UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 6)

(Mark One)

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

For the fiscal year ended December 31, 2015

or 

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

For the transition period from ___________ to ___________

Commission File Number: 000-55576

YANGTZE RIVER DEVELOPMENT LIMITED

(Exact name of registrant as specified in its charter)

Nevada		27-1636887
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
183 Broadway, Suite 5 New York, NY United States		10007
(Address of principal executive offices)		(Zip Code)

 Registrant’s telephone number, including area code: 646-861-3315

 Securities registered pursuant to Section 12(b) of the Act:

Title of each class:		Name of each exchange on which registered:
None		None

 

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.0001 per share

(Title of class) 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐     No ☒ 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐     No ☒ 

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒     No ☐ 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☒ 

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. 

Accelerated filer	☐	Large accelerated filer	☐
Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐     No ☒ 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, as of the last business day of the registrant’s most recently completed second fiscal quarter: $5,343,998. 

Number of the issuer’s common stock outstanding as of September 9, 2016: 172,269,446.

Documents incorporate by reference: None. 

 

 

TABLE OF CONTENTS

 

		Page
PART II
Item 8.	Financial Statements and Supplementary Data.	4
PART IV
Item 15.	Exhibits, Financial Statement Schedules.	5
Signatures		6

 

 

EXPLANATORY NOTE

 

Yangtze River Development Limited (the “Company”) is filing this Amendment No. 6 (the “Amendment No. 6”) to its Annual Report on Form 10-K for the year ended December 31, 2015, filed on February 2, 2016 (the “Original 10-K”), which was subsequently amended on February 17, 2016, March 30, 2016, May 17, 2016, June 17, 2016 and July 29, 2016. Company is filing the Amendment No. 6 in response to certain comment provided by the SEC in connection with Company’s registration statement filed on July 29, 2016. This Amendment No. 6 reflects certain changes to Item 8 Financial Statements and Supplementary Data. The caption in the table under Footnote 6 to Company’s financial statements under Item 8 was revised to clearly indicate that the $316,586,422 in land lots undeveloped represents the amount of capital the Company used to acquire the land use rights.

 

In accordance with applicable SEC rules and as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this amendment includes new certifications from our Principal Executive Officer and Principal Financial Officer dated as of the date of filing of this amendment.

 

No changes have been made to the Original 10-K and its subsequent amendments other than to Item 8 and to the four certification exhibits. This amendment speaks as of the date of the Original 10-K, does not reflect events that may have occurred after the date of the Original 10-K and does not modify or update in any way the disclosures made in the Original 10-K, except as required to reflect the revisions discussed above. This amendment should be read in conjunction with the Original 10-K and its subsequent amendments and with our filings with the SEC filed subsequent to the filing of the Original 10-K.

 

  

Item 8.

Financial Statements and Supplementary Data.

 

Reference is made to the financial statements, listed in Item 15, which appear at Pages F-1 through F-19 of this report and which are incorporated herein by reference.

 

 

PART IV

 

Item 15.

Exhibits, Financial Statement Schedules.

 

(a) The following documents are filed as part of this report:

 

(1)	Financial Statements:

 

The audited balance sheet of the Company as of December 31, 2015 and December 31, 2014, the related condensed statements of operations, changes in stockholders’ deficiency and cash flows for the years then ended, the footnotes thereto, and the report of Dominic KF Chan & Co., independent auditors, are filed herewith.

 

(2)	Financial Schedules:

 

None.

 

Financial statement schedules have been omitted because they are either not applicable or the required information is included in the financial statements or notes hereto.

 

(3)

Exhibits:

 

The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Report.

 

(b) The following are exhibits to this Report and, if incorporated by reference, we have indicated the document previously filed with the SEC in which the exhibit was included.

 

Certain of the agreements filed as exhibits to this Report contain representations and warranties by the parties to the agreements that have been made solely for the benefit of the parties to the agreement. These representations and warranties:

 

	●	may have been qualified by disclosures that were made to the other parties in connection with the negotiation of the agreements, which disclosures are not necessarily reflected in the agreements;
	●	may apply standards of materiality that differ from those of a reasonable investor; and
	●	were made only as of specified dates contained in the agreements and are subject to subsequent developments and changed circumstances.

 

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date that these representations and warranties were made or at any other time. Investors should not rely on them as statements of fact.

 

Exhibit Number		Description
31.1		Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1+		Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2+		Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Schema
101.CAL		XBRL Taxonomy Calculation Linkbase
101.DEF		XBRL Taxonomy Definition Linkbase
101.LAB		XBRL Taxonomy Label Linkbase
101.PRE		XBRL Taxonomy Presentation Linkbase

 

+ In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed.

 

 

SIGNATURES

 

Pursuant to the requirements of 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.

 

	YANGTZE RIVER DEVELOPMENT LIMITED
	By:	/s/ Xiangyao Liu
		Xiangyao Liu
		President and Chief Executive Officer (Principal Executive Officer)
	Date:	September 9, 2016
	By:	/s/ Xin Zheng
		Xin Zheng
		Chief Financial Officer (Principal Financial and Accounting Officer)
	Date:	September 9, 2016

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Name		Title		Date
/s/ Xiangyao Liu		President, Chief Executive Officer and Director		September 9, 2016
Xiangyao Liu		(Principal Executive Officer)
		Chief Financial Officer
/s/ Xin Zheng		(Principal Financial and Accounting Officer)		September 9, 2016
Xin Zheng
/s/ James Stuart Coleman		Director		September 9, 2016
James Stuart Coleman
/s/ Zhanhuai Cheng		Director		September 9, 2016
Zhanhuai Cheng
/s/ Yanliang Wu		Director		September 9, 2016
Yanliang Wu
/s/ Yu Zong		Director		September 9, 2016
Yu Zong
/s/ Harvey Leibowitz		Independent Director		September 9, 2016
Harvey Leibowitz
/s/ Zhixue Liu		Independent Director		September 9, 2016
Zhixue Liu
/s/ Tongming Wang		Independent Director		September 9, 2016
Tongming Wang
/s/ Romano Tio		Independent Director		September 9, 2016
Romano Tio
/s/ Daniel W. Heffernan		Independent Director		September 9, 2016
Daniel W. Heffernan
/s/ Zhihong Su		Independent Director		September 9, 2016
Zhihong Su

 

  

Yangtze River Development Limited

(FORMERLY Kirin International Holding, Inc.)

