and 2014 were 11.8% and 21.9%, respectively. The effective rate in 2015 is lower than the statutory rate due to the reversal of a reserve that is not included in taxable income.

Net Income (Loss)

Due to the factors explained above, for the three months ended September 30, 2015 we generated a net income of $4.1 million, compared to a net income of $0.9 million in the 2014 period.

Foreign Currency Translation gain (loss)

Foreign currency translation loss for the three months ended September 30, 2015 was $1.4 million, an increase of $1.1 million, compared to $0.3 million for the three months ended September 30, 2014. The significant loss in 2015 was attributable to the significant decrease in the RMB-USD exchange rate that occurred during the quarter ended September 30, 2015.

Comparison of Nine months ended September 30, 2015 and 2014

The following table summarizes the results of our operations during the nine months ended September 30, 2015 and 2014 and provides information regarding the dollar and percentage increase or (decrease) in such periods:

		Nine Months Ended September 30,						$		%
		2015			2014			Change		Change

Revenues	$	59,646,341		$	69,470,699		$	(9,824,358	)	-14.1%
Cost of goods sold		46,565,648			61,643,938			(15,078,290	)	-24.5%
Gross profit		13,080,693			7,826,761			5,253,932		67.1%
Selling expenses		2,590,857			3,412,455			(821,598	)	-24.1%
General and administrative expenses		5,232,364			6,858,150			(1,625,786	)	-23.7%
Income (loss) from operations		5,257,472			(2,443,844	)		7,701,316		-315.1%
Other income (expense), net		906,570			4,403,679			(3,497,109	)	-79.4%
Interest income		1,775,220			1,363,169			412,051		30.2%
Interest expense		(2,933,713	)		(2,712,641	)		(221,072	)	8.1%
Exchange loss		(132,226	)		(6,253	)		(125,973	)	2014.6%
Income tax expense		974,107			560,856			413,251		73.7%
Net income (loss) attributed to noncontrolling interest		(46,841	)		3,563			(50,404	)	-1414.7%
Net income attributed to Shiner	$	3,946,057		$	39,691		$	3,906,366		9841.9%

Revenues

Revenues for the nine months ended September 30, 2015 decreased $9.8 million (or 14.1%), to $59.6 million, compared to $69.5 million in 2014. The decrease was primarily attributable to decreased revenues generated from sales in all five of our segments, but largely from our BOPP tobacco segment. During the nine months ended September 30, 2015, revenue from BOPP tobacco decreased $6.6 million (or 17.5%) to $31.3 million, down from $37.9 million; revenue from coated film decreased $2.0 million (or 8.8%) to $21.2 million, down from $23.2 million; revenue from color printing decreased $0.4 million (or 11.8%) to $3.0 million, down from $3.4 million; and revenue from advanced film decreased $0.7 million (or 15.9%) to $3.8 million, down from $4.6 million. During 2015, our domestic (China Mainland) sales decreased as a percentage of total sales from 88.6% in 2014 to 87.2% in 2015. The decrease in revenue for the nine months ended September 30, 2015, compared to the same period in 2014, was largely due to decrease in revenues during the 2015 first quarter as a direct result of the declining economic growth in China during that period. In addition, Chinese regulators have intensified supervision of consumer products resulting in an impact on consumer purchasing.

Cost of Goods Sold

For the nine months ended September 30, 2015, COGS decreased $15.1 million (or 24.5 %), from $61.6 million in the 2014, to $46.6 million in 2015. COGS for the nine months ended September 30, 2015 and 2014 were 78.1% and 88.7% of our revenues, respectively. The decrease in COGS as a percentage of revenues for the nine months ended September 30, 2015, compared to the nine months ended September 30, 2014, was a result of lower raw material costs.

Gross Profit

Our gross profit for the nine months ended September 30, 2015 was $13.1 million, with a profit margin of 21.9%, a 10.7% increase from 11.3% for the nine months ended September 30, 2014. The increase in gross profit percentage was a result of lower raw material costs caused by the decline in oil prices worldwide.

Selling Expenses

For the nine months ended September 30, 2015, our selling expenses decreased by $0.8 million (or 24.1%) to $2.6 million, compared to $3.4 million in 2014. The decrease in selling expenses was mainly due to a decrease in logistics expenses.

