UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
☒ ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2014
or
☐ TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from _____________________ to ___________________________
Commission
file number 0-20532
CHINA
BIO-ENERGY CORP.
(Exact
name of registrant as specified in its charter)
Delaware |
|
74-2559866 |
(State
or other jurisdiction of
Incorporation or organization) |
|
(I.R.S.
Employer
Identification No.) |
40
Wall street ,28th Floor ,New York |
|
10005 |
(Address
of principal executive offices) |
|
(Zip
Code) |
Registrant’s
telephone number, including area code: +86596 2967018
Securities
registered under Section 12(b) of the Exchange Act:
None
Securities
registered under Section 12(g) of the Exchange Act:
Common
Stock, 0.001 per share
(Title
of Class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Note -
Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange
Act from their obligations under those Sections.
Indicate
by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐ No ☒
Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405 of this chapter) is
not contained herein, and will not be contained, to the best registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendments to this From 10-K. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer ☐ |
|
Accelerated
filer ☐ |
|
Non-accelerated
filer ☐ |
|
Smaller
reporting company ☒ |
|
(Do
not check if a smaller reporting company) |
|
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☒ No ☐
State
the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price
at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of
the registrant’s most recently completed second fiscal quarter was $1.83 million as of June 30, 2014.
As of
August 27, 2015, the registrant had 98,405,005 shares of common stock outstanding.
TABLE
OF CONTENTS
|
Page |
|
|
PART
I |
|
Item
1. |
Business |
1 |
Item
1A. |
Risk
Factors |
4 |
Item
1B. |
Unresolved
Staff Comments |
4 |
Item
2. |
Properties |
4 |
Item
3. |
Legal
Proceedings |
4 |
Item
4. |
Mine
Safety Disclosures |
4 |
|
|
PART
II |
|
|
Item
5. |
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
5 |
Item
6. |
Selected
Financial Data |
6 |
Item
7. |
Management’s
Discussion and Analysis of Financial Condition and Results of Operations |
6 |
Item
7A. |
Quantitative
and Qualitative Disclosures About Market Risk |
9 |
Item
8. |
Financial
Statements and Supplementary Data |
9 |
Item
9. |
Changes
in and Disagreements with Accountants on Accounting and Financial Disclosure |
10 |
Item
9A. |
Controls
and Procedures |
11 |
Item
9B. |
Other
Information |
11 |
|
|
PART
III |
|
|
Item
10. |
Directors,
Executive Officers and Corporate Governance |
12 |
Item
11. |
Executive
Compensation |
15 |
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
16 |
Item
13. |
Certain
Relationships and Related Transactions, and Director Independence |
16 |
Item
14. |
Principal
Accounting Fees and Services |
16 |
|
|
|
PART
IV |
|
Item
15. |
Exhibits
and Financial Statement Schedules |
17 |
EXPLANATORY
NOTE
As
used in this annual report, the terms “we,” “us,” “our,” and words of like import, and the
“Company” refers to China Bio-Energy Corp. and its subsidiaries unless the context indicates otherwise.
This
annual report of China Bio-Energy Corp. (the “Company”) covers periods after September 30, 2011. This report covers
the fiscal years ended December 31, 2014, 2013, 2012, and 2011, in lieu of filing separate reports for each of those years. Included
in this Form 10-K are our audited financial statements for the fiscal years ended December 31, 2014, 2013, 2012, and 2011, as
well as quarterly financial information for interim periods in 2015, none of which have been filed with the SEC. Because of the
amount of time that has passed since our last periodic report was filed with the SEC, the information relating to our business
and related matters is focused on our more recent periods. We do not intend to file the Quarterly Reports on Form 10-Q for any
of the quarters ended March 31, 2012 through June 30, 2015. We believe that the filing of this expanded annual report
enables us to provide information to investors in a more efficient manner than separately filing each of the quarterly reports
described above. This annual report should be read together and in connection with the other reports which have been or will be
filed by us with the SEC, for a comprehensive description of our current financial condition and operating results. In the interest
of complete and accurate disclosure, we have included current information in this annual report for all material events and developments
that have taken place through the date of filing of this annual report with the SEC.
FORWARD
LOOKING STATEMENTS
This
Annual Report on Form 10-K contain “forward-looking statements,” within the meaning of the Private Securities Litigation
Reform Act of 1995, all of which are subject to risks and uncertainties. Forward-looking statements can be identified by the use
of words such as “expects,” “plans,” “will,” “forecasts,” “projects,”
“intends,” “estimates,” and other words of similar meaning. One can identify them by the fact that they
do not relate strictly to historical or current facts. These statements are likely to address our growth strategy, financial results
and product and development programs. One must carefully consider any such statement and should understand that many factors could
cause actual results to differ from our forward looking statements. These factors may include inaccurate assumptions and a broad
variety of other risks and uncertainties, including some that are known and some that are not. No forward looking statement can
be guaranteed and actual future results may vary materially.
These
risks and uncertainties, many of which are beyond our control, include, and are not limited to:
|
● |
our
anticipated future operation and profitability; |
|
● |
our
future financing capabilities and anticipated need for working capital; |
|
● |
the
anticipated trends in our industry; |
|
● |
acquisitions
of other companies or assets that we might undertake in the future; |
|
● |
our
operations in China and the regulatory, economic and political conditions in China; and |
|
● |
current
and future competition. |
In
addition, factors that could cause or contribute to such differences include, but are not limited to, those discussed in this
Annual Report on Form 10-K, and in particular, the risks discussed under the caption “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” as well as those discussed in other documents we file with the
SEC. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements,
except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking
statements.
PART
I
Item
1. Business
History
of the Company
China
Bio-Energy Corp. (the “Company”), formerly known as China INSOnline Corp., was initially incorporated on December
23, 1988 as Lifequest Medical, Inc. (“DEXT”) as a Delaware corporation. On December 6, 2010, the Company entered
into an Amendment (the “Amendment”) to the Share Exchange Agreement dated November 12, 2010 with Ding Neng Holdings,
a British Virgin Islands company (“Ding Neng Holdings”). The Share Exchange Agreement and the Amendment provides for
an acquisition transaction (the “Acquisition”) in which the Company, through the issuance of 25,875,000 shares of
its common stock, par value $0.001, representing 90% of the issued and outstanding common stock immediately following the closing
of the Acquisition, acquired 100% of Ding Neng Holdings.
The
closing of the Acquisition took place on February 10, 2011 (the “Closing Date”). On the Closing Date, pursuant to
the terms of the Share Exchange Agreement as amended, the Company shall acquire all of the outstanding equity securities of Ding
Neng Holdings from the shareholders of Ding Neng Holdings; and the shareholders of Ding Neng Holdings shall transfer and contribute
all of their issued and outstanding shares of Ding Neng Holdings to the Company. In connection of the Share Exchange, the Company
changed its fiscal year end from June 30 to December 31.
Ding
Neng Holdings’ post–acquisition organization structure was expected to be as below:
![](image_001.jpg)
Loss
of Control of Ding Neng Bio-Tech
On
or about early October 2011, Mr. Nie Xinfeng, the Company’s former Chairman of the Board, took possession, among other things,
the company seal, financial seal, and original books and records of Ding Neng Bio-Tech. Since then, the Company has been prevented
from obtaining and did not have access to the financial information of Ding Neng Bio-Tech.
It
is within the Company’s knowledge that from late 2011 to 2014, due to change in law, unfavorable market conditions, and
lack of effective management, the business of Ding Neng Bio-Tech deteriorated significantly and eventually defaulted on various
loan obligations. The Company also believes that Ding Neng Bio-Tech guaranteed some of Mr. Nie’s personal debts. During
2011 and 2014, multiple legal proceedings were brought against Ding Neng Bio-Tech by creditors, service vendors and former employees
of the Company and against Mr. Nie by his creditors. As result, substantially all of Ding Neng Bio-tech’s assets were seized
or disposed of by Ding Neng Bio-Tech’s or Mr. Nie’s creditors. Eventually, Ding Neng Bio-tech completely ceased its
operations.
On
June 4, 2015, Zhangzhou Fuhua Bio-Energy Technology Co., Ltd. (“WOFE”) filed a civil action in Haicang District People’s
Court of Xiamen, Fujian, PRC (the “Court”) against Ding Neng Bio-tech, alleging that the purposes of those certain
Consulting Service Agreement, Operating Agreement, Pledge and Security Agreement, Option Agreement, and Voting Rights Proxy Agreement
(the “VIE Agreements”) executed entered into by WOFE and Ding Neng Bio-Tech on October 28, 2010 had been frustrated,
and that these VIE Agreements should be terminated. WOFE alleged that Ding Neng Bio-Tech did not make any payment of service fees
to WOFE, and that Ding Neng Bio-Tech failed to perfect the security interest in the pledged stock. On July 14, 2015, this case
was settled via in-court mediation directed by the Court. As a result, WOFE and Ding Neng Bio-Tech entered into binding settlement
(i) to terminate the VIE Agreements, (ii) that WOFE and Ding Neng Bio-Tech does not have any other disputes over this case, and
(iii) that the litigation fee in the amount of RMB10,000 (approximately $1610.5) would be borne by Ding Neng Bio-Tech.
Given
the Company has not been able to exercise effective control over Ding Neng Bio-Tech or access to Ding Neng Bio-tech’s financial
information since 2011, and the VIE Agreements were terminated, the Company deconsolidated Ding Neng Bio-Tech’s financial
results with effect from October 1, 2010.
During
the recent review of the Company’s financial statements by its auditor, the auditor has examined the share register and all
transactional bought note, sold notes, and instruments of transfer provided by the Secretary of the Company. There is no evidence
that ownership of Ding Neng Holdings was ever registered to be transferred and held by the Company. The Company also discovered
that Ding Neng Holdings is delinquent and defunct. Accordingly, it is not able to determine whether the Company has been registered
as the sole shareholder of Ding Neng Holdings pursuant to the share exchange agreement dated November 12, 2010, as amended on December
6, 2010. As a result, the Company has excluded the accounts of Ding Neng Holdings and its subsidiaries in its consolidated financial
statements and accompanying notes as contained herein. The Company has written off all investments made in Ding Neng Holdings as
loss on investment in subsidiary
Change
of Management and Directors of the Company
On December 6,2010, the Company elected
to adopt the fiscal year used by Ding Neng Holdings, which was a calendar year; accordingly, the Company’s financial statements
presented herein have been, and on a go-forward basis, will be prepared using a December 31 year end date, and each operating
period will cover twelve full calendar months.
On May 3, 2012, Mr. Sanfu Huang submitted to the Board of the Directors of the Company
his resignation as director and Chief Executive Officer of the Company, which became effective on May 3, 2012. Mr. Huang confirmed
that his resignation was not due to any disagreement with the Company.
On
May 3, 2012, the Board appointed Mr. PokKam Li as director and Chief Executive Officer of the Company to fill the vacancies resulting
from Mr. Sanfu Huang’s resignation as director and CEO of the Company. Simultaneously, the Board appointed Ms. Cherrie Liu
as director of the Company and Ms. Yujia Gao as secretary of the Company.
On
June 4, 2012, Mr. Fulun Su submitted to the Board his resignation as director of the Company, which became effective on June 4,
2012.
On
January 29, 2013, Ms. Cherrie Liu submitted to the Board her resignation as director of the Company, which became effective on
January 29, 2013.
On
January 6, 2015, the Board elected Ms. Mei Yang as a director and the Chief Executive Officer of the Company. On January 2, 2015,
Ms. Yang purchased 40,000,000 shares of the Common Stock from the Company at a price of $0.0075 per share for a total purchase
price of $300,000.
On
March 9, 2015, the Board elected Ms. Hongxiao Zhao as the director of the Company. On March 9, 2015, the Board elected Mr. Xiaoqiang
Zuo as the director of the Company.
On
March 9, 2015, Mr. Jianjun Xu, Mr Mingyong Hu, Mr Bin Zhao submitted to the Board their resignations as directors of the Company,
which became effective on March 9, 2015.
Going
Concern
We received a report from
our independent registered public accountants, relating to our December 31, 2014 audited financial statements, containing an explanatory
paragraph regarding our ability to continue as a going concern.
As
a company with no operating business, management believes that the Company will not be able to generate operating cash flows sufficient
to fund its operations in the next twelve months. Based upon our current limited cash resources and without the infusion of additional
capital, management does not believe the Company can operate as a going concern beyond one year.
Our financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. Accordingly, our financial statements do not include any adjustments relating to the
recoverability of assets and classification of liabilities that might be necessary should we unable to continue as a going
concern.
Employees
As
of August 26, 2015, the Company had 6 full-time employees. None of our employees are covered by a collective bargaining agreement.
Intellectual
Property
We
currently do not own any trademarks or patents.
Government
Approval and Regulation
Because
we currently have no business operations, produce no products nor provide any services, we are not presently subject to any governmental
regulation in this regard. However, in the event that we complete a business combination transaction, we will become subject to
all governmental approval requirements to which the reorganized, merged or acquired entity is subject or may become subject.
Competition
Because
we currently have no business operations, produce no products nor provide any services, we do not encounter any competition in
any business area.
ITEM
1A. RISK FACTORS
Not
applicable because we are a smaller reporting company.
ITEM
1B. UNRESOLVED STAFF COMMENTS
Not
applicable because we are a smaller reporting company.
ITEM 2. PROPERTIES
None.
ITEM
3. LEGAL PROCEEDINGS
On
June 4, 2015, Zhangzhou Fuhua Bio-Energy Technology Co., Ltd. (“WOFE”) filed a civil action in Haicang District People’s
Court of Xiamen, Fujian, PRC (the “Court”) against Ding Neng Bio-tech alleging that the purposes of those certain
Consulting Service Agreement, Operating Agreement, Pledge and Security Agreement, Option Agreement, and Voting Rights Proxy Agreement
(the “VIE Agreements”) executed entered into by WOFE and Ding Neng Bio-Tech on October 28, 2010 had been frustrated,
and that these VIE Agreements should be terminated. WOFE alleged that Ding Neng Bio-Tech did not make any payment of service fees
to WOFE, and that Ding Neng Bio-Tech failed to perfect the security interest in the pledged stocks. On July 14, 2015, this case
was settled via in-court mediation directed by the Court. As a result, WOFE and Ding Neng Bio-Tech entered into binding settlement
(i) to terminate the VIE Agreements, (ii) that WOFE and Ding Neng Bio-Tech does not have any other disputes over this case, and
(iii) that the litigation fee in the amount of RMB10,000 (approximately $1610.5) would be borne by Ding Neng Bio-Tech.
ITEM
4. MINE SAFETY DISCLOSURES.
Not
Applicable.
PART
II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market
Information
Our
common stock is quoted on the OTC Market under the trading symbol CHIO. The OTCPink is a quotation service that displays real
time quotes, last sale prices, and volume information in over the counter ("OTC") equity securities. An OTC equity security
generally is any equity that is not listed or traded on a national securities exchange.
Price
Range of Common Stock
The
following table shows, for the periods indicated, the high and low bid prices per share of our common stock as reported by the
OTC quotation service. These bid prices represent prices quoted by broker-dealers on the OTC quotation service. The quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not represent actual transactions.
| |
High Bid | | |
Low Bid | |
Fiscal 2014 | |
| | |
| |
| |
| | |
| |
First Quarter | |
$ | 0.04 | | |
$ | 0.04 | |
Second Quarter | |
$ | 0.1 | | |
$ | 0.02 | |
Third Quarter | |
$ | 0.49 | | |
$ | 0.02 | |
Fourth Quarter | |
$ | 0.48 | | |
$ | 0.03 | |
| |
| | | |
| | |
Fiscal 2013 | |
| | | |
| | |
| |
| | | |
| | |
First Quarter | |
$ | 0.29 | | |
$ | 0.03 | |
Second Quarter | |
$ | 0.1 | | |
$ | 0.03 | |
Third Quarter | |
$ | 0.7 | | |
$ | 0.04 | |
Fourth Quarter | |
$ | 0.04 | | |
$ | 0.04 | |
| |
| | | |
| | |
Fiscal 2012 | |
| | | |
| | |
| |
| | | |
| | |
First Quarter | |
$ | 0.40 | | |
$ | 0.20 | |
Second Quarter | |
$ | 0.20 | | |
$ | 0.15 | |
Third Quarter | |
$ | 0.98 | | |
$ | 0.98 | |
Fourth Quarter | |
$ | 1.00 | | |
$ | 0.17 | |
As
of December 31, 2014, the closing bid quote for our common stock was $0.03 per share.