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 AND 2014

 

TABLE OF CONTENTS

 

		Pages
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2015 and 2014		F-3
Consolidated Statements of Operations and Comprehensive Loss for years ended December 31, 2015 and 2014		F-4
Consolidated Statements of Changes in Equity for years ended December 31, 2015 and 2014		F-5
Consolidated Statements of Cash Flows for years ended December 31, 2015 and 2014		F-6
Notes to the Consolidated Financial Statements		F-7 – F-19

 

   

  

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  

Board of Directors and Stockholders of

Yangtze River Development Limited

 

We have audited the accompanying consolidated balance sheets of Yangtze River Development Limited (the “Company”) (formerly known as Kirin International Holding, Inc.) as of December 31, 2015 and 2014, and the related consolidated statements of operations and comprehensive loss, changes in owners’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

 

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

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Yangtze River Development Limited as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

 

/s/ Dominic K.F. Chan & Co.
Dominic K.F. Chan & Co.
Certified Public Accountants
Hong Kong, March 30, 2016

 

 

Yangtze River Development Limited

(FORMERLY Kirin International Holding, Inc.)

Consolidated Balance Sheets

 

		December 31,
		2015				2014
ASSETS
Cash and cash equivalents		$	512,569			$	56,366
Other assets and receivables			6,259,865				2,937,545
Real estate property completed			31,566,156				33,025,319
Real estate properties and land lots under development			364,876,105				384,610,172
Property and equipment, net			157,499				237,475
Deferred tax assets			3,614,419				2,420,449
Total Assets		$	406,986,613			$	423,287,326
LIABILITIES AND EQUITY
Liabilities
Accounts payable		$	5,526,610			$	5,837,471
Due to related parties			32,045,112				322,388,060
Other taxes payable			13,350				28,203
Other payables and accrued liabilities			560,830				264,558
Real estate property refund and compensation payable			25,274,753				25,158,858
Convertible note			75,000,000				-
Loans payable			44,502,981				47,185,161
Total liabilities		$	182,923,636			$	400,862,311
Equity
Preferred stock at $0.0001 par value; 100,000,000 shares authorized; none issued or outstanding		$	-			$	-
Common stock at $0.0001 par value; 500,000,000 shares authorized; 172,254,446 and 151,000,000 shares issued and outstanding at December 31, 2015 and December 31, 2014, respectively			17,225				15,100
Additional paid-in capital			242,622,947				27,955,331
Accumulated losses			(16,263,010	)			(9,881,148	)
Accumulated other comprehensive (loss) income			(2,314,185	)			4,335,732
Total Equity		$	224,062,977			$	22,425,015
Total Liabilities and Equity		$	406,986,613			$	423,287,326

 

See notes to the consolidated financial statements

 

 

Yangtze River Development Limited

(FORMERLY Kirin International Holding, Inc.)

consolidated Statements of OPERATIONS and Comprehensive LOSS

 

		For the Years Ended December 31,
		2015				2014
Revenue		$	-			$	3,458,295
Cost of revenue			-				3,693,783
Gross loss			-				(235,488	)
Operating expenses
Selling expenses			11,577				87,866
General and administrative expenses			4,547,646				2,090,499
Total operating expenses			4,559,223				2,178,365
Loss from operations			(4,559,223	)			(2,413,853	)
Other expenses
Other income			868				-
Other expenses			(3,231	)			-
Interest income			55				10,996
Interest expenses			(3,199,031	)			(3,256,660	)
Total other expenses			(3,201,339	)			(3,245,664	)
Loss before income taxes			(7,760,562	)			(5,659,517	)
Income taxes benefit			1,378,700				1,402,421
Net loss		$	(6,381,862	)		$	(4,257,096	)
Other comprehensive loss
Foreign currency translation adjustments			(6,649,917	)			(147,341	)
Comprehensive loss		$	(13,031,779	)		$	(4,404,437	)
Loss per share - basic and diluted		$	(0.04	)		$	(0.03	)
Weighted average shares outstanding - basic and diluted			151,682,554				151,000,000

 

See notes to the consolidated financial statements

 

 

Yangtze River Development Limited

(FORMERLY Kirin International Holding, Inc.)

consolidated Statements of CHANGES IN Equity

 

		Common stock								Additional								Accumulated other
		Number of shares				Amount				paid-in capital				Accumulated losses				comprehensive (loss) income				Total
Balance as of January 1, 2014			151,000,000			$	15,100			$	27,955,331			$	(5,624,052	)		$	4,483,073			$	26,829,452
Net loss			-				-				-				(4,257,096	)			-				(4,257,096	)
Foreign currency translation adjustment			-				-				-				-				(147,341	)			(147,341	)
Balance as of December 31, 2014			151,000,000			$	15,100			$	27,955,331			$	(9,881,148	)		$	4,335,732			$	22,425,015
Forgiveness of loan from Wuhan Renhe			-				-				285,413,074				-				-				285,413,074
Effect of share exchange			20,596,546				2,060				(86,182,521	)			-				-				(86,180,461	)
Restricted shares issued for services			657,900				65				3,749,965				-				-				3,750,030
Extinguishment of debt with a former officer			-				-				11,687,098				-				-				11,687,098
Net loss			-				-				-				(6,381,862	)			-				(6,381,862	)
Foreign currency translation adjustment			-				-				-				-				(6,649,917	)			(6,649,917	)
Balance as of December 31, 2015			172,254,446			$	17,225			$	242,622,947			$	(16,263,010	)		$	(2,314,185	)		$	224,062,977

  

See notes to the consolidated financial statements

 

 

Yangtze River Development Limited

(FORMERLY Kirin International Holding, Inc.)

Consolidated Statements of Cash Flows

 

