[X]
|
Quarterly
Report Under Section 13 or 15(d) of The Securities Exchange Act of
1934
for the Quarterly Period Ended June 30,
2007
|
[
]
|
Transition
Report Under Section 13 or 15(d) of The Securities Exchange Act of
1934
for the Transition Period from _______ to
_______
|
Delaware
|
02-0563302
|
(State
or Other Jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
|
Yes
[x]
|
|
|
No
[ ]
|
|
|
|
|
PART
I. FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
ITEM
1. FINANCIAL
STATEMENTS
|
4
|
|
|
ITEM
2. MANAGEMENT'S
DISCUSSION AND
ANALYSIS OR PLAN OF OPERATION
|
19
|
|
|
ITEM
3 CONTROLS AND
PROCEDURES
|
24
|
|
|
PART
II. OTHER INFORMATION
|
|
|
|
ITEM
1. LEGAL PROCEEDINGS
|
25
|
|
|
ITEM
2. CHANGES IN
SECURITIES AND USE OF
PROCEEDS
|
25
|
|
|
ITEM
5. OTHER
INFORMATION
|
25
|
|
|
ITEM
6. EXHIBITS AND
REPORTS ON FORM
8-K
|
25
|
|
|
SIGNATURES
|
26
|
|
|
INDEX
TO
EXHIBITS
|
27
|
Page
|
||||
Condensed
Consolidated Balance Sheets as of June 30, 2007 and December 31,
2006
|
5
|
|||
Condensed
Consolidated Statements of Operations And Comprehensive Income
for the
Three and
Six
Months Ended June 30, 2007 and 2006
|
6
|
|||
Condensed
Consolidated Statements of Cash Flows for the Six Months Ended
June 30,
2007 and 2006
|
7
|
|||
Condensed
Consolidated Statements of Stockholders’ Equity for the Six Months Ended
June 30, 2007
|
8
|
|||
Notes
to Condensed Consolidated Financial Statements
|
9-18
|
NF
ENERGY SAVING CORPORATION OF AMERICA
(FORMERLY
DIAGNOSTIC CORPORATION OF AMERICA)
CONDENSED
CONSOLIDATED BALANCE SHEETS
AS
OF JUNE 30, 2007 AND DECEMBER 31, 2006
(Currency
expressed in United States Dollars (“US$”), except for number of
shares)
|
||||||||
June
30, 2007
|
December
31, 2006
|
|||||||
(Unaudited)
|
(audited)
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ |
1,940,258
|
$ |
796,944
|
||||
Accounts
receivable, trade
|
1,686,869
|
1,398,031
|
||||||
Inventories
|
1,619,523
|
1,812,184
|
||||||
Prepayments
and deposits
|
1,418,926
|
276,864
|
||||||
Total
current assets
|
6,665,576
|
4,284,023
|
||||||
Plant
and equipment, net
|
2,113,138
|
2,195,512
|
||||||
TOTAL
ASSETS
|
$ |
8,778,714
|
$ |
6,479,535
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable, trade
|
$ |
727,217
|
$ |
676,898
|
||||
Customer
deposits
|
81,381
|
17,661
|
||||||
Other
payables and accrued liabilities
|
368,429
|
153,256
|
||||||
Income
tax payable
|
-
|
378,069
|
||||||
Value
added tax payable
|
165,106
|
25,871
|
||||||
Total
current liabilities
|
1,342,133
|
1,251,755
|
||||||
Stockholders’
equity:
|
||||||||
Common
stock, $0.001 par value; 50,000,000 shares authorized;
Issued
and outstanding: 31,527,328 and 30,527,328 shares as of June 30,
2007 and
December 31, 2006
|
31,527
|
30,527
|
||||||
To
be issued: 1,700,000 shares as of June 30, 2007
|
870,000
|
-
|
||||||
Additional
paid-in capital
|
4,844,932
|
4,335,932
|
||||||
Statutory
reserve
|
115,139
|
115,139
|
||||||
Accumulated
other comprehensive income
|
142,212
|
70,360
|
||||||
Retained
earnings
|
1,432,771
|
675,822
|
||||||
Total
stockholders’ equity
|
7,436,581
|
5,227,780
|
||||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$ |
8,778,714
|
$ |
6,479,535
|
NF
ENERGY SAVING CORPORATION OF AMERICA
(FORMERLY
DIAGNOSTIC CORPORATION OF AMERICA)
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
AND
COMPREHENSIVE INCOME
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2007 AND
2006
(Currency
expressed in United States Dollars (“US$”), except for number of
shares)
(Unaudited)
|
||||||||||||||||
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
OPERATING
REVENUE:
|
||||||||||||||||
Products
|
$ |
3,013,085
|
$ |
1,802,659
|
$ |
3,945,336
|
$ |
1,827,619
|
||||||||
Service
|
1,015,812
|
216,331
|
1,086,047
|
216,331
|
||||||||||||
Total
operating revenues
|
4,028,897
|
2,018,990
|
5,031,383
|
2,043,950
|
||||||||||||
COST
OF REVENUES:
|
||||||||||||||||
Cost
of products
|
2,266,486
|
1,314,097
|
3,007,717
|
1,322,349
|
||||||||||||
Cost
of service
|
258,510
|
101,513
|
294,734
|
101,513
|
||||||||||||
Total
cost of revenues
|
2,524,996
|
1,415,610
|
3,302,451
