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Nevada	83-0506099
(State or Other Jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

18/F., Development Centre Building, South of Renmin Rd. LuoHu District, Shenzhen,
Guandong Province, China		n/a
(Address of principal executive offices)		(Zip Code)

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

Class of Securities	Shares Outstanding
Common Stock, $0.001 par value	776,837 shares

	Part I – Financial Information
Item 1	Financial Statements	3
	Unaudited Condensed Balance Sheets, March 31, 2015 and December 31, 2014	3
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2015 and 2014	4
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014	5
	Notes to the Unaudited Condensed Consolidated Financial Statements	6
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3	Quantitative and Qualitative Disclosures about Market Risk	19
Item 4	Controls and Procedures	19
	Part II – Other Information
Item 1	Legal Proceedings	20
Item 2	Unregistered Sales Of Equity Securities And Use Of Proceeds	20
Item 3	Defaults Upon Senior Securities	20
Item 4	Removed and Reserved	20
Item 5	Other Information	20
Item 6	Exhibits	20

 

		March 31, 2015				December 31, 2014
		(Unaudited)				(Audited)
Assets
Current assets
Cash and cash equivalents		$	16,979			$	35,324
Accounts receivable			1,114,708				378,298
Inventories			62,831				31,865
Prepaid expenses and other receivables			117,428				809,652
Total current assets			1,311,946				1,255,139
Property, plant and equipment, net			2,153,616				2,177,348
Land use rights, net			95,473				95,805
Total assets		$	3,561,035			$	3,528,292

Liabilities and stockholders’ equity
Liabilities
Current liabilities
Accounts payable		$	111,062			$	111,853
Accrued expenses and other payables			2,287,760				2,266,692
Receipt in advance			357,106				465,837
Taxes payable			2,083,775				2,098,507
Amount due to a director			816,900				797,919
Total liabilities		$	5,656,603			$	5,740,808
Stockholders’ equity
Common stock: Par value $0.001 per share; 400,000,000 shares authorized, 776,837 shares issued and outstanding			777				777
Additional paid in capital			3,435,412				3,435,412
Accumulated deficits			(5,579,611	)			(5,699,503	)
Accumulated other comprehensive income			47,854				50,798
Total stockholders’ equity		$	(2,095,568	)		$	(2,212,516	)
Total liabilities and stockholders’ equity		$	3,561,035			$	3,528,292

 

		Three months ended March 31,
		2015				2014
Revenues			782,417				100,967
Cost of sales and services			504,275				-
Selling and distribution expenses			5,771				19,262
General and administrative expense (inclusive of depreciation and allowances)			152,479				796,505
Operating profit/(loss)			119,892				(714,800	)
Other income and expenses
Interest income			-				4,709
Total other income/(expenses)			-				4,709
Profit/(loss) before provision for income taxes			119,892				(710,091	)
Provision for income taxes			-				-
Net income/(loss) for the period			119,892				(710,091	)
Other comprehensive loss
(Loss)/gain on foreign currency translation			(2,944	)			31,564
Total comprehensive loss for the period			116,948				(678,527	)
Earnings/(loss) per share, basic and diluted			0.15				(0.91	)
Weighted average number of shares outstanding, basic and diluted			776,837				776,837

 

		Three months ended March 31,
		2015				2014
Cash flows from operating activities
Net income/(loss)		$	119,892			$	(710,091	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense			30,687				50,015
Loss on disposal of property, plant and equipment			-				42,198
Amortization expense of land use rights			507				516
Amortization expense of other intangible assets			-				2,313
Interest income			-				(4,709	)
Changes in operating assets and liabilities:
(Increase)/decrease in accounts receivable			(736,410	)			76,025
(Increase)/decrease in inventories			(30,966	)			810
Decrease/(increase) in prepaid expenses and other receivables			692,224				(23,696	)
Decrease in amount due from a director			-				90,351
Decrease in accounts payable			(791	)			(3,171	)
Increase/(decrease) in accrued expenses and other payables			21,068				(25,776	)
Decrease in receipt in advance			(108,731	)			(11,451	)
Decrease in taxes payable			(14,732	)			(67,539	)
Net cash used in operating activities		$	(27,252	)		$	(584,205	)
Cash flows from investing activities
Additions to property, plant and equipment		$	(3,118	)			-
Proceeds from disposal of property, plant and equipment		$	-				150,366
Net cash (used in)/provided by investing activities		$	(3,118	)		$	150,366
Cash flows from financing activities
Increase in amount due to a director			18,981				270,054
Net cash provided by financing activities		$	18,981			$	270,054
Net decrease cash and cash equivalents		$	(11,389	)		$	(163,785	)
Effect of foreign exchange rate changes		$	(6,956	)		$	97,607
Cash and cash equivalents at January 1		$	35,324			$	97,920
Cash and cash equivalents at March 31		$	16,979			$	31,742
Supplement disclosure of cash flows information:
Cash paid for interest		$	-			$	-
Cash paid for income taxes		$	-			$	-