Stockholders
of Record
As of August 26, 2015,
we had 121 record holders of our common stock. Corporate Stock Transfer, 3200 Cherry Creek Drive S #430 ~ Denver, CO 80209 is
the transfer agent for our common stock.
Dividends
Holders
of our common stock are entitled to receive dividends if, as and when declared by the Board of Directors out of funds legally
available therefore. We have never declared or paid any dividends on our common stock. We intend to retain any future earnings
for use in the operation and expansion of our business. Consequently, we do not anticipate paying any cash dividends on our common
stock to our stockholders for the foreseeable future.
Securities
Authorized for Issuance under Equity Compensation Agreements
We
do not have in effect any compensation plans under which our equity securities are authorized for issuance.
ITEM
6. SELECTED FINANCIAL DATA
Not
applicable because we are a smaller reporting company.
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated
financial statements and related notes included elsewhere in this report.
Overview
History
of the Company
China
Bio-Energy Corp. (the “Company”), formerly known as China INSOnline Corp., was initially incorporated on December
23, 1988 as Lifequest Medical, Inc. (“DEXT”) as a Delaware corporation. On December 6, 2010, the Company entered
into an Amendment (the “Amendment”) to the Share Exchange Agreement dated November 12, 2010 with Ding Neng Holdings,
a British Virgin Islands company (“Ding Neng Holdings”). The Share Exchange Agreement and the Amendment provides for
an acquisition transaction (the “Acquisition”) in which the Company, through the issuance of 25,875,000 shares of
its common stock, par value $0.001, representing 90% of the issued and outstanding common stock immediately following the closing
of the Acquisition, acquired 100% of Ding Neng Holdings.
The closing of the Acquisition took
place on February 10, 2011 (the “Closing Date”). On the Closing Date, pursuant to the terms of the Share Exchange
Agreement as amended, the Company shall acquire all of the outstanding equity securities of Ding Neng Holdings from the shareholders
of Ding Neng Holdings; and the shareholders of Ding Neng Holdings shall transfer and contribute all of their issued and outstanding
shares of Ding Neng Holdings to the Company. In connection of the Share Exchange, the Company changed its fiscal year end from
June 30 to December 31.
Ding Neng Holdings’ post–acquisition
organization structure was expected to be as below:
![](image_001.jpg)
Loss
of Control of Ding Neng Bio-Tech
On
or about early October 2011, Mr. Nie, the Company’s former Chairman of the Board took possession, among other things, the
company seal, financial seal, and original books and records of Ding Neng Bio-Tech. Since then, the Company has been prevented
from obtaining and did not have access to the financial information of Ding Neng Bio-Tech.
It
is within the Company’s knowledge that from late 2011 to 2013, due to change in law, unfavorable market conditions, and
lack of effective management, the business of Ding Neng Bio-Tech deteriorated significantly and eventually defaulted on various
loan obligations. The Company also believes that Ding Neng Bio-Tech guaranteed some of Mr. Nie’s personal debts. During
2011 and 2014, multiple legal proceedings were brought against Ding Neng Bio-Tech by creditors, service vendors and former employees,
and against Mr. Nie by his creditors. As result, substantially all of Ding Neng Bio-tech’s assets were seized or disposed
of by Ding Neng Bio-Tech’s or Mr. Nie’s creditors. Eventually, Ding Neng Bio-tech completely ceased its operations.
On June 4, 2015, Zhangzhou Fuhua Bio-Energy
Technology Co., Ltd. (“WOFE”) filed a civil action in Haicang District People’s Court of Xiamen, Fujian, PRC
(the “Court”) against Ding Neng Bio-tech, alleging that the purposes of those certain Consulting Service Agreement,
Operating Agreement, Pledge and Security Agreement, Option Agreement, and Voting Rights Proxy Agreement (the “VIE Agreements”)
executed entered into by WOFE and Ding Neng Bio-Tech on October 28, 2010 had been frustrated, and that these VIE Agreements should
be terminated. WOFE alleged that Ding Neng Bio-Tech did not make any payment of service fees to WOFE, and that Ding Neng Bio-Tech
failed to perfect the security interest in the pledged stock. On July 14, 2015, this case was settled via in-court mediation
directed by the Court. As a result, WOFE and Ding Neng Bio-Tech entered into binding settlement (i) to terminate the VIE Agreements,
(ii) that WOFE and Ding Neng Bio-Tech does not have any other disputes over this case, and (iii) that the litigation fee in the
amount of RMB10,000 (approximately $1610.5) would be borne by Ding Neng Bio-Tech.
Given the Company has not been able
to exercise effective control over Ding Neng Bio-Tech or access to Ding Neng Bio-tech’s financial information since 2011,
and the VIE Agreements were terminated, the Company deconsolidated Ding Neng Bio-Tech’s financial results with effect from
October 1, 2010.
During the recent
review of the Company’s financial statements by its auditor, the auditor has examined the share register and all transactional
bought note, sold notes, and instruments of transfer provided by the Secretary of the Company. There is no evidence that ownership
of Ding Neng Holdings was ever registered to be transferred and held by the Company. The Company also discovered that Ding Neng
Holdings is delinquent and defunct. Accordingly, it is not able to determine whether the Company has been registered as the sole
shareholder of Ding Neng Holdings pursuant to the share exchange agreement dated November 12, 2010, as amended on December 6, 2010.
As a result, the Company has excluded the accounts of Ding Neng Holdings and its subsidiaries in its consolidated financial statements
and accompanying notes as contained herein. The Company has written off all investments made in Ding Neng Holdings as loss on investment
in subsidiary
Change
of Management and Directors of the Company
On
May 3, 2012, Mr. Sanfu Huang submitted to the Board of the Directors of the Company his resignation as director and Chief Executive
Officer of the Company, which became effective on May 3, 2012. Mr. Huang confirmed that his resignation was not due to any disagreement
with the Company.
On
May 3, 2012, the Board appointed Mr. PokKam Li as director and Chief Executive Officer of the Company to fill the vacancies resulting
from Mr. Sanfu Huang’s resignation as director and CEO of the Company. Simultaneously, the Board appointed Ms. Cherrie Liu
as director of the Company and Ms. Yujia Gao as secretary of the Company.
On
June 4, 2012, Mr. Fulun Su submitted to the Board his resignation as director of the Company, which became effective on June 4,
2012.
On
January 29, 2013, Ms. Cherrie Liu submitted to the Board her resignation as director of the Company, which became effective on
January 29, 2013.
On
January 5, 2015 Mr. PokKam Li submitted to the Board their resignation as CEO of the Company, which became effective on January
5, 2015. Mr. Li confirmed that his resignation was not due to any disagreement with the Company.
On
January 6, 2015, the Board elected Ms. Mei Yang as a director and the Chief Executive Officer of the Company. On January 2, 2015,
Ms. Yang purchased 40,000,000 shares of the Common Stock from the Company at a price of $0.0075 per share.
On
March 9, 2015, Mr. Jianjun Xu, Mr Mingyong Hu, Mr Bin Zhao submitted to the Board their resignation as director of the Company,
which became effective on March 9, 2015.
On
March 9, 2015, the Board elected Ms. Hongxia Zhao as the director of the Company. On March 10, 2015, the Board elected Mr. Xiaoqiang
Zuo as the director of the Company.
Results
of Operations
Year
Ended December 31, 2012 Compared to Year Ended December 31, 2011
Revenues
for the year ended December 31, 2012 and 2011 were 0.
Gross
loss for 2012 was $1,595,510, a decrease of $747,587, or say approximately 747,000 or 31.9%, compared to 2011. The
decrease loss due to the less General and administrative expenses in 2011.
Operating
expenses for the 2012 decreased by approximately $747,000, or 31.9%, from approximately $2,343,000 in 2011 to approximately $1,595,000
in 2012. Our principal operating expense for 2012 and 2011 was administrative expenses.
As
a result of the foregoing, we had a net loss of approximately $1,595,000, or $0.05 per share (basic and diluted) for 2012 compared
to net loss of approximately $2,343,000, or $0.08 per share (basic and diluted), for 2011.
Year
Ended December 31, 2013 Compared to Year Ended December 31, 2012
Revenues
for the year ended December 31, 2013 and 2012 were 0.
Gross
loss for 2013 was $354,480, a decrease of $1,241,030, or 77.8%, compared to 2012. The decrease loss due to the less General
and administrative expenses in 2012.
Operating
expenses for the 2013 decreased by approximately $1,241,030, or 77.8%, from approximately $1,595,510 in 2012 to approximately
$354,480 in 2013. Our principal operating expense for 2013 and 2012 was administrative expenses.
As
a result of the foregoing, we had a net loss of $354,480, or $0.01 per share (basic and diluted) for 2013 compared to net loss
of $1,595,000, or $0.05 per share (basic and diluted), for 2012.
Year Ended December 31, 2014 Compared
to Year Ended December 31, 2013
Revenues for the
year ended December 31, 2014 and 2013 were 0.
Gross loss for 2014
was $971,900, an increase of $617,420, or 174.1%, compared to 2013. The increase loss due to the more General and administrative
expenses in 2014.
Operating expenses
for the 2014 increased by approximately $617,620, or 174.1%, from approximately $354,480 in 2013 to approximately $972,100 in
2014. Our principal operating expense for 2014 and 2013 was administrative expenses.
As a result of the
foregoing, we had a net loss of $971,900 or $0.02 per share (basic and diluted) for 2014 compared to net loss of $354,480, or
$0.01 per share (basic and diluted), for 2013.
Three and Six months ended June 30,
2015 and 2014
Revenues for
the three months ended June 30, 2015 and June 30, 2014 were 0. Revenues for the six months ended June 30, 2015 and six months
ended June 30, 2014 were 0. Gross loss for the three months end June 30, 2015 was 79,591 an increase of $63,966 or 400.9%,
compared to three months end June 30, 2014. The increase loss due to the more General and administrative expenses. Gross loss
for the six months end June 30, 2015 was approximately $470,000, an increase of approximately $130,000, or 38%, operating
expenses for the six months ended June 30 2015 and 2014 compared to six months end June 30, 2014. The increase in gross loss
reflected increased General and Administrative Expenses.
Operating
expenses for the three months end June 30, 2015 increased 79,591, or 400.9%, compared to the three months ended June
30, 2014. Operating expenses for the six months end June 30, 2015 increased by approximately $130,000, or 38%, Operating
expenses for the six months ended June 30, 2015 and 2014. were approximately $470,000 and $340,000. Our principal operating
expense for the three and six months end June 30, 2015 was administrative expenses.
As a result of the
foregoing, we sustained a net loss of $79,591 or $0.00 per share (basic and diluted), for the three months ended June 30, 2015
and a net loss of $470,878, or $0.00 per share (basic and diluted), for the six months ended June 30, 2015, compared to net loss
of $15,625, or $0.00 per share (basic and diluted), and $340,850, or $0.00 per share (basic and diluted), for the three and six
months ended June 30, 2014, respectively.
Liquidity and Capital Resources
At December 31,
2014, we had current assets of 200, current liabilities of 1,294,000, and a working capital deficiency of 1,293,800. Our liabilities consist of accrued taxes and expense of $1, 294,000.
At June 30,
2015, we had current assets of 281,906, current liabilities of 1,551,284, and a working capital deficiency of 15,478,522. Our liabilities consist of accrued taxes and expense of $1, 551,284.
We believe that,
because of our financial condition, our history of losses and negative cash flow from operations, our low stock price and the absence
of SEC disclosure relating to us since 2012 make it difficult for us to raise funds in the debt or equity markets.Our only source
of financing, which we will continue to rely on, is issuing new shares.We do not have working capital that is sufficient to support
our operation for the next 12 months.
Going Concern
As of June 30,
2015, the Company had accumulated deficits of $15,478,522 and working capital deficit of current liabilities exceeding current
assets by $1,269,378 due to the substantial losses in operation in previous years/periods. Management’s plan to support
the Company in operations and to maintain its business strategy is to raise funds through public and private offerings and to
rely on officers and directors to perform essential functions with minimal compensation. If we do not raise all of the money we
need from public or private offerings, we will have to find alternative sources, such as loans or advances from our officers,
directors or others. Such additional financing may not become available on acceptable terms and there can be no assurance that
any additional financing that the Company does obtain will be sufficient to meet its needs in the long term. Even if the Company
is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or
cause substantial dilution for our stockholders, in the case of equity financing. If we require additional cash and cannot raise
it, we will either have to suspend operations or cease business entirely.
The accompanying
financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and
classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Significant Accounting Policies
The discussion and
analysis of our financial condition and results of operations is based upon our financial statements that have been prepared in
accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of assets and liabilities. On an on-going basis, we
evaluate our estimates including the allowance for doubtful accounts, the salability and recoverability of our products, income
taxes and contingencies. We base our estimates on historical experience and on other assumptions that we believe to be reasonable
under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or
conditions.
ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Not applicable because
we are a smaller reporting company.
ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
The audited financial
statements of the Company for the fiscal year ended December 31, 2014, December 31, 2013, December 31, 2012, December 31, 2011
and the notes thereto and the unaudited financial statements of the Company for the quarterly period ended June 30, 2015 and the
notes thereto are set forth on page F-1 through F-31 of this Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On June 20, 2011, the Board approved the dismissal of Malone
Bailey, LLP (DISCLOSURECLOSURE December 31, 2013, December 31, 2012, December 31, 2011 and the notes thereto and the unaudited
financial statements
During the Companythe Board approved the dismissal of Malone
Bailey, LLP (DISCLOSURECLOSURE December 31, 2013, December 31, 2012, December 31, 2011 and the notes thereto and the unaudited
financial statements of the Company for the quarterly period ended rtainty, audit scope or accounting principles.
During the Companythe Board approved the dismissal of Malone
Bailey, LLP (DISCLOSURECLOSURE December 31, 2013, December 31, 2012, Decei) there were no disagreements between the Company
and Malone Bailey on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures
which, if not resolved to Malone Bailey’s satisfaction, would have caused Malone Bailey to make reference in connection with
Malone Bailey’s opinion to the subject matter of the disagreement; and (ii) there were no reportable events as the term described
in Item 304(a)(1)(iv) of Regulation S-K disclosing that, except as reported on the Company’s Current Report on Form 8-K,
filed with the SEC on April 22, 2011, Malone Bailey notified the Company on March 30, 2011 that during Malone Bailey’s revenue
and account receivables confirmation process, Malone Bailey discovered that Fujian Union Oil & Chemistry Ltd., allegedly one
of the Company’s customers during the fiscal years of 2008, 2009 and 2010, did not conduct transactions with the Company
as recorded in the Company’s books. The Company formed an independent committee and conducted a thorough investigation with
respect to this matter. Based on such investigation, the committee concluded that the aforementioned transactions were entered
into by the Company and a PRC resident who wrongfully presented himself as one of Union Oil’s authorized representatives
and the Company recorded the related revenues as received from Union Oil based on those transactions.
Concurrently with the decision to dismiss Malone Bailey as
the Company any matter of accounting principles or practices, financial statement disclosure or auditing sLLP (“LP
(rently with the decisdependent registered public accounting firm as of June 22, 2011.
During the years ended December 31, 2010 and December 31,
2009 and through the date hereof, neither the Company nor anyone acting on its behalf consulted WWC with respect to (i) the application
of accounting principles to a specified transaction, either completed or proposed, nor the type of audit opinion that might be
rendered on the Company’s financial statements, and neither a written report was provided to the Company or oral advice was
provided that WWC concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing
or financial reporting issue; or (ii) any matter that was the subject of a disagreement or reportable events set forth in Item
304(a)(1)(iv) and (v), respectively, of Regulation S-K.
ITEM
9A. CONTROLS AND PROCEDURES
Management’s
Conclusions Regarding Effectiveness of Disclosure Controls and Procedures
We
conducted an evaluation of the effectiveness of our “disclosure controls and procedures” (“Disclosure Controls”),
as defined by Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
as of December 31, 2014, the end of the period covered by this Annual Report on Form 10-K. The Disclosure Controls evaluation
was done under the supervision and with the participation of management, including our chief executive officer and chief financial
officer. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly,
even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
Based upon this evaluation, our chief executive officer and chief financial officer concluded that, due to our limited internal
audit function, our disclosure controls were not effective as of December 31, 2014, such that the information required to be disclosed
by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to the president and treasurer, as appropriate
to allow timely decisions regarding disclosure.
