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EX-31.1 - CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT - Ceetop Inc.f10k2011ex31i_chinaceetop.htm
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011

Or

   o TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER     000-53307

CHINA CEETOP.COM, INC.
(Exact name of registrant as specified in charter)
 
OREGON
 
98-0408707
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
A2803, Lianhe Guangchang, 5022 Binhe Dadao, Futian District, Shenzhen, China
 
518026
(Address of principal executive offices)
 
(Zip Code)
 
Registrant's telephone number, including area code:  86-755- 3336-6628

Securities registered pursuant to Section 12(b) of the Act:   None
Securities registered pursuant to Section 12(g) of the Act:   Common Stock, $0.001 par value
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the above Act.  Yes  o  No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of 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 x   No o
 
 
 
 

 

 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding twelve months (or for such shorter time that the registrant was required to submit and post such files).    Yes   x     No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

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 the 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
x
(Do not check if smaller reporting company)
   
 
Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act:    Yes    ¨      No  x
 
The aggregate market value of the registrant’s voting common stock held by non-affiliates as of the last business day of the registrant’s most recently completed second fiscal quarterwas US $322,810.63.

Indicate the number of shares outstanding of each of the registrant’s class of common stock, as of the latest practicable date: As of April 13, 2012, there were 32,281,063 shares of the Company’s common stock outstanding.

Documents Incorporated by Reference:  None

 
 

 

 
TABLE OF CONTENTS

ITEM NUMBER AND CAPTION
PAGE
     
PART I
   
     
ITEM 1.
Business.
4
ITEM 1A.
Risk Factors.
5
ITEM 1B.
Unresolved Staff Comments.
5
ITEM 2.
Properties.
5
ITEM 3.
Legal Proceedings.
5
ITEM 4.
Mine Safety Disclosures.
5
     
PART II
   
     
ITEM 5.
Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity.
6
ITEM 6.
Selected Financial Data.
6
ITEM 7.
Management’s Discussion And Analysis Of Financial Condition And Results Of Operations.
7
ITEM 7A.
Quantitative And Qualitative Disclosures About Market Risk.
11
ITEM 8.
Financial Statements and Supplementary Data
F-
 
Balance Sheets – December 31, 2011 and December 31, 2010
 
 
Statements Of Operations – Years Ended December 31, 2011 and 2010
 
 
Statement Of Changes In Stockholders’ Deficit – Years Ended December 31, 2011 and 2010
 
 
Statements Of Cash Flows – Years Ended December 31, 2011 and 2010
 
ITEM 9.
Changes In And Disagreements With Accountants On Accounting And Financial Disclosure.
12
ITEM 9A.
Controls And Procedures.
12
ITEM 9B.
Other Information.
13
     
PART III
   
     
ITEM 10.
Directors, Executive Officers And Corporate Governance.
13
ITEM 11.
Executive Compensation.
15
ITEM 12.
Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters.
15
ITEM 13.
Certain Relationships And Related Transactions, and Director Independence.
16
ITEM 14.
Principal Accountant Fees And Services.
16
     
PART IV
   
     
ITEM 15.
Exhibits, Financial Statement Schedules.
16
SIGNATURES
17

 
 
3

 
 
 
PART I

ITEM 1. BUSINESS

Background

China Ceetop.com, Inc. (the “Company” or “China Ceetop”) was incorporated in Oregon on February 18, 2003 under the name of GL Gold Inc. On June 6, 2003 the Company filed an amendment with the State of Oregon changing its name to Oregon Gold, Inc.  On January 7, 2011 Oregon Gold Inc. changed its name to China Ceetop.com, Inc.

Surry Holdings Limited (“Surry”) was incorporated in the British Virgin Islands on September 18, 2009.  Surry holds 100% of Westow Technology Limited (“Westow”), a company incorporated in the British Virgin Islands, which in turn holds 100% of Shenzhen Ceetop Network Technology Co., Limited ("SZ Ceetop"), a company incorporated in Shenzhen, Peoples’ Republic of China ("PRC") and ultimately holds 100% of Hangzhou Ceetop Network Technology Co., Limited ("HZ Ceetop"), a company incorporated in Hangzhou, PRC.

Pursuant to a series of transactions completed in September, 2009, Surry became the holding company of Westow, SZ Ceetop and HZ Ceetop.

Reorganization

On January 27, 2011, the Company became the holding company of Surry through a reverse acquisition.  The Company acquired all of the issued and outstanding capital stock of Surry pursuant to the share exchange agreement dated December 30, 2010 by and among Surry, the Company and the shareholders of the Company (the “Share Exchange Agreement”).  At the same time, the Company effected a reverse stock split such that the number of all existing issued shares were reduced from 19,900,100 to 866,636 on a 23 to 1 basis.  Pursuant to the Share Exchange Agreement, the Company acquired 100% of the capital stock and ownership interests of Surry in exchange for 28,496,427 newly-issued shares of the Company’s common stock and 3,558,046 newly issued shares of the Company’s series A preferred stock.

Business

The Company operates in a single reportable segment, the principal activities of the Company are engaged in the provision of an online platform for distribution of 3C products (computers/communications/consumer electronics) in the PRC by way of a website named www.ceetop.com mainly through its wholly owned legal subsidiaries HZ Ceetop and SZ Ceetop. We are headquartered in Shenzhen, China. We also maintain an operating office located in Hangzhou, China.
 
China Ceetop.com, Inc., an Oregon-registered corporation, is a leading Business-to-Consumer (“B2C”) e-commerce company. The Company owns and operates the online platform: www.ceetop.com. The Company is committed to offering excellent online shopping experience, rapid delivery and outstanding customer service.

The Company mainly focuses on selling Computers/Communications/Consumer (“3C”) products online and providing a trading information platform for both buyers and sellers as software as a service (“SaaS”). The Company carries a wide range of products in assorted categories, including mainstream digital products, home appliances, kitchen appliances, personal care, and lifestyle products, etc. under well-known international and Chinese brands.
 
 
4

 
 
Governmental Regulation / Environmental Matters

We are not currently involved in any administrative, judicial or legal proceedings arising under domestic or foreign, federal, state, or local environmental protection laws and regulations, or under US federal or state common law, which would have a material adverse effect on our financial position or results of operations.

Competition

The Company’s operations are carried out in the PRC.  Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy.  The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

The Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.

Employees

As of April 12, 2012, the Company has 183 employees.  Current corporate structure is managed by the board member, Mr. Weiliang Liu. Weiliang Liu is the Company’s Chairman of the Board, Chief Executive Officer, President and Secretary. Juqun Zhao is the Company’s Chief Financial Officer and Treasurer.
 
ITEM 1A. RISK FACTORS.

Smaller reporting companies are not required to provide disclosure pursuant to this Item.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Smaller reporting companies are not required to provide disclosure pursuant to this Item.

ITEM 2. PROPERTIES.

The Company has three offices situated in Hangzhou and Shenzhen, PRC. The Company’s executive office is located at A2803, Lianhe Guangchang, 5022 Binhe Dadao, Futian District, Shenzhen, China.

ITEM 3. LEGAL PROCEEDINGS.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

 
5

 


PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock did not begin trading on the Over-the-Counter Bulletin Board (“OTCBB”) until March 17, 2009.  As of December 31, 2011, the Company traded under the symbol “ORGG,” Effective January 31, 2011 the symbol for the Company on the Over the Counter Bulletin Board was changed to “CTOP.
 
Dividends
 
We have not paid any dividends to date. We can give no assurance that our proposed operations will result in sufficient revenues to enable profitable operations or to generate positive cash flow. For the foreseeable future, we anticipate that we will use any funds available to finance the growth of our operations and that we will not pay cash dividends to stockholders. The payment of dividends, if any, in the future is within the discretion of the Board of Directors and will depend on our earnings, capital requirements, restrictions imposed by lenders and financial condition, and other relevant factors.
 
As of the date of this Annual Report, we have not authorized any equity compensation plan (other than shares referenced below), nor has our Board of Directors authorized the reservation or issuance of any securities under any equity compensation plan.

Holders
 
As of April 12, 2012 we have 217 shareholders of record of our common stock.

