WEB NEWS Auditor trail
Item 4.01. Changes in Registrant’s Certifying Accountant.
Effective as of April 7, 2016, we dismissed Parker Randall CF (HK) CPA Ltd. (“Parker”) as our independent registered public accounting firm. Our Board of Directors approved the dismissal of Parker on April 7, 2016, and on the same date, approved the engagement of RT LLP, Chartered Accountants (“RT”) as our independent registered public accounting firm.
The reports of Parker on our financial statements for fiscal years ended December 31, 2014 and 2013 did not contain an adverse opinion or disclaimer of opinion, and they were not qualified or modified as to uncertainty, audit scope or accounting principles, except that such reports included a going concern qualification.
During the Company’s fiscal years ended December 31, 2014 and 2013 and the subsequent interim period preceding their dismissal, there were no disagreements with Parker, whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Parker, would have caused them to make reference to the subject matter of the disagreement in connection with their report on our financial statements.
We provided Parker with a copy of the disclosures we are making in this Report and have requested that Parker furnish us with a letter addressed to the SEC stating whether they agree with the above statements. A copy of Parker’s letter is filed herewith as Exhibit 16.1.
Comments & Business Outlook
GRAND CHINA ENERGY GROUP LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(STATED IN US DOLLARS)
Three month ended
Nine months ended
2015
2014
2015
2014
$
$
$
$
Revenue
-
-
-
-
Cost of revenue
-
-
-
-
Gross profit
-
-
-
-
Selling expenses
-
-
-
-
Depreciation & Amortization
(11,728
)
(3,855
)
(35,184
)
(7,710
)
General and administrative
(55,955
)
-
(112,017
)
(121,937
)
Total operating expenses
(67,683
)
(3,855
)
(147,201
)
(129,647
)
Net loss from operations
(67,683
)
(3,855
)
(147,201
)
(129,647
)
Other items:
Interest expense
(1,482
)
(1,729
)
(4,525
)
(5,187
)
Exchange gain
-
-
8,676
5,295
(1,482
)
(1,729
)
4,151
108
Income(loss) before tax
(69,165
)
(5,584
)
(143,050
)
(129,539
)
Income tax expense
-
-
-
-
Net loss for the period
(69,165
)
(5,584
)
(143,050
)
(129,539
)
Foreign currency translation adjustment
11,807
7,486
27,866
8,427
Comprehensive income(loss)
(57,358
)
1,902
(115,184
)
(121,112
)
Earnings Per Share (cents)
– Basic and diluted
(0.00
)
(0.00
)
(0.00
)
(0.00
)
Weighted Average Shares Outstanding
– Basic and diluted
373,793,578
373,793,578
373,793,578
373,793,578
Management Discussion and Analysis
Gross Revenues
Our revenues for the three and nine months ended September 30, 2015 and September 30, 2014 were nil.
Net Loss
Net Loss from operations for the three and nine months ended September 30, 2015 and three and nine months ended September 30, 2014 was $67,683 and $147,201 and $3,855 and $129,647, respectively. The increases in net loss were attributable to increases in general and administrative expenses.
Comments & Business Outlook
GRAND CHINA ENERGY GROUP LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(LOSS)
(STATED IN US DOLLARS)
Three month ended
Six months ended
2015
2014
2015
2014
$
$
$
$
Revenue
-
-
-
-
Cost of revenue
-
-
-
-
Gross profit
-
-
-
-
Selling expenses
-
-
-
-
Depreciation & Amortization
(11,728
)
(3,856
)
(23,456
)
(3,856
)
General and administrative
(49,183
)
(34,650
)
(56,062
)
(121,936
)
Total operating expenses
(60,911
)
(38,506
)
(79,518
)
(125,792
)
Net loss from operations
(60,911
)
(38,506
)
(79,518
)
(125,792
)
Other items:
Interest expense
(1,495
)
(1,730
)
(3,043
)
(3,458
)
Exchange gain
3,177
1,187
8,676
5,295
1,682
(543
)
5,633
1,837
Income(loss) before tax
(59,229
)
(39,049
)
(73,885
)
(123,955
)
Income tax expense
-
-
-
-
Net loss for the period
(59,229
)
(39,049
)
(73,885
)
(123,955
)
Foreign currency translation adjustment
(5,334
)
(5,758
)
16,059
941
Comprehensive income(loss)
(64,563
)
(44,807
)
(57,826
)
(123,014
)
Earnings Per Share (cents) – Basic and diluted
(0.00
)
(0.00
)
(0.00
)
(0.00
)
Weighted Average Shares Outstanding – Basic and diluted
373,793,578
373,793,578
373,793,578
373,793,578
Management Discussion and Analysis
Gross Revenues
The revenue for the three months ended June 30, 2015 and June 30, 2014 is nil respectively.
