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24. Restatement of Financial Statements

12 Months Ended

Dec. 31, 2014

Restatement of Financial Statements

Subsequent to the issuance of the Company’s consolidated financial statements as of and for the year ended December 31, 2014 on April 29, 2015, management identified errors in the Company’s previously issued consolidated financial statements. The Company has incorrectly accounted for the interest in an affiliate for the year ended December 31, 2014 dated April 29, 2015.

The Company recognized US$740,000 of equity in income of an affiliate, Zhejiang Tianlan Environmental Protection Technology Co. Limited, for the year ended December 31, 2014 (See note 10). Management considered this amount was overstated by US$287,000 due to the fact that Zhejiang Tianlan Environmental protection Technology Company Limited had restated its consolidated financial statement of the year ended December 31, 2014 on April 28, 2016. As a result, the interest in an affiliate should decrease US$ 287,000 as of December 31, 2014, the equity in income of affiliates would also decrease by US$ 287,000 and the net loss should be increased by US$287,000 for the year ended December 31, 2014.

The impact of the restatement on the December 31, 2014 financial statements is reflected in the following tables:

CONSOLIDATED BALANCE SHEETS

		December 31, 2014
		As Previously Reported				As Restated
Total Assets			23,686				23,399
Total stockholders’ equity			17,817				17,530
Total liabilities and stockholders’ equity			23,686				23,399

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

		For the year Ended December 31, 2014
		As Previously Reported				As Restated
Equity in income of affiliates			892				605
Net Loss			(5	)			(292	)
Comprehensive loss			(20	)			(307	)
Basic and diluted loss per common share		$	US0.08			$	(US0.06	)

CONSOLIDATED STATEMENTS OF CASH FLOW

		For the year Ended December 31, 2014
		As Previously Reported				As Restated
Net Profit / (Loss)			164				(123	)
Equity in profit of affiliates			(892	)			(605	)

ZHEJIANG TIANLAN

Restatement of Financial Statements

Subsequent to the issuance of the Company’s consolidated financial statements for the year ended December 31, 2014 on April 29, 2015, management identified errors in the Company’s previously issued consolidated financial statements. The Company has incorrectly accounted for: (i) the recognition of CIP at the year ended December 31, 2014; (ii) overstated account and other receivables, other tax payable and income tax payable as of December 31, 2014.

The Company has an error on the accounting treatment regarding one of their construction projects from selling purpose to self-operation purpose in 2014. Therefore the income recognized for this project should be reversed and all the cost related to this project should recognize as a CIP at the year ended December 31, 2014.

The Company recognized RMB 77,841,000 in revenues of this project at the year ended December 31, 2014 in previous issue consolidated financial statement. Management considered this amount was overstated base on the changing of the project. As a result, the account receivable and other receivable related to this project have been overstated for RMB 10,000 and 13,596,000 respectively.

The Company recognized RMB 65,400,000 as cost of this project at the year ended December 31, 2014. Management considered this amount should be recognized as a CIP. As a result, the CIP would increase by RMB 65,400,000 as of December 31, 2014.

Moreover, the Company identified that the income tax was also overstated by RMB1,791,000 for the year ended December 31, 2014 base on the above amendment.

The impact of the restatement on the December 31, 2014 financial statements is reflected in the following tables:

CONSOLIDATED BALANCE SHEETS

		December, 2014
		As Previously Reported				As Restated
Total current assets			392,278				379,718
Accounts receivable, net (note 6)			156,618				156,608
Prepayments and other current assets (note 7)			190,409				177,859
Property, plant and equipment (Note 9)			96,524				161,924
Total Assets			500,938				553,778
Other payables and accrued expenses			49,203				113,438
Other taxes payable			10,681				8,902
Income tax payable			805				60
Total liabilities			335,627				397,338
Total stockholders’ equity			165,311				156,440
Total liabilities and stockholders’ equity			500,938				553,778

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

		For the year Ended December 31, 2014
		As Previously Reported				As Restated

Revenue			474,265				396,424
Cost of revenue			(380,955	)			(313,776	)
Income taxes			(2,559	)			(768	)
Net income			22,879				14,008

CONSOLIDATED STATEMENTS OF CASH FLOW

		For the year Ended December 31, 2014
		As Previously Reported				As Restated
Net income			22,879				14,008
Accounts receivable, net			(9,491	)			(9,481	)
Prepayments and other current assets			(33,249	)			(20,699	)
Other payables and accrued expenses			(27,160	)			37,075
Other tax payable			2,813				1,034
Income tax payable			296				(449	)
Net cash provided by/(used in) operating activities			34,928				100,328
Purchase of property, plant and equipment			(52,566	)			(117,966	)
Net cash used in investing activities			(51,223	)			(116,623	)