Recent Sales Of Unregistered Securities

On July 12,2011, the Company issued 2,900,000 shares of the Company's common stock to Wuying Wang, Xiaohua Jin, Lifang Yang and Qingxin Huang, four independent parties, in exchange for the market research and other advisory services pursuant to the terms of four consultancy agreement dated May 6, 2011, June 15, 2011, April 3, 2011 and May 5, 2011 respectively.

On December 27, 2011, the Company issued 18,000 shares of the Company’s common stock to Capital Link, Inc., an independent party, in exchange for investor relations and financial media services provided by that party pursuant to the terms of service agreement dated November 9, 2011.

ITEM 6. SELECTED FINANCIAL DATA.

Smaller reporting companies are not required to provide disclosure pursuant to this Item.

 
6

 

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of our financial condition and results of operations should be read together with the consolidated financial statements and the related notes included in this report. This discussion contains, in addition to historical information, forward-looking statements that involve risks and uncertainties.  Our actual results could differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below as well as those discussed elsewhere in this report. We disclaim any obligation to update information contained in any forward-looking statement.

Forward Looking Statements

This report contains a number of forward-looking statements, which reflect the Company's current views with respect to future events and financial performance including statements regarding the Company's projections. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. In this report, the words "anticipates", "believes", "expects", "intends", "future", "plans", "targets" and similar expressions identify forward-looking statements. Readers are cautioned to not place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements, to reflect events or circumstances that may arise after the date hereof. Additionally, these statements are based on certain assumptions that may prove to be erroneous and are subject to certain risks including, but not limited to, the Company's dependence on limited cash resources, and its dependence on certain key personnel within the Company. Accordingly, actual results may differ, possibly materially, from the predictions contained herein.

Financial Condition and Changes in Financial Condition

 Overall Operating Results:

The Company’s sales decreased from $14,774,240 at December 31, 2010 to $12,855,876 at December 31, 2011, a decrease of $1,918,364 or 13%.  The decrease was mainly due to high competition in online shopping during the year.

Cost of sales decreased slightly as a percentage of sales over the two year period. Cost of sales for the year ended December 31, 2011 was $12,156,963 or 94.6% of sales, compared to $14,156,162 or 95.8% of sales. The increased gross profit is due to higher gross margins on some of our 3C products.

The Company had $2,160,375 in selling, general and administrative expenses during 2011.  Of this expense, $94,856 was for legal expenses, and $2,065,519 was for other consulting and administrative expenses.  During 2010, the Company had $2,230,797 in selling, general and administrative expenses.  Of this expense, $271,408 was for legal expenses, and $1,959,389 was for other consulting and administrative expenses.

In 2011 the Company also chose to award $200,757 in stock based compensation to four independent parties for market research and other advisory services and an independent party for investor relations and financial media services. There was no such expense in 2010.
 
 
7

 
 
Liquidity and Capital Resources:

As of December 31, 2011, the Company has a working capital of $871,827 and total stockholders’ equity of $931,485.  We believe that the Company currently has the necessary working capital to support existing operations through 2012.  Our primary capital source will be cash flow from operations, as we anticipate reaching profitability in 2012.

Net cash used in operations during 2011 was $2,275,027 compared with $1,804,952 used in operations during the same period in 2010.   Cash used in operations during 2011 was primarily due to the Company decreasing its accounts payable during 2011.

Net cash generated from investing activities during 2011 was $48,686 compared with net cash used in investing activities during 2010 was $16,429. Net cash generated from investing activities during 2011 was primarily due by repayment from related parties during the year.

Net cash provided by financing activities was $362,583 during 2011 compared with $2,934,000 during 2010. Net cash provided by financing activities was primarily due to capital injection from the preferred  shareholder, Guoxing Wang, during the year.

Our independent auditors, in their report on the financial statements, have indicated that the Company has experienced recurring losses from operations and may not have enough cash and working capital to fund its operations beyond the very near term, which raises substantial doubt about our ability to continue as a going concern. Management has made a similar note in the financial statements.  As indicated herein, we have need of capital for the implementation of our business plan, and we will need additional capital for continuing our operations.  We do not have sufficient revenues to pay our expenses of operations.  Unless the Company is able to raise working capital, it is likely that the Company either will have to cease operations or substantially change its methods of operations or change its business plan.

Significant Accounting Policies

Cash and Cash Equivalents
 
For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.  The Company has no cash in excess of FDIC federally insured limits and no cash equivalents as of December 31, 2011 and 2010.
 
Revenue Recognition
 
The Company’s revenue recognition policies are in compliance with SEC Staff Accounting bulletin (“SAB”) 104 (codified in FASB ASC Topic 605). Sales revenue is recognized at the completion of delivery to customers when a formal arrangement exists, the price is fixed or determinable, no other significant obligations of the Company exist and collectability is reasonably assured at the date of completion of delivery. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Accounts Receivable/Bad Debt
 
The allowance for doubtful accounts is maintained at a level sufficient to provide for estimated credit losses based on evaluating known and inherent risks in the receivables portfolio.  Management evaluates various factors including expected losses and economic conditions to predict the estimated realization on outstanding receivables.  Allowances for doubtful accounts as of December 31, 2011 and 2010 were $1,080 and $503, respectively.
 
 
8

 
 
Property and Equipment
 
Property and equipment are valued at cost.  Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected in operations.  Depreciation is provided using the straight-line method over the estimated useful lives of the assets.

Impairment of Long-Lived Assets
 
The Company reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of the asset by estimating the undiscounted future net cash flows, which depend on estimates of metals to be recovered from proven and probable ore reserves, and also identified resources beyond proven and probable reserves, future production costs and future metals prices over the estimated remaining mine life.  If undiscounted cash flows are less than the carrying value of a property, an impairment loss is recognized based upon the estimated expected future net cash flows from the property discounted at an interest rate commensurate with the risk involved.  If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value.  
 
All mine-related costs, other than acquisition costs, are expensed prior to the establishment of proven or probable reserves.  Reserves designated as proven and probable are supported by a final feasibility study, indicating that the reserves have had the requisite geologic, technical and economic work performed and are legally extractable at the time of reserve determination.  Once proven or probable reserves are established, all development and other site-specific costs are capitalized.  
 
Capitalized development costs and production facilities are depleted using the units-of-production method based on the estimated gold which can be recovered from the ore reserves processed.  There has been no change to the estimate of proven and probable reserves.  Lease development costs for non-producing properties are amortized over their remaining lease term if limited.  Maintenance and repairs are charged to expense as incurred.
 
The fair value of an asset retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made.  The present value of the estimated asset retirement costs is capitalized as part of the carrying amount of the long-lived asset.  For the Company, asset retirement obligations primarily relate to the abandonment of ore-producing property and facilities. There are currently no obligations.

Income Taxes
 
The Company utilizes the accounting standards (“SFAS”) No. 109, “Accounting for Income Taxes,” codified in Financial Accounting Standard Board Accounting Standards Codification (“ASC”) Topic 740 which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (“FIN 48”), codified in FASB ASC Topic 740. When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits are classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income. The adoption of FIN 48 did not have a material impact on the Company’s financial statements. At December 31, 2011 and December 31, 2010, the Company did not take any uncertain positions that would necessitate recording a tax related liability.
 
 
9

 
 
Basic and Diluted Income / (Loss) Per Share
 
The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding.  Diluted net loss per common share is computed by dividing the net loss adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities.  
 
Fair Value of Financial Instruments
 
The Financial Instrument Topic of the Codification requires that the Company disclose 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.

Share Based Compensation
 
Stock-based awards to non-employees are accounted for using the fair value method.
 
The Company adopted provisions which requires that we measure and recognize compensation expense at an amount equal to the fair value of share-based payments granted under compensation arrangements.