Net Loss for the three months ended June 30, 2015 and three months ended June 30, 2014 is $60,911 and $38,506 respectively.
Comments & Business Outlook
GRAND CHINA ENERGY GROUP LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(LOSS)
(STATED IN US DOLLARS)
Three months ended
2015
2014
$
$
Revenue, net of sales tax
-
-
Cost of revenue
-
-
Gross profit
-
-
Selling expenses
-
-
General and administrative
(18,607
)
(87,285
)
Total operating expenses
(18,607
)
(87,285
)
Net loss from operations
(18,607
)
(87,285
)
Other items:
Interest expense
(1,548
)
(1,729
)
Exchange gain
5,499
4,108
Loss before tax
(14,656
)
(84,906
)
Income tax expense
-
-
Net loss for the period
(14,656
)
(84,906
)
Foreign currency translation adjustment
21,393
6,699
Comprehensive income(loss)
6,737
(78,207
)
Earnings Per Share (cents) – Basic and diluted
(0.00
)
(0.00
)
Weighted Average Shares Outstanding – Basic and diluted
373,793,578
373,793,578
Management Discussion and Analysis
Gross Revenues
The revenue for the three months ended March 31, 2014 and March 31, 2013 is nil respectively.
Net Loss for the three months ended March 31, 2015 and three months ended March 31, 2014 is $14,656 and $84,906 respectively.
Comments & Business Outlook
GRAND CHINA ENERGY GROUP LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(STATED IN US DOLLARS)
Year ended 31 December
2014
2013
$
$
Revenue, net of sales tax
-
189,000
Cost of revenue
-
(100,000
)
Gross profit
-
89,000
Depreciation & amortization
(29,880
)
-
General and administrative
(190,556
)
(189,157
)
Total operating expenses
(220,436
)
(189,157
)
Net loss from operations
(220,436
)
(100,157
)
Other items:
Exchange gain
10,374
-
Interest expense
(6,755
)
(1,744
)
Loss before tax
(216,817
)
(101,901
)
Income tax expense
-
(20,000
)
Net loss from continuing operations;
(216,817
)
(121,901
)
Net (loss)/income from discontinued operations
-
(16,753,104
)
Net loss for the period
(216,817
)
(16,875,005
)
Foreign currency translation adjustment
18,194
(599,762
)
Comprehensive (loss)/income
(198,623
)
(17,474,767
)
(Loss)/earnings Per Share (cents) – Basic and diluted
(0.00
)
(0.05
)
Weighted Average Shares Outstanding – Basic and diluted
373,793,578
373,793,578
Management Discussion and Analysis
Net Sales
We had no revenues in 2014 compared to revenues from continuing operations of $189,000 in 2013, all of which were derived from consulting services for the coal mine operations in Fujian Province, China. Our services include sales chain management system advisory as well as advisory works for mining exploration management on other coal mines in Fujian Province.
SGB Investment Limited have reduced its trading and consulting activates due to that fact, and spending more time on studying, developing and planning for other mining deposits which are near Shanxi Province, Xinjiang Province and in central Asian countries such as Kyrgyzstan and Uzbekistan.
We recorded a net loss from continuing operations for the year ended December 31, 2014, of $216,817 as compared to a net loss from continuing operations for the year ended December 31, 2013, of $121,901. The increase was attributable to the geological research and due diligence conducted by us in 2014. We recorded a net loss from discontinued operations involving Dragon International Resources Group Co., Limited and Fujian Huilong Coal Mine Co. Ltd. for the year ended December 31, 2013 of $16,753,104. As those operations were discontinued in December 2013, we recorded no losses from discontinued operations for the year ended December 31, 2014.
