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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 

FORM 10-Q

 

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

   

For the Quarterly Period Ended September 30, 2012


 

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

       For the Transition Period From ____to _____

 

Commission File Number: 001-33907

 

CAM GROUP, INC.

 f/k/a RT Technologies, Inc.

(Exact name of registrant as specified in its charter) 

 

Nevada 57-1021913
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)  

 

151 Shengli Avenue North, Jixing Building, Shijiazhuang, Hebei Province, P.R.China

(Address of principal executive offices)

 

(86) 0311-86964264

  (Registrant's telephone number, including area code)

  

Indicate by check mark if the registrant is a well-know seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ] 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 Act

Yes [ ] No [x]

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 [   ]

 

 

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  

Yes [x]   No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated filer ¨ Accelerated filer ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ]     No [x]

 

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.

 

 

Number of shares of preferred stock, par value $.001, outstanding as of November 19, 2012: 1,000,000

Number of shares of common stock, par value $.001, outstanding as of November 19, 2012: 25,075,000

  

 

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

 

The discussion contained in this 10-Q under the Securities Exchange Act of 1934, as amended, contains forward-looking statements that involve risks and uncertainties. The issuer's actual results could differ significantly from those discussed herein. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "the Company believes," "management believes" and similar language, including those set forth in the discussions under "Notes to Consolidated Financial Statements" and "Management's Discussion and Analysis or Plan of Operation" as well as those discussed elsewhere in this Form 10-Q. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. Statements contained in this Form 10-Q that are not historical facts are forward-looking statements that are subject to the "safe harbor" created by the Private Securities Litigation Reform Act of 1995.

  

(1)

 

 
 

  

TABLE OF CONTENTS    
     
PART I. FINANCIAL INFORMATION    
     
ITEM 1. FINANCIAL STATEMENTS 4  
     
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10  
     
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 12  
     
ITEM 4. CONTROLS AND PROCEDURES     
     

ITEM 4T. CONTROLS AND PROCEDURES
12  
     
PART II. OTHER INFORMATION    
     
ITEM 1. LEGAL PROCEEDINGS 13  
     
ITEM 1A. RISK FACTORS 13  
     
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 13  
     
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 13  
     
ITEM 4. MINE SAFETY DISCLOSURE 13  
     
ITEM 5. OTHER INFORMATION 13  
     
ITEM 6. EXHIBITS 13  
     
SIGNATURES 14  
     
INDEX TO EXHIBITS 15  

 

(2)

ITEM 1. FINANCIAL STATEMENTS

 

FINANCIAL STATEMENTS

(UNAUDITED)

September 30, 2012

 

The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted.  However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the periods presented have been made.  These financial statements should be read in conjunction with the accompanying notes, and with the historical financial information of the Company.

 

(3)

   

CAM Group, Inc. and Subsidiaries
f/k/a RT Technologies Inc.
Unaudited Consolidated Balance Sheets
As of September 30, 2012 and December 31, 2011
       
       
   September 30, 2012  December 31, 2011
       
Current Assets      
       
Cash and cash equivalent  $2,514,373   $4,141 
Cash and cash equivalent - restricted   2,755,200    —   
Prepayment and deposits   175    67,768 
Other receivable   3,182    —   
Total  Current Assets   5,272,930    71,909 
           
Plant and Equipment, Net   155,954    —   
           
Total Assets  $5,428,884   $71,909 
           
Liabilities          
Due to shareholders  $567,172   $—   
Due to related parties   60,945    32,242 
Other payables   11,827    2,858 
Income Tax Payable   331,005    —   
Total Liabilities   970,949    35,100 
           
Equity          
Preferred stock, $.001 par value, 10,000,000 shares authorized, 1,000,000 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively   1,000    1,000 
Common stock, $.001 par value, 90,000,000 shares authorized, 25,075,000 and 22,500,000 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively   25,075    22,500 
Additional paid-in capital   3,169,690    129,192 
Subscription receivable   (207,480)   —   
Accumulated other comprehensive income   13,184   (1,482)
Retained earnings (deficit)   1,407,548    (100,362)
Total equity   4,409,017    50,848 
Non-controlling interest   48,918    (14,039)
Total Liabilities and Equity  $5,428,884   $71,909 
           
The accompanying notes are an integral part of these consolidated financial statements

