[X]
|
Quarterly
Report Under Section 13 or 15(d) of The Securities Exchange Act of
1934
for the Quarterly Period Ended March 31,
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
|
17
|
|
|
ITEM
3 CONTROLS
AND PROCEDURES
|
21
|
|
|
PART
II. OTHER INFORMATION
|
|
|
|
ITEM
1. LEGAL
PROCEEDINGS
|
22
|
|
|
ITEM
2. CHANGES
IN SECURITIES AND USE OF PROCEEDS
|
22
|
|
|
ITEM
5. OTHER
INFORMATION
|
22
|
|
|
ITEM
6. EXHIBITS
AND REPORTS ON FORM 8-K
|
22
|
|
|
SIGNATURES
|
23
|
|
|
INDEX
TO EXHIBITS
|
24
|
Page
|
||||
Condensed
Consolidated Balance
Sheet as of March 31, 2007
|
5
|
|||
Condensed
Consolidated Statement
of
Operations And Comprehensive Income for the Three Months Ended
March 31,
2007 and 2006
|
6
|
|||
Condensed
Consolidated Statement
of Cash Flows for the Three Months Ended March 31, 2007 and 2006
|
7
|
|||
Notes
to Condensed Consolidated Financial Statements
|
8-16
|
NF
ENERGY SAVING CORPORATION OF AMERICA
(FORMERLY
DIAGNOSTIC CORPORATION OF AMERICA)
CONDENSED
CONSOLIDATED BALANCE SHEET
AS
OF MARCH 31, 2007
(Currency
expressed in United States Dollars (“US$”), except for number of
shares)
(Unaudited)
|
|||||||
2006
|
|
March
31, 2007
|
|||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
796,944
|
$
|
36,006
|
|||
Accounts
receivable, trade
|
1,398,031
|
1,990,488
|
|||||
Inventories
|
1,812,184
|
2,187,051
|
|||||
Prepayments
and deposits
|
276,864
|
232,717
|
|||||
Total
current assets
|
4,284,023
|
4,446,262
|
|||||
Plant
and equipment, net
|
2,195,512
|
2,128,473
|
|||||
TOTAL
ASSETS
|
$
|
6,479,535
|
$
|
6,574,735
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
676,898
|
$
|
841,756
|
|||
Customer
deposits
|
17,661
|
34,510
|
|||||
Other
payables and accrued liabilities
|
153,256
|
225,512
|
|||||
Value
added tax payable
|
25,871
|
34,366
|
|||||
TOTAL
LIABILITIES
|
1,251,755
|
1,136,144
|
|||||
Stockholders’
equity:
|
|||||||
Common
stock, $0.001 par value; 50,000,000 shares authorized; 31,527,328
shares
issued and outstanding
|
30,527
|
31,527
|
|||||
Additional
paid-in capital
|
4,335,932
|
4,844,932
|
|||||
Deferred
compensation
|
(255,000
|
)
|
|||||
Statutory
reserve
|
115,139
|
115,139
|
|||||
Accumulated
other comprehensive income
|
70,360
|
106,958
|
|||||
Retained
earnings
|
675,822
|
595,035
|
|||||
Total
stockholders’ equity
|
5,227,780
|
5,438,591
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
6,479,535
|
$
|
6,574,735
|
NF
ENERGY SAVING CORPORATION OF AMERICA
(FORMERLY
DIAGNOSTIC CORPORATION OF AMERICA)
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
AND
COMPREHENSIVE INCOME
FOR
THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
(Currency
expressed in United States Dollars (“US$”), except for number of
shares)
(Unaudited)
|
|||||||
Three
Months Ended March 31,
|
|||||||
2007
|
2006
|
||||||
OPERATING
REVENUES:
|
|||||||
Products
|
$
|
932,251
|
$
|
24,960
|
|||
Service
|
70,235
|
-
|
|||||
Total
operating revenues
|
1,002,486
|
24,960
|
|||||
COST
OF REVENUES:
|
|||||||
Cost
of products
|
741,231
|
8,252
|
|||||
Cost
of service
|
36,224
|
-
|
|||||
Total
cost of revenues
|
777,455
|
8,252
|
|||||
GROSS
PROFIT
|
225,031
|
16,708
|
|||||
OPERATING
EXPENSES:
|
|||||||
Stock-based