		For the Years Ended December 31,
		2015				2014
Cash Flows from Operating Activities:
Net loss		$	(6,381,862	)		$	(4,257,096	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation of property, and equipment			79,064				80,133
Loss on disposal of property, and equipment			3,082				-
Deferred tax benefit			(1,378,700	)			(1,402,421	)
Share-based compensation expense			1,808,867				-
Changes in operating assets and liabilities:
Prepayments			-				884,391
Other assets and receivables			(1,534,700	)			(57,758	)
Real estate property completed			(312,163	)			(276,595	)
Real estate properties and land lots under development			(778,977	)			(6,412,919	)
Accounts payable			-				4,486,912
Other taxes payable			(13,914	)			28,204
Other payables and accrued liabilities			2,257,051				72,260
Real estate property refund and compensation payables			1,517,110				1,577,864
Net Cash Used In Operating Activities			(4,735,142	)			(5,277,025	)
Cash Flows from Investing Activities:
Purchase of property and equipment			(11,733	)			(70,908	)
Proceeds from disposal of property and equipment			130				-
Effect of share exchange			505,782				-
Net Cash Provided By (Used In) Investing Activities			494,179				(70,908	)
Cash Flows from Financing Activities:
Proceeds from financial institution loans			-				47,187,464
Repayment of financial institution loans			(176,599	)			(488,146	)
Advances from related parties			4,874,761				4,834,513
Repayment to related parties			-				(47,187,464	)
Net Cash Provided By Financing Activities			4,698,162				4,346,367
Effect of Exchange Rate Changes on Cash and Cash Equivalents			(996	)			(5,801	)
Net Increase (Decrease) In Cash and Cash Equivalents			456,203				(1,007,367	)
Cash and Cash Equivalents at Beginning of Year			56,366				1,063,733
Cash and Cash Equivalents at End of Year		$	512,569			$	56,366
Supplemental Cash Flow Information:
Cash paid for interest expense		$	3,001,771			$	3,256,660
Cash paid for income tax		$	-			$	-
Supplemental Disclosure of Non-Cash Transactions:
Forgiveness of loans from an owner		$	285,413,074			$	-
Issuance of convertible note		$	150,000,000			$	-
Reduction of convertible note		$	75,000,000			$	-

 

See notes to the consolidated financial statements

 

 

YANGTZE RIVER DEVELOPMENT LIMITED

(FORMERLY KIRIN INTERNATIONAL HOLDING, INC.)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2015 AND 2014

 

1. ORGANIZATION AND PRINCIPAL ACTIVITIES

 

The consolidated financial statements include the financial statements of Yangtze River Development Limited (the “Company” or “Yangtze River”) and its subsidiaries, Energetic Mind Limited (“Energetic Mind”), Ricofeliz Capital (HK) Limited (“Ricofeliz Capital”), and Wuhan Yangtze River Newport Logistics Co., Ltd. (“Wuhan Newport”).

 

The Company, formerly named as Kirin International Holding, Inc., and Ciglarette, Inc., was incorporated in the State of Nevada on December 23, 2009. The Company was a development stage company and has not generated significant revenue since inception to March 1, 2011.

 

On March 1, 2011, the Company entered into a share exchange agreement that Kirin China Holding Limited (“Kirin China”) became the Company’s wholly-owned subsidiary. Kirin China engaged in the development and sales of residential and commercial real estate properties, and development of land lots in People’s Republic of China (“China”, or the “PRC”).

 

On December 19, 2015, the Company completed a share exchange (the “Share Exchange”) with Energetic Mind and all the shareholders of Energetic Mind, whereby Yangtze River acquired 100% of the issued and outstanding capital stock of Energetic Mind, in exchange for 151,000,000 shares of Yangtze River’s common stock, which constituted approximately 88% of its issued and outstanding shares on a fully-diluted basis of Yangtze River immediately after the consummation of the Share Exchange, and an 8% convertible note (the “Note”) in the principal amount of $150,000,000. As a result of the Share Exchange, Energetic Mind became Yangtze River’s wholly-owned subsidiary and Jasper Lake Holdings Limited (“Jasper”), the former shareholder of Energetic Mind, became Yangtze River’s controlling stockholder. The Share Exchange transaction with Energetic Mind was treated as an acquisition, with Energetic Mind as the accounting acquirer and Yangtze River as the acquired party. The financial statements before the date of the Share Exchange are those of Energetic Mind with the results of the Company being consolidated from the date of the Share Exchange.

 

Energetic Mind owns 100% of Ricofeliz Capital and operates its business through its subsidiary Wuhan Newport.

 

Wuhan Newport was a wholly owned subsidiary of Wuhan Renhe Group Co., Ltd. (the “Wuhan Renhe”), a company incorporated in the PRC as at September 23, 2002. On July 13, 2015, Wuhan Renhe transferred all of the equity interests of the Company to Ricofeliz Capital, a company incorporated in Hong Kong on March 25, 2015. Ricofeliz Capital was incorporated by Energetic Mind, a company incorporated in British Virgin Islands (“BVI”). Energetic Mind was incorporated by Mr. Liu Xiangyao on January 2, 2015, and was subsequently purchased by various companies incorporated in BVI or the United States of America (“USA”), among whom Jasper became its 64% owner. Jasper was 100% owned by Mr. Liu Xiangyao, a Hong Kong citizen.

 

The major assets of Wuhan Newport include land lots for developing commercial buildings that are in line with the principal activities of Kirin China.

 

On December 31, 2015, the Company entered into certain stock purchase and business sale agreements (the “Agreements”) with Kirin Global Enterprises, Inc. (the “Purchaser”), a California corporation and an entity controlled by a former officer and director of the Company whereby the Company sold its interest in certain subsidiaries (see note 11) for an aggregate of $75,000,002. (the “Sale”).

 

Pursuant to the terms of the Agreements, Jasper agreed to finance the Sale by reducing Company’s financial obligations of the Note by an aggregate of $75,000,000. In addition, the Purchaser agreed to pay the remaining two dollar in cash.

 

Upon completion of the Sale, the Company operates its business solely through its subsidiary Wuhan Newport, primarily engaging in the business as a port logistic center located in the middle reaches of the Yangtze River in the PRC.

 

 

YANGTZE RIVER DEVELOPMENT LIMITED

(FORMERLY KIRIN INTERNATIONAL HOLDING, INC.)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2015 AND 2014

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

2.1 Basis of presentation

 

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).  

 

The consolidated financial statements include the financial statements of all the subsidiaries. All transactions and balances between the Company and its subsidiaries have been eliminated upon consolidation.

 

The consolidated balance sheets are presented unclassified because the time required to complete real estate projects and the Company’s working capital considerations usually stretch for more than one-year period.

 

2.2 Use of estimates

 

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews these estimates using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. Significant accounting estimates reflected in the consolidated financial statements include: (i) the allowance for doubtful debts; (ii) accrual of estimated liabilities; and (iii) contingencies; (iv) deferred tax assets; (v) impairment of long-lived assets; (vi) useful lives of property plant and equipment; and (vii) real estate property refunds and compensation payables.

 

2.3 Cash and cash equivalents

 

Cash and cash equivalents consist of cash and bank deposits with original maturities of three months or less, which are unrestricted as to withdrawal and use the Company maintains accounts at banks and has not experienced any losses from such concentrations.

 

2.4 Property and equipment

 

The property and equipment are stated at cost less accumulated depreciation. The depreciation is computed on a straight-line method over the estimated useful lives of the assets with 5% salvage value. Estimated useful lives of property and equipment are stated in Note 7.