 

Name		Domicile and date of incorporation		Effective ownership		Principal activities
Jiangxi Jien Industries Limited  (“Jiangxi Jien”)		The PRC April 8, 1997		100%		Distribution of consumer goods in the PRC.
Shenzhen Jien Electronic Commerce Company Limited (“Shenzhen Jien”)		The PRC April 13, 2009		100%		Distribution of consumer goods in the PRC, and provision of online customer services

 

(i)	Initial admission fee income is generally recorded upon completion of admission procedures, when the rights to use the “GEN+Me” trademarks are granted to the users, and when collectability is reasonably assured.

(ii)	Continuing management fee income represent regular contractual payments received for our supporting services, which are recognized as revenue when earned, generally on a straight line basis.

		March 31, 2015				December 31, 2014				March 31, 2014
Period/year end RMB : US$ exchange rate			0.1612				0.1609				0.1610
Average yearly RMB : US$ exchange rate			0.1599				0.1620				0.1629

 

 

		March 31, 2015				December 31,  2014
Prepaid expenses– (i)		$	2,420			$	522,181
Other receivables– (i)			-				-
Amount due from Shu Jian– (ii)			115,008				287,471
Total		$	117,428			$	809,652

 

(i)	The Company evaluates prepaid expenses and other receivables on a periodic basis and records a charge to the current operations of the Company when the related expense has been incurred or when the amounts reported as other receivables is no longer deemed to be collectible by the Company.

(ii)	The amount represents temporary advances to Shu Jian, an independent third party during the year ended March 31, 2015, which is unsecured and repayable within a year.

	Depreciable lives		March 31, 2015				December 31,  2014
At cost:
Plant	40 years		$	2,189,616			$	2,185,541
Machinery	15 years			219,166				218,758
Motor vehicle	10 years			84,645				84,488
Office equipment	5 years			253,833				250,222
Leasehold Improvement	2 years			865,806				864,194
				3,613,066				3,603,203
Less: Accumulated depreciation				(1,459,450	)			(1,425,855	)
Property, plant and equipment, net			$	2,153,616			$	2,177,348

	Useful lives		March 31, 2015				December 31,  2014
At cost:
Land use rights	59 – 60 years		$	122,560			$	122,332
Less: Accumulated amortization				(27,087	)			(26,527	)
Land use rights, net			$	95,473			$	95,805

 

		March 31, 2015				December 31,  2014
Amount due to directors
Ye Xin Zhang		$	179,277				161,446
Chen Xing Hua		$	637,623				636,473
Total			816,900				797,919

 

		March 31, 2015				December 31,  2014
Accrued interest expense			274,611				274,100
Amount due to Shenzhen Hanhong – (i)			878,540				876,905
Other accrual and payables – (ii)			1,134,609				1,115,687
		$	2,287,760			$	2,266,692

 

(i)	The amount mainly represents consultancy fee payable to Shenzhen Hanhong. Shenzhen Hanhong is a related party as Mr. Chen Xing Hua is a common director of the Company and Shenzhen Hanhong. The amount is interest free, unsecured and has no fixed terms of repayment.

 

(ii)

Included in other payable as of March 31, 2015, there are an amount payable for office decoration in the amount of $257,920, and an amount payable for marketing and promotional expenses of $435,263. The remaining balance consists of amounts owed by the Company to various entities that are incurred by the Company in daily business operations other than trading nature.  These liabilities and accrued operating expenses are non-interest bearing and are payable within one year.

(i)	Initial admission fee income is generally recorded upon completion of admission procedures, when the rights to use the trademarks are granted to the users, and when collectability is reasonably assured.

(ii)	Continuing management fee income represent regular contractual payments received for the use of the “GEN+Me” trademarks plus our supporting services, which is recognized as revenue when earned, generally on a straight line basis.

As of the balance sheet dates, the Company’s taxes payable are summarized as follows:

		March 31, 2015				December 31,  2014
Income tax payables		$	344,017			$	343,376
Value added tax payables			1,682,613				1,697,172
Other tax payables			57,145				57,959
Total		$	2,083,775			$	2,098,507

		Three months ended March 31,
		2015				2014
Revenues from:						$
Sale of consumer products			572,425				-
Regional distribution rights			209,992				100,967
			782,417				100,967
Segment profit/(loss) from:
Sale of consumer products			14,662				(554,543	)
Regional distribution rights			204,221				81,705
Corporate			(98,991	)			(237,253	)
			119,892				(710,091	)

		Three months ended March 31,
		2015				2014
		Amount				Amount
Profit/(loss) before provision for income taxes		$	119,892				(710,091	)
Expected PRC income tax expense at statutory tax rate of 25%			29,973				(177,523	)
Utilization of tax loss brought forward			(29,973	)			-
Tax losses not recognized as deferred tax assets			-				177,523
Provision for Income Taxes		$	-			$	-

 

(i)	Both Jiangxi Jien and Shenzhen Jien are subject to PRC tax. The provision for PRC income tax is based on a statutory rate of 25% of the assessable income of the PRC subsidiaries as determined in accordance with the relevant income tax rules and regulations of the PRC.