Comments & Business Outlook
GRAND CHINA ENERGY GROUP LTD
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(LOSS)
(STATED IN US DOLLARS)
Three months ended
Nine months ended
2014
2013(restated)
2014
2013(restated)
$
$
$
$
Revenue
600,000
-
1,707,000
-
Cost of revenue
(447,869
)
-
(1,196,534
)
-
Gross profit
152,131
-
510,466
-
Selling expenses
(82,431
)
-
(148,665
)
(641
)
Depreciation & amortization
(3,855
)
-
(7,710
)
-
General and administrative
(66,550
)
(5,228
)
(209,707
)
(134,829
)
Total operating expenses
(152,836
)
(5,228
)
(366,082
)
(135,470
)
Net income (loss) from operations
(705
)
(5,228
)
144,384
(135,470
)
Other items:
Interest expense
(1,729
)
-
(5,187
)
-
Exchange gain
-
5,295
-
Income (loss) before tax
(2,434
)
(5,228
)
144,492
(135,470
)
Income tax expense
(60,000
)
-
(170,700
)
-
Net loss from continuing operations;
(62,434
)
(5,228
)
(26,208
)
(135,470
)
Net loss from discontinued operations
-
(16,769,790
)
-
(16,929,732
)
Net loss for the period
(62,434
)
(16,775,018
)
(26,208
)
(17,065,202
)
Foreign currency translation adjustment
7,486
105,964
8,427
241,409
Comprehensive loss
(54,948
)
(16,669,054
)
(17,781
)
(16,823,793
)
Earnings Per Share (cents) – Basic and diluted
(0.00
)
(4.49
)
(0.00
)
(4.57
)
Weighted Average Shares Outstanding – Basic and diluted
373,793,578
373,793,578
373,793,578
373,793,578
Management Discussion and Analysis
Revenues
Our revenues are derived from the sale of coal. Overall revenue decreased by 1,124,690 or 65% from $1.72 million in 2013 Q3 to $0.6million in 2014 Q3, principally due to the restructuring of the Company after the disposal of Dragon International and Fujian Huilong on December 19, 2013.
As a result of the above, our net loss decreased by $16 million from $16.78 million in 2013 Q3 to $0.06 million in 2014 Q3.
Comments & Business Outlook
GRAND CHINA ENERGY GROUP LTD
(FORMERLY KNOWN AS “SGB INTERNATIONAL HOLDINGS INC.”)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(LOSS)
(STATED IN US DOLLARS)
Three month ended
Six months ended
2014
2013
2014
2013
$
$
$
$
Revenue
580,000
-
1,078,015
-
Cost of revenue
(456,180
)
-
(719,680
)
-
Gross profit
123,820
-
358,335
-
Selling expenses
(66,234
)
-
(66,234
)
(632
)
Depreciation & Amortization
(3,856
)
-
(3,856
)
-
General and administrative
(55,870
)
(94,581
)
(143,156
)
(127,671
)
Total operating expenses
(125,960
)
(94,581
)
(213,246
)
(128,303
)
Net income(loss) from operations
(2,140
)
(94,581
)
145,089
(128,303
)
Other items:
Interest expense
(1,730
)
(3,458
)
-
Exchange gain
1,187
5,295
-
(543
)
-
1,837
-
Income(loss) before tax
(2,683
)
(94,581
)
146,926
(128,303
)
Income tax expense
(58,000
)
(110,700
)
-
Net income(loss) from continuing operations;
(60,683
)
(94,581
)
36,226
(128,303
)
Net income from discontinued operations
-
(368,887
)
-
(258,606
)
Net income(loss) for the period
(60,683
)
(463,468
)
36,226
(386,909
)
Foreign currency translation adjustment
(5,758
)
182,822
941
232,169
Comprehensive income(loss)
(66,441
)
(280,646
)
37,167
(154,740
)
Earnings Per Share (cents)
– Basic and diluted
(0.02
)
(0.12
)
0.01
(0.10
)
Weighted Average Shares Outstanding –
Basic and diluted
373,793,578
373,793,578
373,793,578
373,793,578
Management Discussion and Analysis
Revenues
Our revenues are derived from the sales of coal. The overall revenue decreased by 2,781,934 or 83% from $3.36 million in 2013 Q2 to $0.58 million in 2014 Q2, principally due to the restructuring the company after disposal of Dragon International and Fujian Huilong on December 19, 2013.