Share-based payment is accounted for based on the FASB Statement No. 123R, “Share-Based Payment, an Amendment of FASB Statement No. 123” (“FAS No. 123R”) and Emerging Issue Task Force 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services” (“EITF 96-18”) and Emerging Issue Task Force 00-18 “Accounting Recognition for Certain Transactions involving Equity Instruments Granted to Other Than Employees” (“EITF 00-18”) (codified in FASB ASC Topic 505-50).  The Company recognized in the statement of income and comprehensive income the fair value of shares, stock options and other equity-based compensation issued to non-employees when the service provided by non-employees is completed, or the date when the shares were issued (provided that the shares issued are fully vested and not subject to forfeiture) with the prepaid services presented as contra equity.  This is in accordance with the consensus reached in EITF 00-18 that in the event that a note or receivable is acquired in exchange for the fully vested, non-forfeitable equity instruments, the note or receivable should be displayed as contra-equity by the granter.  The Company as granter interprets that the term “receivable” also embraces prepaid service fees. For employees, the Company recognized in the statement of income and comprehensive income the grant date of the shares, stock options and other equity-based compensation over the requisite service period.  In respect of the service agreement the Company entered into with a service provider for provision of investor relations and financial media service, the service provider is compensated for 9,000 common shares of the Company no later than the 5th day of and for each month over the period of the agreement, in accordance with the consensus reached in EITF 96-18, the Company recognized in the statement of income and comprehensive income the fair value of each 9,000 common shares issued to the service provider each month as share based payment on the same basis in the same period and in the same manner as if the Company had paid cash for the service rendered by the service provider instead of paying with equity instruments (common shares) of the Company in each month and that the measurement date of the fair value of each 9,000 common shares issued to the service provider will be the issue date which is before the 5th day of each month.
 
 
10

 
 
Commitment and Contingencies

None.

Off Balance Sheet Arrangements

None.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Smaller reporting companies are not required to provide disclosure pursuant to this Item.


 
11

 


ITEM 8. FINANCIAL STATEMENTS ANS SUPPLEMENTARY DATA.



CHINA CEETOP.COM, INC.

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011
TABLE OF CONTENTS

   
Report of Independent Registered Public Accounting Firm
F-1
   
Consolidated Balance Sheets
F-2
   
Consolidated Statements of Income and Comprehensive Income
F-3
   
Consolidated Statements of Cash Flows
F-4
   
Consolidated Statements of Stockholders’ Equity
F-5
   
Notes to Consolidated Financial Statements
F-6 - F-15

 
 

 


Report of Independent Registered Public Accounting Firm




Board of Directors and Stockholders of
China Ceetop.com, Inc.

We have audited the accompanying Consolidated Balance Sheets of China Ceetop.com, Inc. as of December 31, 2011 and 2010, and the related Consolidated Statements of income and Comprehensive Income, Stockholders’ Equity and Cash Flows for each of the years in the two-year period ended December 31, 2011.  China Ceetop.com, Inc.’s management is responsible for these financial statements.  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.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of China Ceetop.com, Inc. as of December 31, 2011 and 2010, and the consolidated results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company incurred a net loss of $1,654,520 for the year ended December 31, 2011 and has accumulated deficit of $4,325,648 at December 31, 2011.  These matters are discussed in Note 2 to the consolidated financial statements that raises substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans in regard to these matters are described in Note 2.  These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/Clement C. W. Chan & Co.
Clement C. W. Chan & Co.
Certified Public Accountants

3/F., & 5/F., Heng Shan Centre, 145 Queen’s Road East, Wanchai, Hong Kong
Date : April 12, 2012
 
 
F-1

 
 
 
CHINA CEETOP.COM, INC.
 
CONSOLIDATED BALANCE SHEETS
 
   
   
         
December 31,
   
December 31,
 
   
Notes
   
2011
   
2010
 
                   
          ASSETS
                 
                   
Current Assets
                 
                   
  Cash and cash equivalents
        $ 855,713     $ 2,671,162  
  Accounts receivable
    3       96,931       97,045  
  Deposits and other receivables
            58,491       169,703  
  Inventories
    3       194,344       164,649  
  Amount due from related parties
    5       -       50,000  
  Prepayments
            4,629       13,113  
                         
    Total Current Assets
            1,210,108       3,165,672  
                         
  Property and equipment, net
    3       59,658       106,783  
                         
    Total Assets
          $ 1,269,766     $ 3,272,455  
                         
          LIABILITIES AND STOCKHOLDERS' EQUITY
                       
                         
Current and Total Liabilities
                       
                         
  Accounts payable
          $ -     $ 989,564  
  Accrued expenses and other payable
            338,281       305,399  
                         
  Total Current and Total Liabilities
            338,281       1,294,963  
                         
Stockholders' Equity
                       
                         
  Common stock, USD0.001 par value, 100,000,000 shares
                       
    authorized, 32,281,063 and 28,496,427 shares issued
                       
    and outstanding at December 31, 2011 and December 31,
                       
    2010 respectively
    6       32,281       28,496  
  Preferred stock, USD0.001 par value, 3,558,046 shares
                       
    authorized, issued and outstanding
    6       3,558       3,558  
  Additional paid-in capital
    7       5,815,844       4,563,546  
  Common stock issued for prepaid service
    8       (702,743 )     -  
  Statutory reserve
    9       -       -  
  Accumulated other comprehensive income
    10       108,193       53,020  
  Accumulated deficit
            (4,325,648 )     (2,671,128 )
                         
    Stockholders' Equity
            931,485       1,977,492  
                         
    Total Liabilities and Stockholders' Equity
          $ 1,269,766     $ 3,272,455  
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
F-2

 
 
 
CHINA CEETOP.COM, INC.
 
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
 
   
   
   
2011
   
2010
 
             
Sales
  $ 12,855,876     $ 14,774,240  
                 
Cost of sales
    (12,156,963 )     (14,156,162 )
                 
Gross profit
    698,913       618,078  
                 
Stock based compensation
    (200,757 )     -  
                 
Selling, general and administrative expenses
    (2,160,375 )     (2,230,797 )
                 
(Loss) from operations
    (1,662,219 )     (1,612,719 )
                 
Other Income
               
  Interest income
    7,699       8,494  
  Other income
    -       7,638  
                 
Total other income
    7,699       16,132  
                 
Net (loss)
  $ (1,654,520 )   $ (1,596,587 )
                 
Weighted average shares (including common shares and
               
  non-convertible preferred shares) outstanding
               
    Basic
    34,234,144       31,685,627  
    Diluted
    34,234,144       31,685,627  
                 
Net (loss) per share (include common shares and non-convertible
               
  preferred shares)
               
    Basic
  $ (0.048 )   $ (0.050 )
    Diluted
  $ (0.048 )   $ (0.050 )
                 
Net (loss)
  $ (1,654,520 )   $ (1,596,587 )
Other comprehensive income
    55,173       77,611  
                 
Comprehensive (loss)
  $ (1,599,347 )   $ (1,518,976 )
                 
                 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
F-3

 
 
CHINA CEETOP.COM, INC.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
 
   
   
   
2011
   
2010
 
             
CASH FLOWS FROM OPERATING ACTIVITIES
           
             
  Net loss
  $ (1,654,520 )   $ (1,596,587 )
  Adjustments to reconcile net to net cash provided by/(used in) operating activities :
               
    Depreciation
    51,638       48,218  
    Share-based payment expense
    200,757       -  
    Provision for doubtful accounts
    1,080       503  
    Reversal of provision previously recognized
    (503 )     (638 )
    Changes in operating assets and liabilities :
               
     Accounts receivable
    3,202       18,308  
     Other receivable, deposits and prepayment
    119,696       (152,904 )
     Inventories
    (29,695 )     (164,649 )
     Accounts payable
    (989,564 )     5,519  
     Accrued expense and other payable
    22,882       37,278  
                 
    Net cash used in operating activities
    (2,275,027 )     (1,804,952 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
                 
  Purchase of property and equipment
    (1,314 )     (16,429 )
  Repayment from related parties
    50,000       -  
                 
    Net cash generated from (used in) investing activities
    48,686       (16,429 )
                 
CASH FLOW FROM FINANCING ACTIVITIES
               
                 
  Merge with China Ceetop
    50,171       -  
  Capital injection from shareholders
    312,412       2,934,000  
                 
    Net cash provided by financing activities
    362,583       2,934,000  
                 
Effect of exchange rate changes on cash and cash equivalents
    48,309       73,551  
                 
Net (decrease)/increase in cash and cash equivalents
    (1,815,449 )     1,186,170  
                 
Cash and cash equivalents, beginning balance
    2,671,162       1,484,992  
                 
Cash and cash equivalents, ending balance
  $ 855,713     $ 2,671,162  
                 
SUPPLEMENTAL DISCLOSURES:
               
                 
  Cash paid during the year for:
               
    Interest payments
  $ -     $ -  
                 
    Income tax payments
  $ -     $ -  
                 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
F-4

 
 
 
CHINA CEETOP. COM, INC.
 