 

The Company eliminates the cost and related accumulated depreciation of assets sold or otherwise retired from the accounts and includes any gain or loss in the statement of income. The Company charges maintenance, repairs and minor renewals directly to expenses as incurred; major additions and betterment to equipment are capitalized.

 

2.5 Impairment of long-lived assets

 

The Company applies the provisions of ASC No. 360 Sub topic 10, "Impairment or Disposal of Long-Lived Assets"(ASC 360- 10) issued by the Financial Accounting Standards Board ("FASB"). ASC 360-10 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

 

The Company tests long-lived assets, including property and equipment and finite lived intangible assets, for impairment at least annually or more frequently upon the occurrence of an event or when circumstances indicate that the net carrying amount is greater than its fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally measured by discounting expected future cash flows as the rate the Company utilizes to evaluate potential investments. The Company estimates fair value based on the information available in making whatever estimates, judgments and projections are considered necessary. There were no impairment losses in the years ended December 31, 2015 and 2014.

 

 

YANGTZE RIVER DEVELOPMENT LIMITED

(FORMERLY KIRIN INTERNATIONAL HOLDING, INC.)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2015 AND 2014

 

2.6 Fair values of financial instruments

 

ASC Topic 825, Financial Instruments (“Topic 825”) requires disclosure of fair value information of financial instruments, whether or not recognized in the balance sheets, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Topic 825 excludes certain financial instruments and all nonfinancial assets and liabilities from its disclosure requirements. Accordingly, the aggregate fair value amounts do not represent the underlying value of the Company.

 

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) 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, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

 

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

 

As of December 31, 2015 and 2014, financial instruments of the Company primarily comprise of cash, accrued interest receivables, other receivables, short-term bank loans, deposits payables and accrued expenses, which were carried at cost on the balance sheets, and carrying amounts approximated their fair values because of their generally short maturities.

 

2.7 Convertible notes

 

In accordance with ASC subtopic 470-20, the convertible notes are initially carried at the principal amount of the convertible notes. Debt premium or discounts, which are the differences between the carrying value and the principal amount of convertible notes at the issuance date, together with related debts issuance cost, are subsequently amortized using effective interest method as adjustments to interest expense from the debt issuance date to its first redemption date. Convertible notes are classified as a current liability if they are or will be callable by the Company or puttable by the debt holders within one year from the balance sheet date, even though liquidation may not be expected within that period.

 

2.8 Foreign currency translation and transactions

 

The Company’s consolidated financial statements are presented in the U.S. dollar (US$), which is the Company’s reporting currency. Yangtze River, Energetic Mind, and Ricofeliz Capital uses US$ as its functional currency. Wuhan Newport uses Renminbi Yuan(“RMB”) as its functional currency. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the statements of operations.

 

In accordance with ASC 830, Foreign Currency Matters, the Company translated the assets and liabilities into US$ using the rate of exchange prevailing at the applicable balance sheet date and the statements of operations and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation are recorded in owners’ equity as part of accumulated other comprehensive income.

 

		December 31,
		2015				2014
Balance sheet items, except for equity accounts			6.4917				6.1460

 

		For the Years Ended December 31,
		2015				2014
Items in the statements of operations and comprehensive income, and statements of cash flows			6.2288				6.1457

 

2.9 Revenue recognition

 

The Company recognizes revenue from steel trading when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collection is reasonably assured.

 

Real estate sales are reported in accordance with the provisions of ASC 360-20, Property, Plant and Equipment, Real Estate Sales.

 

 

YANGTZE RIVER DEVELOPMENT LIMITED

(FORMERLY KIRIN INTERNATIONAL HOLDING, INC.)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2015 AND 2014

 

Revenue from the sales of completed properties and properties where the construction period is twelve months or less is recognized by the full accrual method when (a) sale is consummated; (b) the buyer’s initial and continuing involvements are adequate to demonstrate a commitment to pay for the property; (c) the receivable is not subject to future subordination; (d) the Company has transferred to the buyer the usual risks and rewards of ownership in a transaction that is in substance a sale and does not have a substantial continuing involvement with the property. A sale is not considered consummated until (a) the parties are bound by the terms of a contract or agreement, (b) all consideration has been exchanged, (c) any permanent financing for which the seller is responsible has been arranged, (d) all conditions precedent to closing have been performed. Fair value of buyer’s payments to be received in future periods pursuant to sales contract is classified under accounts receivable. Sales transactions not meeting all the conditions of the full accrual method are accounted for using the deposit method of accounting. Under the deposit method, all costs are capitalized as incurred, and payments received from the buyer are recorded as a deposit liability.

 

Revenue and profit from the sale of development properties where the construction period is more than twelve months is recognized by the percentage-of-completion method on the sale of individual units when the following conditions are met: (a)construction is beyond a preliminary stage; (b) the buyer is committed to the extent of being unable to require a refund except for non-delivery of the unit; (c) sufficient units have already been sold to assure that the entire property will not revert to rental property; (d) sales prices are collectible and (e) aggregate sales proceeds and costs can be reasonably estimated. If any of these criteria are not met, proceeds are accounted for as deposits until the criteria are met and/or the sale consummated.

 

The Company has not generated any revenue from the sales of real estate property for the years ended December 31, 2015 and 2014.

 

2.10 Real estate capitalization and cost allocation

 

Real estate property completed and real estate properties and land lots under development consist of commercial units under construction and units completed. Properties under development or completed are stated at cost or estimated net realizable value, whichever is lower. Cost capitalization of development and redevelopment activities begins during the predevelopment period, which we define as the activities that are necessary to begin the development of the property. We cease capitalization upon substantial completion of the project, but no later than one year from cessation of major construction activity. We also cease capitalization when activities necessary to prepare the property for its intended use have been suspended. Costs include costs of land use rights, direct development costs, interest on indebtedness, construction overhead and indirect project costs. The Company acquires land use rights with lease terms of 40 years through government sale transaction. Land use rights are divided and transferred to customers after the Company delivers properties. The Company capitalizes payments for obtaining the land use rights, and allocates to specific units within a project based on units’ gross floor area. Costs of land use rights for the purpose of property development are not amortized. Other costs are allocated to units within a project based on the ratio of the sales value of units to the estimated total sales value.

 

2.11 Capitalization of interest

 

In accordance with ASC 360, Property, Plant and Equipment, interest incurred during construction is capitalized to properties under development. For the years ended December 31, 2015 and 2014, nil and nil were capitalized as properties under development, respectively.