As a result of the above, our net loss decreased by $0.40 million from $0.46 million in 2013 Q2 to $0.06 million in 2014 Q2.
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(LOSS)
(STATED IN US DOLLARS)
Year ended December 31
2013
2012
$ $
Revenue, net of sales tax
189,000 -
Cost of revenue
(100,000 ) -
Gross profit
89,000 -
Selling expenses
- (11,129 )
General and administrative
(189,157 ) (451,040 )
Total operating expenses
(189,157 ) (462,169 )
Net loss from operations
(100,157 ) (462,169 )
Other items:
Interest expense
(1,744 ) (9,736 )
Loss before tax
(101,901 ) (471,905 )
Income tax expense
(20,000 ) -
Net loss from continuing operations;
(121,901 ) (471,905 )
Net (loss)/income from discontinued operations
(16,753,104 ) 1,011,610
Net loss for the period
(16,875,005 ) 539,705
Foreign currency translation adjustment
(599,762 ) (49,047 )
Comprehensive (loss)/income
(17,474,767 ) 490,658
(Loss)/earnings Per Share (cents)
– Basic and diluted
(0.05 ) (0.00 )
Weighted Average Shares Outstanding –
Basic and diluted
373,793,578 323,344,302
Management Discussion and Analysis
Net SalesThe overall revenue decreased by $5.48 million or 43% from $12.72 million in 2012 to $7.23 million in 2013. We have yet to attain the full production capacity in 2013 due mainly to the on-going construction of the new shafts which has slowed down the mining production.
Net Incomenet income decreased by about $16.5 million from $0.54 million in 2012 to the loss of $17.0 million in 2013.
Auditor trail
Item 4.01 Changes in Registrant's Certifying Accountant. On March 3, 2014, the Board of Directors determined to dismiss MNP LLP (“MNP”) as the Company's independent registered public accounting firm effective immediately. The reports of MNP on the Company's consolidated financial statements as of and for the years ended December 31, 2012 and 2011 did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles.
During the years ended December 31, 2012 and 2011, and through March 3, 2014, there were no (a) disagreements with MNP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to MNP's satisfaction, would have caused MNP to make reference to the subject matter thereof in connection with its reports for such years; or (b) reportable events, as described under Item 304(a)(1)(v) of Regulation S-K.
The Company provided MNP with a copy of the disclosures it is making in this Current Report on Form 8-K and requested from MNP a letter addressed to the Securities and Exchange Commission indicating whether it agrees with such disclosures. A copy of MNP's letter dated March 25, 2014 is attached as Exhibit 16.1.
Contemporaneous with the determination to dismiss MNP, the Board of Directors engaged Parker Randall CF (H.K.) CPA LIMITED as the Company's independent registered public accounting firm for the year ended December 31, 2013, also to be effective immediately.
During the years ended December 31, 2012 and 2011, and the subsequent interim period through and through March 3, 2014, the Company did not consult with Parker Randall CF (H.K.) CPA LIMITED regarding any of the matters or events set forth in Item 304(a)(2) of Regulation S-K.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On March 20, 2014, the Board of Directors of SGB International Holdings Inc. (the “Company”), appointed Mr. Vincent Xu and Ms. Feng Baozhu as a directors of the Company, effective immediately, to serve until the next annual meeting of shareholders.
Vincent Xu, age 29, graduated from Griffith University in Australia and received his Master’s degree of Applied Finance in Queensland University of Technology in 2007. Mr. Xu has been a corporate advisor since 2012. He served as a senior account executive at Well & Well JP Capital Group Limited and currently as a senior executive vice president at Strategic Capital Management (Asia) Limited. He has extensive experience in working closely with CEOs, their leadership teams, and corporate boards in such areas as team development, formulating and implementing corporate strategy and capital restructuring.
Feng Baozhu, age 24, is the Administration Manager of Hong Kong Jardine Chemical Limited, a chemical product trading company. She was graduated from Agricultural University of South China with a major in accounting and auditing. She served as the Administration and Operation manager of Carnival City Hotel in Dong Guan from 2007 to 2011, leading the team to provide high quality hospitality service for 4 years.