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
 
                                                       
   
Common Stock
   
Preferred Stock
    Additional      
Common
stock issued
for
     Other
comprehensive
           
Total
 
   
Stock
         
Stock
          paid-in     prepaid     income/    
(Accumulated
   
stockholders
 
   
outstanding
   
Amount
   
outstanding
   
Amount
   
capital
   
service
   
(loss)
   
loss)
   
equity
 
                                                       
Balance January 1, 2010
    12,821,789     $ 12,822     $ -     $ -     $ 1,618,778     $ -     $ (24,591 )   $ (1,074,541 )   $ 532,468  
                                                                         
Foreign currency translation adjustments - note 10)
    -       -       -       -       -       -       77,611       -       77,611  
                                                                         
Issue of shares
    19,232,684       19,232       -       -       10,768       -       -       -       30,000  
                                                                         
Conversion of common stock to preferred stock
    (3,558,046 )     (3,558 )     3,558,046       3,558       -       -       -       -       -  
                                                                         
Waiver of amount due to a shareholder
    -       -       -       -       2,934,000       -       -       -       2,934,000  
                                                                         
(Loss) for the year ended December 31, 2010
    -       -       -       -       -       -       -       (1,596,587 )     (1,596,587 )
                                                                         
Balance December 31, 2010
    28,496,427       28,496       3,558,046       3,558       4,563,546       -       53,020       (2,671,128 )     1,977,492  
                                                                         
Foreign currency translation adjustments - note 9)
    -       -       -       -       -       -       55,173       -       55,173  
                                                                         
Merge with China Ceetop - note 1)
    866,636       867       -       -       39,304       -       -       -       40,171  
                                                                         
Capital injection from a shareholder - note 7)
    -       -       -       -       312,412       -       -       -       312,412  
                                                                         
Issuance of common stock for prepaid service - note 6, 8)
    2,900,000       2,900       -       -       896,100       (899,000 )     -       -       -  
                                                                         
Record of common stock for prepaid service - note 8)
    -       -       -       -       -       196,257       -       -       196,257  
                                                                         
Issuance of common stock for consultancy service - note 6, 8)
    18,000       18       -       -       4,482       -       -       -       4,500  
                                                                         
(Loss) for the year endedDecember 31, 2011
    -       -       -       -       -       -       -       (1,654,520 )     (1,654,520 )
                                                                         
Balance December 31, 2011
    32,281,063     $ 32,281       3,558,046     $ 3,558     $ 5,815,844     $ (702,743 )   $ 108,193     $ (4,325,648 )   $ 931,485  
                                                                         
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
F-5

 
 
CHINA CEETOP.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011

Note 1 - ORGANIZATION

China Ceetop.com, Inc. (the “Company” or “China Ceetop”) was incorporated in Oregon on February 18, 2003 under the name of GL Gold Inc.  On June 6, 2003 the Company filed an amendment with the State of Oregon changing its name to Oregon Gold, Inc.  On January 7, 2011 Oregon Gold Inc. changed its name to China Ceetop.com, Inc.

Surry Holdings Limited (“Surry”) was incorporated in the British Virgin Islands on September 18, 2009.  Surry holds 100% of Westow Technology Limited (“Westow”), a company incorporated in the British Virgin Islands, which in turn holds 100% of Shenzhen Ceetop Network Technology Co., Limited ("SZ Ceetop"), a company incorporated in Shenzhen, Peoples’ Republic of China ("PRC") and ultimately holds 100% of Hangzhou Ceetop Network Technology Co., Limited ("HZ Ceetop"), a company incorporated in Hangzhou, PRC.

Pursuant to a series of transactions completed in September, 2009, Surry became the holding company of Westow, SZ Ceetop and HZ Ceetop ("Group Reorganization").

Since Surry, Westow, SZ Ceetop and HZ Ceetop were under common control of a controlling party both before and after the completion of the Group Reorganization, the Group Reorganization has been accounted for using merger accounting.  The consolidated financial statements have been prepared on the basis as if Surry had always been the holding company of Westow, SZ Ceetop and HZ Ceetop and this group structure had been in existence throughout the years ended December 31, 2011 and 2010 as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, “Consolidation”.

On January 27, 2011, the Company became the holding company of Surry through a reverse acquisition.  The Company acquired all of the issued and outstanding capital stock of Surry pursuant to the share exchange agreement dated December 30, 2010 by and among Surry, the Company and the shareholders of the Company (the “Share Exchange Agreement”).  At the same time, the Company effected a reverse stock split such that the number of all existing issued shares were reduced from 19,900,100 to 866,636 on a 23 to 1 basis.  Pursuant to the Share Exchange Agreement, the Company acquired 100% of the capital stock and ownership interests of Surry in exchange for 28,496,427 newly-issued shares of the Company’s common stock and 3,558,046 newly issued shares of the Company’s series A preferred stock.

Prior to the acquisition of the Surry, the Company was a non-operating public shell.  Pursuant to Securities and Exchange Commission (“SEC”) rules, the merger or acquisition of a private operating company into a non-operating public shell with nominal net assets is considered as a capital transaction, rather than a business combination.  Accordingly, for accounting and financial reporting purposes, the transaction was treated as a reverse acquisition, wherein Surry is considered the acquirer.  The assets and liabilities of Surry have been brought forward at their book value and no goodwill has been recognized.  The historical financial statements prior to January 27, 2011 are those of Surry.

The Company operates in a single reportable segment, the principal activities of the Company are engaged in the provision of an online platform for distribution of 3C products (computers/communications/consumer electronics) in the PRC by way of a website named www.ceetop.com mainly through its wholly owned legal subsidiaries HZ Ceetop and SZ Ceetop.

These Consolidated Financial Statements present the Company and its subsidiaries on a historical basis.

 
 
F-6

 

CHINA CEETOP.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011

Note 2 - GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.  As shown in the accompanying consolidated financial statements, the Company incurred a net loss of $1,654,520 for the year and has accumulated deficit of $4,325,648 at December 31, 2011.  Although as mentioned in Note 7 “Additional Paid in Capital”, a major shareholder of the Company has undertaken to inject funds in the amount of RMB10,000,000 (equivalent to $1,547,000) to HZ Ceetop as its working capital on or before December 31, 2011.  However, up to December 31, 2011, only RMB2,000,000 (equivalent to $312,412) was injected by that major shareholder, Guoxing, Wang, management is unable to ascertain when the balance of RMB8,000,000 (equivalent to $1,234,588) would be injected to the Company.  These factors create an uncertainty about the Company’s ability to continue as a going concern.  In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans or through additional sales of common stock.  There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable operations.  The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Note 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).  The Company adopted the new accounting guidance (“Codification”) on July 1, 2009.  For the year ended December 31, 2011, all reference for periods subsequent to July 1, 2009 are based on the codification.  The Company's functional currency is the Chinese Yuan Renminbi (“RMB”); however the accompanying consolidated financial statements have been translated and presented in the United States Dollars (“USD”).

Principles of Consolidation

The Consolidated Financial Statements incorporate the financial statement items of the combining entities or businesses in which the common control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the control of the controlling party.

The net assets of the combining entities or businesses are combined using the existing book values from the controlling parties’ perspective.  No amount is recognized in respect of goodwill or excess of acquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of common control combination, to the extent of the continuation of the controlling party’s interest.

The Consolidated Statements of Income and Comprehensive Income include the results of each of the combining entities or businesses from the earliest date presented or since the date when the combining entities or businesses first came under common control, where this is a shorter period.