General and Administrative (“G&A”) Expenses

For the nine months ended September 30, 2015, our G&A expenses decreased by $1.6 million (or 23.7 %) to $5.2 million, compared to $6.9 million in 2014. G&A expenses include rent, management and staff salaries, insurance, accounting, legal, and R&D expenses. The significant decrease in G&A expenses is due to the partial reversal of a previous allowance for advances to suppliers during the quarter ended September 30, 2015.

Other Income, net

For the nine months ended September 30, 2015, other income decreased by $3.5 million (or 79.4 %), to $0.9 million in 2015, compared to other income of $4.4 million in 2014. The change in other income (expense) is mainly due to a decrease in subsidy income and a decrease in the sale of waste materials.

Interest Income

For the nine months ended September 30, 2015, interest income increased by $0.4 million (or 30.2 %) to $1.8 million, compared to $1.4 million in the 2014 period. The net increase in interest income is primarily due to a significant increase in interest charged on other receivables during the last half of 2014 in connection with loans to unrelated third parties. During 2014, we borrowed RMB120 million, or approximately $19.5 million, at a 7.35% interest under a line of credit agreement and then lent these and other funds to unrelated third parties, three of which were repayable at interest rates ranging from 12%-16% interest, and the remaining of which were repayable at zero interest. A large portion of these loans, including the interest-bearing loans, were repaid during the beginning of the 2015 second quarter.

Interest Expense

For the nine months ended September 30, 2015, interest expense increased by $0.2 million (or 8.1 %) to $2.9 million, compared to $2.7 million in 2014. The increase in interest expense is primarily due to the increase in the amount of short-term and long-term loans outstanding. During 2014 we borrowed RMB120 million, or approximately $19.5 million, at a 7.35% interest under a line of credit agreement and then lent the funds to unrelated third parties unrelated third parties, three of which were repayable at interest rates ranging from 12%-16%, and the remaining of which were repayable at zero interest.

Income Tax Expense

For the nine months ended September 30, 2015, we recorded a tax provision of $1.0 million, compared to $0.6 million in the 2014 period. Our effective tax rates for 2015 and 2014 were 20.0% and 92.8%, respectively. The effective rate in 2015 is lower than the statutory rate due to the reversal of a reserve that is not included in taxable income. The effective rate in 2014 was higher than the statutory rate due to losses incurred by some of our subsidiaries which were not able to offset as income generated by other subsidiaries for tax purposes.

Net Loss

Due to the factors explained above, for the nine months ended September 30, 2015, we generated a net income attributed to Shiner of $3.9 million, compared to $39,691 in the 2014 period.

Foreign Currency Translation gain (loss)

Foreign currency translation loss for the nine months ended September 30, 2015 was $1.2 million, an increase of $0.9 million, compared to $0.3 million for the nine months ended September 30, 2014. The significant loss in 2015 was attributable to the significant decrease in the RMB-US exchange rate that occurred during the nine months ended September 30, 2015.

Liquidity and Capital Resources

At September 30, 2015, we had $8.0 million in cash and equivalents on hand, compared to $5.7 million at December 31, 2014. We had working capital surplus of $3.8 million at September 30, 2015, compared to a working capital deficit of $10.1 million at December 31, 2014. The primary reason for the decrease working capital deficit is the pay down of a long-term loan, currently in default that is classified as a current liability. Our principal demands for liquidity are: increasing capacity, purchasing raw materials, sales distribution and the possible acquisition of new subsidiaries in our industry, as well as other general corporate purposes.

Below is a tabular summary of our cash flows for the nine months ended September 30, 2015 and 2014:

		Nine Months Ended September 30,
		2015			2014
Net cash provided by (used in) operating activities	$	(6,398,594	)	$	14,713,431
Net cash provided by (used in) investing activities		15,480,260			(38,399,932	)
Net cash provided by (used in) financing activities		(6,600,465	)		20,801,140
Effect of exchange rate changes on cash and equivalents		(162,520	)		(72,403	)
Net increase (decrease) in cash and equivalents		2,318,681			(2,957,764	)
Cash and equivalents at beginning of period		5,710,373			9,135,988
Cash and equivalents at end of period	$	8,029,054		$	6,178,224

Operating Activities

Net cash flow used in operating activities during the nine months ended September 30, 2015 was $6.4 million, a decrease of $21.1 million, compared to cash flow provided by operating activities during the nine months ended September 30, 2014 of $14.7 million. The decrease in cash used in operating activities during the nine months ended September 30, 2015 was primarily attributable to the changes in working capital components, particularly the significant increase in advances to suppliers and accounts receivable, and the decreases in accounts payable and other payables in the 2015 period.

