Company Background

6 Months Ended

Jun. 30, 2011

Organization, Consolidation and Presentation of Financial Statements [Abstract]

1.	Company Background

China Green Lighting Limited (the “Company”) (formerly named Transit Management Holding Corp. (“TRMH”)) is incorporated in the State of Colorado. TRMH was a public shell company with no operations. On May 13 2011, (the “Closing Date”), the Company closed a voluntary share exchange transaction (the “Share Exchange”) with China Green Lighting Limited (“CGL”), a company organized under the laws of the British Virgin Islands. The Share Exchange Agreement dated May 13, 2011 (the “Exchange Agreement”) was signed by TRMH, a majority shareholder of TRMH, CGL and the shareholders of CGL. Pursuant to the Exchange Agreement, (i) TRMH acquired 100% of the issued and outstanding capital stock of CGL, in exchange of 39,200 shares of Series “A” Convertible Preferred Stock; and (ii) the former principal stockholders of TRMH surrendered 21,923,000 shares of the Company’s common stock then outstanding in exchange for 700 shares of Series “A” Convertible Preferred Stock, so that immediately prior to the Share Exchange, TRMH had 302,200 shares of common stock issued and outstanding. Each share of Series “A” Convertible Preferred Stock was convertible into 1,000 shares of common stock, $0.001 par value. The Share Exchange resulted in a change in control of TRMH.

On July 8, 2011, the Company’s corporate name was changed to “China Green Lighting Limited”.

The Share Exchange has been accounted for as a reverse acquisition. These transactions are considered to be capital transactions in substance, rather than business combinations. Accordingly, the Share Exchange has been accounted for as a recapitalization and, for accounting purposes, CGL is deemed to be the accounting acquirer (legal acquiree) and TRMH to be the accounting acquiree (legal acquirer). The financial statements before the Share Exchange are those of CGL with results of TRMH being consolidated from the date of the Share Exchange. The equity section and earnings per share of the Company have been retroactively restated to reflect the reverse acquisition and no goodwill has been recorded. Costs incurred for the reverse acquisition amounted to $685,162 were paid by an existing stockholder of the Company. They were expensed and charged to additional paid-in capital as they were incurred on behalf of the Company.

TRMH’s historical accumulated deficit for the period prior to May 13, 2011, in the amount of $63,111, was eliminated against additional paid in capital, and the accompanying consolidated financial statements present the previously issued shares of TRMH’s common stock as having been issued pursuant to the Share Exchange Agreement on May 13, 2011. The shares of common stock of the Company issued to the CGL shareholders in the reverse merger are presented as having been outstanding since the original issuance of the shares.

CGL was incorporated on February 25, 2011 under the laws of the British Virginia Islands as a limited liability company. CGL is a holding company. CGL together with subsidiaries as discussed below is engaged in manufacturing fluorescent lamps for sales in America and Asia markets.

First Green Lighting Limited (“FGL”), wholly-owned by CGL was incorporated on March 9, 2011 under the laws of Hong Kong as limited liability company. FGL was established to set up a wholly-owned subsidiary in China: Jiangshan Green world Photoelectricity Consulting Co., Ltd. (“JGP”). JGP was established on May 4, 2011.

Zhejiang Joinan Lighting Co., Ltd. (“ZJL” or “VIE”) was incorporated on December 6, 2006 under the laws of the People’s Republic of China (PRC) as a limited liability company. ZJL has been engaged in the business of manufacturing and sales of fluorescent lamps since it started its operation in September, 2007.

As discussed below, JGP entered into various agreements with ZJL and/or its shareholders to allow JGP’s effective control over ZJL.

Exclusive Purchase Option Agreement: JGP has the option to purchase all of ZJL’s assets and ownership at any time at nominal value.

Consigned Management Agreement and Exclusive Technology Service Agreement , JGP is appointed as ZJL’s exclusive service provider to provide business support and related consulting services. JGP is to be paid consulting and service fee equal to 100% of the net profits of ZJL.

Loan Agreement and Equity Pledge Agreement , ZJL’s shareholders agreed to pledge their legal interest to JGP as a security for the obligations of ZJL under the exclusive technology services agreement and loan agreement.

Through the above contractual agreements, the Company maintains substantial control over the ZJL’s daily operations and financial affairs, election of their senior executives and all matters requiring shareholder approval. As the primary beneficiary of ZJL, the Company is entitled to consolidate the financial results of ZJL in its own consolidated financial statements under Financial Accounting Standards Board Accounting Standard Codification (ASC) Topic 810 and related subtopics related to the consolidation of variable interest entities (collectively, “ASC Topic 810”).

China Green Lighting Ltd 10-Q/A