A business combination involving entities or businesses under common control is a business combination in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory.  Such business combinations are referred to as common control combinations which is in line with U.S. GAAP.

Translation Adjustment

As of December 31, 2011 and 2010, the accounts of the Company were maintained, and its financial statements were expressed, in RMB.  Such financial statements were translated into USD in accordance with the Foreign Currency Matters Topic of the Codification, with the RMB as the functional currency.  According to the Codification, all assets and liabilities were translated at the current exchange rate, stockholders’ equity are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with the Comprehensive Income Topic of the Codification, as a component of shareholders’ equity.  Transaction gains and losses are reflected in the income statement.

 
F-7

 
 
CHINA CEETOP.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011

Note 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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.

Comprehensive Income

The Company uses SFAS 130 “Reporting Comprehensive Income” (codified in FASB ASC Topic 220). Comprehensive income is comprised of net income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders.  Comprehensive income for the years ended December 31, 2011 and 2010 included net income and foreign currency translation adjustments.

Risks and Uncertainties

The Company’s operations are carried out in the PRC.  Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy.  The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

The Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.

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 and legal counsel assess 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 unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.  There were no contingencies of this type as of December 31, 2011 and 2010.

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.  There were no contingencies of this type as of December 31, 2011 and 2010.

Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

Accounts Receivable

The Company maintains reserves for potential credit losses on accounts receivable.  Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.  Reserves are recorded based on the Company’s historical collation history.  Allowances for doubtful accounts as of December 31, 2011 and 2010 were $1,080 and $503, respectively.
 
 
F-8

 
 
CHINA CEETOP.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011

Note 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Inventories

Inventories are valued at the lower of cost (determined on a weighted average basis) or market.  Management compares the cost of inventories with the market value and allowance is made for writing down their inventories to market value, if lower.  There is no provision of inventories for the years ended December 31, 2011 and 2010.  As of December 31, 2011 and 2010, inventories consist of the following :

   
12/31/2011
   
12/31/2010
 
             
Finished goods
  $ 194,344     $ 164,649  

Property, Plant & Equipment

Property, plant and equipment are stated at cost.  Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized.  When property, plant and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations.  Depreciation of property, plant and equipment is provided using the straight-line method for substantially all assets with estimated lives of:

Office equipment
3 - 5 years

As of December 31, 2011 and 2010 Property, Plant & Equipment consist of the following:

   
12/31/2011
   
12/31/2010
 
             
Office equipment
    263,983       253,157  
                 
Accumulated depreciation
    (204,325 )     (146,374 )
                 
    $ 59,658     $ 106,783  

Depreciation expense for the years ended December 31, 2011 and 2010 was $51,638 and $48,218, respectively.

Long-Lived Assets

The Property, Plant and Equipment Topic of the Codification addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes previous accounting guidance, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and “Reporting the Results of Operations for a Disposal of a Segment of a Business.”  The Company periodically evaluates the carrying value of long-lived assets to be held and used, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amounts.  In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets.  Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of December 31, 2011 and 2010, there were no impairments of its long-lived assets.

Fair Value of Financial Instruments

The Financial Instrument Topic of the Codification requires that the Company disclose 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.

Revenue Recognition

The Company’s revenue recognition policies are in compliance with SEC Staff Accounting bulletin (“SAB”) 104 (codified in FASB ASC Topic 605).  Sales revenue is recognized at the completion of delivery to customers when a formal arrangement exists, the price is fixed or determinable, no other significant obligations of the Company exist and collectability is reasonably assured at the date of completion of delivery.  Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.
 
 
F-9

 
 
CHINA CEETOP.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011

Note 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Advertising

Advertising expenses consist primarily of costs of promotion for corporate image and product marketing and costs of direct advertising.  The Company expenses all advertising costs as incurred.  For the years ended December 31, 2011 and 2010, the Company incurred advertising expenses of $Nil and $54,704 respectively.

Shipping and Handling costs

Shipping and handling costs consist primarily of freight charges and packaging charges for delivery of goods to the customers and are included in selling, general and administrative expenses.  The Company expenses all shipping and handling costs when they are incurred.  For the years ended December 31, 2011 and 2010, the Company incurred freight charges of $124,207 and $131,248 respectively, and packaging charges of $2,758 and $22,390 respectively.

Income Taxes

The Company utilizes the accounting standards (“SFAS”) No. 109, “Accounting for Income Taxes,” codified in Financial Accounting Standard Board Accounting Standards Codification (“ASC”) Topic 740 which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.  Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (“FIN 48”), codified in FASB ASC Topic 740.  When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained.  The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.  Tax positions taken are not offset or aggregated with other positions.  Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority.  The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits are classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income.  The adoption of FIN 48 did not have a material impact on the Company’s financial statements.  At December 31, 2011 and 2010, the Company did not take any uncertain positions that would necessitate recording a tax related liability.

Statement of Cash Flows

In accordance with SFAS 95 “Statement of Cash Flows”, codified in FASB ASC Topic 230, cash flows from the Company’s operations are based upon the local currencies.  As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

Basic and Diluted Earnings per Share

Earnings per share are calculated in accordance with FASB ASC Topic 260, “Earnings per Share”.  Basic earnings per share is based upon the weighted average number of common shares and preferred shares outstanding.  Preferred shares are included in the denominator of basic earnings per share because preferred shares participate with common shares in the earnings and dividends of the Company on a one-for-one basis.  Diluted earnings per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method.  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.
 
 
F-10

 
 
CHINA CEETOP.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011

Note 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
Share-Based payment
 
Share-based payment is accounted for based on the FASB Statement No. 123R, “Share-Based Payment, an Amendment of FASB Statement No. 123” (“FAS No. 123R”) and Emerging Issue Task Force 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services” (“EITF 96-18”) and Emerging Issue Task Force 00-18 “Accounting Recognition for Certain Transactions involving Equity Instruments Granted to Other Than Employees” (“EITF 00-18”) (codified in FASB ASC Topic 505-50).  The Company recognized in the statement of income and comprehensive income the fair value of shares, stock options and other equity-based compensation issued to non-employees when the service provided by non-employees is completed, or the date when the shares were issued (provided that the shares issued are fully vested and not subject to forfeiture) with the prepaid services presented as contra equity.  This is in accordance with the consensus reached in EITF 00-18 that in the event that a note or receivable is acquired in exchange for the fully vested, non-forfeitable equity instruments, the note or receivable should be displayed as contra-equity by the granter.  The Company as granter interprets that the term “receivable” also embraces prepaid service fees. For employees, the Company recognized in the statement of income and comprehensive income the grant date of the shares, stock options and other equity-based compensation over the requisite service period.  In respect of the service agreement the Company entered into with a service provider for provision of investor relations and financial media service, the service provider is compensated for 9,000 common shares of the Company no later than the 5th day of and for each month over the period of the agreement, in accordance with the consensus reached in EITF 96-18, the Company recognized in the statement of income and comprehensive income the fair value of each 9,000 common shares issued to the service provider each month as share based payment on the same basis in the same period and in the same manner as if the Company had paid cash for the service rendered by the service provider instead of paying with equity instruments (common shares) of the Company in each month and that the measurement date of the fair value of each 9,000 common shares issued to the service provider will be the issue date which is before the 5th day of each month.
 
Concentration of Credit Risk
 
Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions.  The Company has a diversified customer base. Majority of sales are either cash receipt in advance or cash receipt upon delivery.  During the years ended 2011 and 2010, no customers accounted for more than 10% of net revenue.  As of December 31, 2011 and 2010, no customers accounted for more than 10% of net accounts receivable.  For those credit sales, the Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.
 
Recent Accounting Pronouncements
 
In May 2011, the FASB issued ASU No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, which amends the current fair value measurement and disclosure guidance of ASC Topic 820, Fair Value Measurement, to include increased transparency around valuation inputs and investment categorization.  The guidance provided in ASU No. 2011-04 is effective prospectively for interim and annual periods beginning after December 15, 2011.  The Company does not expect the adoption of these provisions to have a material impact on its consolidated statements of income and balance sheets.
 