 

(4)

 

CAM Group, Inc. and Subsidiaries
f/k/a RT Technologies Inc.
Unaudited Condensed Consolidated Statements of Operations and Consolidated Comprehensive Income
For the three and nine months ended September 30, 2012
       
   Three Months Ended  Nine Months Ended
   September 30, 2012  September 30, 2012
       
Revenue - related party  $1,713,228   $2,284,453 
Cost of revenue   98,800    161,485 
Gross profit   1,614,428    2,122,968 
           
Operating expenses:          
Selling, general & administrative expenses   117,778    284,053 
Total operating expenses   117,778    284,053 
           
Operating income   1,496,650    1,838,915 
           
Other income (expenses)          
Interest income   —      —   
Total other income (expenses)   —      —   
           
Income before income tax   1,496,650    1,838,915 
           
Income tax expense   261,005    331,005 
           
Net income   1,235,645    1,507,910 
Less: Net income attributable to noncontrolling interests   —      —   
Net income attributable to CAM Group common shareholders   1,235,645    1,507,910 
           
Net income per share:          
Basic  $0.05   $0.06 
Diluted  $0.01   $0.01 
           
Weighted average number of shares          
Basic   25,075,000    24,045,147 
Diluted   125,740,670    124,039,507 
           
Comprehensive income:          
Net income  $1,235,645   $1,507,910 
Foreign currency translation adjustment   17,122    14,666 
Comprehensive income:   1,252,767    1,522,576 
Comprehensive income attributable to noncontrolling interests   —      —   
Comprehensive income attributable to CAM Group  $1,252,767   $1,522,576 
           
           
The accompanying notes are an integral part of these consolidated financial statements

  

(5)

 

CAM Group, Inc. and Subsidiaries
RT Technologies Inc.
Unaudited Condensed Consolidated Statement of Cash Flows
For the nine months ended September 30, 2012
    
   Nine Months Ended
Cash flows from operating activities:  September 30, 2012
Net income (loss)  $1,507,910 
Adjustments to reconcile net income to net cash     
provided by (used in) operating activities:     
Depreciation   4,774 
Stock based compensation   80,393 
Changes in operating assets and liabilities:     
Prepayment and deposits   67,271 
Other receivable   (3,159)
Other payables   8,899 
Taxes Payable   331,005 
Net cash provided by operating activities   1,997,093 
      
Cash flows from investing activities:     
Purchase of property and equipment   (120,403)
Construction in progress   (39,205)
Net cash provided by investing activities    (159,608)
      
Cash flows from financing activities:     
Capital contribution from non controlling interest   62,957 
Proceeds from shareholder loan payable   563,096 
Proceeds from related party loan payable   28,419 
Changes in restricted cash   (2,755,200)
Proceeds from stock issuance   300,000 
Proceeds from warrants issuance   2,455,200 
Net cash provided by financing activities   654,472 
      
Effect of changes in exchange rate   18,275 
      
Net increase/(decrease) in cash and cash equivalents   2,510,232 
      
Cash and cash equivalents at the beginning of the year   4,141 
      
Cash and cash equivalents at the end of the year  $2,514,373 
      
SUPPLEMENTAL CASH FLOW INFORMATION:     
Cash paid for interest  $—   
Cash paid for income taxes  $—   
      
       
      
      
The accompanying notes are an integral part of these consolidated financial statements

  

(6)

 

CAM GROUP, INC.

f/k/a RT Technologies, Inc .

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE three and nine MONTHS ENDED September 30, 2012

(Expressed in USD)

 

1. BASIS OF PRESENTATION

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with both generally accepted accounting principles for interim financial information, and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) that are, in the opinion of management, considered necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year.

 

The unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the interim financial information have read or have access to the Company’s annual audited consolidated financial statements for the preceding fiscal year. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes for the years ended December 31, 2011 and 2010 thereto contained in the Current Report on Form 8-K filed with Securities and Exchange Commission on April 24, 2012.

 

2. ORGANIZATION AND BUSINESS BACKGROUND 

 

CAM Group Inc., f/k/a RT Technologies Inc. (the “Company” or “RTTE”) was originally incorporated as Savannah River Technologies, Inc. under the laws of the State of South Carolina on March 2, 1995. On July 31, 2007, the Company formed a corporation pursuant to the laws of the State of Nevada having a par value of $0.001 for both the preferred and common stock. On August 11, 2007, the stockholders of the Company approved a change of corporate domicile which resulted in the dissolution of the South Carolina Corporation and the Company became domiciled in the State of Nevada.