Management’s
Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act. Our management is also required to assess and report on the
effectiveness of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of
2002 (“Section 404”). Management assessed the effectiveness of our internal control over financial reporting as
of December 31, 2014. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) in Internal Control - Integrated Framework. During our assessment of the effectiveness of
internal control over financial reporting as of December 31, 2014, management identified material weaknesses related
to (i) proper controls over the possession and keeping of books and records, (ii) lack of an internal audit function, (iii)
lack of an audit committee with a financial expert, (iv) a lack of segregation of duties within accounting functions, and (v)
lack of adequate resources, systems and procedures to monitor and carry out financial reporting. Therefore, our internal
controls over financial reporting were not effective as of December 31, 2014.
Management and the board have not established
a system to protect and safeguard the Company’s books and records.
Management has determined that our internal
audit function is non-existent.
The Board has yet to elect members to
the audit committee as well as determine an audit committee chairman whom is considered a financial expert. The Board will make
best efforts to interview candidate and nominate audit committee members and an audit committee chairman.
The Company does not have any segregation
of duties. Due to our size and nature, segregation of all conflicting duties is not possible. However, to the extent possible,
we plan to implement procedures to assure that the initiation of transactions, the custody of assets and the recording of transactions
will be performed by separate individuals.
The Company plans to aside adequate
funds and human resources to establish systems and procedures of internal control over financial reporting; however, the Company’s
financial condition makes it difficult for us to implement a system of internal controls over financial reporting.
Changes
in Internal Control over Financial Reporting.
During
the period ended December 31, 2014, there was no change in our internal control over financial reporting (as such term is defined
in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
ITEM
9B. OTHER INFORMATION.
Issuance
of Shares
The Company's
common stock issued after share exchange were summarized as follows:
| |
| | |
| | |
Issue | | |
|
| |
| | |
| | |
Value | | |
|
| |
| | |
Number of | | |
Per | | |
|
Name of Shareholder | |
Date | | |
Shares | | |
Share | | |
Reason for Issuance |
| |
| | | |
| | | |
| | | |
|
NUWA GROUP LLC | |
| March 22, 2011 | | |
| 80,000 | | |
$ | 0.001 | | |
Consulting service fee |
MAXIM PARTNERS LLC | |
| March 30, 2011 | | |
| 655,000 | | |
$ | 0.001 | | |
Consulting service fee |
H.X.Z. BEYOND INVESTMENT CONSULTING CO | |
| May 17, 2011 | | |
| 718,752 | | |
$ | 0.001 | | |
Consulting service fee |
GREENSTONE HOLDINGS GROUP LLC | |
| July 29, 2011 | | |
| 25,000 | | |
$ | 0.001 | | |
Consulting service fee |
Ming Yi | |
| April
11, 2012 | | |
| 863,738 | | |
$ | 0.001 | | |
Employee shares |
Zhenyu Wang | |
| April
11, 2012 | | |
| 2,000,000 | | |
$ | 0.001 | | |
Consulting service fee |
PokKam Li | |
| June
26, 2012 | | |
| 1,000,000 | | |
$ | 0.001 | | |
Employee shares |
Johnson Chen | |
| June
26, 2012 | | |
| 500,000 | | |
$ | 0.2 | | |
Purchase |
Chi Yuen Andrew Chu | |
| June
26, 2012 | | |
| 250,000 | | |
$ | 0.2 | | |
Purchase |
Elite International Group Ltd | |
| August
10, 2012 | | |
| 5,000,000 | | |
$ | 0.001 | | |
Consulting service fee |
US New Media Holding Group Inc | |
| September
18, 2014 | | |
| 20,000,000 | | |
$ | 0.003 | | |
Consulting service fee |
Mei Yang | |
| January
16, 2015 | | |
| 40,000,000 | | |
$ | 0.0075 | | |
Purchase |
Total | |
| | | |
| 71,092,490 | | |
| | | |
|
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The
following table presents information with respect to our officers, directors:
Name |
|
Age |
|
Position(s) |
|
Position
Since |
Mei
Yang |
|
44 |
|
Director;
chief executive officer |
|
January
2015 |
Hongxia
Zhao |
|
45 |
|
Director |
|
March
2015 |
Xiaoqiang
Zuo |
|
47 |
|
Director |
|
March
2015 |
PokKam
Li |
|
58 |
|
Director
|
|
May
2012 |
Ming
Yi |
|
35 |
|
Director,
Chief financial officer |
|
June
2011 |
Each
director serves until our next annual meeting of the stockholders or unless they resign earlier. The board of directors elects
officers, who serve at the discretion of the board of directors.
Ms.
Mei Yang has served as a director and the chief executive officer of the Company since January 2015. She also served as the vice
president of Shenzhen Qianhai Exce-Card Technology Co, a technology firm focus on smart cards' design and manufacturing company
since December 2013. From June 2009 to November 2013, Ms. Yang served as the chief financial officer of Beijing Yuxin ShangFang
Technology Company, a PRC-based debit card technology solution company. Ms. Yang holds a B.S. in economic information management
from Xinjiang Agricultural University.
Ms.
Hongxia Zhao has served as the director of the Company since March 2015. She has also served as manager of Wall Street Standard
Capital Inc., a financial consulting company since January 2010, and as the president of Huayuan Kaituo Limited Company, an information
technology company since January 2004. Ms. Zhao holds a B.S. in renewable resources engineering from Anhui Finance and Economics
University.
Mr.
Xiaoqiang Zuo has served as the director of the Company since March 2015. He has also served as the president of Shenzhen Tianshi
Future Electronic Technology Company, a PRC-based company specializing in surface mounted technology and manufacturing electronics
since June 2010, and as the president of Huayuan Runtong (Beijing) Technology Company, a PRC-based software development company
since December 2004. Mr. Zuo holds a B.S. in electronics and information system from Mongolia University.
Mr.
PokKam Li has served as a director of the Company since May 2012. From May 2012 to January 2015, he served as the chief executive
officer of the Company. Since August 2007, Mr. Li has served as consultant to China Grand Forestry Green Resources Group Ltd.,
a public company traded on the Hong Kong Stock Exchange (910.HK) engaged in the ecological forestry business in China. Since May
2008, Mr. Li has acted as consultant to China E-Learning Group Ltd., a company traded on the Hong Kong Stock Exchange (8055.HK)
providing occupational education, industry certification course, skills training, and education consultation services in China.
Mr. Li holds a B.S. in International Trade from the University of International Business and Economics in Beijing, China.
Mr.
Yi Ming has served as the chief financial officer and director of the Company since June 2011. From September 2009 to April 2011,
he served as a senior manager in Qi He Certified Public Accountants Co. Ltd., a PRC-based accounting firm. Mr. Yi holds a B.S.
in Accounting from School of Business Administrations of Liaoning University, and an M.S. in Accounting and Finance from Victory
University, Australia. Mr.Yi is a Certified Public Account in Australia.
Our
directors are appointed to hold office until the next annual meeting of stockholders or until his or hers resignation or removal
from office in accordance with our bylaws.
Committees
and Meetings
We
do not have a standing audit committee of the Board of Directors. We do not have a financial expert serving on the Board of Directors
or employed as an officer based on management's belief that the cost of obtaining the services of a person who meets the criteria
for a financial expert under Item 407(d) of Regulation S-K is beyond its limited financial resources and the financial skills
of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial
reporting in light of the limited scope and simplicity of accounting issues raised in its financial statements at this stage of
its development.
Code
of Ethics
We
have not yet adopted a code of ethics that applies to our principal executive officers, principal financial officer, principal
accounting officer or controller, or persons performing similar functions, since we have been focusing our efforts on developing
our business. We expect to adopt a code as we develop our business.
Family
Relationships
None.
Committees
of the Board of Directors
We
do not have any committees of our board of directors.
Involvement
in Certain Legal Proceedings
To
the best of our knowledge, none of our directors or executive officers has, during the past ten years:
|
● |
been
convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other
minor offenses); |
|
● |
had
any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or
business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or
within two years prior to that time; |
|
● |
been
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction
or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement
in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities,
or to be associated with persons engaged in any such activity; |
|
● |
been
found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity
Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated; |
|
● |
been
the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an
alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial
institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement
or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or
any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
|
● |
been
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of
the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority
over its members or persons associated with a member. |
None of our directors
or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or
associates which are required to be disclosed pursuant to the rules and regulations of the Commission.
Term
of Office
Our
directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until
removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until
removed by the board.
Code
of Ethics
We
do not have a code of ethics that applies to our officers, employees and directors.
Corporate
Governance
The
business and affairs of the company are managed under the direction of our board. In addition to the contact information in this
annual report, each stockholder will be given specific information on how he/she can direct communications to the officers and
directors of the corporation at our annual stockholders meetings. All communications from stockholders are relayed to the members
of the board of directors.
Role
in Risk Oversight
Our
board of directors is primarily responsible for overseeing our risk management processes. The board of directors receives and
reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our company's
assessment of risks. The board of directors focuses on the most significant risks facing our company and our company's general
risk management strategy, and also ensures that risks undertaken by our company are consistent with the board's appetite for risk.
While the board oversees our company's risk management, management is responsible for day-to-day risk management processes. We
believe this division of responsibilities is the most effective approach for addressing the risks facing our company and that
our board leadership structure supports this approach.
Compliance
with Section 16(a) of the Securities Exchange Act of 1934
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more
than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements
of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of the our common stock
and other equity securities, on Form 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders
are required by the Securities and Exchange Commission regulations to furnish our company with copies of all Section 16(a) reports
they file.
Based
solely on our review of the copies of such reports received by us, and on written representations by our officers and directors
regarding their compliance with the applicable reporting requirements under Section 16(a) of the Exchange Act, we believe that,
with respect to the period ended December 31, 2014, our officers and directors, and all of the persons known to us to own more
than 10% of our common stock, have not filed all required reports on a timely basis.
ITEM
11: EXECUTIVE COMPENSATION.
The
following summary compensation table sets forth information concerning compensation for services rendered in all capacities during
the period through December 31, 2014, earned by or paid to our executive officers.
Name
and Principal
Position | |
Year | | |
Salary
| | |
Bonus
Awards | | |
Stock
Awards | | |
Options/
Warrant Awards (1) | | |
Non
-Equity Plan Compensation
| | |
Nonqualified
Deferred Earnings | | |
All
Other Compensation
| | |
Total
| |
| |
| | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | |
PokKam Li, CEO | |
| 2014 | | |
| 1 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1 | |
| |
| 2013 | | |
| 1 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1 | |
| |
| 2012 | | |
| 1 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Ming Yi, CFO | |
| 2014 | | |
| 1 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1 | |
| |
| 2013 | | |
| 1 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1 | |
| |
| 2012 | | |
| 1 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1 | |
| |
| 2011 | | |
| 170,116 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 170,116 | |
Employment
Agreements
We
do not have any other employment agreements with our officers or directors.
Outstanding
Equity Awards at Fiscal Year-End (December 31, 2014)
There
were no outstanding equity awards for the year ended December 31, 2014.
Directors’
Compensation
The
Company has not compensated any of its directors for service on the Board of Directors. Management directors are not compensated
for their service as directors; however they may receive compensation for their services as employees of the Company. The compensation
received by our management directors is shown in the "Summary Compensation Table" above.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The
following table sets forth certain information regarding the ownership of our capital stock, as of August 27, 2015, for: by (i)
each person known by us to be the beneficial owner of 5% or more of the outstanding common stock, (ii) each executive officer
and director of the Company, and (iii) all of our executive officers and directors as a group. As of August 27, the Company has
56,541,267 shares of Common Stock outstanding.
Unless
otherwise indicated, the Company believes that all persons named in the table have sole voting and investment power with respect
to all shares of common stock beneficially owned by them.
Unless
otherwise specified, the address of each of the persons set forth below is in care of the Company, 40 wall street,
28th Floor New York, NY 10005.
Name and Address of Beneficial Owner | |
Amount
and Nature of Beneficial
Ownership | | |
% of Class | |
Director and Officers | |
| | |
| |
Mei Yang | |
| 40,000,000 | | |
| 40.64 | % |
Hongxia Zhao | |
| - | | |
| * | |
Xiaoqiang Zuo | |
| - | | |
| * | |
PokKam Li | |
| 1,000,000 | | |
| * | |
Ming Yi | |
| 863,738 | | |
| * | |
All officers and directors as a group (fiveindividuals) | |
| | | |
| 42.54 | % |
Total outstanding shares 98,405,005 | |
| | | |
| | |
5% Holders | |
| | | |
| | |
Mei Yang | |
| 40,000,000 | | |
| 40.64 | % |
* less
than 1%.
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related
Transactions
None.
Director
Independence
Each
of Mr. PokKam Li and Ms. Hongxia Zhao is an “independent” directors based on the definition of independence in the
listing standards of the NYSE.
ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES
For the periods ended
December 31, 2014, 2013, 2012, 2011, and 2010, we engaged, WWC, Professional Corporation as our independent auditor. For the periods
ended December 31, 2014, 2013, 2012, 2011, and 2010, we incurred fees as discussed below:
| |
For the years ended December 31, | |
| |
2014 | | |
2013 | | |
2012 | | |
2011 | |
Audit Fee | |
$ | 37,500 | | |
$ | 37,500 | | |
$ | 37,500 | | |
$ | 37,500 | |
Audit
fees consist of fees related to professional services rendered in connection with the audit of our annual financial statements.
All other fees relate to professional services rendered in connection with the review of the quarterly financial statements.
Our
policy is to pre-approve all audit and permissible non-audit services performed by the independent accountants. These services
may include audit services, audit-related services, tax services and other services. Under our audit committee’s policy,
pre-approval is generally provided for particular services or categories of services, including planned services, project based
services and routine consultations. In addition, the audit committee may also pre-approve particular services on a case-by-case
basis. Our audit committee approved all services that our independent accountants provided to us in the past four fiscal years.
PART
IV
ITEM
15. EXHIBITS
Exhibit No. |
|
Description |
2.1 |
|
Share
Exchange Agreement, dated November 12, 2010, by and among the Registrant, Ding Neng Holdings and Shareholders of Ding Neng
Holdings (1) |
2.2 |
|
Amendment
to the Share Exchange Agreement, by and among the Registrant, Ding Neng Holdings and Shareholders of Ding Neng Holdings (2) |
3.1 |
|
Certification
of Incorporation of the Registrant (3) |
3.2 |
|
Certificate
of Amendment to the Company’s Certificate of Incorporation, dated February 26, 2008 (4) |
3.3 |
|
Certificate
of Amendment to the Company's Certificate of Incorporation, dated January 31, 2011 (5) |
3.4 |
|
Amended
and Restated Bylaws of the Registrant (4) |
10.1 |
|
Consulting
Services Agreement, dated January 20,2011, between Ding Neng Bio-tech and the WFOE (5) |
10.2 |
|
Operating
Agreement, dated January 20,2011, by and among Ding Neng Bio-tech, its shareholders and the WFOE (5) |
10.3 |
|
Voting
Rights Proxy Agreement, dated January 20,2011, by and among Ding Neng Bio-tech, its shareholders and the WFOE (5) |
10.4 |
|
Equity
Pledge Agreement, dated January 20,2011, by and among Ding Neng Bio-tech, its shareholders and the WFOE (5) |
10.5 |
|
Option
Agreement, dated January 20,2011, by and among Ding Neng Bio-tech, its shareholders and the WFOE (5) |
10.6 |
|
Unofficial
Translation of Forest and Plants Transfer Agreement, by and between Tiantai County Manyuanchun Agriculture and Forestry Development
Co., Ltd., and Fujian Zhangzhou Ding Neng Bio- Tech Co., Ltd., dated November 23, 2009(5) |
10.8 |
|
Unofficial
Translation of Employment Agreement between Ding Neng Bio-tech and Sanfu Huang dated June 1, 2010 (5) |
10.9 |
|
Unofficial
Translation of Settlement Agreement between Ding Neng Bio-Tech and Zhangzhou Fuhua Biomass Energy Technology Co., Ltd., dated
July 14, 2015 |
|
|
|
101.INS |
|
XBRL
Instance Document* |
101.SCH |
|
XBRL
Taxonomy Schema Document* |
101.CAL |
|
XBRL
Taxonomy Calculation Document* |
101.DEF |
|
XBRL
Taxonomy Linkbase Document* |
101.LAB |
|
XBRL
Taxonomy Label Linkbase Document* |
101.PRE |
|
XBRL
Taxonomy Presentation Linkbase Document* |
* |
Filed
herewith |
|
(1) |
Incorporated
by reference to Annex A to the Registrant’s Schedule 14(c), filed on December 30, 2010. |
(2) |
Incorporated
by reference to Annex B to the Registrant’s Schedule 14(c), filed on December 30, 2010. |
(3) |
Incorporated
by reference to the Company’s Current Report on Form 8-K as filed with the SEC on December 20, 2007. |
(4) |
Incorporated
by reference to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2008. |
(5) |
Incorporated
by reference to the Current Report on Form 8-K as filed with the SEC on February 11, 2011. |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Date August
31, 2015
|
CHINA
BIO-ENERGY |
|
|
|
|
By: |
/s/
Mei Yang |
|
|
Name:
|
|
|
Title:
Chief Executive Officer |
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/
Mei Yang |
|
Director,
chief executive officer, president (principal executive officer) |
|
August
31, 2015 |
|
|
|
|
|
|
|
|
|
|
/s/
Ming Yi |
|
Director,
chief financial officer (principal financial officer) |
|
August
31, 2015 |
|
|
|
|
|
|
|
|
|
|
/s/
PokKam Li |
|
Director |
|
August
31, 2015 |
|
|
|
|
|
|
|
|
|
|
/s/
Hongxia Zhao |
|
Director |
|
August
31, 2015 |
|
|
|
|
|
/s/
Xiaoqiang Zuo |
|
Director |
|
August
31, 2015 |
China Bio-Energy Corp.
