China Growth Stocks

[morokoy]

XNYH - once the matter of the building is settled, so should the loan. From 10Q -
The “receivable for disposal of building” arose from a contract under which the Company sold a building. The contract provided that the Buyer should pay RMB 5,950,000 on the day the Company signed the contract. The remaining balance should be settled in two installments: RMB 10,250,000 by June 30, 2009, and RMB 10,250,000 by December 31, 2009. At that time, the Company did not foresee any risks associated with future payment as the contract is legally executed. Based on review of the creditworthiness of the Buyer, management was confident that the Buyer would meet the payment terms. Hence no allowance was suggested at December 31, 2008.

By September 30 2009, the Buyer had paid the Company RMB 4,000,000 of the RMB 10,250,000 due on that date. The remaining RMB6,250,000 is outstanding, because the Buyer increased its investment in 2009 for their business development, which resulted in tightened cash flow. On June 30, 2009 the Company made a supplemental agreement with the Buyer, in which the Buyer has agreed to settle the entire balance before December 31, 2009. If it fails to meet the revised payment terms, it is mandatory that the Buyer pay the Company at an interest rate which is 20% higher than the general bank interest rate during the extended period.

The Company has not reserved against this receivable because the Company believes that it is unlikely the Buyer would fail to meet the payment terms, due to the penalties involved. By the end of 2009, if the Buyer does not meet the revised payment terms, the Company will reconsider the necessity for an allowance.