Investing Activities

Net cash flows provided by investing activities during the nine months ended September 30, 2015 was $15.5 million, an increase of $53.9 million, compared to cash used in investing activities of $38.4 million in 2014. During 2015, we received $27.1 million from the repayment of other receivables and issued $12.1 million in new receivables compared to the issuance of $37.1 million of other receivables in 2014.

Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2015 was $6.6 million, a decrease of $27.4 million, compared to cash provided by financing activities of $20.8 million in 2014. During the 2015 period, we repaid $50.1 million of short-term loans and $6.8 million of long-term loans and borrowed an additional $49.6 million from short-term loans. During the 2014 period, we repaid $41.6 million of short-term loans and borrowed an additional $44.2 million from short-term loans and $19.5 million from long-term loans.

Assets

Our total assets as of September 30, 2015 were $114.5 million, a decrease of $14.6 million, compared to $129.1 million as of December 31, 2014. The decrease was primarily due to the decrease of other receivables, current, of $8.7 million, other non-current receivables of $8.1 million, restricted cash of $6.7 million, and property and equipment of $3.3 million, offset by an increase in advances to suppliers of $4.1 million, inventory of $3.0 million, accounts receivable of $1.8 million and cash of $2.3 million. The decrease in other receivables (both current and long-term) is due to the repayment of amounts loaned in 2014. (See Note 3 to the financial statements). We have historically advanced minimal funds to customers and other unrelated third parties that are non-interest bearing and payable upon demand. However, in 2014 we decided to temporarily provide loans to unrelated third parties, three of which were repayable at interest rates ranging from 12%-16% interest, and the remaining of which were repayable at zero interest. The practice of lending funds to unrelated third parties at zero interest has continued through the 2015 third quarter. The decrease in restricted cash is due to the lenders requirements to keep less cash in restricted accounts. The decrease in property and equipment is due to depreciation expense. The increase in cash is due to the timing of collections of receivables and payment of payables. The increase in advances to suppliers is due to us placing additional orders of inventory to meet upcoming demands. The increase in accounts receivable is due to the timing of the collection of customer balances. The increase in inventory is due to the purchase of additional products to meet upcoming demands.

Liabilities

Our total liabilities decreased by $17.9 million as of September 30, 2015, compared to December 31, 2014, principally due to a decrease in long-term loans of $7.5 million and other payables of $7.9 million; a decrease in accounts payable of $1.8 million; and a decrease in short-term loans of $1.7 million.

The decrease in long-term loans is due to our repayment of RMB40 million (approximately $6.8 million) of an RMB 120 million credit facility pursuant to a Trust Agreement between Hainan Shiner, our primary operating subsidiary, and Zhongrong International Trust Co., Ltd., or Zhongrong, on April 17, 2014. The credit facility bears interest at 7.35% per annum, is due on April 17, 2017 and is collateralized by the common stock of Hainan Shiner, our buildings and our land use rights. We intend to meet our liquidity requirements under this Trust Agreement, including capital expenditures related to the purchase of equipment, purchase of raw materials, and the expansion of our business, through cash flow provided by operations, and our current credit facilities. Under the terms of the Trust Agreement, the proceeds of the funds borrowed were to be used solely for the construction of an office building and research facility at the Hainan Xiandai Packaging Industrial Park and for the purchase of research and development equipment, however, on April 30, 2014, we loaned the entire proceeds of the credit facility to unrelated third parties who have provided no collateral on such loans other than a written guarantee from each of the borrowers and an unrelated fourth party. As such, Zhongrong has the right to declare a breach of the Trust Agreement and enforce its right to ownership of the stock, buildings and land use rights of Hainan Shiner, our primary operating subsidiary. We have not been able to obtain a waiver for the violation of the use of proceeds provision of the Trust Agreement, therefore the remaining amount due under this credit facility of RMB 80 million (approximately $12.6 million) is being shown as a current liability. If Zhongrong calls the loan due to the violation of the agreement, we will attempt to negotiate a waiver, or request additional time in order to collect the amounts due from unrelated third parties or to obtain other financing to repay the loan.