 

2.12 Advertising expenses

 

Advertising costs are expensed as incurred, or the first time the advertising takes place, in accordance with ASC 720-35, Advertising Costs. For the years ended December 31, 2015 and 2014, the Company recorded advertising expenses of $7,724 and $47,187, respectively.

 

2.13 Share-based compensation

 

The Company grants restricted shares to its non-employee consultants. Awards granted to non-employees are measured at fair value at the earlier of the commitment date or the date the services are completed, and are recognized using graded vesting method over the period the service is provided.

 

2.14 Income taxes

 

Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. As part of the process of preparing consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. The Company accounts for income taxes using the liability method. Under this method, deferred income taxes are recognized for tax consequences in future years of differences between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements at each year-end and tax loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates applicable for the differences that are expected to affect taxable income.

 

The Company adopts a more likely than not threshold and a two-step approach for the tax position measurement and financial statement recognition. Under the two-step approach, the first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained, including resolution of related appeals or litigation process, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. As of December 31, 2015 and 2014, the Company did not have any uncertain tax position.

 

 

YANGTZE RIVER DEVELOPMENT LIMITED

(FORMERLY KIRIN INTERNATIONAL HOLDING, INC.)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2015 AND 2014

 

2.15 Land Appreciation Tax (“LAT”)

 

In accordance with the relevant taxation laws in the PRC, the Company is subject to LAT based on progressive rates ranging from 30% to 60% on the appreciation of land value, which is calculated as the proceeds of sales of properties less deductible expenditures, including borrowing costs and all property development expenditures. LAT is prepaid at 1% to 2% of the pre-sales proceeds each year as required by the local tax authorities, and is settled generally after the construction of the real estate project is completed and majority of the units are sold. The Company provides LAT as expensed when the related revenue is recognized based on estimate of the full amount of applicable LAT for the real estate projects in accordance with the requirements set forth in the relevant PRC laws and regulations. LAT would be included in income tax expense in the statements of operations and comprehensive income (loss).

 

2.16 Earnings (loss) per share

 

Basic earnings (loss) per share is computed using the weighted average number of common shares outstanding during the year. Diluted earnings per share is computed using the weighted average number of common shares and potential common shares outstanding during the period for convertible notes under if-convertible method, if dilutive. Potential common shares are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive, such as in a period in which a net loss is recorded.

 

2.17 Comprehensive loss

 

Comprehensive loss includes net income (loss) and foreign currency adjustments. Comprehensive loss is reported in the consolidated statements of operations and comprehensive loss. Accumulated other comprehensive loss, as presented on the consolidated balance sheets are the cumulative foreign currency translation adjustments.

 

2.18 Contingencies

 

In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations and tax matters. In accordance with ASC No. 450 Sub topic 20, “Loss Contingencies”, the Company records accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.

 

2.19 Recently issued accounting pronouncements

 

The Company does not believe other recently issued but not yet effective accounting standards from ASU 2016-01, if currently adopted, would have a material effect of the consolidated financial position, results of operation and cash flows.

 

 

YANGTZE RIVER DEVELOPMENT LIMITED

(FORMERLY KIRIN INTERNATIONAL HOLDING, INC.)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2015 AND 2014

 

3. RISKS

 

(a) Liquidity risk

 

The Company is exposed to liquidity risk which is risk that it is unable to provide sufficient capital resources and liquidity to meet its commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures.

 

(b) Foreign currency risk

 

A majority of the Company’s operating activities and a significant portion of the Company’s assets and liabilities are denominated in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the Peoples’ Bank of China (“PBOC”) or other authorized financial institutions at exchange rates quoted by PBOC. Approval of foreign currency payments by the PBOC or other regulatory institutions requires submitting a payment application form together with suppliers' invoices and signed contracts. The value of RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market.

 

(c) Concentration risk

 

For the year ended December 31, 2014, two customers accounted for all of sales. There were no sales for the year December 31, 2015.

 

		Years Ended December 31,
		2015				2014
Customer A			-				20	%
Customer B			-				80	%
			-				100	%

 

For the year ended December 31, 2014, products purchased from two suppliers accounted for all of product purchases. There were no sales for the year December 31, 2015.

 

		Years Ended December 31,
		2015				2014
Supplier A			-				19	%
Supplier B			-				81	%
			-				100	%

 

4. OTHER ASSETS AND RECEIVABLES

 

Other assets and receivables as of December 31, 2015 and 2014 consisted of:

 

		December 31,
		2015				2014
Deposits		$	847			$	3,611
Working capital borrowed by contractors			-				12,431
Individual income tax receivable			-				361
Staff allowance			-				72,346
Prepaid consulting and legal fees			1,941,163				-
Underwriting commission deposit			1,606,000				-
Excessive business tax and related urban construction and education surcharge			1,726,408				1,814,991
Excessive land appreciation tax			985,447				1,033,805
		$	6,259,865			$	2,937,545

 

Business tax and LAT are payable each year at 5% and 1% - 2% respectively of customer deposits received. The Company recognizes sales related business tax and LAT in the income statement to the extent that they are proportionate to the revenue recognized each period. Any excessive amounts of business and LAT liabilities recognized at period-end pursuant to tax laws and regulations over the amounts recognized in the income statement are capitalized in prepayments and will be expensed in subsequent periods.

 

 

YANGTZE RIVER DEVELOPMENT LIMITED

(FORMERLY KIRIN INTERNATIONAL HOLDING, INC.)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2015 AND 2014

 

5. REAL ESTATE PROPERTY COMPLETED 

 

The account balance and components of the real estate property completed were as follow:

 

		December 31,
		2015				2014
Properties completed
Wuhan Centre China Grand Steel Market
Costs of land use rights		$	7,716,994			$	8,151,059
Other development costs			23,849,162				24,874,260
		$	31,566,156			$	33,025,319

 

As of December 31, 2015, the sole and wholly owned developing project of the Company is called Wuhan Centre China Grand Steel Market (Phase 1) Commercial Building in the south of Hans Road, Wuhan Yangluo Economic Development Zone with approximately 222,496.6 square meters of total construction area. Since June 2009, the Company commenced the construction of the project that funded through a combination of bank loans and advances from shareholders. The Company has obtained certificates representing titles of the land use rights used for the development of the project. As of December 31, 2015, the Company has completed the construction of four buildings covering area of approximately 35,350.4 square meters of construction area. The Company values the real estate assets based on estimates using present value by quoted prices for comparable real estate projects.