Audited Financial Statements
December 31, 2014, 2013, 2012, 2011, and 2010
(Stated in US Dollars)
China Bio-Energy Corp.
Contents |
|
Pages |
|
|
|
Report of Independent Registered Public Accounting Firm |
|
F-1 |
|
|
|
Balance Sheets |
|
F-2 |
|
|
|
Statements of Operations and Comprehensive Loss |
|
F-3 |
|
|
|
Statements of Cash Flows |
|
F-4 |
|
|
|
Statements of Stockholders’ Equity/ (Deficiency) |
|
F-5 |
|
|
|
Notes
to Financial Statements |
|
F-6 – F-16 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To: |
The Board of Directors and Stockholders of
China Bio-Energy Corp. |
We have audited the accompanying balance sheets
of China Bio-Energy Corp. (the “Company”) as of December 31, 2014, 2013, 2012, 2011, and 2010, and the related statements
of operations and comprehensive income, stockholders' equity, and cash flows for the years ended 2014, 2013, 2012, and 2011 and
for the six months ended December 31, 2010. These financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred
to above present fairly, in all material respects, the financial position of China Bio-Energy Corp. as of December 31, 2014, 2013,
2012, 2011, and 2010, and the results of its operations and its cash flows for each of the fiscal years then ended in conformity
with accounting principles generally accepted in the United States of America.
As discussed in Note 11 to the financial statements,
the Variable Interest Entity agreements between the Company and the Variable Interest Entities have been terminated. Moreover,
long term investments in certain subsidiaries have become dormant and defunct as a result of delinquent statutory filings; accordingly,
the accompanying financial statements have been prepared assuming that the Company no longer exercises control over these subsidiaries.
The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 12 to the financial statements,
the Company had incurred substantial losses in previous years and has a working capital deficit, which raises substantial doubt
about its ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note
12. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
San Mateo, California |
WWC, P.C. |
August 31, 2015 |
Certified Public Accountants |
China Bio-Energy Corp.
Audited Balance Sheets
As of December 31, 2014, 2013, 2012, 2011, and
2010
(Stated in US Dollars)
| |
As of December 31, | |
| |
2014 | | |
2013 | | |
2012 | | |
2011 | | |
2010 | |
ASSETS | |
| | | |
| | | |
| | | |
| | | |
| | |
Current assets | |
| | | |
| | | |
| | | |
| | | |
| | |
Cash and cash equivalents | |
$ | 200 | | |
$ | - | | |
$ | 14,780 | | |
$ | 242 | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total Assets | |
$ | 200 | | |
$ | - | | |
$ | 14,780 | | |
$ | 242 | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | | |
| | | |
| | | |
| | |
Current liabilities | |
| | | |
| | | |
| | | |
| | | |
| | |
Accrued expense | |
$ | 250,000 | | |
$ | 187,500 | | |
$ | 125,000 | | |
$ | 62,500 | | |
$ | - | |
Taxes and other payables | |
| 1,044,000 | | |
| 734,400 | | |
| 457,200 | | |
| 212,400 | | |
| - | |
Total current liabilities | |
| 1,294,000 | | |
| 921,900 | | |
| 582,200 | | |
| 274,900 | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total Liabilities | |
$ | 1,294,000 | | |
$ | 921,900 | | |
$ | 582,200 | | |
$ | 274,900 | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Commitment and contingencies | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Stockholders’ Equity | |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock, $0.001 par value, 100,000,000 shares authorized; 58,405,005, 38,405,005, 38,405,005, 28,791,267 and 27,312,515 shares issued and outstanding as of December 31, 2014, 2013, 2012, 2011, and 2010, respectively | |
$ | 58,405 | | |
$ | 38,405 | | |
$ | 38,405 | | |
$ | 28,791 | | |
$ | 27,313 | |
Additional paid in capital | |
| 13,655,439 | | |
| 13,075,439 | | |
| 13,075,439 | | |
| 11,782,305 | | |
| 9,715,344 | |
Accumulated deficit | |
| (15,007,644 | ) | |
| (14,035,744 | ) | |
| (13,681,264 | ) | |
| (12,085,754 | ) | |
| (9,742,657 | ) |
Total stockholders’ equity | |
$ | (1,293,800 | ) | |
$ | (921,900 | ) | |
$ | (567,420 | ) | |
$ | (274,658 | ) | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total Liabilities and Stockholders’ Equity | |
$ | 200 | | |
$ | - | | |
$ | 14,780 | | |
$ | 242 | | |
$ | - | |
See Accompanying Notes to the Financial Statements.
China Bio-Energy Corp.
Audited Statements of Operations and Comprehensive
Loss
For the years ended December 31, 2014, 2013,
2012, and 2011, and
For the six months ended December 31, 2010
(Stated in US Dollars)
| |
For the years ended December 31, | | |
For the six months
ended December 31, | |
| |
2014 | | |
2013 | | |
2012 | | |
2011 | | |
2010 | |
| |
| | |
| | |
| | |
| | |
| |
Revenue | |
$ | - | | |
$ | - | | |
$ | - | | |
| - | | |
$ | - | |
Cost of revenue | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Gross profit | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
General and administrative expenses | |
| 972,100 | | |
| 354,480 | | |
| 1,595,510 | | |
| 2,343,339 | | |
| 150 | |
Impairment loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| 9,742,657 | |
Total operating expenses | |
| 972,100 | | |
| 354,480 | | |
| 1,595,510 | | |
| 2,343,339 | | |
| 9,742,807 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Loss from operation | |
| (972,100 | ) | |
| (354,480 | ) | |
| (1,595,510 | ) | |
| (2,343,339 | ) | |
| (9,742,807 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Other income/(expenses) | |
| 200 | | |
| - | | |
| - | | |
| 242 | | |
| - | |
Total other expenses | |
| 200 | | |
| - | | |
| - | | |
| 242 | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Loss before income taxes | |
| (971,900 | ) | |
| (354,480 | ) | |
| (1,595,510 | ) | |
| (2,343,097 | ) | |
| (9,742,807 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Provisions for income tax | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
$ | (971,900 | ) | |
$ | (354,480 | ) | |
$ | (1,595,510 | ) | |
| (2,343,097 | ) | |
$ | (9,742,807 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Other comprehensive income | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Comprehensive loss | |
$ | (971,900 | ) | |
$ | (354,480 | ) | |
$ | (1,595,510 | ) | |
| (2,343,097 | ) | |
$ | (9,742,807 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Loss per share | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | (0.02 | ) | |
$ | (0.01 | ) | |
$ | (0.05 | ) | |
| (0.08 | ) | |
$ | (0.36 | ) |
Diluted | |
$ | (0.02 | ) | |
$ | (0.01 | ) | |
$ | (0.05 | ) | |
| (0.08 | ) | |
$ | (0.36 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 44,103,635 | | |
| 38,405,005 | | |
| 33,722,846 | | |
| 28,329,640 | | |
| 27,194,159 | |
Diluted | |
| 44,103,635 | | |
| 38,405,005 | | |
| 33,722,846 | | |
| 28,329,640 | | |
| 27,206,482 | |
See Accompanying Notes to the Financial Statements.
China Bio-Energy Corp.
Audited Statements of Cash Flows
For the years ended December 31, 2014, 2013,
2012, and 2011, and
For the six months ended December 31, 2010
(Stated in US Dollars)
| |
For the years ended December 31, | | |
For the six months
ended December 31, | |
| |
2014 | | |
2013 | | |
2012 | | |
2011 | | |
2010 | |
| |
| | |
| | |
| | |
| | |
| |
Net loss | |
| (971,900 | ) | |
| (354,480 | ) | |
| (1,595,510 | ) | |
| (2,343,097 | ) | |
| (9,742,807 | ) |
Adjustments to reconcile net income to net cash from operations: | |
| | | |
| | | |
| | | |
| | | |
| | |
Impairment loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| 9,742,657 | |
Stock-based compensation | |
| 600,000 | | |
| - | | |
| 1,152,748 | | |
| 2,068,439 | | |
| - | |
Changes in operating assets and liabilities: | |
| | | |
| | | |
| | | |
| | | |
| | |
Increase in accounts payables and accruals | |
| 62,500 | | |
| 62,500 | | |
| 62,500 | | |
| 62,500 | | |
| 150 | |
Increase in taxes and other payables | |
| 309,600 | | |
| 277,200 | | |
| 244,800 | | |
| 212,400 | | |
| - | |
Net cash generated from/(used by) operating activities | |
| 200 | | |
| (14,780 | ) | |
| (135,462 | ) | |
| 242 | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Cash flows from investing activities | |
| | | |
| | | |
| | | |
| | | |
| | |
Net cash provided by investing activities | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Cash flows from financing activities | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of common stock | |
| - | | |
| - | | |
| 150,000 | | |
| - | | |
| - | |
Net cash provided by financing activities | |
| - | | |
| - | | |
| 150,000 | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net increase/(decrease) of cash and cash equivalents | |
| 200 | | |
| (14,780 | ) | |
| 14,538 | | |
| 242 | | |
| - | |
Cash & cash equivalents at the beginning of year | |
| - | | |
| 14,780 | | |
| 242 | | |
| - | | |
| - | |
Cash & cash equivalents at the end of year | |
| 200 | | |
| - | | |
| 14,780 | | |
| 242 | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Supplementary information | |
| | | |
| | | |
| | | |
| | | |
| | |
Interest received | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Interest paid | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Income taxes paid | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES:
| a) | In 2011, the Company issued a total of 1,478,752 shares of common stock valued at $2,068,439 to four
consulting firms for corporate advisory services. |
| b) | In 2012, the Company issued a total of 9,613,738 shares of common stock valued at $1,152,748 to five
consultants and one consulting firm for corporate advisory services. |
| c) | In 2014, the Company issued a total of 20,000,000 shares of common stock valued at $600,000 to a
consulting firm for corporate advisory services. |
See Accompanying Notes to the Financial Statements.
China Bio-Energy Corp.
Audited Statements of Stockholders’ Equity/
(Deficiency)
For the fiscal years ended December 31, 2014,
2013, 2012, and 2011, and
For the six months ended December 31, 2010
(Stated in US Dollars)
| |
| | |
| | |
| | |
Retained | | |
Accumulated | | |
| |
| |
Number | | |
| | |
Additional | | |
earnings/ | | |
other | | |
| |
| |
of | | |
Common | | |
paid in | | |
(Accumulated | | |
comprehensive | | |
| |
| |
Shares | | |
stock | | |
capital | | |
deficit) | | |
income | | |
Total | |
Balance at July 1, 2010 | |
| 40,000,000 | | |
| 40,000 | | |
| 86,360 | | |
| (1,451,677 | ) | |
| 740,901 | | |
| (584,416 | ) |
Exercise of stock options | |
| 6,000,000 | | |
| 6,000 | | |
| - | | |
| - | | |
| - | | |
| 6,000 | |
1 for 40 reverse split | |
| (44,849,990 | ) | |
| (44,850 | ) | |
| - | | |
| - | | |
| - | | |
| (44,850 | ) |
Net loss from continuing operations | |
| - | | |
| - | | |
| - | | |
| (9,742,807 | ) | |
| - | | |
| (9,742,807 | ) |
Share exchange agreement with Ding Neng Holdings and recapitalization | |
| 26,162,505 | | |
| 26,163 | | |
| 9,628,984 | | |
| 1,451,827 | | |
| (740,901 | ) | |
| 10,366,073 | |
Balance at December 31, 2010 | |
| 27,312,515 | | |
| 27,313 | | |
| 9,715,344 | | |
| (9,742,657 | ) | |
| - | | |
| - | |
Balance at January 1, 2011 | |
| 27,312,515 | | |
| 27,313 | | |
| 9,715,344 | | |
| (9,742,657 | ) | |
| - | | |
| - | |
Stock-based compensation | |
| 1,478,752 | | |
| 1,478 | | |
| 2,066,961 | | |
| - | | |
| - | | |
| 2,068,439 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (2,343,097 | ) | |
| - | | |
| (2,343,097 | ) |
Balance at December 31, 2011 | |
| 28,791,267 | | |
| 28,791 | | |
| 11,782,305 | | |
| (12,085,754 | ) | |
| - | | |
| (274,658 | ) |
Balance at January 1, 2012 | |
| 28,791,267 | | |
| 28,791 | | |
| 11,782,305 | | |
| (12,085,754 | ) | |
| - | | |
| (274,658 | ) |
Issuance of shares for cash | |
| 750,000 | | |
| 750 | | |
| 149,250 | | |
| - | | |
| - | | |
| 150,000 | |
Stock-based compensation | |
| 8,863,738 | | |
| 8,864 | | |
| 1,143,884 | | |
| - | | |
| - | | |
| 1,152,748 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (1,595,510 | ) | |
| - | | |
| (1,595,510 | ) |
Balance at December 31, 2012 | |
| 38,405,005 | | |
| 38,405 | | |
| 13,075,439 | | |
| (13,681,264 | ) | |
| - | | |
| (567,420 | ) |
Balance at January 1, 2013 | |
| 38,405,005 | | |
| 38,405 | | |
| 13,075,439 | | |
| (13,681,264 | ) | |
| - | | |
| (567,420 | ) |
Net loss | |
| - | | |
| - | | |
| - | | |
| (354,480 | ) | |
| - | | |
| (354,480 | ) |
Balance at December 31, 2013 | |
| 38,405,005 | | |
| 38,405 | | |
| 13,075,439 | | |
| (14,035,744 | ) | |
| - | | |
| (921,900 | ) |
Balance at January 1, 2014 | |
| 38,405,005 | | |
| 38,405 | | |
| 13,075,439 | | |
| (14,035,744 | ) | |
| - | | |
| (921,900 | ) |
Stock-based compensation | |
| 20,000,000 | | |
| 20,000 | | |
| 580,000 | | |
| - | | |
| - | | |
| 600,000 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (971,900 | ) | |
| - | | |
| (971,900 | ) |
Balance at December 31, 2014 | |
| 58,405,005 | | |
| 58,405 | | |
| 13,655,439 | | |
| (15,007,644 | ) | |
| - | | |
| (1,293,800 | ) |
See Accompanying Notes to the Financial Statements.
China Bio-Energy Corp.
Notes to Financial Statements
As of and for the years ended December 31, 2014,
2013, 2012, and 2011, and
As of and for the six months ended December
31, 2010
(Stated in US Dollars)
1. | The
Company and Principal Business Activities |
China
Bio-Energy Corp. (the “Company”), formerly known as China INSOnline Corp., was incorporated on December 23, 1988 as
Lifequest Medical, Inc., a Delaware corporation.