In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220)—Presentation of Comprehensive Income (ASU 2011-05). ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity.  Instead, ASU 2011-05 requires entities to report all non-owner changes in stockholders’ equity in either a single continuous statement of comprehensive income, or in two separate, but consecutive statements. ASU 2011-05 does not change the items that must be reported in other comprehensive income, or when an item must be reclassified to net income. ASU 2011-05 requires retrospective application and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011.  Other than the presentational changes that will be required by ASU 2011-05, the adoption of ASU 2011-05 is not expected to have any impact on its consolidated financial statements.
 
 
F-11

 
 
CHINA CEETOP.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011

Note 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements (continued)

In September 2011, the FASB has issued ASU No. 2011-08, Intangibles—Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU 2011-08 is intended to simplify how entities, both public and nonpublic, test goodwill for impairment.  ASU 2011-08 permits an entity to first assess qualitative factors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350, Intangibles-Goodwill and Other.  The more-likely-than-not threshold is defined as having a likelihood of more than 50%. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  The Company does not expect the adoption of ASU 2011-08 to have any impact on its consolidated financial statements.

In December 2011, the FASB issued Accounting Standards Update No. 2011-11, “Balance Sheet (Topic 210) : Disclosures about Offsetting Assets and Liabilities,” (“ASU 2011-11”).  ASU 2011-11 enhances disclosures regarding financial instruments and derivative instruments.  Entities are required to provide both net information and gross information for these assets and liabilities in order to enhance comparability between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS.  This new guidance is to be applied retrospectively.  The adoption of these provisions does not have a material impact on the Company’s consolidated financial statements.

Note 4 - INCOME TAXES

The Company operates in more than one jurisdiction with the main operations conducted in PRC and no activities in USA with complex regulatory environments subject to different interpretations by the taxpayer and the respective governmental taxing authorities. The Company evaluates its tax positions and establishes liabilities, if required.

Pursuant to the PRC Income Tax Laws, the Enterprise Income Tax (“EIT”) through December 31, 2007 is at a statutory rate of 33%, which is comprised of 30% national income tax and 3% local income tax.  As from January 1, 2008 onwards, the EIT is at a statutory rate of 25%.

Uncertain Tax Positions

Interest associated with unrecognized tax benefits are classified as income tax and penalties in selling, general and administrative expenses in the statements of operations. For the years ended December 31, 2011 and 2010, the Company had no related interest and penalties expenses.  Currently, the Company is not subject to examination by major tax jurisdictions, but the tax authority in PRC has the right to examine the Company’s tax position in all past years.

The deferred tax asset not recognized is as follows :

   
12/31/2011
   
12/31/2010
 
             
Unused tax loss brought forward
    2,671,128       1,074,541  
Unused tax loss for the year
    1,654,520       1,596,587  
Expenses not deductible for tax (share-based payment)
    (200,757 )     -  
                 
Unused tax loss carried forward
  $ 4,124,891     $ 2,671,128  
                 
Unrecognized deferred tax asset brought forward
    667,782       268,635  
Unrecognized deferred tax asset for the year
               
   (at PRC tax rate of 25%)
    363,441       399,147  
                 
Unrecognized deferred tax asset carried forward
  $ 1,031,223       667,782  
Less : valuation allowance     (1,031,223 )     (667,782 )
                 
Deferred income tax benefit, net of valuation allowance
  $ -     $ -  
                 
 
 
F-12

 
 
 
CHINA CEETOP.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011

Note 4 - INCOME TAXES (CONTINUED)

The Company has not recognized deferred tax asset in respect of PRC tax loss in these Consolidated Financial Statements as it is not more-likely-than-not that the future taxable profit against which loss can be utilized will be available to the entities operating in PRC.  The unrecognized tax loss as of December 31, 2011 that will be expiring in 2013, 2014, 2015 and 2016 are respectively $426,068, $648,473, $1,596,587 and $1,453,763.

The reconciliation of the effective income tax rate to the federal statutory rate for the years ended December 31, 2011 and 2010 is as follows :

   
2011
   
2010
 
             
Federal income tax rate
    -34.0 %     -34.0 %
Foreign tax rate difference
    9.0 %     9.0 %
Use of prior year NOLs
    0.0 %     0.0 %
Increase in valuation allowance
    22.0 %     25.0 %
Permanent difference for share-based payment
    3.0 %     -  
                 
Effective income tax rate
  $ 0.0 %   $ 0.0 %

Note 5 - AMOUNT DUE FROM RELATED PARITES

As of December 31, 2010, the amount due from related parties was $50,000, it was unsecured interest free and was repayable on demand.  There was no amount due from related parties at December 31, 2011.

Note 6 - COMMON STOCK AND PREFERRED STOCK

The Company is authorized to issue up to 100,000,000 shares of common stock of par value of $0.001 per share and 3,558,046 shares of Series A preferred stock of par value of $0.001 per share.  As detailed in Note 1 above, on January 27, 2011, the Company effected a reverse stock split such that the number of all existing issued shares were reduced from 19,900,100 to 866,636 (equivalent to US$867) on a 23 to 1 basis.  At the same time, pursuant to the Share Exchange Agreement, Surry became a wholly-owned subsidiary of the Company through issuance of 28,496,427 shares of common stock of par value of $0.001 per share and 3,558,046 shares of Series A preferred stock of par value of $0.001 per share.

For accounting purposes, this transaction was treated as reverse acquisition and the Company’s equity accounts at December 31, 2010 prior to the acquisition are restated based on the ratio of the exchange of 28,496,427 shares of common stock of the Company for 44,450 shares of common stock of Surry and exchange of 3,558,046 shares of preferred stock of the Company for 5,550 shares of preferred stock of Surry.  As the par value of the capital stock of the Company and Surry are $0.001 and $1 respectively, the difference in capital of $17,946 arising from this reverse acquisition was reallocated to additional paid-in capital.

On July 12, 2011, the Company issued 2,900,000 shares of common stock to four independent parties as payments to such parties for market research and other advisory services for $899,000 (see Note 8).

On December 27, 2011, the Company issued 18,000 shares of common stock to an independent party as payment for investor relations and financial media services for $4,500 (see Note 8) provided by that party.

As of December 31, 2011, the Company has a total of 32,281,063 shares of common stock and 3,558,046 shares of Series A Preferred Stock outstanding.

Solely for voting purposes, each share of Series A Preferred Stock shall be equivalent to ten (10) shares of Common Stock and all shares of Series A Preferred Stock shall vote together with the shares of Common Stock as a single class.

 
F-13

 
CHINA CEETOP.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011

Note 7 - ADDITIONAL PAID IN CAPITAL

Included in the balance of $5,815,844 as Additional Paid in Capital as of December 31, 2011, is an amount of $4,399,000 arose from two waivers of amount due to shareholders of which a waiver of $1,465,000 took place in December, 2009 and the other waiver of $2,934,000 took place in February, 2010.

On July 21, 2011, the Company obtained a financial undertaking from the holder of our preferred stock, Guoxing Wang, to inject funds in the amount of RMB10,000,000 (equivalent to $1,547,000) to HZ Ceetop as its working capital on or before December 31, 2011.  That shareholder further agreed that such capital injection will be interest free and he waived his entitlement to and right for repayment to the capital injected.  On August 8, 2011, there was a capital injection of RMB2,000,000 (equivalent to $312,412) received from that shareholder and the amount was credited to Additional Paid in Capital of the Company.

Note 8 - SHARE BASED PAYMENTS

On July 12, 2011, the Company issued 2,900,000 shares of the Company’s common stock to Wuying Wang, Xiaoghua Jin, Lifang Yang and Qingxin Huang, four independent parties, in exchange for the market research and other advisory services pursuant to the terms of four consultancy agreements dated May 6, 2011, June 15, 2011, April 3, 2011 and May 5, 2011 respectively (“Consultancy Agreements”) (see Note 6).  The shares were fully vested and not subject to forfeiture when issued. The fair value of the shares issued was $0.31 per share and the total fair value of the shares issued was $899,000.  The fair value of the shares issued was based on the quoted market price of the Company’s shares as of July 12, 2011. The total fair value of the shares issued are recognized as a share-based payment expense over the period from date of the Consultancy Agreements to the date when consultancy services are completed.  The consultancy services are to be performed for a period of two to three years.  For the year ended December 31, 2011 the Company amortized $196,257 as share-based payment expense.  The unrecognized share-based payment expense of $702,743 as of December 31, 2011 will be amortized up to July 2014.  There is no tax benefit related to the share-based payment expense recognized.