The increase in long-term loans is due to our withdrawal of funds under a credit agreement discussed in more detail elsewhere herein, which we subsequently lent to unrelated third parties at higher interest rates than we are being charged. The increase in other payables is due to an increase in amounts due to two companies that we are engaged in business with. The decrease in accounts payable is due to the timing of payments to our vendors. The decrease in unearned revenue is due to shipping products to customers that had given us a deposit on their orders.

Loan Commitments

In addition to the Trust Agreement disclosed under Liabilities, on August 2, 2010, Hainan Shiner, our wholly owned subsidiary, entered into a credit facility with the Hainan Branch of the Bank of China. The credit facility is comprised of a seven-year RMB70 million, or $11.1 million, secured revolving credit facility. On each of January 24, February 10, February 16, February 17, March 25, November 30, December 23, 2011 and March 19, 2012, Hainan Shiner made withdrawals on the credit facility of $2.5 million, $2.6 million, $2.2 million, $1.2 million, $0.4 million, $0.2 million, $0.5 million and $1.1 million, respectively. Hainan Shiner may only use the loan proceeds to improve the technology of its BOPP film and to purchase certain equipment necessary for these improvements. Proceeds under the facility not used for these purposes may be subject to a misappropriation penalty interest rate of 100% of the current interest rate (6.6% at September 30, 2015) on the loan. The initial interest rate on each withdrawal from the facility is the 5-year benchmark lending rate announced by the People’s Bank of China on the date of such withdrawal, and is subject to adjustment every 12 months based upon this benchmark. Additional interest is paid on any overdue loan under this credit facility of 50% of the current interest rate on the loan. Hainan Shiner and certain of its affiliates, including the Company, provided guarantees and certain land use rights, buildings, and property as collateral under this facility. The credit facility includes financial covenants that prohibit Hainan Shiner from making distributions to its sole shareholder if (a) its after-tax net income for the fiscal year is zero or negative, (b) its after-tax net income is insufficient to make up its accumulated loss for the last several fiscal years, (c) its income before tax is not utilized in paying off the capital, interest and expense of the lender, or (d) the income before tax is insufficient to pay the capital, interest and expense of the lender. As of September 30, 2015, the outstanding balance under this credit facility was RMB 43 million or $6.8 million.

Except as set forth above, as at September 30, 2015, the Company is in compliance with all its obligations under the foregoing loan commitments.

Dividends

Our Chinese subsidiaries have restrictions on the payment of dividends to us. China has currency and capital transfer regulations that may require our Chinese subsidiaries to comply with complex regulations for the movement of capital. These regulations include a public notice issued in October 2005 by the State Administration of Foreign Exchange (“SAFE”) requiring PRC residents, including both legal and natural persons, to register with the competent local SAFE branch before establishing or controlling any company outside of China. Although we believe our Chinese subsidiaries are in compliance with these regulations, should these regulations or the interpretation of them by courts or regulatory agencies change, we may not be able to pay dividends outside of China.

Obligations under Material Contracts

We have no material payment obligations other than the loan commitments disclosed above.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments.

Accounts Receivable, net

Inventory, net

Inventory is valued at the lower of cost (determined on a weighted average basis) or market. Management compares the cost of inventory with this market value and allowance is made to write down inventory to market value, if lower.

Revenue Recognition

The Company’s revenue recognition policies comply with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition.” Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Sales revenue consists of the invoiced value of goods, which is net of value-added tax (“VAT”). All of the Company’s products are sold in the PRC and are subject to Chinese VAT of 17% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing their end product. The Company recorded VAT payable and VAT receivable net of payments in the financial statements. The VAT tax return is filed offsetting the payables against the receivables.

Sales and purchases are recorded net of VAT collected and paid. VAT taxes are not affected by the income tax holiday.

Stock-Based Compensation

The Company records stock-based compensation in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation.” ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value (“FV”) at the grant date and recognize the expense over the employee’s requisite service period. The Company recognizes in the statement of operations the grant-date FV of stock options and other equity-based compensation issued to employees and non-employees.

Income Taxes

Under FASB ASC Topic 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company’s consolidated financial statements.

Basic and Diluted Earnings Per Share

Earnings per share (“EPS”) is calculated in accordance with the FASB ASC Topic 260, “Earnings Per Share.” Basic EPS is based upon the weighted average number of common shares outstanding. Diluted EPS is based on the assumption that all dilutive convertible shares and stock warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Recent Accounting Pronouncements

In April 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-08 (ASU 2014-08), Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360). ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company's operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The adoption of the ASU did not have a material impact on the Company's results of operations or financial condition.