compensation
|
255,000
|
-
|
|||||
Consulting
and professional fees
|
5,900
|
-
|
|||||
General
and administrative
|
51,570
|
4,674
|
|||||
Total
operating expenses
|
312,470
|
4,674
|
|||||
(LOSS)
INCOME FROM OPERATION
|
(87,439
|
)
|
12,034
|
||||
OTHER
INCOME:
|
|||||||
Other
income
|
6,652
|
-
|
|||||
Interest
income
|
-
|
110
|
|||||
Total
other income
|
6,652
|
110
|
|||||
(LOSS)
INCOME BEFORE INCOME TAXES
|
(80,787
|
)
|
12,144
|
||||
Income
tax expense
|
-
|
-
|
|||||
NET
(LOSS) INCOME
|
$
|
(80,787
|
)
|
$
|
12,144
|
||
Other
comprehensive income:
|
|||||||
-
Foreign currency translation gain
|
36,598
|
19
|
|||||
COMPREHENSIVE
(LOSS) INCOME
|
$
|
(44,189
|
)
|
$
|
12,163
|
||
Net
(loss) income per share - Basic and diluted
|
$
|
(0.00
|
)
|
$
|
0.00
|
||
Weighted
average number of shares outstanding during the period - Basic
and
diluted
|
31,249,550
|
3,877,328
|
NF
ENERGY SAVING CORPORATION OF AMERICA
(FORMERLY
DIAGNOSTIC CORPORATION OF AMERICA)
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR
THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
(Currency
expressed in United States Dollars (“US$”))
(Unaudited)
|
|||||||
Three
Months Ended March 31,
|
|||||||
2007
|
2006
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
(loss) income
|
$
|
(80,787
|
)
|
$
|
12,144
|
||
Adjustments
to reconcile net (loss) income to net cash used in operating
activities:
|
|||||||
Depreciation
|
56,709
|
17,976
|
|||||
Gain
on disposal of plant and equipment
|
(6,203
|
)
|
-
|
||||
Stock-based
compensation
|
255,000
|
-
|
|||||
Change
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
(592,457
|
)
|
(26,931
|
)
|
|||
Inventories
|
(374,867
|
)
|
(557,119
|
)
|
|||
Prepayments
and deposits
|
44,147
|
(1,996,485
|
)
|
||||
Accounts
payable
|
164,858
|
479,565
|
|||||
Customer
deposits
|
16,849
|
546
|
|||||
Other
payables and accrued liabilities
|
72,255
|
655,182
|
|||||
Income
tax payable
|
(378,068
|
)
|
-
|
||||
Value
added tax payable
|
8,495
|
-
|
|||||
Net
cash used in operating activities
|
(814,069
|
)
|
(1,415,122
|
)
|
|||
Cash
flows from investing activities:
|
|||||||
Purchase
of plant and equipment
|
-
|
(5,995
|
)
|
||||
Proceeds
from disposal of plant and equipment
|
16,533
|
-
|
|||||
Net
cash provided by (used in) investing activities
|
16,533
|
(5,995
|
)
|
||||
Cash
flows from financing activities:
|
|||||||
Proceeds
from and additions to shareholder loans
|
-
|
1,872,159
|
|||||
Capital
contribution to paid-in capital
|
-
|
124,370
|
|||||
Net
cash provided by financing activities
|
-
|
1,996,529
|
|||||
Foreign
currency translation adjustment
|
36,598
|
19
|
|||||
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
(760,938
|
)
|
575,431
|
||||
CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
796,944
|
-
|
|||||
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
36,006
|
$
|
575,431
|
|||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|||||||
Cash
paid for income taxes
|
$
|
390,005
|
$
|
-
|
|||
Cash
paid for interest expenses
|
$
|
-
|
$
|
-
|
|||
SUPPLEMENTAL
DISCLOSURE OF NON-CASH TRANSACTIONS:
|
|||||||
Plant
and equipment in exchange for loan due to owners
|
$
|
-
|
$
|