 

6. REAL ESTATE PROPERTIES AND LAND LOTS UNDER DEVELOPMENT

 

The components of real estate properties and land lots under development were as follows:

 

		December 31,
		2015				2014
Properties under development
Wuhan Centre China Grand Steel Market
Costs of land use rights		$	9,306,948			$	9,830,445
Other development costs			38,982,735				40,385,963
Land lots under development
Costs of land use rights			316,586,422				334,393,764
		$	364,876,105			$	384,610,172

 

The investments in undeveloped land were acquired in September, 2007. The Company leases the land under land use right leases with various terms from the PRC government, and does not have ownership of the underlying land.

 

As of December 31, 2015, the Company has three buildings under development of the project described in Note 5 covering area of approximately 57,450.4 square meters of construction area.

 

Land use right with net book value of $181,287,079, including in real estate held for development and land lots undeveloped were pledged as collateral for the financial institution loan as at December 31, 2015. (See Note 10).

 

 

YANGTZE RIVER DEVELOPMENT LIMITED

(FORMERLY KIRIN INTERNATIONAL HOLDING, INC.)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2015 AND 2014

 

7. PROPERTY AND EQUIPMENT

 

The Company’s property and equipment used to conduct day-to-day business are recorded at cost less accumulated depreciation. Depreciation expenses are calculated using straight-line method over the estimated useful life with 5% of estimated salvage value below:

 

		Useful life		December 31,
		Years		2015				2014
Fixture, furniture and office equipment		5		$	63,474			$	56,710
Vehicles		5			528,424				605,642
Less: accumulated depreciation					(434,399	)			(424,877	)
Property and equipment, net				$	157,499			$	237,475

 

Depreciation expense totaled $76,419 and $80,133 for the years ended December 31, 2015 and 2014, respectively.

 

8. OTHER PAYABLES AND ACCRUED LIABILITIES

 

Other payables and accrued liabilities as of December 31, 2015 and 2014 consisted of:

 

		December 31,
		2015				2014
Salaries payable		$	182,716			$	75,301
Business tax and related urban construction and education surcharge			12,947				121
Deposits from contractors			167,907				177,351
Interests payable in connection with convertible note			197,260				-
Others			-				11,785
		$	560,830			$	264,558

 

9. REAL ESTATE PROPERTY REFUND AND COMPENSATION PAYABLE

 

During the years 2012 and 2011, the Company signed 443 binding agreements of sales of commercial offices of the project with floor area of 22,790 square meters to unrelated purchasers (the transactions or the real estate sales transactions). The Company received deposits and considerations from the purchasers as required by the agreements. The construction commenced in the 2010, which was originally expected to be delivered to customers in late of 2012. No revenue was recognized from the sales of the commercial offices due to the reason stated below.

 

Owing to commercial reasons, the Company decided to terminate the agreements made for the sale of the real estate properties in relation to the project of Wuhan Centre China Grand Market. According to the agreements of sales, the Company is obliged to compensate the purchaser at a rate equal to 6% per annum or 0.05% per day on the deposits paid. In the years ended December 31, 2015 and 2014, the Company incurred $1,528,126 and $1,547,428 compensation expenses which were included in general and administrative expenses.

 

As at December 31, 2015, 375 out of 443 agreements were cancelled, and no completed office (or real estate certificate) has been delivered to the purchaser. The Company is still in the progress of negotiating with the purchasers for the cancellation of the remaining agreements. The directors of the Company are of the opinion that almost all of the purchasers shall accept the cancellation. If, finally the purchaser insisted on the execution of the agreement, the Company will accept.

 

Real estate property refund and compensation payable represent the amount of customer deposits received and the compensation calculated in accordance with the provisions in the sales agreements. The payable consists of the followings:

 

		December 31,
		2015				2014
Property sales deposits		$	20,152,652			$	21,297,363
Compensation			5,122,101				3,861,495
		$	25,274,753			$	25,158,858

 

 

YANGTZE RIVER DEVELOPMENT LIMITED

(FORMERLY KIRIN INTERNATIONAL HOLDING, INC.)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2015 AND 2014

 

10. LOANS PAYABLE

 

		Weighted- average						December 31
Bank name		interest rate				Term		2015				2014
China Construction Bank			6.33	%		From May 30, 2014 to May 29, 2020			44,502,981				47,185,161

   

Interest expenses incurred on loans payable for the years ended December 31, 2015 and 2014 was $3,001,771 and $3,256,660, respectively.

 

Land use right with net book value of $181,287,079, including in real estate held for development and land lots under development were pledged as collateral for the loan as at December 31, 2015.

 

The aggregate maturities of loans payable of each of years subsequent to December 31, 2015 are as follows:

 

2016		$	154,043
2017			10,783,000
2018			10,783,000
2019			12,323,428
2020			10,459,510
		$	44,502,981

 

11. DISPOSAL OF SUBSIDIARIES

 

On December 31, 2015, the Company sold all of its interests in i) Brookhollow Lake, LLC, ii) Newport Property Holding, LLC, iii) wholly-owned subsidiary Kirin China, iv) wholly-owned subsidiary Kirin Hopkins Real Estate Group, v) wholly-owned subsidiary Archway Development Group LLC, vi) wholly-owned subsidiary Specturm International Enterprise, LLC and vii) wholly-owned subsidiary HHC-6055 Centre Drive LLC (collectively referred to as the “Kirin Subsidiaries”). The sale of Kirin China also effectively terminated Company’s contractual relationship with Hebei Zhongding Real Estate Development Co. Ltd and Xingtai Zhongding Jiye Real Estate Development Co., Ltd, both of which are companies formed under the laws of the People’s Republic of China and were deemed Company’s variable interest entities prior to the Sale.

 

The Company sold its interests in Kirin Subsidiaries for an aggregate of $75,000,002 for the Sale. The carrying amount of the net assets of Kirin Subsidiaries was $63,312,904 as of disposal date and the Company recognized the differences of $11,687,098 to shareholders' equity as a capital transaction.

 

12. CONVERTIBLE NOTE

 

On December 19, 2015, the Company issued an 8% convertible note in the principal amount of $150,000,000 to Jasper, a related party, in the Share Exchange (see note 1). The holder of the Note may convert all or any portion of the then aggregate outstanding principal amount, together with any accrued and unpaid interest, into shares of Company’s common stock at $10.00 per share.

 

On December 31, 2015, pursuant to the terms and conditions of the Agreements, Jasper, financed the Purchaser for the Sale by reducing Company’s financial obligations under the Note by an aggregate of $75,000,000 (see note 1). As a result of the Sale, the outstanding balance due to Jasper under the Note was $75,000,000 plus any accrued interest.