In May 2014, the FASB issued ASU No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current US GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management is currently assessing the impact the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting.

In June 2014, the FASB issued ASU No. 2014-10 (ASU 2014-10), Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. ASU 2014-10 eliminates the requirement to present inception-to-date information about income statement line items, cash flows, and equity transactions, and clarifies how entities should disclosure the risks and uncertainties related to their activities. ASU 2014-10 also eliminates an exception provided to development stage entities in Consolidations (ASC Topic 810) for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The presentation and disclosure requirements in Topic 915 will no longer be required for interim and annual reporting periods beginning after December 15, 2014, and the revised consolidation standards will take effect in annual periods beginning after December 15, 2015. Early adoption is permitted. The Company adopted the provisions of ASU 2014-10 effective for its financial statements for the interim period ended September 30, 2014, and will no longer present the inception-to-date information formerly required.

In August 2014, the FASB issued ASU No. 2014-15 (ASU 2014-15), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern , which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact the adoption of ASU 2014-15 on the Company’s financial statement presentation and disclosures.

In November 2014, the FASB issued ASU No. 2014-16 (ASU 2014-16), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity . The amendments in this ASU do not change the current criteria in U.S. GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. The amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. The ASU applies to all entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share and is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of ASU 2014-16 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted.

In January 2015, the FASB issued ASU No. 2015-01 (Subtopic 225-20) - Income Statement - Extraordinary and Unusual Items. ASU 2015-01 eliminates the concept of an extraordinary item from US GAAP. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-01 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted.

In February, 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-02 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted.

In August, 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendment in this ASU defers the effective date of ASU No. 2014-09 for all entities for one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods with that reporting period. The Company has not determined the impact of adopting this ASU.

In September, 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805). Topic 805 requires that an acquirer retrospectively adjust provisional amounts recognized in a business combination, during the measurement period. To simplify the accounting for adjustments made to provisional amounts, the amendments in the Update require that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amount is determined. The acquirer is required to also record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. In addition an entity is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The adoption of ASU 2015-016 is not expected to have a material effect on the Company’s consolidated financial statements.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

Seasonality of Our Sales

The first quarter of the calendar year is typically the slowest season of the year for us due to the Chinese New Year holiday. During this period, accounts receivable collection tends to be very slow and we also need to purchase raw materials to prepare for upcoming busier seasons.

Inflation

Inflation does not materially affect our business or the results of our operations.

Off-Balance Sheet Arrangements

As of September 30, 2015, we did not have any off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(e), our management has carried out an evaluation, with the participation and under the supervision of our Chief Executive Officer, Mr. Qingtao Xing and our Interim Chief Financial Officer, Xuezhu Xu, of the effectiveness of the design and operation of our disclosure controls and procedures, as of September 30, 2015. Based upon, and as of the date of this evaluation, Mr. Xing and Mr. Xu, determined that, as of September 30, 2015, and as of the date of this report, our disclosure controls and procedures were effective.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal controls over financial reporting during the nine months ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II.
OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

ITEM 1A. RISK FACTORS

There are no material changes from the risk factors previously disclosed in Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2014.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

We have no information to disclose that was required to be in a report on Form 8-K during the period covered by this report, but was not reported. There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors.

ITEM 6. EXHIBITS

Exhibit	Description of Exhibit
31.1	Certification of our Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended, filed herewith
31.2	Certification of our Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended, filed herewith
32.1	Certification of our Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith
32.2	Certification of our Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith
101*	Interactive data files pursuant to Rule 405 of Regulation S-T

_________________

Filed with this Form 10-Q for Shiner International, Inc. Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or for purposes of Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SHINER INTERNATIONAL, INC.

November 23, 2015	By: /s/ Qingtao Xing
	Name: Qingtao Xing
	Title: President and Chief Executive Officer
	(Principal Executive Officer)

November 23, 2015	By: /s/ Xuezhu Xu
	Name: Xuezhu Xu
	Title: Interim Chief Financial Officer
	(Principal Financial and Accounting Officer)

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Shiner International, Inc. - FORM 10-Q - November 23, 2015

Attached files

Shiner International, Inc. Reports