There is no arrangement or understanding between the Company and either Mr. Xu or Ms. Feng and any other person pursuant to which Mr. Xu or Ms. Feng was elected as a director. Additionally, there is no transaction between the Company and either Mr. Xu or Ms. Feng that would require disclosure under Item 404(a) of Regulation S-K.
Comments & Business Outlook
SGB INTERNATIONAL HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(STATED IN US DOLLARS)
(UNAUDITED)
Three Months Ended
Nine Months Ended
September 30
September 30
September 30
September 30
2013
2012
2013
2012
$
$
$
$
Revenue
1,724,690
3,041,935
7,008,929
8,763,676
Cost of revenue
(1,597,902
)
(2,211,493
)
(5,497,795
)
(6,085,845
)
Gross profit
126,788
830,442
1,511,134
2,677,831
Selling expenses
(13,515
)
(24,497
)
(136,977
)
(218,422
)
General and administrative
(676,515
)
(593,121
)
(1,376,401
)
(1,650,477
)
Depreciation and amortization
(40,397
)
(47,003
)
(137,719
)
(135,264
)
Total operating expenses
(730,427
)
(664,621
)
(1,651,097
)
(2,004,163
)
Net income/(loss) from operations
(603,639
)
165,821
(139,963
)
673,668
Other items:
Interest expense
(64,317
)
(39,175
)
(65,177
)
(119,641
)
Loss on non-collectible deposit for investment
(2,912,793
)
-
(2,895,758
)
-
Loss on disposal
(901,806
)
(8,282
)
(1,699,609
)
(37,311
)
Other income
-
-
-
5,274
Gain on debt waiver
239,903
-
238,500
-
Impairment loss
(12,516,482
)
-
(12,443,281
)
-
(16,155,495
)
(47,457
)
(16,865,325
)
(151,678
)
Income/(loss) before income tax expense
(16,759,134
)
118,364
(17,005,288
)
521,990
Income tax expense
(15,884
)
(23,173
)
(59,914
)
(66,989
)
Net income/(loss)
(16,775,018
)
95,191
(17,065,202
)
455,001
Foreign currency translation adjustment
105,964
(92,238
)
241,409
(121,424
)
Comprehensive income/(loss)
(16,669,054
)
2,953
(16,823,793
)
333,557
(Loss)/earnings Per Share (cents)
– Basic and diluted
(4.49
)
0.03
(4.57
)
0.15
Weighted Average Shares Outstanding –
Basic and diluted
373,793,578
373,798,573
373,793,578
312,946,625
The accompanying notes are an integral part of these consolidated financial statements
Comments & Business Outlook
SGB INTERNATIONAL HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (STATED IN US DOLLARS) (UNAUDITED)
THREE MONTHS ENDED
SIX MONTHS ENDED
June 30
June 30
June 30
June 30
2013
2012
2013
2012
$
$
$
$
Revenue
3,361,934
3,290,115
5,234,484
5,721,741
Cost of revenue
(2,495,178 )
(2,341,451
)
(3,860,394 )
(3,874,351
)
Gross profit
866,756
948,664
1,374,090
1,847,390
Selling expenses
(18,248 )
(97,053
)
(60,499 )
(193,925
)
General and administrative
(426,537 )
(496,960
)
(767,450 )
(1,057,356
)
Depreciation and amortization
(57,982 )
(47,408
)
(92,739 )
(88,261
)
Total operating expenses
(502,767 )
(641,421
)
(920,688 )
(1,339,542
)
Net income from operations
363,989
307,243
453,402
507,848
Other items:
Interest expense
-
(37,814
)
-
(80,466
)
Disposition Loss
(798,805 )
(15
)
(796,547 )
(29,032
)
Other income
-
88
-
5,275
(798,805 )
(37,741
)
(796,547 )
(104,223
)
Income (loss) before income tax
(434,816 )
269,502
(343,145 )
403,625
expense
Income tax expense
(28,652 )
(25,444
)
(43,764 )
(43,815
)
Net income/(loss)
(463,468 )
244,058
(386,909 )
359,810
Foreign currency translation adjustment
182,822
(85,970
)
232,169
(29,186
)
Comprehensive (expense)/income
(280,646 )
158,088
(154,740 )
330,624
(Loss)/earnings Per Share (cents)
– Basic and diluted
(0.12 )
0.08
(0.10 )
0.10
Weighted Average Shares Outstanding – Basic and diluted
373,793,578
320,855,157
373,793,578
347,470,606
The accompanying notes are an integral part of these consolidated financial statements
Investor Alert
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On July 8, 2013, Mr. Longwen Lin resigned as a director, Chief Executive Officer and President of our company and Mr. Yi Zhang also resigned as a director of our company. Messrs. Lin and Zhang’s resignations were not as a result of a disagreement with our company on any matter relating to our operations, policies or practices.