 

There was no beneficial conversion feature attributable to the Note as the set conversion price of the Note was greater than the fair value of the common share price at the date of issuance. The Company has accounted for the Note in accordance with ASC 470-20, as a single instrument as a non-current liability. The Note is initially carried at the gross cash received at the issuance date.

 

The interest expense for the convertible note included in the consolidated statements of operations is $197,260 and nil for the years ended December 31, 2015 and 2014. Note issuance costs are immaterial.

 

13. EMPLOYEE RETIREMENT BENEFIT

 

The Company has made employee benefit contribution in accordance with Chinese relevant regulations, including retirement insurance, unemployment insurance, medical insurance, work injury insurance and birth insurance. The Company recorded the contribution in the salary and employee charges when incurred. The contributions made by the Company were $64,005 and $17,507 for the years ended December 31, 2015 and 2014, respectively.

 

 

YANGTZE RIVER DEVELOPMENT LIMITED

(FORMERLY KIRIN INTERNATIONAL HOLDING, INC.)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2015 AND 2014

 

14. INCOME TAXES

 

The Company was incorporated in the state of Nevada. Under the current law of Nevada, the Company is not subject to state corporate income tax. No provision for federal corporate income tax has been made in the financial statements as there are no assessable profits.

 

Energetic Mind was incorporated in the British Virgin Islands (“BVI”). Under the current law of the BVI, Energetic Mind is not subject to tax on income.

 

Ricofeliz Capital was incorporated in Hong Kong. No provision for Hong Kong profits tax has been made in the financial statements as there are no assessable profits.

 

Wuhan Newport was incorporated in the PRC, was governed by the income tax law of the PRC and is subject to PRC enterprise income tax (“EIT”). The EIT rate of PRC is 25%.

 

Income tax expenses for the years ended December 31, 2015 and 2014 are summarized as follows:

 

		Years Ended December 31,
		2015				2014
Current		$	-			$	-
Deferred tax benefit			1,378,700				1,402,421
		$	1,378,700			$	1,402,421

 

A reconciliation of the income tax benefit (expenses) determined at the PRC EIT income tax rate to the Company’s effective income tax benefit is as follows:

 

		Years Ended December 31,
		2015				2014
EIT at the PRC statutory rate of 25%		$	1,940,140			$	1,414,879
Permanent items			-				(12,458	)
Valuation allowance			(561,440	)			-
		$	1,378,700			$	1,402,421

 

The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. For the years ended December 31, 2015 and 2014, the Company had no unrecognized tax benefits.

 

The Company does not anticipate any significant increase to its liability for unrecognized tax benefit within the next 12 months. The Company will classify interest and penalties related to income tax matters, if any, in income tax expense.

 

Deferred income taxes are recognized for tax consequences in future years of differences between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements at each year-end and tax loss carry forwards. The tax effects of temporary differences that give rise to the following approximate deferred tax assets and liabilities as of December 31, 2015 and 2014 are presented below.

 

		December 31,
		2015				2014
Deferred tax assets
Operating loss carry forward		$	303,237			$	229,288
Excess of interest expenses			1,398,582				648,140
Accrued expenses			1,912,600				1,543,021
		$	3,614,419			$	2,420,449

 

The Company had net operating losses carry forward of $1,212,948 as of December 31, 2015 which will expire on various dates between December 31, 2018 and 2019.

 

 

YANGTZE RIVER DEVELOPMENT LIMITED

(FORMERLY KIRIN INTERNATIONAL HOLDING, INC.)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2015 AND 2014

 

15. LOSS PER SHARE

 

		Years Ended December 31,
		2015				2014
Numerator:
Net loss for basic and diluted loss per share		$	(6,381,862	)		$	(4,257,096	)
Denominator:
Weighted average number of common shares outstanding-basic and diluted			151,682,554				151,000,000
Basic and diluted loss per share		$	(0.04	)		$	(0.03	)

 

246,900 common shares resulting from the assumed conversions of 8% Convertible Note (note 12) were excluded from the calculation of diluted loss per share for the year ended December 31, 2015 as their effect is anti-dilutive.

 

16. RELATED PARTY TRANSACTIONS

 

16.1 Nature of relationships with related parties

 

Name		Relationships with the Company
Wuhan Renhe Group Co., Ltd (“Wuhan Renhe”)		Former shareholder (Mr Wang Geng) of Wuhan Newport
Wuhan Renhe Real Estate Co., Ltd. (“Renhe RE”)		Mr Wang Geng, the director of the Company, holds 100% of Renhe RE
Mr Zhao Weibin		Officer
Mr Liu Xiangyao		Director

 

16.2 Related party balances and transactions

 

Amount due to Wuhan Renhe were $28,822,089 and $322,388,060 as at December 31, 2015 and 2014, respectively. The amount is unsecured, interest free and does not have a fixed repayment date.

 

On June 30, 2015, Wuhan Renhe forgave a total amount of $285,413,074 with the Company. The Company has credited the amount of $285,413,074 to additional paid-in capital in equity.

 

A summary of changes in the amount due to Wuhan Renhe is as follows:

 

		December 31,
		2015				2014
At beginning of year		$	322,388,060			$	366,755,923
Advances from the related party			28,463,394				4,834,513
Repayment to the related party			-				(47,187,464	)
Forgiveness of loan			(285,413,074	)			-
Exchange difference adjustment			(36,616,291	)			(2,014,912	)
At end of year		$	28,822,089			$	322,388,060

 

Amount due to Renhe RE were $667,776 and nil as at December 31, 2015 and 2014, respectively. The amount is unsecured, interest free and does not have a fixed repayment date.

 

A summary of changes in the amount due to Renhe RE is as follows:

 

		December 31,
		2015				2014
At beginning of year		$	-			$	-
Advances from the related party			667,776				-
At end of year		$	667,776			$	-

 

Amount due to Mr Zhao Weibin were $ 126,516 and nil as at December 31, 2015 and 2014, respectively. The amount is unsecured, interest free and does not have a fixed repayment date.

 

 

YANGTZE RIVER DEVELOPMENT LIMITED

(FORMERLY KIRIN INTERNATIONAL HOLDING, INC.)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2015 AND 2014

 

A summary of changes in the amount due to Mr Zhao Weibin is as follows:

 

		December 31,
		2015				2014
At beginning of year		$	-			$	-
Advances from the officer			126,516				-
At end of year		$	126,516			$	-

 

Amount due to Mr Liu Xiangyao were $2,428,731 and nil as at December 31, 2015 and 2014, respectively. The amount is unsecured, interest free and does not have a fixed repayment date.