In
June 2010, the Company ceased all operations conducted by its then subsidiaries: Ever Trend Investment Limited, Run Ze Yong Cheng
(Beijing) Technology, San Teng Da Fei Technology, and Guang Hua Insurance Agency (“Ever Trend Group”); on January
27, 2015, the Company announced the completion of the disposition of the aforementioned subsidiaries. Accordingly, the Company
has excluded the accounts of Ever Trend Group in these financial statements and the accompanying notes contained herein.
On
November 12, 2010, the Company entered into a share exchange agreement with Ding Neng Holdings Ltd, an investment holdings company
incorporated in the British Virgin Islands (“Ding Neng Holdings”); the share exchange agreement was amended on December
6, 2010, where by the Company, under the share exchange agreement and its related amendment, would have contemplated acquiring
100% of Ding Neng Holdings in exchange for the issuance of 26,162,505 shares of the Company’s common stock, par value $0.001.
Under the share exchange agreement, the Company would have contemplated owning and operating Ding Neng Holdings and Ding Neng
Holdings’ directly, and indirectly held subsidiaries: Ding Neng Bio-technology Co., Ltd. (“Ding Neng HK”), Zhangzhou
Fuhua Biomass Energy Technology Co., Ltd. (“WOFE”), and Ding Neng Bio-tech. Ding Neng HK was incorporated under the
laws of Hong Kong on September 10, 2010. Ding Neng HK did not have any operations. Ding Neng HK has been delinquent with its annual
regulatory filings in Hong Kong, and should be considered dormant and defunct. Ding Neng HK was wholly-owned by Ding Neng Holdings.
Zhangzhou Fuhua Biomass Energy Technology Co., Ltd. (“WFOE”) was incorporated as a wholly-foreign owned entity under
the laws of the People’s Republic of China (“PRC”), on November 2, 2010. WFOE was wholly-owned by Ding Neng
HK. Ding Neng Bio-tech was incorporated under the laws of the PRC on December 8, 2006. It was located in Zhangzhou city Fujian
Province of PRC. Ding Neng Bio-tech was engaged in the production, refinement and distribution of bio-diesel fuel in Southern
China. Ding Neng Bio-tech operated a biodiesel manufacturing facility in Zhangzhou city. On October 28, 2010, WFOE and Ding Neng
Bio-tech entered into a set of variable interest entity agreements that included: (1) a Consulting Service Agreement with Ding
Neng Bio-tech, which entitled WFOE to receive substantially all of the economic benefits of Ding Neng Bio-tech in consideration
for services provided by WFOE to Ding Neng Bio-tech, (2) an Option Agreement with Xinfeng Nie, Sanfu Huang, and Shunlong Hu (the
shareholders of Ding Neng Bio-tech) allowing the WFOE to acquire all the shares of Ding Neng Bio-tech as permitted by PRC laws,
(3) a Voting Rights Proxy Agreement that provides WFOE with the all voting rights of the Ding Neng Bio-tech shareholders, and
(4) an Equity Pledge Agreement that pledges the shares in Ding Neng Bio-tech to WFOE (VIE Agreements). These VIE Agreements granted
effective control of Ding Neng Bio-tech to WFOE. On June 4, 2015, WFOE filed a civil action in Haicang District People’s
Court of Xiamen, Fujian, PRC (the “Court”) against Ding Neng Bio-tech, alleging that the purposes of those certain
executed VIE Agreements entered into by WFOE and Ding Neng Bio-Tech on October 28, 2010, had been frustrated, and that these VIE
Agreements should be terminated. WFOE alleged that Ding Neng Bio-Tech did not make any payment of service fees to WFOE, and that
Ding Neng Bio-Tech failed to perfect the security interest in the pledged stocks. On July 14, 2015, this case was settled via
in-court mediation directed by the Court. As a result, WFOE and Ding Neng Bio-Tech entered into binding settlement (i) to terminate
the VIE Agreements, (ii) that WFOE and Ding Neng Bio-Tech do not have any other disputes over this case, and (iii) that the litigation
fee in the amount of RMB10,000 (approximately $1,610.5) would be borne by Ding Neng Bio-Tech. Ding Neng Holdings is delinquent
with its regulatory filings and annual fees to the British Virgin Islands; accordingly, the Ding Neng Holdings should be considered
dormant and defunct.
China Bio-Energy Corp.
Notes to Financial Statements
As of and for the years ended December 31, 2014,
2013, 2012, and 2011, and
As of and for the six months ended December
31, 2010
(Stated in US Dollars)
Given
that the Company has not been able to exercise effective control over Ding Neng Bio-Tech or to access Ding Neng Bio-tech’s
financial information since 2011, and the VIE Agreements were terminated, the Company has excluded the accounts of Ding Neng Bio-Tech’s
in these financial statements and the accompanying notes contained herein; the exclusion of such accounts is considered as a type
two material subsequent event that occurred prior to the issuance of the financial statements but after the balance sheets dates
that required material adjustments to the financial statements presented. Ding Neng Holdings is delinquent and defunct; the Company
has determined that the Company was never registered as the sole shareholder of Ding Neng Holdings pursuant to the share exchange
agreement dated November 12, 2010, and amended December 6, 2010; accordingly, the Company has excluded the accounts of Ding Neng
and its subsidiaries in these financial statements and the accompanying notes as contained herein; the exclusion of such accounts
is considered as a type two material subsequent event that occurred prior to the issuance of the financial statements but after
the balance sheets dates that required material adjustments to the financial statements presented. The Company accounted for the
issuance of shares to the shareholders of Ding Neng Holdings under the contemplated share exchange transaction as a recapitalization
of the Company under reverse take-over accounting; accordingly, the Company’s historical stockholders’ equity has
been retroactively restated to the first period presented; as a result of the Company not being updated to Ding Neng Holdings
shareholder register, and that Ding Neng Holdings being defunct, the Company has written off all investments made in Ding Neng
as loss on investment in subsidiary.
In
connection with the share exchange agreement with the shareholders of Ding Neng Holdings that contemplated the acquisition of
Ding Neng Holdings and its subsidiaries, the Company elected to adopt the fiscal year used by Ding Neng Holdings, which was a
calendar year; accordingly, the Company’s financial statements presented herein have been, and on a go-forward basis, will
be prepared using a December 31 year end date, and each operating period will cover twelve full calendar months.
2. | Significant
Accounting Policies |
The
accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America (“US GAAP”).
The
preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates. Estimates are used for, but not limited to, the accounting for certain items such as allowance for doubtful accounts,
depreciation and amortization, impairment, inventory allowance, taxes and contingencies.
Certain
conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will
only be resolved when one or more future events occur or fail to occur. The Company’s management assesses such contingent
liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal
proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company’s
management evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the
amount of relief sought or expected to be sought.
If
the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability
can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment
indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be
estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable
and material would be disclosed.
Loss
contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case
the guarantee would be disclosed.
China Bio-Energy Corp.
Notes to Financial Statements
As of and for the years ended December 31, 2014,
2013, 2012, and 2011, and
As of and for the six months ended December
31, 2010
(Stated in US Dollars)
| D. | Cash
and cash equivalents |
The
Company classifies the following instruments as cash and cash equivalents: cash on hand, unrestricted bank deposits, and all highly
liquid investments purchased with original maturities of three months or less.
The
Company uses the accrual method of accounting to determine income taxes for the year. The Company has implemented FASB ASC 740
Accounting for Income Taxes. Income tax liabilities computed according to the United States, People’s Republic of China
(PRC), and Hong Kong tax laws provide for the tax effects of transactions reported in the financial statements and consists of
taxes currently due, plus deferred taxes, related primarily to differences arising from the recognition of expenses related to
the depreciation of plant and equipment, amortization of intangible assets, and provisions for doubtful accounts between financial
and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences,
which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized
for operating losses that are available to offset future income taxes.
A
valuation allowance is recognized for deferred tax assets if it is more likely than not, that the deferred tax assets will either
expire before the Company is able to realize that tax benefit, or that future realization is uncertain.
| F. | Stock-based
compensation |
The
Company has elected to use the Black-Scholes-Merton (“BSM”) pricing model to determine the fair value of stock options
on the dates of grant. Also, the Company recognizes stock-based compensation using the straight-line method over the requisite
service period.
The
Company values stock awards using the market price on or around the date the shares were awarded and includes the amount of compensation
as a period compensation expense over the requisite service period.
For the years ended December 31,
2014, 2013, 2012, and 2011, and for the six months ended December 31, 2010, the Company recognized stock-based compensation of
$600,000; $0; $1,152,748; $2,068,439; and $0, respectively.
| G. | Foreign
currency translation |
The
accompanying financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi
(RMB). The financial statements are translated into United States dollars from RMB at year-end exchange rates as to assets and
liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange
rates when the capital transactions occurred.
| |
As of December 31, | |
Exchange Rates | |
2014 | | |
2013 | | |
2012 | | |
2011 | | |
2010 | |
Year-end RMB : US$ exchange rate | |
| 6.15350 | | |
| 6.11400 | | |
| 6.31610 | | |
| 6.36470 | | |
| 6.61180 | |
Average 12-month RMB : US$ exchange rate | |
| 6.14821 | | |
| 6.19817 | | |
| 6.31984 | | |
| 6.47351 | | |
| 6.77875 | |
The
RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions.
No representation is made that the RMB amounts could have been, or could be, converted into US Dollar at the rates used in translation.
China Bio-Energy Corp.
Notes to Financial Statements
As of and for the years ended December 31, 2014,
2013, 2012, and 2011, and
As of and for the six months ended December
31, 2010
(Stated in US Dollars)
In
accordance to FASB ASC 605-10, The Company recognizes revenue net of value added tax (VAT) when persuasive evidence of an arrangement
exists, delivery of the goods has occurred, customer acceptance has been obtained, which means the significant risks and ownership
have been transferred to the customer, the price is fixed or determinable and collectability is reasonably assured. No return
allowance is made as products returns are insignificant based on historical experience. Costs of distributing products to the
Company’s customers are included in selling expenses.
Cost
of goods sold consists primarily of raw materials, utility and supply costs consumed in the manufacturing process, manufacturing
labor, depreciation expense and direct overhead expenses necessary to manufacture finished goods as well as warehousing and distribution
costs such as inbound freight charges, shipping and handling costs, purchasing and receiving costs.
Basic
earnings per share is computed on the basis of the weighted average number of common stock outstanding during the period. Diluted
earnings per share is computed on the basis of the weighted average number of common stock and common stock equivalents outstanding.
Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation.
Dilution
is computed by applying the treasury stock method for options and warrants. Under this method, options and warrants are assumed
to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used
to purchase common stock at the average market price during the period.
Comprehensive
income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners.
The Company presents components of comprehensive income with equal prominence to other financial statements. The Company’s
current component of other comprehensive income is the foreign currency translation adjustment.
The
Company evaluates subsequent events that have occurred after the consolidated balance sheet date but before the consolidated financial
statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence with
respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing
financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions that did not exist at
the date of the balance sheet but arose subsequent to that date. The Company has identified material subsequent events that would
require disclosure to the financial statements.
| M. | Recent
accounting pronouncements |
In
May 2014, the FASB issued Accounting Standards Update ASU No. 2014-09, “Revenue from Contracts with Customers”, a
converged standard on revenue recognition. The new pronouncement requires revenue recognition to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for those goods or services. The guidance also specifies the accounting for some costs to obtain or fulfil a contract with a customer,
as well as enhanced disclosure requirements. ASU 2014-9 is effective for annual reporting periods beginning after December 15,
2016. Early adoption is not permitted. The adoption of ASC 2014-9 is not expected to have a material effect on the Company’s
financial statements.
China Bio-Energy Corp.
Notes to Financial Statements
As of and for the years ended December 31, 2014,
2013, 2012, and 2011, and
As of and for the six months ended December
31, 2010
(Stated in US Dollars)
In
August 2014, the FASB issued Accounting Standards Update ASU No. 2014-15, “Presentation of Financial Statements Going Concern
(Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently,
there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about
an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update
provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures.
The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding
upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of
the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles
for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated
as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial
doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are
issued (or available to be issued). The Company is currently reviewing the provisions of this ASU to determine if there will be
any impact on the Company’s financial statements.
In
February 2015, the FASB issued Accounting Standards Update ASU No. 2015-02, “Consolidation” (Topic 810). ASU 2015-02
changes the guidance with respect to the analysis that a reporting entity must perform to determine whether it should consolidate
certain types of legal entities. All legal entities are subject to reevaluation under the revised consolidation mode. ASU 2015-02
affects the following areas: (1) Limited partnerships and similar legal entities. (2) Evaluating fees paid to a decision maker
or a service provider as a variable interest. (3) The effect of fee arrangements on the primary beneficiary determination. (4)
The effect of related parties on the primary beneficiary determination. (5) Certain investment funds. ASU 2015-02 is effective
for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15,
2015. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the guidance in an interim
period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. A reporting
entity may apply the amendments in this guidance using a modified retrospective approach by recording a cumulative-effect adjustment
to equity as of the beginning of the fiscal year of adoption. A reporting entity also may apply the amendments retrospectively.
The adoption of ASU 2015-02 is not expected to have any impact on the Company’s financial statements.
In
April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs”. The accounting
guidance requires that debt issuance costs related to a recognized debt liability be reported on the Statements of Financial Condition
as a direct deduction from the carrying amount of that debt liability. The guidance is effective for the Company retrospectively
beginning in the first quarter of fiscal 2017 and early adoption is permitted. The adoption of this accounting guidance is not
expected to have a material impact on the Company’s financial statements.
In
July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory,” which applies
to inventory that is measured using first-in, first-out (“FIFO”) or average cost. Under the updated guidance, an entity
should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices
in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement
is unchanged for inventory that is measured using last-in, last-out (“LIFO”). This ASU is effective for annual and
interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning
of an interim or annual reporting period. The adoption of this accounting guidance is not expected to have a material impact on
the Company’s financial statements.
As
of December 31, 2014, except for the above, there are no recently issued accounting standards not yet adopted that would have
a material effect on the Company’s financial statements.
China Bio-Energy Corp.
Notes to Financial Statements
As of and for the years ended December 31, 2014,
2013, 2012, and 2011, and
As of and for the six months ended December
31, 2010
(Stated in US Dollars)
Accrued
expenses consisted of the followings as of December 31, 2014, 2013, 2012, 2011, and 2010:
| |
As of December 31, | |
| |
2014 | | |
2013 | | |
2012 | | |
2011 | | |
2010 | |
Audit Fee | |
$ | 150,000 | | |
$ | 112,500 | | |
$ | 75,000 | | |
$ | 37,500 | | |
$ | - | |
Legal Fee | |
| 100,000 | | |
| 75,000 | | |
| 50,000 | | |
| 25,000 | | |
| - | |
| |
$ | 250,000 | | |
$ | 187,500 | | |
$ | 125,000 | | |
$ | 62,500 | | |
$ | - | |
4. |
Taxes and Other Payables |
Taxes
and other payables consisted of the followings as of December 31, 2014, 2013, 2012, 2011, and 2010:
| |
As of December 31, | |
| |
2014 | | |
2013 | | |
2012 | | |
2011 | | |
2010 | |
Franchise Tax | |
$ | 720,000 | | |
$ | 540,000 | | |
$ | 360,000 | | |
$ | 180,000 | | |
$ | - | |
Interest and Penalties | |
| 324,000 | | |
| 194,400 | | |
| 97,200 | | |
| 32,400 | | |
| - | |
| |
$ | 1,044,000 | | |
$ | 734,400 | | |
$ | 457,200 | | |
$ | 212,400 | | |
$ | - | |
5. |
General and Administrative Expenses |
General
and Administrative Expenses consisted of the followings for the years ended December 31, 2014, 2013, 2012, and 2011, and for the
six months ended 2010:
| |
For the years ended December 31, | | |
For the six months ended December 31, | |
| |
2014 | | |
2013 | | |
2012 | | |
2011 | | |
2010 | |
Audit Fee | |
$ | 37,500 | | |
$ | 37,500 | | |
$ | 37,500 | | |
$ | 37,500 | | |
$ | - | |
Consulting Fee | |
| - | | |
| - | | |
| 132,000 | | |
| - | | |
| - | |
Franchise Tax | |
| 180,000 | | |
| 180,000 | | |
| 180,000 | | |
| 180,000 | | |
| - | |
Interest and Penalties | |
| 129,600 | | |
| 97,200 | | |
| 64,800 | | |
| 32,400 | | |
| - | |
Legal Fee | |
| 25,000 | | |
| 25,000 | | |
| 25,000 | | |
| 25,000 | | |
| - | |
Other Expense | |
| - | | |
| 14,780 | | |
| 3,462 | | |
| - | | |
| 150 | |
Stock Compensation | |
| 600,000 | | |
| - | | |
| 1,152,748 | | |
| 2,068,439 | | |
| - | |
| |
$ | 972,100 | | |
$ | 354,480 | | |
$ | 1,595,510 | | |
$ | 2,343,339 | | |
$ | 150 | |
China Bio-Energy Corp.