Also on July 8, 2013, Mr. Shibi Chen was appointed to be a director, Chief Executive Officer and President of our company.
CFO Trail
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On May 7, 2013 Thomas Tze Khern Yeo resigned as Chief Financial Officer and Corporate Secretary of our company. Mr. Yeo’s resignation was not as a result of any disagreement with our company or its policies. Effective May 7, 2013 Peifeng Huang was appointed as our Chief Financial Officer and Corporate Secretary.
Mr. Huang has served as a production manager of Tong Duan Ping Coal Mine in Fujian Province from 1997 to 2005 and has served as coal mine production manager of Fujian Huilong since 2006. Mr. Huang graduated from Fujian Coal University with a degree in coal mining.
Deal Flow
On December 29, 2011, we
completed a private placement of 128,769,132 shares of our common stock at a deemed price of $0.06 per share. We issued the securities to two non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction in which we relied on the registration exemption provided for in Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended.
Reverse Merger Activity
On May 11, 2011 Yongding Shangzhai became a public entity via a
reverse merger transaction .`
Company Snapshot:
Engaged in coal production and sales by exploring, developing, and mining coal properties
Industry Snapshot
Post Merger Share Calculation :
5,071,210: Pre reverse merger outstanding shares (adjusted for 4.5 for one forward split).
220,522,000: Newly issued shares of Common Stock
GeoTeam® best effort calculation of total post reverse merger shares assuming full conversions: 225,593,210
Year Ended December 31, 2010
Year Ended December 31, 2009
$
% of Sales
$
% of Sales
Net sales
13,617,770
100%
15,409,749
100%
Cost of sales
(6,702,426
)
49%
(9,171,294
)
60%
Gross profit
6,915,344
51%
6,238,455
40%
Operating expenses
(2,034,217
)
15%
(1,398,851
)
9%
Profit from operations
4,881,127
36%
4,839,604
31%
Net income
3,017,777
22%
1,861,341
12%
Pro Forma Valuation : using ask price of $0.30 and new share count
Trailing EPS: $0.02
Trailing P/E: 15
Liquidity Requirements
Based on our current expectations, we believe our cash, and cash generated from operations will satisfy our working capital needs, and other liquidity requirements associated with our existing operations through the remainder of this year. We will continue to seek opportunities to expand our existing mining operations and acquire additional coal mining rights, and
we expect to finance such acquisitions through the issuance of debt or equity securities.
Investor Alert
The Shangzhai coal mine produced more than 200,000 t of coal in 2009. However, this production capacity may not be sustainable Government authorities may order the Shangzhai coal mine to be closed or limited at any time, since the area of active mining currently exceeds the limits of the mining permit.
We have submitted to the relevant authorities for the renewal of the mining permit to expand the mining area and increase production capacity. A notice issued in 2006 by the State Environmental Protection Administration (SEPA) deemed that the Environmental Impact Assessment of a coal mine construction project within an area covered by a coal mine master plan cannot be approved until a planning Environmental Impact Assessment of the coal mine master plan is approved. Since the master plan for the Longyang Longtan – Shizhong coal mine area (which covers the Shangzhai coal mine) was under preparation as of November 2010 , there is a risk that an Environmental Impact Assessment for the Shangzhai coal mine expansion will not be approved before the corresponding planning Environmental Impact Assessment is approved. Delay or failure in securing the relevant governmental approvals or permits as well as any adverse change in government policies may cause a significant adjustment to our operations and financial condition.