 

A summary of changes in the amount due to Mr Liu Xiangyao is as follows:

 

		December 31,
		2015				2014
At beginning of year		$	-			$	-
Advances from the director			2,428,731				-
At end of year		$	2,428,731			$	-

 

17. SHARE-BASED COMPENSATION EXPENSES

 

On December 27, 2015, the Company granted 317,345 and 340,555 shares of the Company’s restricted common stock to a number of consultants, in exchange for its legal and professional services to the Company for the years ended December 31, 2015 and 2016, respectively. These shares were valued at $5.7 per share, the closing bid price of the Company’s common stock on the date of grant. Total compensation expense recognized in the general and administrative expenses of the consolidated statement of operations for the year ended December 31, 2015 was $1,808,867. Total compensation expense of approximately $1,941,163 will be recognized in 2016. The shares attributable to fiscal 2015 and 2016 were issued on December 30, 2015.

 

18. CONCENTRATION OF CREDIT RISKS

 

As of December 31, 2015 and 2014, substantially all of the Company’s cash and cash equivalents were held by major financial institutions located in China and the US, which management believes are of high credit quality.

 

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 as well as by the general state of the PRC’s economy. The 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.

 

No customer accounted for more than 10% of total accounts receivable as of December 31, 2015 and 2014.

 

19. COMMITMENTS AND CONTINGENCIES

 

Operating lease commitments

 

For the years ended December 31, 2015 and 2014, rental expenses under operating leases were $6,000 and nil, respectively.

 

The future obligations for operating leases as of December 31, 2015 are as follows:

 

2016		$	72,000
2017			18,000
Total minimum payment required		$	90,000

 

Legal proceeding

 

The Company is not currently a party to any legal proceeding, investigation or claim which, in the opinion of the management, is likely to have a material adverse effect on the business, financial condition or results of operations. The Company did not identify any contingency as of December 31, 2015.

 

 

YANGTZE RIVER DEVELOPMENT LIMITED

(FORMERLY KIRIN INTERNATIONAL HOLDING, INC.)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2015 AND 2014

 

20. SUBSEQUENT EVENT

 

The management evaluated all events subsequent to the balance sheet date through the date the consolidated financial statements were available to be issued. Except for the followings, there are no significant matters to make material adjustments or disclosure in the consolidated financial statements.

 

On January 13, 2016, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of the State of Nevada, changing its name from “Kirin International Holding, Inc.” to “Yangtze River Development Limited”.

 

Effective January 22, 2016, upon approval by FINRA, Yangtze River Development Limited, or formerly Kirin International Holding, Inc., changed its stock symbol from “KIRI” to “YERR”.

 

On January 25, the board of directors (the “Board”) of the Company formed and adopted charters for six standing committees: Audit Committee, Compensation Committee, Nomination Committee, Governance and Human Resources Committee, Board Oversight Committee, Social Media Committee (collectively the “Committees”). Each Committee consists of only independent directors of the Company. The Board also adopted charter for the Regulatory, Compliance and Government Affairs Committee, for which the charter will be implemented once the committee is formed. The Company believes that the adoption of these charters and formation of these Committees are necessary for the implementation of effective internal control and oversight and a significant step towards remediating any material weakness the Company currently has. Members of the Committees are as set forth below

 

	●	Audit Committee: Harvey Leibowitz (Chair), Zhihong Su, Daniel W. Heffernan, Romano Tio, Tongmin Wang
	●	Compensation Committee: Harvey Leibowitz (Chair), Zhihong Su, Zhixue Liu, Romano Tio, Daniel W. Heffernan
	●	Nomination Committee: Daniel W. Heffernan (Chair), Harvey Leibowitz, Zhixue Liu, Romano Tio, Zhihong Su
	●	Governance and Human Resources Committee: Zhihong Su (Chair), Harvey Leibowitz, Romano Tio, Daniel W. Heffernan, Tongmin Wang
	●	Board Oversight Committee: Daniel W. Heffernan (Chair), Zhixue Liu, Harvey Leibowitz, Romano Tio, Zhihong Su
	●	Social Media Committee: Romano Tio (Chair), Harvey Leibowitz, Zhihong Su, Daniel W. Heffernan, Tongmin Wang

 

The Company believes that all members of each of the audit and compensation committees are independent and that Mr. Harvey Leibowitz qualifies as an “audit committee financial expert,” as that term is defined in applicable regulations of the SEC.

 

The Audit Committee is responsible for making such examinations as are necessary to monitor the corporate financial reporting and external audits of the Company and its subsidiaries; to provide to the Board the results of its examinations and recommendations derived there from; to outline to the Board improvements made, or to be made, in internal accounting controls; to nominate independent auditor; and to provide to the Board such additional information and materials as it may deem necessary to make the Board aware of significant financial matters requiring Board attention.

 

The Company believes that the adoption of these charters and formation of these Committees, specifically that of the Audit Committee, are necessary for the implementation of effective internal control.

 

21. RESTRICTED NET ASSETS

 

PRC laws and regulations permit payments of dividends by the Company’s subsidiary incorporated in the PRC only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. In addition, the Company’s subsidiary incorporated in the PRC are required to annually appropriate 10% of their net income to the statutory reserve prior to payment of any dividends, unless such reserve have reached 50% of their respective registered capital. In addition, registered share capital and capital reserve accounts are also restricted from withdrawal in the PRC, up to the amount of net assets held in each subsidiary. As a result of the restrictions described above and elsewhere under PRC laws and regulations, the Company’s subsidiary incorporated in the PRC are restricted in their ability to transfer a portion of their net assets to the Company in the form of dividends or advances from PRC subsidiary. Such restriction amounted to $297,052,074 as of December 31, 2015. Except for the above, there is no other restriction on the use of proceeds generated by the Company’s subsidiary to satisfy any obligations of the Company.

 

22. GOING CONCERN

 

As shown in the accompanying financial statements, the Company has sustained recurring losses and negative cash flows from operations. Over the past years, the Company has been funded through a combination of bank loans and advances from shareholders. On January 29, 2016, the Company received an undertaking commitment letter provided by the Company’s majority shareholder who is willing to provide sufficient funding on an as-needed basis. In addition, the Company plans to dispose of the existing developed real estate properties with market value of approximately $42 million when the Company needs cash flows. The Company believes that, as a result of these, it currently has sufficient cash and financing commitments to meet its funding requirements for a reasonable period of time.

 

 

F-19