|
1,423,862
|
||||||||||||
GROSS
PROFIT
|
1,503,901
|
603,380
|
1,728,932
|
620,088
|
||||||||||||
OPERATING
EXPENSES:
|
||||||||||||||||
Sales
and marketing
|
14,709
|
4,566
|
14,709
|
4,566
|
||||||||||||
Stock-based
compensation
|
255,000
|
-
|
510,000
|
-
|
||||||||||||
Research
and development
|
329,906
|
-
|
329,906
|
-
|
||||||||||||
General
and administrative
|
71,759
|
77,551
|
129,229
|
82,225
|
||||||||||||
Total
operating expenses
|
671,374
|
82,117
|
983,844
|
86,791
|
||||||||||||
INCOME
FROM OPERATIONS
|
832,527
|
521,263
|
745,088
|
533,297
|
||||||||||||
OTHER
INCOME (EXPENSES):
|
||||||||||||||||
Other
income
|
4,867
|
1,097
|
11,519
|
1,097
|
||||||||||||
Interest
income
|
342
|
170
|
342
|
280
|
||||||||||||
Total
other income
|
5,209
|
1,267
|
11,861
|
1,377
|
||||||||||||
INCOME
BEFORE INCOME TAXES
|
837,736
|
522,530
|
756,949
|
534,674
|
||||||||||||
Income
tax expenses
|
-
|
(176,442 | ) |
-
|
(176,442 | ) | ||||||||||
NET
INCOME
|
$ |
837,736
|
$ |
346,088
|
$ |
756,949
|
$ |
358,232
|
||||||||
Other
comprehensive income:
|
||||||||||||||||
-
Foreign currency translation gain
|
35,254
|
7,831
|
71,852
|
7,850
|
||||||||||||
COMPREHENSIVE
INCOME
|
$ |
872,990
|
$ |
353,919
|
$ |
828,801
|
$ |
366,082
|
||||||||
Net
income per share – Basic and diluted
|
$ |
0.03
|
$ |
0.09
|
$ |
0.02
|
$ |
0.09
|
||||||||
Weighted
average number of shares outstanding during the period – Basic and
diluted
|
31,527,328
|
3,877,328
|
31,388,439
|
3,877,328
|
NF
ENERGY SAVING CORPORATION OF AMERICA
(FORMERLY
DIAGNOSTIC CORPORATION OF AMERICA)
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR
THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
|
||||||||
Six
Months Ended June 30,
|
||||||||
2007
|
2006
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ |
756,949
|
$ |
358,232
|
||||
Adjustments
to reconcile net income to net cash used in operating
activities:
|
||||||||
Depreciation
|
113,254
|
73,578
|
||||||
Gain
on disposal of plant and equipment
|
(10,533 | ) |
-
|
|||||
Stock-based
compensation
|
510,000
|
-
|
||||||
Change
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(288,838 | ) | (1,319,212 | ) | ||||
Inventories
|
192,661
|
(930,503 | ) | |||||
Prepayments
and deposits
|
(1,142,062 | ) | (250,083 | ) | ||||
Accounts
payable
|
50,319
|
110,243
|
||||||
Customer
deposits
|
63,720
|
-
|
||||||
Other
payables and accrued liabilities
|
215,173
|
74,968
|
||||||
Income
tax payable
|
(378,069 | ) |
176,442
|
|||||
Value
added tax payable
|
139,235
|
(50,115 | ) | |||||
Net
cash provided by (used in) operating activities
|
221,809
|
(1,756,450 | ) | |||||
Cash
flows from investing activities:
|
||||||||
Purchase
of plant and equipment
|
(74,170 | ) | (5,274 | ) | ||||
Proceeds
from disposal of plant and equipment
|
53,823
|
-
|
||||||
Net
cash used in investing activities
|
(20,347 | ) | (5,274 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from private placement
|
870,000
|
-
|
||||||
Capital
contribution from stockholders
|
-
|
1,996,529
|
||||||
Net
cash provided by financing activities
|
870,000
|
1,996,529
|
||||||
Foreign
currency translation adjustment
|
71,852
|
7,850
|
||||||
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
1,143,314
|
242,655
|
||||||
CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
796,944
|
-
|
||||||
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
$ |
1,940,258
|
$ |
242,655
|
||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash
paid for income taxes
|
$ |
378,069
|
$ |
-
|
||||
Cash
paid for interest expenses
|
$ |
-
|
$ |
-
|
||||
SUPPLEMENTAL
DISCLOSURE OF NON-CASH TRANSACTIONS:
|
||||||||
Plant
and equipment in exchange for loan due to owners
|
$ |
-
|
$ |
2,369,277
|
NF
ENERGY SAVING CORPORATION OF AMERICA
(FORMERLY
DIAGNOSTIC CORPORATION OF AMERICA)
CONDENSED
CONSOLDIATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR
THE SIX MONTHS ENDED JUNE 30, 2007
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
|
||||||||||||||||||||||||||||||||||||
Common
stock
|
Common
stock to be issued
|
|||||||||||||||||||||||||||||||||||
No.