Notes to Financial Statements
As of and for the years ended December 31, 2014,
2013, 2012, and 2011, and
As of and for the six months ended December
31, 2010
(Stated in US Dollars)
The
Company was incorporated in the United States of America (“USA”). The Company does not generate any net income from
its operations for the years ended December 31, 2014, 2013, 2012, 2011 and 2010.
The
provision for income taxes consists of the following:
| |
For the years ended December 31, | | |
For the six months ended December 31, | |
Current: | |
2014 | | |
2013 | | |
2012 | | |
2011 | | |
2010 | |
USA | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Deferred: | |
| | | |
| | | |
| | | |
| | | |
| | |
USA | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Provision for income taxes | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
The
reconciliation of USA statutory income tax rate to the Company’s effective income tax rate is as follows:
| |
For the years ended December 31, | | |
For the six months ended December 31, | |
| |
2014 | | |
2013 | | |
2012 | | |
2011 | | |
2010 | |
Income tax at USA statutory rate of 34% | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
Others | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Provision for income taxes | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Uncertain
Tax Positions
Interest
associated with unrecognized tax benefits are classified as income tax, and penalties are classified in selling, general and administrative
expenses in the statements of operations. For the years ended December 31, 2014, 2013, 2012, 2011, and 2010, the Company had no
unrecognized tax benefits and related interest and penalties expenses. Currently, the Company is not subject to examination by
major tax jurisdictions.
Deferred
Income Tax Benefits
Deferred
income tax benefits arise from temporary differences between the tax basis of assets and liabilities and their reported amounts
in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating the Company’s
ability to recover the deferred tax assets, the management considers all available positive and negative evidence, including scheduled
reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations.
In projecting future taxable income, the Company begins with historical results adjusted for the results of discontinued operations
and incorporate assumptions about the amount of future state, federal, and foreign pretax operating income adjusted for items
that do not have tax consequences. The assumptions about future taxable income require the use of significant judgment and are
consistent with the plans and estimates that the Company is using to manage the underlying businesses. As of December 31, 2014,
2013, 2012, 2011, and 2010, management was uncertain as to whether or not the Company would be able to utilize the potential deferred
tax assets arising from net operating losses` since the Company is not currently generating any revenue; accordingly, the Company
has not recognized a deferred tax assets.
China Bio-Energy Corp.
Notes to Financial Statements
As of and for the years ended December 31, 2014,
2013, 2012, and 2011, and
As of and for the six months ended December
31, 2010
(Stated in US Dollars)
Basic
loss per common share from operations attributable to the Company is based on the weighted-average common shares outstanding during
the relevant period. Diluted loss per common share from continuing operations attributable to the Company is based on the weighted-average
common shares outstanding during the relevant period adjusted for the dilutive effect of share-based awards. The Company did not
have significant share-based awards outstanding that were antidilutive and not included in the calculation of diluted loss per
common share from operations attributable to the Company for the years ended December 31, 2014, 2013, 2012, and 2011, and for
the six months ended 2010.
The
following table provides a reconciliation of the numerators and denominators used to determine basic and diluted income per common
share from continuing operations attributable to the Company:
| |
For the years ended December 31, | | |
For the six
months ended
December 31, | |
| |
2014 | | |
2013 | | |
2012 | | |
2011 | | |
2010 | |
Numerator | |
| | |
| | |
| | |
| | |
| |
Net Loss | |
$ | (971,900 | ) | |
$ | (354,480 | ) | |
$ | (1,595,510 | ) | |
$ | (2,343,097 | ) | |
$ | (9,742,807 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Denominator | |
| | | |
| | | |
| | | |
| | | |
| | |
Weighted-average common shares outstanding, basic | |
| 44,103,635 | | |
| 38,405,005 | | |
| 33,722,846 | | |
| 28,329,640 | | |
| 27,194,159 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Potentially Dilutive Securities: | |
| | | |
| | | |
| | | |
| | | |
| | |
Addition to Common Stock from Exercise of Stock option | |
| - | | |
| - | | |
| - | | |
| - | | |
| 12,323 | |
Weighted-average common shares outstanding, diluted | |
| 44,103,635 | | |
| 38,405,005 | | |
| 33,722,846 | | |
| 28,329,640 | | |
| 27,206,482 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Loss per common share | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | (0.02 | ) | |
$ | (0.01 | ) | |
$ | (0.05 | ) | |
$ | (0.08 | ) | |
$ | (0.36 | ) |
Diluted | |
$ | (0.02 | ) | |
$ | (0.01 | ) | |
$ | (0.05 | ) | |
$ | (0.08 | ) | |
$ | (0.36 | ) |
For
the years ended December 31, 2014, 2013, 2012, and 2011, and for the six months ended 2010, the Company does not generate any
income and no risk is occurred during the years.
The
Company’s financial instruments, including cash and equivalents, accounts and other receivables, accounts and other payables,
accrued liabilities and short-term debt, have carrying amounts that approximate their fair values due to their short maturities.
ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments
held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation
hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying
amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a
reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their
expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
Level
1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
China Bio-Energy Corp.
Notes to Financial Statements
As of and for the years ended December 31, 2014,
2013, 2012, and 2011, and
As of and for the six months ended December
31, 2010
(Stated in US Dollars)
Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that
are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level
3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The
Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities
from Equity,” and ASC 815.
The
following tables present the Company’s financial assets and liabilities at fair value in accordance to ASC 820-10:
As of December 31, 2014: | |
Quoted in Active | | |
Significant | | |
| | |
| |
| |
Markets | | |
Other | | |
Significant | | |
| |
| |
for Identical | | |
Observable | | |
Unobservable | | |
| |
| |
Assets | | |
Inputs | | |
Inputs | | |
| |
| |
(Level 1) | | |
(Level 2) | | |
(Level 3) | | |
Total | |
Financial assets: | |
| | |
| | |
| | |
| |
Cash | |
$ | 200 | | |
$ | - | | |
$ | - | | |
$ | 200 | |
Total financial assets | |
$ | 200 | | |
$ | - | | |
$ | - | | |
$ | 200 | |
As of December 31, 2013: | |
Quoted in Active | | |
Significant | | |
| | |
| |
| |
Markets | | |
Other | | |
Significant | | |
| |
| |
for Identical | | |
Observable | | |
Unobservable | | |
| |
| |
Assets | | |
Inputs | | |
Inputs | | |
| |
| |
(Level 1) | | |
(Level 2) | | |
(Level 3) | | |
Total | |
Financial assets: | |
| | |
| | |
| | |
| |
Cash | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
Total financial assets | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
As of December 31, 2012: | |
Quoted in Active | | |
Significant | | |
| | |
| |
| |
Markets | | |
Other | | |
Significant | | |
| |
| |
for Identical | | |
Observable | | |
Unobservable | | |
| |
| |
Assets | | |
Inputs | | |
Inputs | | |
| |
| |
(Level 1) | | |
(Level 2) | | |
(Level 3) | | |
Total | |
Financial assets: | |
| | |
| | |
| | |
| |
Cash | |
$ | 14,780 | | |
$ | - | | |
$ | - | | |
$ | 14,780 | |
Total financial assets | |
$ | 14,780 | | |
$ | - | | |
$ | - | | |
$ | 14,780 | |
China Bio-Energy Corp.
Notes to Financial Statements
As of and for the years ended December 31, 2014,
2013, 2012, and 2011, and
As of and for the six months ended December
31, 2010
(Stated in US Dollars)
As of December 31, 2011: | |
Quoted in Active | | |
Significant | | |
| | |
| |
| |
Markets | | |
Other | | |
Significant | | |
| |
| |
for Identical | | |
Observable | | |
Unobservable | | |
| |
| |
Assets | | |
Inputs | | |
Inputs | | |
| |
| |
(Level 1) | | |
(Level 2) | | |
(Level 3) | | |
Total | |
Financial assets: | |
| | |
| | |
| | |
| |
Cash | |
$ | 242 | | |
$ | - | | |
$ | - | | |
$ | 242 | |
Total financial assets | |
$ | 242 | | |
$ | - | | |
$ | - | | |
$ | 242 | |
As of December 31, 2010: | |
Quoted in Active | | |
Significant | | |
| | |
| |
| |
Markets | | |
Other | | |
Significant | | |
| |
| |
for Identical | | |
Observable | | |
Unobservable | | |
| |
| |
Assets | | |
Inputs | | |
Inputs | | |
| |
| |
(Level 1) | | |
(Level 2) | | |
(Level 3) | | |
Total | |
Financial assets: | |
| | |
| | |
| | |
| |
Cash | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
Total financial assets | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
On
January 15, 2015, the Company entered into a lease agreement for office space in New York. The monthly rental expense is approximately
$2,831. The contract expires on January 31, 2016. The Company made a rental deposit of $4,700. The Company’s outstanding
lease commitments for 2015 and 2016 are $33,875 and $2,939, respectively.
(i)
Termination of VIE agreement
On
June 4, 2015, the Company, through its subsidiary Zhangzhou Fuhua Biomass Energy Technology Co., Ltd. (“WFOE”), filed
a civil action in Haicang District People’s Court of Xiamen, Fujian, PRC (the “Court”) against Ding Neng Bio-tech,
alleging that the purposes of those certain executed VIE Agreements entered into by WFOE and Ding Neng Bio-Tech on October 28,
2010 had been frustrated, and that these VIE Agreements should be terminated. WFOE alleged that Ding Neng Bio-Tech did not make
any payment of service fees to WFOE, and that Ding Neng Bio-Tech failed to perfect the security interest in the pledged stocks.
On
July 14, 2015, this case was settled via in-court mediation directed by the Court. As a result, WFOE and Ding Neng Bio-Tech entered
into a binding settlement (i) to terminate the VIE Agreements, (ii) that WFOE and Ding Neng Bio-Tech do not have any other disputes
over this case, and (iii) that the litigation fee in the amount of RMB10,000 (approximately $1,610.5) would be borne by Ding Neng
Bio-Tech.
Given
that the Company has not been able to exercise effective control over Ding Neng Bio-Tech or access to Ding Neng Bio-tech’s
financial information since 2011, and the VIE agreements were terminated, the Company has excluded the accounts of Ding Neng Bio-Tech’s
in these consolidated financial statements and accompanying notes contained herein; the exclusion of such accounts is considered
as a type two material subsequent event that occurred prior to the issuance of the financial statements but after the balance
sheets dates that required material adjustments to the consolidated financial statements presented.
China Bio-Energy Corp.
Notes to Financial Statements
As of and for the years ended December 31, 2014,
2013, 2012, and 2011, and
As of and for the six months ended December
31, 2010
(Stated in US Dollars)
(ii)
Delinquent of statutory filings of certain subsidiaries
Ding
Neng Holdings is delinquent with its regulatory filings and annual fees to the British Virgin Islands; accordingly, Ding Neng
Holdings should be considered dormant and defunct.
Ding
Neng Holdings is delinquent and defunct. The Company has also determined that the Company has not been registered as the sole
shareholder of Ding Neng Holdings pursuant to the share exchange agreement dated November 12, 2010, which was amended on December
6, 2010; accordingly, the Company has excluded the accounts of Ding Neng and its subsidiaries in these consolidated financial
statements and accompanying notes as contained herein. The exclusion of such accounts is considered as a type two material subsequent
event that occurred prior to the issuance of the financial statements but after the balance sheets dates that required material
adjustments to the consolidated financial statements presented. Accordingly, the Company has written off all investments made
in Ding Neng Holdings as loss on investment in subsidiary.
12. |
Going Concern Uncertainties |
These
financial statements have been prepared assuming that Company will continue as a going concern, which contemplates the realization
of assets and the discharge of liabilities in the normal course of business for the foreseeable future.
As
of December 31, 2014, the Company had accumulated deficits of $15,007,644 and working capital deficit of current liabilities exceeding
current assets by $1,293,800 due to the substantial losses in operation in previous years. Management’s plan to support
the Company in operations and to maintain its business strategy is to raise funds through public and private offerings and to
rely on officers and directors to perform essential functions with minimal compensation. If we do not raise all of the money we
need from public or private offerings, we will have to find alternative sources, such as loans or advances from our officers,
directors or others. Such additional financing may not become available on acceptable terms and there can be no assurance that
any additional financing that the Company does obtain will be sufficient to meet its needs in the long term. Even if the Company
is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or
cause substantial dilution for our stockholders, in the case of equity financing. If we require additional cash and cannot raise
it, we will either have to suspend operations or cease business entirely.
The
accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or
the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
China Bio-Energy Corp.
Unaudited Financial Statements
As of June 30, 2015 and December 31, 2014
(Stated in US Dollars)
CHINA BIO-ENERGY CORP.
INDEX TO FINANCIAL STATEMENTS
Contents
|
Page(s) |
|
|
Condensed Balance
Sheets |
F-19 |
|
|
Condensed Statements of Operations and Comprehensive Loss |
F-20 |
|
|
Condensed Statements of Cash Flows |
F-21 |
|
|
Notes to Condensed Financial Statements |
F-22
– F-31 |
CHINA BIO-ENERGY CORP.
CONDENSED BALANCE SHEETS
AS OF JUNE
30, 2015 AND DECEMBER 31, 2014
(Stated in US Dollars)
| |
June 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
| |
(Unaudited) | | |
(Audited) | |
ASSETS |
| |
| | |
| |
Current Assets | |
| | |
| |
Cash and cash equivalents | |
| 264,851 | | |
| 200 | |
Prepaid expenses | |
| 3,004 | | |
| - | |
Prepaid taxes | |
| 14,051 | | |
| - | |
Total Current Assets | |
| 281,906 | | |
| 200 | |
| |
| | | |
| | |
Non-current Assets | |
| | | |
| | |
Deposits | |
| 4,700 | | |
| - | |
Total Non-Current Assets | |
| 4,700 | | |
| - | |
| |
| | | |
| | |
Total Assets | |
| 286,606 | | |
| 200 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | |
| |
| | | |
| | |
Current Liabilities | |
| | | |
| | |
Taxes and other payable | |
$ | 1,376,565 | | |
$ | 1,044,000 | |
Wages payable | |
| 24,719 | | |
| - | |
Accrued expenses | |
| 150,000 | | |
| 250,000 | |
Total Current Liabilities | |
| 1,551,284 | | |
| 1,294,000 | |
| |
| | | |
| | |
Commitment and contingencies | |
| | | |
| | |
| |
| | | |
| | |
Stockholders' Equity | |
| | | |
| | |
Common stock, $0.001 par value, 100,000,000 shares authorized, 98,405,005 and 58,405,005 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively. | |
| 98,405 | | |
| 58,405 | |
Additional paid in capital | |
| 14,115,439 | | |
| 13,655,439 | |
Accumulated deficit | |
| (15,478,522 | ) | |
| (15,007,644 | ) |
Total Stockholders' Equity | |
| (1,264,678 | ) | |
| (1,293,800 | ) |
| |
| | | |
| | |
Total Liabilities and Stockholders' Equity | |
$ | 286,606 | | |
$ | 200 | |
The accompanying notes are an integral
part of these financial statements
CHINA BIO-ENERGY CORP.