2,237,001
|
l |
Basis
of presentation
|
l |
Use
of estimates
|
l |
Basis
of consolidation
|
l |
Accounts
receivable
|
l |
Inventories
|
l |
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
|
l |
Cost
of revenues
|
l |
Stock-based
compensation
|
l |
Income
taxes
|
l |
Comprehensive
(loss) income
|
l |
Product
warranty
|
l |
Net
(loss) income per share
|
l |
Foreign
currencies translation
|
l |
Segment
reporting
|
l |
Fair
value of financial instruments
|
l |
Recently
issued accounting standards
|
March
31, 2007
|
||||
Raw
materials
|
$
|
293,332
|
||
Work-in-progress
|
791,186
|
|||
Finished
goods
|
1,102,533
|
|||
$
|
2,187,051
|
March
31, 2007
|
||||
Supplier
deposits
|
$
|
210,966
|
||
Advances
to staff
|
21,751
|
|||
$
|
232,717
|
|
||||
March
31, 2007
|
||||
Plant
and machinery
|
$
|
2,339,811
|
||
Furniture,
fixture and equipment
|
32,885
|
|||
2,372,696
|
||||
Less:
accumulated depreciation
|
(244,223
|
)
|
||
Plant
and equipment, net
|
$
|
2,128,473
|
March
31, 2007
|
||||
Rental
payable
|
$
|
45,472
|
||
Government
levies payable
|
5,452
|
|||
Construction
payable
|
4,294
|
|||
Welfare
payable
|
104,727
|
|||
Accrued
expenses
|
65,567
|
|||
$
|
225,512
|
Production
segment
|
|
Service
segment
|
|
Total
|
||||||
Operating
revenues
|
$
|
932,251
|
$
|
70,235
|
$
|
1,002,486
|
||||
Cost
of revenues
|
741,231
|
36,224
|
777,455
|
|||||||
Gross
profit
|
191,020
|
34,011
|
225,031
|
|||||||
Depreciation
|
53,306
|
3,403
|
56,709
|
|||||||
Net
loss
|
(71,900
|
)
|
(8,887
|
)
|
(80,787
|
)
|
||||
Total
assets
|
6,180,251
|
394,484
|
6,574,735
|
Customers
|
Revenues
|
Percentage
of
revenues
|
Accounts
receivable
|
||||||||||
Customer
A
|
$
|
782,230
|
78
|
%
|
$
|
865,396
|
|||||||
Customer
B
|
161,730
|
16
|
%
|
821,258
|
|||||||||
Total:
|
$
|
943,960
|
94
|
%
|
Total:
|
$
|
1,686,654
|
||||||
Vendors
|
Purchases
|
Percentage
of
purchases
|
Accounts
payable
|
||||||||||
Vendor
A
|
$
|
269,064
|
35
|
%
|
$
|
72,413
|
|||||||
Vendor
B
|
155,083
|
20
|
%
|
-
|
|||||||||
$
|
424,147
|
55
|
%
|
$
|
72,413
|
Customers
|
Revenues
|
Percentage
of
revenues
|
Accounts
receivable
|
|||||||
Customer
A
|
$
|
24,960
|
100
|
%
|
$
|
24,960
|
||||
Vendors
|
Purchases
|
|
|
Percentage
of
purchases
|
|
|
Accounts
payable
|
|||
Vendor
A
|
$
|
4,951
|
60
|
%
|
$
|
4,951
|
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
|
-
|
Advise
on procedures, regulations, and compliance of a public listed
company;
|
*
|
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
January 16, 2007, we filed an 8-K report under Item 4.01, Changes
in
Registrant’s Certifying Accountant reporting the changes in our certifying
accountant.
|
(2)
|
On
January 18, 2007, we filed an 8-K report under Item 3.02,
Unregistered Sales of Equity Securities reporting stock issuance
for
convertible loan.
|
(3)
|
On
January 25, 2007 and February 5, 2007, we filed two amendments to
an 8-K
report, dated January 16, 2007, regarding the changes in our certifying
accountant.
|
|
NF
Energy Saving Corporation of America
|
|
|
|
|
Date:
May 15, 2007
|
By:
|
/s/ Li,
Gang
|
|
Li,
Gang
President
and Chief Executive Officer
|
Exhibit
No.
|
Description
|
31.1
|
|
31.2
|
|
|
|
32.1
|
|
32.2
|