of share
|
Amount
|
No.
of share
|
Amount
|
Additional
paid-in
capital
|
|
Accumulated
other
comprehensive
income
|
Statutory
reserve
|
Retained
earnings
|
Total
Equity
|
|||||||||||||||||||||||||||
Balance
as of January 1, 2007
|
30,527,328
|
$ |
30,527
|
-
|
-
|
$ |
4,335,932
|
$ |
70,360
|
$ |
115,139
|
$ |
675,822
|
$ |
5,227,780
|
|||||||||||||||||||||
Shares
issued for service rendered
|
1,000,000
|
1,000
|
-
|
-
|
509,000
|
-
|
-
|
-
|
510,000
|
|||||||||||||||||||||||||||
Shares
issued for private placement
|
-
|
-
|
1,700,000
|
870,000
|
-
|
-
|
-
|
-
|
870,000
|
|||||||||||||||||||||||||||
Foreign
currency transactions adjustment
|
-
|
-
|
-
|
-
|
-
|
71,852
|
-
|
-
|
71,852
|
|||||||||||||||||||||||||||
Net
income for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
756,949
|
756,949
|
|||||||||||||||||||||||||||
Balance
as of June 30, 2007
|
31,527,328
|
$ |
31,527
|
1,700,000
|
$ |
870,000
|
$ |
4,844,932
|
$ |
142,212
|
$ |
115,139
|
$ |
1,432,771
|
$ |
7,436,581
|
l
|
Basis
of presentation
|
l
|
Use
of estimates
|
l
|
Basis
of consolidation
|
l
|
Accounts
receivable
|
l
|
Inventories
|
l
|
Property,
plant and equipment, net
|
Depreciable
life
|
Residual
value
|
||
Plant
and machinery
|
3
–
20 years
|
5%
|
|
Furniture,
fixture and equipment
|
5
–
8 years
|
5%
|
l
|
Impairment
of long-lived assets
|
l
|
Revenue
recognition
|
(c)
|
Interest
income
|
l
|
Cost
of revenues
|
l
|
Stock-based
compensation
|
l
|
Income
taxes
|
l
|
Comprehensive
income
|
l
|
Product
warranty
|
l
|
Net
income per share
|
l
|
Foreign
currencies translation
|
l
|
Segment
reporting
|
l
|
Fair
value of financial instruments
|
l
|
Recently
issued accounting standards
|
June
30, 2007
|
December
31, 2006
|
|||||||
(audited)
|
||||||||
Raw
materials
|
$ |
1,167,582
|
$ |
269,759
|
||||
Work-in-process
|
400,915
|
701,206
|
||||||
Finished
goods
|
51,026
|
841,219
|
||||||
$ |
1,619,523
|
$ |
1,812,184
|
June
30, 2007
|
December
31, 2006
|
|||||||
(audited)
|
||||||||
Deposits
to equipment suppliers
|
$ |
1,289,126
|
$ |
266,183
|
||||
Prepayment
for equipment purchase
|
122,722
|
-
|
||||||
Advances
to staff
|
7,078
|
10,681
|
||||||
$ |
1,418,926
|
$ |
276,864
|
June
30, 2007
|
December
31, 2006
|
|||||||
(audited)
|
||||||||
Plant
and machinery
|
$ |
2,303,065
|
$ |
2,351,240
|
||||
Furniture,
fixture and equipment
|
106,469
|
32,885
|
||||||
2,409,534
|
2,384,125
|
|||||||
Less:
accumulated depreciation
|
(296,396 | ) | (188,613 | ) | ||||
Plant
and equipment, net
|
$ |
2,113,138
|
$ |
2,195,512
|
June
30, 2007
|
December
31, 2006
|
|||||||
(audited)
|
||||||||
Rental
payable
|
$ |
16,480
|
$ |
35,200
|
||||
Government
levies payable
|
43,485
|
7,295
|
||||||
Welfare
payable
|
68,124
|
59,495
|
||||||
Accrued
expenses
|
240,340
|
51,266
|
||||||
$ |
368,429
|
$ |
153,256
|
Valves
manufacturing service
|
Energy-saving
related service
|
Total
|
||||||||||
Operating
revenues