(ii)	The Company and other immediate holding companies did not generate any taxable income in their jurisdiction during the three months ended March 31, 2015 and 2014, respectively.

 

 

 

		March 31, 2015				December 31,  2014
Construction-in-progress:
Contracted but not provided for		$	1,650,330			$	1,647,259

 

 
 

Overview and Recent Developments

 

		Three months ended
		March 31								Increase/				%
		2015				2014				(decrease)				change
Revenue		$	782,417			$	100,967			$	681,450				674.9
Cost of sales and services			504,275				-				504,275				N/A
Selling and distribution expenses			5,771				19,262				(13,491	)			(70.0	)
General and administrative expenses			152,479				796,505				(644,026	)			(80.9	)
Income/(loss) before income taxes			119,892				(710,091	)			829,983				N/A
Provision for income taxes			-				-				-				-
Net income/(loss)		$	119,892			$	(710,091	)		$	829,983				N/A

 

		Three months ended March 31,								Increase/				%
		2015				2014				(decrease)				change
Sale of consumer products		$	572,425			$	-				572,425				N/A
Regional distribution rights			209,992				100,967				109,025				108.0
			782,417				100,967				681,450				674.9

(a)	Sale of consumer products

 

(b)	Regional distribution rights

(i)	Initial admission fee income is generally recorded upon completion of admission procedures, when the rights to use the “GEN+ME” trademarks are granted to the users, and when collectability is reasonably assured.

(ii)	Continuing management fee income represent regular contractual payments received for our supporting services, which are recognized as revenue when earned, generally on a straight line basis.

 

		Three months ended
		March 31,
		2015				2014
Net cash used in operating activities		$	(27,252	)		$	(584,205	)
Net cash (used in)/provided by investing activities			(3,118	)			150,366
Net cash provided by financing activities			18,981				270,054
Net decrease in cash and cash equivalents		$	(11,389	)		$	(163,785	)

 

 

 

 

(i) Initial admission fee income is generally recorded upon completion of admission procedures, when the rights to use the “GEN+ME” trademarks are granted to the users, and when collectability is reasonably assured.

(ii) Continuing management fee income represent regular contractual payments received for our supporting services, which are recognized as revenue when earned, generally on a straight line basis.

On January 9, 2015, FASB published ASU 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The ASU applies to all entities and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company does not expect the adoption of ASU 2015-01 to have material impact on the Company's consolidated financial statement.

 

 

 

 

 

 

 

 

In connection with the preparation of our financial statements for the fiscal year ended December 31, 2014, the management determined that our internal control environment is not properly designed due to the existence of certain material weaknesses and that it did not operate effectively to ensure that the Company’s financial statements (and related financial statement disclosures) were prepared in accordance with US generally accepted accounting principles (US GAAP).  In order to remediate the material weakness discussed above, we hired additional accounting staff who are familiar with PRC GAAP and US GAAP in the preparation of financial statements in accordance with US GAAP, and, once our cash flows from operations improves to a level where we are able to, we intend to recruit experienced professionals to augment our financial staff for sufficient US GAAP, financial reporting, which would improve our controls and procedures with the regard to financial statements preparation and improve the knowledge of U.S. accounting standards for our current accounting staff. As of the end of the period covered by the report, we continue the process of implementing and maintaining the remediation measures, but we cannot assure when or if we will be able to successfully implement these remedial measures.  For more information regarding our controls and procedures, please refer to Item 9A. Controls and Procedures in our Annual Report on Form 10-K for fiscal year ended December 31, 2014, filed with the SEC on March 31, 2015.

PART II.

OTHER INFORMATION

 

ITEM 1.

LEGAL PROCEEDINGS

 

 

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

 

None.

ITEM 3.	DEFAULT UPON SENIOR SECURITIES

 

 

ITEM 4.	[REMOVED AND RESERVED]

 

 

ITEM 5.	OTHER INFORMATION

 

 

 

 

 

Exhibit Number		Description*
31.1		Certification of Chief Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer furnished 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 Chief Financial Officer furnished 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 Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
* Filed herewith

 

 

	CHINA SHIANYUN GROUP CORP., LTD.
Dated: May 15, 2015	/s/ Ye Xing Zhang
	Ye Xing Zhang
	Chief Executive Officer
Dated: May 15, 2015	/s/ Deng Lin
	Deng Lin
	Chief Financial Officer and Chief Accounting Officer