On December 27, 2011, the Company issued 18,000 shares of the Company’s common stock to Capital Link, Inc., an independent party, in exchange for investor relations and financial media services provided by that party pursuant to the terms of service agreement dated November 9, 2011 (see Note 6). The shares were fully vested and not subject to forfeiture when issued. The fair value of the shares issued was $0.25 per share and total fair value of the shares issued was $4,500 and was recognized as a share-based payment expense when issued. The fair value of the shares issued was based on the quoted market price of the Company’s shares as of December 27, 2011. The Service Agreement are to be performed from December 1, 2011 to November 30, 2012 with a monthly retainer payable in the form of 9,000 common shares. There is no tax benefit related to the share-based payment expense recognized.

Note 9 - STATUTORY RESERVE

In accordance with the laws and regulations of the PRC, a wholly-owned Foreign Invested Enterprise’s income, after the payment of the PRC income taxes, shall be allocated to the statutory reserves.  The allocation is 10 percent of the net income and the cumulative allocations are not to exceed 50 percent of the registered capital.  However, the laws do not prohibit enterprises allocate net income to this reserve after the limit of 50 per cent of registered capital has been reached.  These reserves are not transferable to the Company in the form of cash dividends, loans or advances.  These reserves are therefore not available for distribution except in liquidation. As of December 31, 2011 and 2010, the Company has not allocated any amount to these non-distributable reserve funds due to loss sustained in both years.

 
 
F-14

 
 
CHINA CEETOP.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011

Note 10 - ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

Balances and movements of accumulated other comprehensive income/(loss), included in stockholders’ equity, at December 31, 2011 and 2010, are as follows:

   
Foreign
   
Accumulated
 
   
Currency
   
Other
 
   
Translation
   
Comprehensive
 
   
Adjustment
   
Income/(Loss)
 
             
Balance at December 31, 2009
  $ (24,591 )   $ (24,591 )
Change for 2010
    77,611       77,611  
                 
Balance at December 31, 2010
    53,020       53,020  
Change for 2011
    55,173       55,173  
                 
Balance at December 31, 2011
  $ 108,193     $ 108,193  

Note 11 - CURRENT VULNERABILITY DUE TO CERTAIN RISK FACTORS

The Company’s operations are carried out in the PRC.  Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, by the general state of the PRC's economy.  The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Note 12 - LEASES

As at December 31, 2011, the Company had total future aggregate minimum lease payments under non-cancellable operating leases as follows:

     
12/31/2011
 
         
With 1 year
 
$
35,736
 
In the second year
   
18,535
 
In the third year
   
9,538
 
         
   
$
63,809
 

As at December 31, 2011, the Company has three offices situated in Hangzhou and Shenzhen, PRC, respectively.  The operating leases for these three offices provide for monthly rental payments of $2,324, $705 and $1,393 that are expiring in May, 2012, September, 2012 and June, 2014 respectively.  In respect of these three leases, the Company paid rental expenses of $41,338 for the year ended December 31, 2011.

Note 13 - SUBSEQUENT EVENTS

For the year ended December 31, 2011, the Company has evaluated subsequent events for potential recognition and disclosure.

No significant events occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on our consolidated financial statements.

 
F-15

 

 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
There are no disagreements with our accountant on accounting and financial disclosure.
 
ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)).  Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.  Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act, as amended.  Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2011. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework.  A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.  We have identified the following material weaknesses:
 
 
1.
As of December 31, 2011, we did not maintain effective controls over the control environment.  Specifically, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-B.  Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

 
2.
As of December 31, 2011, we did not maintain effective controls over financial statement disclosure.  Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements.   Accordingly, management has determined that this control deficiency constitutes a material weakness.

Because of these material weaknesses, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2011, based on the criteria established in "Internal Control-Integrated Framework" issued by the COSO.

Changes in Internal Control over Financial Reporting

There has been no change in the Company’s internal control over financial reporting that occurred in the quarter ended December 31, 2011, that has materially affected, or is reasonably likely to affect, the Company’s internal control over financial reporting.
 
 
12

 
 
 
Independent Registered Accountant’s Internal Control Attestation

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act, which permanently exempts smaller reporting companies from providing attestation of their internal controls pursuant to Section 404 of the Sarbanes-Oxley Act. As a result, this report does not provide such an attestation, and the Company will be exempted from providing such an attestation until such time as it reaches $75 million in market capitalization.

Corrective Action

Management plans to address the structure of the Board of Directors and discuss adding an audit committee during 2011.

ITEM 9B.   OTHER INFORMATION

There is no information to be disclosed in a report on Form 8-K during the fourth quarter of the fiscal year covered by this Form 10-K that has not been previously filed with the Securities and Exchange Commission.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Effective January 27, 2011, as a result of the closing of the transaction with Surry: Yinfang Yang resigned as officer and director; Weiliang Liu was appointed Chairman of the Board, Chief Executive Officer, President and Secretary; and Juqun Zhao was appointed Chief Financial Officer and Treasurer.
 
Weiliang Liu, Director, Chairman of the Board, Chief Executive Officer, President and Secretary
 
Weiliang Liu was appointed Chairman of the Board, Chief Executive Officer, President and Secretary of the Company upon the closing of the transaction with Surry.  Weiliang Liu, graduated from Shanghai Tongji University with a B.S. Degree in Computer Science major, worked as the General Manager at Information Technology Ltd, an affiliate of Zhe Jiang China Commodities City Group co. Ltd from 2003 to 2007. Since 2008 Weiliang Liu is the CEO and chairman of Shenzhen Ceetop Network Technology Co. Ltd
 
 
There are no family relationships between Mr. Liu and the directors, or executive officers, of the Company. During the last two years, there have been no transactions, or proposed transactions, to which the Company was or is to be a party, in which Mr. Liu (or any member of his immediate family) had or is to have a direct or indirect material interest, except for the transaction with Surry as described herein.

Mr. Liu is not a party to any material proceedings adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.

During the past ten years Mr. Liu has not been a party to any legal proceeding as set forth in Item 410 of Regulation S-K.

Juqun Zhao, Chief Financial Officer and Treasurer
 
Juqun Zhao was appointed Chief Financial Officer and Treasurer of the Company upon the closing of the transaction with Surry.  Mr. Zhao graduated from Nanjing University of Finance and Economics with Bachelor Degree in Economics. From 2003 to 2009, he worked at Shenzhen Zhongda Group Co. Ltd. as Chief Financial Officer. From 2009 to now, he worked at Ceetop.com as Chief Financial Officer.
 
Mr. Zhao does not hold any directorships with reporting companies in the United States. There are no family relationships between Mr. Zhao and the directors, or executive officers, of the Company. During the last two years, there have been no transactions, or proposed transactions, to which the Company was or is to be a party, in which Mr. Zhao (or any member of his immediate family) had or is to have a direct or indirect material interest.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires the Company's directors and executive officers, and persons who own more than 10% of the outstanding shares of the Company's Common Stock, to file initial reports of beneficial ownership and reports of changes in beneficial ownership of shares of Common Stock with the Commission. Such persons are required by Commission regulations to furnish the Company with copies of all Section 16(a) forms they file.

Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Company during the year ended December 31, 2011, and upon a review of Forms 5 and amendments thereto furnished to the Company with respect to the year ended December 31, 2011, or upon written representations received by the Company from certain reporting persons that no Forms 5 were required for those persons, to its knowledge, except for the filing of a Form 3 from Ms. Yang, all the Section 16(a) filing requirements applicable to such persons with respect to fiscal year ended December 31, 2011 were complied with.
 
