Golden Elephant Glass (PINK:GOEG)

On May 6, 2008, our subsidiary Dollar Come Investment Limited entered into a loan agreement with Lin Tan to borrow $5 million at the annual interest rate of 8%. The agreement has a two-year term, and was unsecured and due no later than May 5, 2010. The loan proceeds were used for working capital. Under a July 30, 2008 agreement, $3,260,000 of this loan was paid with payment made to Fuxin Zhonglin Industry Limited and W.T. Construction Inc., both wholly owned by Ms. Tan. An amount of $1,108,343 was offset by advances to Lin Tan during 2009. An additional $146,500 of this loan was offset during the first quarter of 2010. As of July 2011, we owe Lin Tan $485,157 for the principal amount in default and $111,986 for interest incurred thereof. In the fourth quarter of 2010, Lin Tan made an additional loan to us in amount of $1,328,763. This loan bears no interest and will be due on demand. The loan proceeds were used for manufacturing facility constructions.

During the recent global economic crisis, becuase many of our customers operate in industry segments that have been hardest hit by the economic crisis, such as the automotive, construction and home furnishing industries, our performance was consequently suffered. From November 2008, we suspended operations (page20) of our float glass manufacturing operations in order to perform maintenance and system upgrades that eventually would be needed We opted to suspend operations and initiate the maintenance program at a time when pricing and demand for our products was low in order to minimize the adverse effect of suspending operations. Until the amelioration of the economic crisis, particularly in the industry segments in which our targeted customers operate, we expect to continue to experience significant challenges. In response to these challenges, we will continue to implement what we believe to be prudent, cost-saving measures in a judicious and timely fashion. We expect to complete our maintenance program and resume our operations in the second quarter of 2011. There is, however, no assurance that these activities will be successful.

As of March 31, 2010, we had cash and cash equivalents of $7,340. We incurred a net loss of $1,240,253 for the three months ended March 31, 2010 and had accumulated deficits of $12,802,022 as of March 31, 2010. In addition, we have been implementing a maintenance program for the float glass production lines since November 2008. During the maintenance period, all operations of the production lines and all manufacturing of the glass products are suspended. These matters raise substantial doubt about our ability to continue as a going concern.

Comments from third quarter 10Q:

Our financial and operating results for the quarter ended September 30, 2009 were, and are expected to be for the foreseeable future, suboptimal due to the worldwide global economic crisis. Since many of our customers operate in industry segments that have been hardest hit by the economic crisis, such as the automotive, construction and home furnishing industries, our performance has consequently suffered. Until the amelioration of the economic crisis, particularly in the industry segments in which our targeted customers operate, we expect to continue to experience significant challenges. In response to these challenges, we will continue to implement what we believe to be prudent, cost-saving measures in a judicious and timely fashion. Recently, we suspended operations of our float glass manufacturing operations in order to perform maintenance and system upgrades that eventually would be needed. We opted to suspend operations and initiate the maintenance program at a time when pricing and demand for our products was low in order to minimize the adverse effect of suspending operations. We intend to continue to take appropriate steps to minimize the adverse effects of the global economic crisis on our operations and financial performance. However, there is substantial doubt about our ability to continue as a going concern.

The GeoTeam is curious if the company's outlook has improved now that the industries it serves are in full recovery mode. We will track this story.

GOEG had been removed from the "On The Radar List". 

•  The GeoTeam® has not been able to locate any press releases via the major news wires since July of 2008.

• The GeoTeam® has not been able to locate a United States investor relations firm representing GOEG.  

• The GeoTeam® does not generally consider stocks that trade under $1.

Comments from the SEC form 424B3 may also warrant some attention, due to the sudden collapse of the global economy:

• Our business is seasonal and if we fall significantly short of our anticipated earnings the first and fourth quarters, it will significantly decrease the working capital available to us which may adversely affect our purchasing abilities. (Page 8)

• If there is a decline in economic activity in China and the other markets in which we operate or a decrease of sales of construction materials, automobiles or electrical household appliances, demand for our glass and glass products will decline and our revenue will decrease.(Page 7)

On a positive note the company's  SEC form 10Q , filed in November 2008,  did show growth in sales and EPS. 

Three months Fiscal 2008 vs 2007 Ended September

	2008 Third Quarter  Reported	2007 Third Quarter  Reported	Period Change
GAAP Revenue	$ 17.42 million	$ 13.15 million	32.47%
GAAP EPS	$ 0.13	$ 0.09	44.44%
Tax Rate	0% (negligible tax benefit)	17.29%	NA
Adjusting EPS for a 36% Tax Rate	$ 0.08	$ 0.07	14.29%

Nine months Fiscal 2008 vs 2007 Ended September

	2008 Nine Months Reported	2007 Nine Months Reported	Period Change
GAAP Revenue	$ 44.59 million	$ 39.54 million	12.77%
GAAP EPS	$ 0.32	$ 0.21	52.38%
Tax Rate	6%	16.95%	-64.60%
Adjusting EPS for a 36% Tax Rate	$ 0.22	$ 0.17	29.41%

However, the economy has changed dramatically since November.  The GeoTeam® will wait for the filing of the 2009 10K and reevaluate the situation.

Key financial targets with regards to a recent private placement transaction:

In connection with a recent private placement transaction, management entered into a 'make good agreement' and has placed 1.7 million of its shares into escrow to secure its obligations to meet specific Net Income targets for 2008and 2009. If the targets are not achieved, the shares  will be transferred to the investors involved in the private placement.

Net Income targets:

1.   $10 million in adjusted net income for 2008. (This would imply Earnings Per Share of .37) 

2.   $14 million in after-tax net income for 2009 (This would imply Earnings Per Share of .52) 


GeoTeam Note:   We are assuming that these targets assume the 2007  tax rate of 7.7% 

Net Income targets adjusted for a fully taxed situation:

1.    $7.2 millionin adjusted net income for 2008. (This would imply Earnings Per Share of.27) 

2.   $10 million in after-tax net income for 2009. (This would imply Earnings Per Share of .37) 

Source: Business Wire (July 25, 2008)

GOEG may qualify as a GeoBargain. The GeoTeam will provide an update when more information becomes available.

GEOG is an illiquid stock with a wide BId/Ask spread, as the Reverse Merger Shares are still not effective.