CONDENSED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2015 AND 2014
(Stated in US Dollars)
(Unaudited)
| |
Three Months Ended
June 30, | | |
Six Months Ended
June 30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
| | |
| |
Revenue | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | |
Operating expenses: | |
| | | |
| | | |
| | | |
| | |
General and administrative expenses | |
| 79,591 | | |
| 15,625 | | |
| 470,878 | | |
| 340,850 | |
Total operating expenses | |
| 79,591 | | |
| 15,625 | | |
| 470,878 | | |
| 340,850 | |
| |
| | | |
| | | |
| | | |
| | |
Loss before income taxes | |
| (79,591 | ) | |
| (15,625 | ) | |
| (470,878 | ) | |
| (340,850 | ) |
| |
| | | |
| | | |
| | | |
| | |
Provision for income tax | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Net loss | |
$ | (79,591 | ) | |
$ | (15,625 | ) | |
| (470,878 | ) | |
| (340,850 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other comprehensive loss - foreign currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Comprehensive loss | |
$ | (79,591 | ) | |
$ | (15,625 | ) | |
| (470,878 | ) | |
| (340,850 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss per share | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
| (0.00 | ) | |
| (0.01 | ) |
Diluted | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
| (0.00 | ) | |
| (0.01 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average number of common shares outstanding | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 98,405,005 | | |
| 38,405,005 | | |
| 94,668,741 | | |
| 38,405,005 | |
Diluted | |
| 98,405,005 | | |
| 38,405,005 | | |
| 94,668,741 | | |
| 38,405,005 | |
The accompanying notes are an integral
part of these financial statements
CHINA BIO-ENERGY CORP.
CONDENSED STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDED JUNE 30,
2015 AND 2014
(Stated in US Dollars)
(Unaudited)
| |
Six Months Ended
March 31, | |
| |
2015 | | |
2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |
| | |
| |
Net loss | |
$ | (470,878 | ) | |
$ | (340,850 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities and Changes in operating assets and liabilities: | |
| | | |
| | |
Increase in prepaid taxes | |
| (3,004 | ) | |
| - | |
Increase in prepaid expense | |
| (14,051 | ) | |
| - | |
Increase in deposit | |
| (4,700 | ) | |
| - | |
Increase in wage payable | |
| 24,719 | | |
| - | |
Increase in taxes payable | |
| 180,000 | | |
| 180,000 | |
Increase in other payables | |
| 152,565 | | |
| 129,600 | |
(Decrease)/increase in accrued expense | |
| (100,000 | ) | |
| 31,250 | |
Net cash used in operating activities | |
| (235,349 | ) | |
| - | |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES | |
| | | |
| | |
Issuance of common stock | |
| 500,000 | | |
| - | |
Net cash generated from financing activities | |
| 500,000 | | |
| - | |
| |
| | | |
| | |
Net increase in cash and cash equivalents | |
| 264,651 | | |
| - | |
| |
| | | |
| | |
Cash and cash equivalents, beginning balance | |
| 200 | | |
| - | |
Cash and cash equivalents, ending balance | |
$ | 264,851 | | |
$ | - | |
| |
| | | |
| | |
SUPPLEMENTAL DISCLOSURES: | |
| | | |
| | |
Interest received | |
$ | - | | |
$ | - | |
Interest paid | |
$ | - | | |
$ | - | |
Income tax paid | |
$ | - | | |
$ | - | |
The accompanying notes are an integral
part of these financial statements
CHINA BIO-ENERGY CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2015 AND DECEMBER 31,
2014 AND
FOR THE SIX MONTHS PERIOD ENDED JUNE
30, 2015 AND 2014
(Stated in US Dollars)
Note 1 – THE
COMPANY AND PRINCIPAL BUSINESS ACTIVITIES
China Bio-Energy Corp. (the
“Company”), formerly known as China INSOnline Corp., was incorporated on December 23, 1988 as Lifequest Medical, Inc.,
a Delaware corporation.
In June 2010, the Company ceased
all operations conducted by its then subsidiaries: Ever Trend Investment Limited, Run Ze Yong Cheng (Beijing) Technology, San Teng
Da Fei Technology, and Guang Hua Insurance Agency (“Ever Trend Group”); on January 27, 2015, the Company announced
the completion of the disposition of the aforementioned subsidiaries. Accordingly, the Company has excluded the accounts of Ever
Trend Group in these financial statements and the accompanying notes contained herein.
On November 12, 2010, the Company
entered into a share exchange agreement with Ding Neng Holdings Ltd, an investment holdings company incorporated in the British
Virgin Islands (“Ding Neng Holdings”); the share exchange agreement was amended on December 6, 2010, where by the Company,
under the share exchange agreement and its related amendment, would have contemplated acquiring 100% of Ding Neng Holdings in exchange
for the issuance of 26,162,505 shares of the Company’s common stock, par value $0.001. Under the share exchange agreement,
the Company would have contemplated owning and operating Ding Neng Holdings and Ding Neng Holdings’ directly, and indirectly
held subsidiaries: Ding Neng Bio-technology Co., Ltd. (“Ding Neng HK”), Zhangzhou Fuhua Biomass Energy Technology Co.,
Ltd. (“WOFE”), and Ding Neng Bio-tech. Ding Neng HK was incorporated under the laws of Hong Kong on September 10, 2010.
Ding Neng HK did not have any operations. Ding Neng HK has been delinquent with its annual regulatory filings in Hong Kong, and
should be considered dormant and defunct. Ding Neng HK was wholly-owned by Ding Neng Holdings. Zhangzhou Fuhua Biomass Energy Technology
Co., Ltd. (“WFOE”) was incorporated as a wholly-foreign owned entity under the laws of the People’s Republic
of China (“PRC”), on November 2, 2010. WFOE was wholly-owned by Ding Neng HK. Ding Neng Bio-tech was incorporated under
the laws of the PRC on December 8, 2006. It was located in Zhangzhou city Fujian Province of PRC. Ding Neng Bio-tech was engaged
in the production, refinement and distribution of bio-diesel fuel in Southern China. Ding Neng Bio-tech operated a biodiesel manufacturing
facility in Zhangzhou city. On October 28, 2010, WFOE and Ding Neng Bio-tech entered into a set of variable interest entity agreements
that included: (1) a Consulting Service Agreement with Ding Neng Bio-tech, which entitled WFOE to receive substantially all of
the economic benefits of Ding Neng Bio-tech in consideration for services provided by WFOE to Ding Neng Bio-tech, (2) an Option
Agreement with Xinfeng Nie, Sanfu Huang, and Shunlong Hu (the shareholders of Ding Neng Bio-tech) allowing the WFOE to acquire
all the shares of Ding Neng Bio-tech as permitted by PRC laws, (3) a Voting Rights Proxy Agreement that provides WFOE with the
all voting rights of the Ding Neng Bio-tech shareholders, and (4) an Equity Pledge Agreement that pledges the shares in Ding Neng
Bio-tech to WFOE (VIE Agreements). These VIE Agreements granted effective control of Ding Neng Bio-tech to WFOE. On June 4, 2015,
WFOE filed a civil action in Haicang District People’s Court of Xiamen, Fujian, PRC (the “Court”) against Ding
Neng Bio-tech, alleging that the purposes of those certain executed VIE Agreements entered into by WFOE and Ding Neng Bio-Tech
on October 28, 2010, had been frustrated, and that these VIE Agreements should be terminated. WFOE alleged that Ding Neng Bio-Tech
did not make any payment of service fees to WFOE, and that Ding Neng Bio-Tech failed to perfect the security interest in the pledged
stocks. On July 14, 2015, this case was settled via in-court mediation directed by the Court. As a result, WFOE and Ding Neng Bio-Tech
entered into binding settlement (i) to terminate the VIE Agreements, (ii) that WFOE and Ding Neng Bio-Tech do not have any other
disputes over this case, and (iii) that the litigation fee in the amount of RMB10,000 (approximately $1,610.5) would be borne by
Ding Neng Bio-Tech. Ding Neng Holdings is delinquent with its regulatory filings and annual fees to the British Virgin Islands;
accordingly, the Ding Neng Holdings should be considered dormant and defunct.
Given that the Company has
not been able to exercise effective control over Ding Neng Bio-Tech or to access Ding Neng Bio-tech’s financial information
since 2011, and the VIE Agreements were terminated, the Company has excluded the accounts of Ding Neng Bio-Tech’s in these
financial statements and the accompanying notes contained herein; the exclusion of such accounts is considered as a type two material
subsequent event that occurred prior to the issuance of the financial statements but after the balance sheets dates that required
material adjustments to the financial statements presented. Ding Neng Holdings is delinquent and defunct; the Company has determined
that the Company was never registered as the sole shareholder of Ding Neng Holdings pursuant to the share exchange agreement dated
November 12, 2010, and amended December 6, 2010; accordingly, the Company has excluded the accounts of Ding Neng and its subsidiaries
in these financial statements and the accompanying notes as contained herein; the exclusion of such accounts is considered as a
type two material subsequent event that occurred prior to the issuance of the financial statements but after the balance sheets
dates that required material adjustments to the financial statements presented. The Company accounted for the issuance of shares
to the shareholders of Ding Neng Holdings under the contemplated share exchange transaction as a recapitalization of the Company
under reverse take-over accounting; accordingly, the Company’s historical stockholders’ equity has been retroactively
restated to the first period presented; as a result of the Company not being updated to Ding Neng Holdings shareholder register,
and that Ding Neng Holdings being defunct, the Company has written off all investments made in Ding Neng as loss on investment
in subsidiary.
CHINA
BIO-ENERGY CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF JUNE 30, 2015 AND DECEMBER 31, 2014 AND
FOR
THE SIX MONTHS PERIOD ENDED JUNE 30, 2015 AND 2014
(Stated
in US Dollars)
In connection with
the share exchange agreement with the shareholders of Ding Neng Holdings that contemplated the acquisition of Ding Neng
Holdings and its subsidiaries, the Company elected to adopt the fiscal year used by Ding Neng Holdings, which was a calendar
year; accordingly, the Company’s financial statements presented herein have been, and on a go-forward basis, will be
prepared using a December 31 year end date, and each operating period will cover twelve full calendar months.
Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements
have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).
The preparation of the financial
statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates are used
for, but not limited to, the accounting for certain items such as allowance for doubtful accounts, depreciation and amortization,
impairment, inventory allowance, taxes and contingencies.
Certain conditions may exist
as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when
one or more future events occur or fail to occur. The Company’s management assesses such contingent liabilities, and such
assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending
against the Company or un-asserted claims that may result in such proceedings, the Company’s management evaluates the perceived
merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected
to be sought.
If the assessment of a contingency
indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the
estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential
material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of
the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed.
CHINA
BIO-ENERGY CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF JUNE 30, 2015 AND DECEMBER 31, 2014 AND
FOR
THE SIX MONTHS PERIOD ENDED JUNE 30, 2015 AND 2014
(Stated
in US Dollars)
Loss contingencies considered
to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
| D. | Cash and cash equivalents |
The Company classifies the following
instruments as cash and cash equivalents: cash on hand, unrestricted bank deposits, and all highly liquid investments purchased
with original maturities of three months or less.
The Company uses the accrual
method of accounting to determine income taxes for the year. The Company has implemented FASB ASC 740 Accounting for Income Taxes.
Income tax liabilities computed according to the United States, People’s Republic of China (PRC), and Hong Kong tax laws
provide for the tax effects of transactions reported in the financial statements and consists of taxes currently due, plus deferred
taxes, related primarily to differences arising from the recognition of expenses related to the depreciation of plant and equipment,
amortization of intangible assets, and provisions for doubtful accounts between financial and tax reporting. The deferred tax assets
and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when
the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available
to offset future income taxes.
A valuation allowance is recognized
for deferred tax assets if it is more likely than not, that the deferred tax assets will either expire before the Company is able
to realize that tax benefit, or that future realization is uncertain.
|
F. |
Stock-based
compensation |
The Company has elected to use
the Black-Scholes-Merton (“BSM”) pricing model to determine the fair value of stock options on the dates of grant.
Also, the Company recognizes stock-based compensation using the straight-line method over the requisite service period.
The Company values stock awards
using the market price on or around the date the shares were awarded and includes the amount of compensation as a period compensation
expense over the requisite service period.
For the six months ended June
30, 2015 and 2014, no stock-based compensation has been recognized.
|
G. |
Foreign
currency translation |
The accompanying financial statements
are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). The financial statements
are translated into United States dollars from RMB at year-end exchange rates as to assets and liabilities and average exchange
rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions
occurred.
| |
| |
Exchange Rates | |
6/30/2015 | | |
3/31/2015 | | |
12/31/2014 | | |
6/30/2014 | | |
3/31/2014 | |
Year-end RMB : US$ exchange rate | |
| 6.0888 | | |
| 6.1091 | | |
| 6.1535 | | |
| 6.1552 | | |
| 6.1619 | |
Average 12-month RMB : US$ exchange rate | |
| 6.1128 | | |
| 6.1358 | | |
| 6.1482 | | |
| 6.1397 | | |
| 6.1156 | |
The RMB is not freely convertible
into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation
is made that the RMB amounts could have been, or could be, converted into US Dollar at the rates used in translation.
CHINA
BIO-ENERGY CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF JUNE 30, 2015 AND DECEMBER 31, 2014 AND
FOR
THE SIX MONTHS PERIOD ENDED JUNE 30, 2015 AND 2014
(Stated
in US Dollars)
In
accordance to FASB ASC 605-10, The Company recognizes revenue net of value added tax (VAT) when persuasive evidence of an arrangement
exists, delivery of the goods has occurred, customer acceptance has been obtained, which means the significant risks and ownership
have been transferred to the customer, the price is fixed or determinable and collectability is reasonably assured. No return
allowance is made as products returns are insignificant based on historical experience. Costs of distributing products to the
Company’s customers are included in selling expenses.
Cost
of goods sold consists primarily of raw materials, utility and supply costs consumed in the manufacturing process, manufacturing
labor, depreciation expense and direct overhead expenses necessary to manufacture finished goods as well as warehousing and distribution
costs such as inbound freight charges, shipping and handling costs, purchasing and receiving costs.
Basic
earnings per share is computed on the basis of the weighted average number of common stock outstanding during the period. Diluted
earnings per share is computed on the basis of the weighted average number of common stock and common stock equivalents outstanding.
Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation.
Dilution
is computed by applying the treasury stock method for options and warrants. Under this method, options and warrants are assumed
to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used
to purchase common stock at the average market price during the period.
Comprehensive
income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners.
The Company presents components of comprehensive income with equal prominence to other financial statements. The Company’s
current component of other comprehensive income is the foreign currency translation adjustment.
The
Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued.
There are two types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions
that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements,
and (2) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance
sheet but arose subsequent to that date. The Company has identified material subsequent events that would require disclosure to
the financial statements.
|
M. |
Recent
accounting pronouncements |
In
May 2014, the FASB issued Accounting Standards Update ASU No. 2014-09, “Revenue from Contracts with Customers”, a
converged standard on revenue recognition. The new pronouncement requires revenue recognition to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for those goods or services. The guidance also specifies the accounting for some costs to obtain or fulfil a contract with a customer,
as well as enhanced disclosure requirements. ASU 2014-9 is effective for annual reporting periods beginning after December 15,
2016. Early adoption is not permitted. The adoption of ASC 2014-9 is not expected to have a material effect on the Company’s
financial statements.
CHINA
BIO-ENERGY CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF JUNE 30, 2015 AND DECEMBER 31, 2014 AND
FOR
THE SIX MONTHS PERIOD ENDED JUNE 30, 2015 AND 2014
(Stated
in US Dollars)
In August 2014, the FASB issued
Accounting Standards Update ASU No. 2014-15, “Presentation of Financial Statements Going Concern (Subtopic 205-40) –
Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance
in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability
to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance.
In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments
require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain
principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial
doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating
effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration
of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and
(6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be
issued). The Company is currently reviewing the provisions of this ASU to determine if there will be any impact on the Company’s
financial statements.
In February 2015, the FASB issued
Accounting Standards Update ASU No. 2015-02, “Consolidation” (Topic 810). ASU 2015-02 changes the guidance with respect
to the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities.
All legal entities are subject to reevaluation under the revised consolidation mode. ASU 2015-02 affects the following areas: (1)
Limited partnerships and similar legal entities. (2) Evaluating fees paid to a decision maker or a service provider as a variable
interest. (3) The effect of fee arrangements on the primary beneficiary determination. (4) The effect of related parties on the
primary beneficiary determination. (5) Certain investment funds. ASU 2015-02 is effective for public business entities for fiscal
years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including
adoption in an interim period. If an entity early adopts the guidance in an interim period, any adjustments should be reflected
as of the beginning of the fiscal year that includes that interim period. A reporting entity may apply the amendments in this guidance
using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal
year of adoption. A reporting entity also may apply the amendments retrospectively. The adoption of ASU 2015-02 is not expected
to have any impact on the Company’s financial statements.