 
13

 
 
AUDIT COMMITTEE AND FINANCIAL EXPERT

We are not required to have and we do not have an Audit Committee. The Company's sole director performs some of the same functions of an Audit Committee, such as: recommending a firm of independent certified public accountants to audit the financial statements; reviewing the auditors' independence, the financial statements and their audit report; and reviewing management's administration of the system of internal accounting controls. The Company does not currently have a written audit committee charter or similar document.

We have no audit committee financial expert. Our directors have financial statement preparation and interpretation ability obtained over the years from past business experience and education. We believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of the nature of our current limited operations, we believe the services of a financial expert are not warranted.

CODE OF ETHICS

A code of ethics relates to written standards that are reasonably designed to deter wrongdoing and to promote:

        
o
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

        
o
Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the Securities and Exchange Commission and in other public communications made by the Company;
     
        
o
Compliance with applicable government laws, rules and regulations;

        
o
The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and,
     
        
o
Accountability for adherence to the code.

We have not adopted a formal code of ethics statement. The Board of Directors evaluated the business of the Company and the number of employees and determined that since the business is operated by a small number of persons who are also the officers and directors and many of the persons employed by the Company are independent contractors, general rules of fiduciary duty and federal and state criminal, business conduct and securities laws are adequate ethical guidelines.
 
SHAREHOLDER-DIRECTOR COMMUNICATION

We have neither a nominating committee for persons to be proposed as directors for election to the Board of Directors nor a formal method of communicating nominees from shareholders. We do not have any restrictions on shareholder nominations under our certificate of incorporation or by-laws. The only restrictions are those applicable generally under Oregon Corporate Law and the federal proxy rules. Currently the board of directors decides on nominees, on the recommendation of one or more members of the board. None of the members of the board of directors are "independent." The board of directors will consider suggestions from individual shareholders, subject to evaluation of the person's merits. Stockholders may communicate nominee suggestions directly to any of the board members, accompanied by biographical details and a statement of support for the nominees. The suggested nominee must also provide a statement of consent to being considered for nomination. Although there are no formal criteria for nominees, the board of directors believes that persons should be actively engaged in business endeavors, have a financial background, and be familiar with acquisition strategies and money management.

Because, as of December 31, 2011, the management and director of the Company is the same person, the board of directors determined not to adopt a formal methodology for communications from shareholders on the belief that any communication would be brought to the board’s attention by virtue of the co-extensive employment.

The board of directors does not have a formal policy of attendance of directors at the annual meeting. It does encourage such attendance.

 
14

 

ITEM 11. EXECUTIVE COMPENSATION

The following table reflects compensation paid to our officers and directors for the fiscal years ended December 31, 2011 and 2010.

             
STOCK
 
OPTION
 
TOTAL
 
     
SALARY
 
BONUS
 
AWARDS
 
AWARDS
 
COMPENSATION
 
NAME AND PRICIPAL POSITION
 
YEAR
($)
 
($)
 
($)
 
($)
 
($)
 
                                   
Weiliang Liu - Chairman and CEO
 
2011
 
$
60,047
   
$
0
   
$
0
   
$
0
   
$
60,047
 
Juqun Zhao - CFO
 
2011
 
$
35,563
   
$
0
   
$
0
   
$
0
   
$
35,563
 
Weiliang Liu - Chairman and CEO
 
2010
 
$
60,064
   
$
0
   
$
0
   
$
0
   
$
60,064
 
Juqun Zhao - CFO
 
2010
 
$
32,843
   
$
0
   
$
0
   
$
0
   
$
32,843
 
 
COMPENSATION DISCUSSION AND ANALYSIS

Overview of Compensation Program and Philosophy

As of December 31, 2011, the goal of the compensation program is to adequately reward the efforts and achievements of executive officers for the management of the Company.  The Company has no pension plan and no deferred compensation arrangements.  The Company has not used a compensation consultant in any capacity.

At this time there are no compensation arrangements in place for our executive officers.

Compensation of Directors

Persons who are directors and employees are not currently additionally compensated for their services as a director.  Current directors do not receive compensation for serving as directors of the Company.  There is no plan in place for compensation of persons who are directors who are not employees, but it is expected that in the future we will create a remuneration and expense reimbursement plan. It is anticipated that such a plan would be primarily based on stock options.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth, as of April 12, 2011, the name and shareholdings of each person who owns of record, or was known by us to own beneficially,* 5% or more of the shares of the common stock currently issued and outstanding; the name and shareholdings, including options to acquire the common stock, of each director; and the shareholdings of all executive officers and directors as a group.
 
             
NAME OF PERSON OR GROUP
 
NUMBER OF
SHARES OWNED *
   
PERCENTAGE
OF
OWNERSHIP (1)
 
             
Yinfang Yang (2)
   
456,626
     
1.4
%
Weilang Liu (3)
   
641,090
     
  1.9
%
Juqun Zhao (4)
   
-
     
-
%
Guoxing Wang (5)
   
3,558,046
     
10.8
%
Qinfang Wang
   
2,705,398
     
8.2
%
Feihua Huang
   
2,705,398
     
8.2
%
All executive officers and directors as a group (two person2)
   
641,090
     
1.9
%

______________
 *Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities.  Shares of common stock issuable upon the exercise of options or warrants currently exercisable or convertible within 60 days, are deemed outstanding for computing the percentage ownership of the person holding such options or warrants but are not deemed outstanding for computing the percentage ownership of any other person.
 
(1)      Based on 32,921,688 shares of Common Stock outstanding on a fully diluted basis, which includes 3,558,046 shares of Series A Preferred Stock and 29,363,642 shares of Common Stock.  Effective November 11, 2010 the Company completed a 23 for one reverse stock of the issued and outstanding shares of the Company’s Common Stock.  All figures in the table are based on a post reverse split basis.

(2)      Ms. Yang is the former Chief Executive Officer, Chief Financial Officer, Secretary and Director of the Company.

(3)      Mr. Liu became Chief Executive Officer, President and Secretary of the Company effective January 27, 2011.

 (4)      Juqun Zhao became Chief Financial Officer and Treasurer of the Company effective January 27, 2011.

(5)       Represents 3,558,046 shares of Series A Preferred Stock of the Company. Each share of Series A Preferred Stock is convertible into one share of Common Stock of the Company.

 
 
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Securities authorized for issuance under equity compensation plans.

The Company has no Securities authorized for issuance under equity compensation plans.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

None.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

We paid our current auditors, Clement C. W. Chan & Co. $53,000 and $42,000 for audit fees for 2011 and 2010, respectively

Audit-Related Fees

The Company paid audit-related fees totaling $0 for the fiscal years ended December 31, 2011 and 2010.

Tax Fees

None.

All Other Fees

None.

Audit Committee Policies and Procedures

The Company does not currently have a standing audit committee. The above services were approved by the Company’s Board of Directors.

 
PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

a.  Exhibits
 
Exhibit
Number
Name of Exhibit
 
31.1
Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.(1)
 
31.2
Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.(1)
 
32.1
Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002. (1)
 
101*
The following financial information from the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets; (ii) Unaudited Condensed Consolidated Statement of Operations; (iii) Unaudited Statement of Stockholders’ Equity; (iv) Unaudited Condensed Statement of Cash Flows for; and (v) Notes to Unaudited Condensed Financial Statements, tagged as blocks of text.
 
(1) 
Filed herewith

*
Users of this data are advised that pursuant to Rule 406T of Regulation S-T, this XBRL information is being furnished and not filed herewith for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and Sections 11 or 12 of the Securities Act of 1933, as amended, and is not to be incorporated by reference into any filing, or part of any registration statement or prospectus, of China Ceetop.com, Inc., whether made before or after the date hereof, regardless of any general incorporation language in such filing.


 
16

 
 
 SIGNATURES
 
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
 
CHINA CEETOP.COM, INC.
(Registrant)
   
By:
/s/Weiliang Liu
 
Weiliang Liu
 
CEO, President, Secretary, and Director
   
Date:
April 16, 2012
   

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
Signatures
 
Title
 
Date
         
         
/s/Weiliang Liu
 
CEO, President, Secretary, and Director
 
April 16, 2012
Weiliang Liu
       
         
/s/Juqun Zhao   CFO, and Treasurer   April 16, 2012
Juqun Zhao        
 
17