China Wood Inc. (GREY:CNWD)

We believe that our current levels of cash, cash flows from operations, and bank/related party borrowings, will be sufficient to meet our anticipated cash needs for at least the next 12 months.

Future Goals:

In the next 12 months, we will continue to acquire more forest tracts, targeting three or four years old Eucalyptus trees in the Northern Quandong area. The stability of the raw material supply and the price of the materials are the major factors in our business.

As more and more manufacturers tend to produce high margin products, we expect the demand for Eucalyptus will be intense in the coming months.

On the other hand we are increasing our machines and production capacity in our existing factory. More machines will be purchase in the Q4 of this financial year as well as the Q1 of 2011-2012 financial year.

We are also looking to acquire existing manufacturers in the nearby area in order to further expand our production capacity.

GeoTeam® Note: Investors should be aware that the company's liquidity statement in the Fiscal 2011 second quarter explicitly implied that a capital raise was necessary.

The increase in sales was primarily attributable to the catching up of the foreign markets as well as the continuous strong demand for the plywood products used in manufacturing wooden floors from local market in China.

Future Goals In the next 12 months, our goal is to develop the mobile phone related service operation in Shenzhen and expand the sales network in Guangzhou. In the event that expansion is successful, we plan on adding additional mobile phone application and software and market them in both Guangzhou and Shenzhen.

Following becoming a reporting company which we hope to achieve within the next 60 days, we plan on making a private placement of our securities to raise the funds for our initial expansion plans. The private placement should close within the next six (6) months and we have contacted a securities firm to assist us with the private placement. Assuming the private placement is successful, we plan on expanding in Shenzhen during the next six (6) months and starting the mobile phone application and software development thereafter. The development of mobile phone application is dependent upon sufficient financing and the identification of suitable mobile phone application suppliers and distributors.

Future Goals In the next 12 months, our goal is to develop the mobile phone related service operation in Shenzhen and expand the sales network in Guangzhou. In the event that expansion is successful, we plan on adding additional mobile phone application and software and market them in both Guangzhou and Shenzhen.

Following becoming a reporting company which we hope to achieve within the next 60 days, we plan on making a private placement of our securities to raise the funds for our initial expansion plans. The private placement should close within the next six (6) months and we have contacted a securities firm to assist us with the private placement. Assuming the private placement is successful, we plan on expanding in Shenzhen during the next six (6) months and starting the mobile phone application and software development thereafter. The development of mobile phone application is dependent upon sufficient financing and the identification of suitable mobile phone application suppliers and distributors.

On September 30, 2010 China Wood, Inc became a public company via a reverse merger transaction.

Immediately after the Share Exchange, we entered into a securities purchase agreement (with certain accredited investors for the issuance and sale in a private placement of investment units: 

• 1,336,244 preferred shares convertible into common stock at $4.00.
• 801,747 warrants convertible at $4.80.

Company Snapshot:

One of the largest plywood manufacturers in China.

Industry Snapshot:

• China has become one of the world’s largest plywood producers. China is both a domestic supplier and an exporter of plywood products.

• In 2008, the Chinese plywood industry was negatively impacted by the global financial crisis. The total export volume of Chinese plywood was 7.1842 million m3 in 2008, a year over year (YOY) decline of 17.57%.

• From January through August of 2009, the total export volume of Chinese plywood was 3.4568 million m3, a YOY decline of 34.11% (declining by 43.28% compared with that in the same period of 2007). The United States is the largest importer of Chinese plywood. In 2007, the export volume of Chinese plywood to the United States reached 1.9973 million m3, or 23% of the China’s total export volume. In 2009, the export volume of Chinese plywood fell by 43.28% (2.6 million m3) compared with that in the same period of 2007. The export volume to the US was only 723,200 m3 in 2009, dropping by 46.99% (641,000 m3) compared with that in the same period of 2007.

• Since 2009, the demand for Chinese plywood has been starting to recover. Chinese plywood sales have increased slightly, but prices show a downward trend. Though the Chinese plywood industry developed rapidly, it faced anti-dumping appeals from European and other import countries. With the expansion of Chinese infrastructure and development in Central and West China, there is considerable growth potential in the Chinese plywood market. (Source: Research report on Chinese Plywood Industry. 2009-2010. (www.articlesbase.com)

Post Merger Share Calculation: (Post 540.61745923707:1 reverse stock split).

•  793,537: Pre reverse merger outstanding shares
• 8,639,651: Newly issued shares of Common Stock
• 1,336,244: Shares from convertible preferred stock associated with private placement
•    801,747: Shares from warrants associated with private placement

GeoTeam® best effort calculation of total post reverse merger shares assuming full conversions:  11,571,179

Financial Snapshot:

• Our net sales for the three months ended June 30, 2010 was $13.8 million, an increase of $3.6 million or 35.5% from $10.2 million for the three months June 30, 2009.

• Net income for the three months ended June 30, 2010 was $3.4 million or 24.5% of net revenue, compared to $2.5 million or 24.4% of net revenue for the three months ended June 30, 2009, an increase of $.9 million or 26.5%.

In connection with a private placement transaction China Wood placed 1,336,244 post-reverse split shares of common stock into escrow for the benefit of the Investors if the make good target is not met:

• With respect to the fiscal year ending March 31, 2011, if we do not achieve $13.0 million in net income, then one-half of the Escrow Shares will be distributed to the Investors on a pro rata basis.

• With respect to the fiscal year ending March 31, 2012, if we do not achieve $20.0 million in net income, then the other one-half of the Escrow Shares will be distributed to the Investors on a pro rata basis.