|
$ |
3,155,446
|
$ |
873,451
|
$ |
4,028,897
|
||||||
Cost
of revenues
|
2,335,874
|
189,122
|
2,524,996
|
|||||||||
Gross
profit
|
819,572
|
684,329
|
1,503,901
|
|||||||||
Depreciation
|
44,286
|
12,259
|
56,545
|
|||||||||
Net
income
|
$ |
351,261
|
$ |
486,475
|
$ |
837,736
|
Valves
manufacturing service
|
Energy-saving
related service
|
Total
|
||||||||||
Operating
revenues
|
$ |
4,157,932
|
$ |
873,451
|
$ |
5,031,383
|
||||||
Cost
of revenues
|
3,113,329
|
189,122
|
3,302,451
|
|||||||||
Gross
profit
|
1,044,603
|
684,329
|
1,728,932
|
|||||||||
Depreciation
|
100,995
|
12,259
|
113,254
|
|||||||||
Net
income
|
$ |
270,474
|
$ |
486,475
|
$ |
756,949
|
Customers
|
Revenues
|
Percentage
of
revenues
|
Accounts
receivable
|
|||||||||||
Customer
A
|
$ |
939,455
|
23 | % | $ |
$189,908
|
||||||||
Customer
B
|
559,953
|
14 | % |
-
|
||||||||||
Customer
C
|
479,174
|
12 | % |
231,081
|
||||||||||
Customer
D
|
392,490
|
10 | % |
-
|
||||||||||
Total:
|
$ |
2,371,072
|
59 | % |
Total:
|
$ |
$420,989
|
|||||||
Vendors
|
Purchases
|
Percentage
of
purchases
|
Accounts
payable
|
|||||||||||
Vendor
A
|
$ |
1,321,818
|
52 | % | $ |
$78,755
|
Customers
|
Revenues
|
Percentage
of
revenues
|
Accounts
Receivable
|
|||||||||||
Customer
A
|
$ |
1,696,433
|
34 | % | $ |
$189,908
|
||||||||
Customer
B
|
549,991
|
11 | % |
-
|
||||||||||
Customer
E
|
637,234
|
13 | % |
504,136
|
||||||||||
Total:
|
$ |
2,883,658
|
58 | % |
Total:
|
$ |
$694,044
|
|||||||
Vendors
|
Purchases
|
Percentage
of
purchases
|
Accounts
Payable
|
|||||||||||
Vendor
A
|
$ |
1,587,815
|
48 | % | $ |
$78,755
|
Depreciable
life
|
Residual
value
|
||
Plant
and machinery
|
3
–
20 years
|
5%
|
|
Furniture,
fixture and equipment
|
5
–
8 years
|
5%
|
-
|
Advise
on matters relating to our structure, management, operation and
subsidiaries;
|
-
|
The
preparation and implementation of a new business plan and a future
growth
strategy;
|
-
|
Assistance
with preparation of applicable filings with the SEC;
|
-
|
Assistance
with preparation of financial statements;
|
-
|
EDGAR
services
|
-
|
Assistance
with preparation of applicable filings with the SEC;
|
-
|
Assistance
with preparation of financial statements;
|
-
|
EDGAR
services
|
*
|
Curtail
new product launches
|
*
|
Limit
our future marketing efforts to areas that we believe would be the
most
profitable.
|
(1)
|
Exhibits:
Exhibits required to be attached by Item 601 of Regulation S-B are
listed
in the Index to Exhibits Beginning on page 8 of this Form 10-QSB,
which is
incorporated herein by reference.
|
(1)
|
On
August 8, 2007, we filed an 8-K report under Item 3.02, Unregistered
Sales of Equity Securities reporting stock issuance for cash
investment.
|
|
NF
Energy Saving Corporation of America
|
|
|
|
|
Date:
August 15, 2007
|
By:
|
/s/ Li,
Gang
|
|
Li,
Gang
President
and Chief Executive Officer
|
Exhibit
No.
|
Description
|
31.1
|
|
31.2
|
|
|
|
32.1
|
|
32.2
|