In April 2015, the FASB issued
ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs”. The accounting guidance requires that debt
issuance costs related to a recognized debt liability be reported on the Statements of Financial Condition as a direct deduction
from the carrying amount of that debt liability. The guidance is effective for the Company retrospectively beginning in the first
quarter of fiscal 2017 and early adoption is permitted. The adoption of this accounting guidance is not expected to have a material
impact on the Company’s financial statements.
In July 2015, the FASB issued
ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory,” which applies to inventory that is
measured using first-in, first-out (“FIFO”) or average cost. Under the updated guidance, an entity should measure inventory
that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course
of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged
for inventory that is measured using last-in, last-out (“LIFO”). This ASU is effective for annual and interim periods
beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim
or annual reporting period. The adoption of this accounting guidance is not expected to have a material impact on the Company’s
financial statements.
As of June 30, 2015, except
for the above, there are no recently issued accounting standards not yet adopted that would have a material effect on the Company’s
financial statements.
|
O. |
Unaudited
Interim Financial Information |
These
unaudited interim condensed financial statements have been prepared in accordance with GAAP for interim financial reporting
and the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. Therefore,
certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been
condensed or omitted. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation
of the financial position, results of operations and cash flows for the periods presented have been made. The results of operations
for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31,
2015.
CHINA
BIO-ENERGY CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF JUNE 30, 2015 AND DECEMBER 31, 2014 AND
FOR
THE SIX MONTHS PERIOD ENDED JUNE 30, 2015 AND 2014
(Stated
in US Dollars)
The balance sheets and
certain comparative information as of December 31, 2014 are derived from the audited financial statements and related notes for
the year ended December 31, 2014 (“2014 Annual Financial Statements”), included in the Company’s 2014 Annual
Report on Form 10-K. These unaudited interim financial statements should be read
in conjunction with the 2014 Annual Financial Statements.
|
P. |
Fair
Value of Financial Instruments |
ASC
825, Financial Instruments, requires that the Company discloses estimated fair values of financial instruments. The carrying amounts
reported in the balance sheets for current assets and current liabilities qualifying as financial instruments are a reasonable
estimate of fair value.
The Company applies the provisions
of ASC 820-10, Fair Value Measurements and Disclosures. ASC 820-10 defines fair value, and establishes a three-level valuation
hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. For certain
financial instruments, including cash and cash equivalents, loan receivables and short-term bank loans, the carrying amounts approximate
fair value due to their relatively short maturities. The three levels of valuation hierarchy are defined as follows:
| · | Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. |
| · | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and
inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial
instrument. |
| · | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
The Company analyzes all financial
instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,”
and ASC 815.
The following tables
present the Company’s financial assets and liabilities at fair value in accordance to ASC 820-10
As of June 30, 2015: | |
Quoted in Active | | |
Significant | | |
| | |
| |
| |
Markets | | |
Other | | |
Significant | | |
| |
| |
for Identical | | |
Observable | | |
Unobservable | | |
| |
| |
Assets | | |
Inputs | | |
Inputs | | |
| |
| |
(Level 1) | | |
(Level 2) | | |
(Level 3) | | |
Total | |
Financial assets: | |
| | |
| | |
| | |
| |
Cash | |
$ | 264,851 | | |
$ | - | | |
$ | - | | |
$ | 264,851 | |
Total financial assets | |
$ | 264,851 | | |
$ | - | | |
$ | - | | |
$ | 264,851 | |
As of December 31, 2014: | |
Quoted in Active | | |
Significant | | |
| | |
| |
| |
Markets | | |
Other | | |
Significant | | |
| |
| |
for Identical | | |
Observable | | |
Unobservable | | |
| |
| |
Assets | | |
Inputs | | |
Inputs | | |
| |
| |
(Level 1) | | |
(Level 2) | | |
(Level 3) | | |
Total | |
Financial assets: | |
| | |
| | |
| | |
| |
Cash | |
$ | 200 | | |
$ | - | | |
$ | - | | |
$ | 200 | |
Total financial assets | |
$ | 200 | | |
$ | - | | |
$ | - | | |
$ | 200 | |
CHINA
BIO-ENERGY CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF JUNE 30, 2015 AND DECEMBER 31, 2014 AND
FOR
THE SIX MONTHS PERIOD ENDED JUNE 30, 2015 AND 2014
(Stated
in US Dollars)
Note 3 – ACCRUED EXPENSES
Accrued expenses consisted of the followings as of June 30,
2015 and December 31, 2014:
| |
June 30,
2015 | | |
December 31,
2014 | |
Audit Fee | |
$ | 100,000 | | |
$ | 150,000 | |
Legal Fee | |
| 50,000 | | |
| 100,000 | |
| |
$ | 150,000 | | |
$ | 250,000 | |
Note 4 – TAXES AND OTHER PAYABLES
Taxes and other payables consisted of the followings as of
June 30, 2015 and December 31, 2014:
| |
June 30,
2015 | | |
December 31,
2014 | |
Franchise Tax | |
$ | 900,000 | | |
$ | 720,000 | |
Interest and Penalties | |
| 476,565 | | |
| 324,000 | |
| |
$ | 1,376,565 | | |
$ | 1,044,000 | |
Note 5 – GENERAL AND ADMINISTRATIVE EXPENSES
General and Administrative Expenses consisted of the followings
for the six months period ended June 30, 2015 and 2014
| |
For the six months period ended June 30, | |
| |
2015 | | |
2014 | |
Audit Fee | |
$ | - | | |
$ | 18,750 | |
Bank charges | |
| 55 | | |
| - | |
Consulting Fee | |
| 40,000 | | |
| - | |
Franchise Tax | |
| 180,000 | | |
| 180,000 | |
Insurance | |
| 1,186 | | |
| - | |
Interest and Penalties | |
| 154,608 | | |
| 129,600 | |
Legal Fee | |
| - | | |
| 12,500 | |
Office expense | |
| 556 | | |
| - | |
Other expense | |
| 2,027 | | |
| - | |
Professional fee | |
| 4,050 | | |
| - | |
Rental expense | |
| 22,747 | | |
| - | |
Salaries and wages | |
| 62,977 | | |
| - | |
Stock transfer fee | |
| 2,672 | | |
| - | |
| |
$ | 470,878 | | |
$ | 340,850 | |
CHINA
BIO-ENERGY CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF JUNE 30, 2015 AND DECEMBER 31, 2014 AND
FOR
THE SIX MONTHS PERIOD ENDED JUNE 30, 2015 AND 2014
(Stated
in US Dollars)
Note 6 – STOCKHOLDERS’ EQUITY
(a) Common stock
As of June 30, 2015 and December 31,
2014, the Company has 100,000,000 shares of common stock authorized, 98,405,005 and 58,405,005 shares issued and outstanding at
par value of $0.001 per share.
For the six months ended June 30, 2015,
the Company issued 40,000,000 shares to an selected consultant at $0.0125 per share.
Note 7 – INCOME TAXES
The Company was incorporated in the United
States of America (“USA”). The Company does not generate any net income from its operations for the six months ended
June 30, 2015 and 20114
The provision for income taxes consists of the following:
| |
For the six months ended
June 30, | |
Current: | |
2015 | | |
2014 | |
USA | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
Deferred: | |
| | | |
| | |
USA | |
| - | | |
| - | |
Provision for income taxes | |
| - | | |
| - | |
The reconciliation of USA statutory
income tax rate to the Company’s effective income tax rate is as follows:
| |
For the six months ended
June 30, | |
| |
2015 | | |
2014 | |
Income tax at USA statutory rate of 34% | |
$ | - | | |
$ | - | |
Others | |
| - | | |
| - | |
Provision for income taxes | |
| - | | |
| - | |
CHINA
BIO-ENERGY CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF JUNE 30, 2015 AND DECEMBER 31, 2014 AND
FOR
THE SIX MONTHS PERIOD ENDED JUNE 30, 2015 AND 2014
(Stated
in US Dollars)
Uncertain Tax Positions
Interest associated with unrecognized
tax benefits are classified as income tax, and penalties are classified in selling, general and administrative expenses in the
statements of operations. For the six months ended June 30, 2015 and 2014, the Company had no unrecognized tax benefits
and related interest and penalties expenses. Currently, the Company is not subject to examination by major tax jurisdictions.
Deferred Income Tax Benefits
Deferred income tax benefits arise from
temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which
will result in taxable or deductible amounts in the future. In evaluating the Company’s ability to recover the deferred tax
assets, the management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities,
projected future taxable income, tax-planning strategies, and results of recent operations. In projecting future taxable income,
the Company begins with historical results adjusted for the results of discontinued operations and incorporate assumptions about
the amount of future state, federal, and foreign pretax operating income adjusted for items that do not have tax consequences.
The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates
that the Company is using to manage the underlying businesses. As of June 30, 2015 and December 31, 2014, management was uncertain
as to whether or not the Company would be able to utilize the potential deferred tax assets arising from net operating losses`
since the Company is not currently generating any revenue; accordingly, the Company has not recognized a deferred tax assets.
Note 8 – EARNINGS PER SHARE
Basic loss per common share from operations
attributable to the Company is based on the weighted-average common shares outstanding during the relevant period. Diluted loss
per common share from continuing operations attributable to the Company is based on the weighted-average common shares outstanding
during the relevant period adjusted for the dilutive effect of share-based awards. The Company did not have significant share-based
awards outstanding that were antidilutive and not included in the calculation of diluted loss per common share from operations
attributable to the Company for the six months ended June 30, 2015 and 2014.
CHINA
BIO-ENERGY CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF JUNE 30, 2015 AND DECEMBER 31, 2014 AND
FOR
THE SIX MONTHS PERIOD ENDED JUNE 30, 2015 AND 2014
(Stated
in US Dollars)
The following table sets forth the computation of basic and
diluted earnings per share of common stock:
| |
Three Months Ended
June 30, | | |
Six Months Ended
June 30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
| | |
| |
Basic loss per share: | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Net loss used in computing basic earnings per share | |
$ | (79,591 | ) | |
$ | (15,625 | ) | |
$ | (470,878 | ) | |
$ | (340,850 | ) |
| |
| | | |
| | | |
| | | |
| | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Weighted average common shares outstanding | |
| 98,405,005 | | |
| 38,405,005 | | |
| 94,668,741 | | |
| 38,405,005 | |
Basic loss per share | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.01 | ) |
| |
| | | |
| | | |
| | | |
| | |
Diluted earnings per share: | |
| | | |
| | | |
| | | |
| | |
Numerator: | |
| | | |
| | | |
| | | |
| | |
Net loss used in computing diluted loss per share | |
$ | (79,591 | ) | |
$ | (15,625 | ) | |
$ | (470,878 | ) | |
$ | (340,850 | ) |
| |
| | | |
| | | |
| | | |
| | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Weighted average common shares outstanding | |
| 98,405,005 | | |
| 38,405,005 | | |
| 94,668,741 | | |
| 38,405,005 | |
Diluted loss per share | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.01 | ) |
Dilutive securities having an anti-dilutive effect on diluted
(loss) earnings per share are excluded from the calculation.
Note 9 – SUBSEQUENT
EVENTS
No significant event occurred from June 30, 2015 to the date
these financial statements are filed with the Securities Exchange Commission that would have a material impact on the Company’s
financial statements.
Note 10 – GOING CONCERN
UNCERTAINTIES
These financial statements have
been prepared assuming that Company will continue as a going concern, which contemplates the realization of assets and the discharge
of liabilities in the normal course of business for the foreseeable future.
As of June 30, 2015, the Company
had accumulated deficits of $15,478,522 and working capital deficit of current liabilities exceeding current assets by $1,264,378
due to the substantial losses in operation in previous years/periods. Management’s plan to support the Company in operations
and to maintain its business strategy is to raise funds through public and private offerings and to rely on officers and directors
to perform essential functions with minimal compensation. If we do not raise all of the money we need from public or private offerings,
we will have to find alternative sources, such as loans or advances from our officers, directors or others. Such additional financing
may not become available on acceptable terms and there can be no assurance that any additional financing that the Company does
obtain will be sufficient to meet its needs in the long term. Even if the Company is able to obtain additional financing, it may
contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders,
in the case of equity financing. If we require additional cash and cannot raise it, we will either have to suspend operations or
cease business entirely.
The accompanying financial statements
do not include any adjustments related to the recoverability and classification of assets or the amounts and classifications of
liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 11
– COMMITMENTS
On January 15, 2015, the Company
entered into a lease agreement for office space in New York. The monthly rental expense is approximately $2,831. The contract expires
on January 31, 2016. The Company made a rental deposit of $4,700. At June 30, 2015, the Company’s outstanding lease commitments
for 2015 and 2016 were $20,573 and $2,939, respectively.
Page
F-31 of F-31
Exhibit 10.9
Haicang District People's Court in Xiamen,
Fujian
Civil Mediation
(2015) Hai Min Chu Zi No.1642
Plaintiff: Zhangzhou
Fuhua Biomass Energy Technology Co., Ltd. (organization code: 56335818-8), located at Pingzhai Village, Shange Town, Pinghe County,
Zhangzhou City, Fujian Province.
Plantiff’s legal
representative: Sanfu Huang, General Manager
Plantiff’s entrusted
agent: Guoxing Yan, Director
Defendant: Fujian
Zhangzhou Ding Neng Bio-Technology Co., Ltd. (organization code: 79379376-7), located at Pingzhai Village, Shange Town, Pinghe
County, Zhangzhou City, Fujian Province.
Defendant’s
legal representative: Xinfeng Nie
Defendant’s
entrusted agent: Yilong Yan, Employee
In this contract dispute
case between the Plaintiff and the Defendant, the Plaintiff requested this Court to terminate the Consulting Services Agreement
and Operating Agreement between both parties. Upon mediation presided over by this Court, both parties voluntarily agreed as follows:
| 1. | The Consulting Services Agreement, Operating Agreement, Equity Pledge Agreement, Option Agreement,
and Proxy Agreement executed on October 28, 2010 by both parties are hereby terminated on July 14, 2015, and all of the rights
and obligations under such agreements are therefore terminated. |
| | |
| 2. | This dispute is hereby solved, and there is no other controversy between both parties. |
| | |
| 3. | The litigation cost for this case is RMB 10,000 and should be paid by the Defendant. |
| | |
| 4. | This settlement agreement is legally effective once it is signed and confirmed by both parties. |
This agreement is
in compliance with related laws and regulations, and hence, it is confirmed by this Court.
Judge: Yumei Huang
July 14, 2015
Substitute Clerk: Yaxin Yang
EXHIBIT
31.1
CERTIFICATION
OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Mei
Yang, certify that:
1. |
I
have reviewed this report on Form 10-K of China Bio-Energy Corp.; |
|
|
2 |
Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report; |
|
|
3 |
Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
|
|
4 |
The
registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
|
|
a. |
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
b. |
Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
c. |
Evaluated
the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and |
|
|
|
|
d. |
Disclosed
in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
|
|
|
5 |
The
registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons
performing the equivalent functions): |
|
|
|
a. |
All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information;
and |
|
|
|
|
b. |
Any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
internal control over financial reporting. |
Date:
August 31, 2015 |
By: |
/s/
Mei Yang |
|
|
Mei
Yang |
|
|
Director
and Chief Executive Officer |
|
|
|
EXHIBIT 31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Ming Yi, certify that:
1 |
I have reviewed this report on Form 10-K of China Bio-Energy Corp.; |
|
|
2 |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
3 |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
4 |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
|
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
c. |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
d. |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
|
|
|
5 |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
|
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
|
|
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date:
August 31, 2015 |
|
|
|
By: |
/s/
Ming Yi |
|
|
Ming Yi |
|
|
Director and Chief Financial Officer |
|
|
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
SECTION 906 OF SARBANES-OXLEY ACT OF 2002
Mei Yang, Chief Executive Officer of China Bio-Energy Corp. (the
“Company”), and Ming Yi, Chief Financial Officer of the Company, each certifies, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, 18 U.S.C. Section 1350, that:
|
1. |
The Report on Form 10-K of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (U.S.C. 78m or 78o(d)); and |
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: August
31, 2015 |
By: |
/s/
Mei Yang |
|
|
Mei Yang |
|
|
Director and Chief Executive Officer |
|
|
|
|
By: |
/s/
Ming Yi |
|
|
Ming Yi |
|
|
Director and Chief Financial Officer |
The foregoing certification is being furnished
solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title
18, United States Code) and is not being filed as part of a separate disclosure document.
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