 

On April 17, 2012, RTTE completed a stock exchange transaction with China Agriculture Media Group Co., Ltd (“CAM Group”). CAM Group is organized and exists under the laws of Hong Kong Special Administrative Region of the People’s Republic of China (the “PRC”), which was incorporated on March 30, 2011. CAM Group is an investment holding company, whose only asset is 100% equity interest in China Agriculture Media (Hong Kong) Group Co. Ltd. (“CAM HK”). CAM HK is an investment holding company organized and exists under the laws of Hong Kong Special Administrative Region of PRC, with its only asset being a 60% equity interest in China Agriculture Media (Hebei) Co. Ltd. (the “CAM Hebei”). CAM Hebei was established in the Hebei Province, PRC on November 28, 2011 as a domestic enterprise.

 

The stock exchange transaction involved two simultaneous transactions:

 

RTTE issued to CAM Group Shareholders an amount equal to 22,500,000 new investment shares of Common Stock of RTTE and 1,000,000 shares of RTTE super-voting Preferred Stock in exchange for one hundred percent (100%) of the issued and outstanding share capital of CAM Group from CAM Group Shareholders.

 

RTTE issued 1,607,853 shares of Common Stock to RTTE prior management and an advisor for services previously rendered. Simultaneously, Angela Ross, the former Chief Executive Officer of RTTE, returned 2,500,000 shares of Common stock to the RTTE treasury for immediate cancelation.

 

Upon completion of the exchange, CAM Group and its subsidiaries became subsidiaries of RTTE and the former owners of CAM Group then owned a ‘controlling interest’ in RTTE representing 98% of the voting shares of RTTE and 90% of the issued and outstanding shares of Common Stock.

 

The stock exchange transaction has been accounted for as a reverse acquisition and recapitalization of the RTTE whereby CAM Group is deemed to be the accounting acquirer (legal acquiree) and RTTE to be the accounting acquiree (legal acquirer).  The accompanying consolidated financial statements are in substance those of CAM Group and its subsidiaries, with the assets and liabilities, and revenues and expenses, of RTTE being included effective from the date of stock exchange transaction.  RTTE is deemed to be a continuation of the business of CAM Group and its subsidiaries.  Accordingly, the accompanying consolidated financial statements include the following:

 

(1)           The balance sheet consists of the net assets of the accounting acquirer at historical cost and the net assets of the accounting acquiree at historical cost; 

 

(2)           The financial position, results of operations, and cash flows of the accounting acquirer for all periods presented as if the recapitalization had occurred at the beginning of the earliest period presented and the operations of the accounting acquiree from the date of stock exchange transaction.

 

RTTE, CAM Group, CAM HK and CAM Hebei are hereafter collectively referred to as the “Company”.

 

(7)

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

 

Use of Estimates

 

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenue and expenses in the financial statements and accompanying notes. Actual results could differ from such estimates.

 

Basis of consolidation

 

All inter-company transactions and balances within the Company have been eliminated upon consolidation.

 

Cash and cash equivalents

 

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.

 

Prepayments and deposits

 

Prepayments and deposits represent the prepayment for the purchase of LCD displays. The amounts are carried at cost and will be transferred into the cost of the equipment when they are ready for their intended use.

 

Fixed Assets, Net

 

Fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values: 

 

   Depreciable life  Residual value
        Machinery and Equipment  5 years   0%
         Furniture and fixture  7 years   0%
         Computer and software  3 years   0%

 

Expenditures for maintenance and repairs are expensed as incurred.

 

Revenue Recognition

 

In accordance with guidance in paragraph 605-10-S99-1 of the FASB ASC for revenue recognition, the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable and collectability is reasonably assured. The Company provides air time for the clients’ advertisement through the Company’s own media network. Revenue is recognized when the air time is used by the clients.

 

Cost of Revenues

 

Cost of revenues consists primarily of material costs, direct labor, depreciation and overhead, which are directly attributable to the manufacture of products and the provision of services. The depreciation expenses in connection with equipments for advertising and broadcasting are included in cost of revenues.

 

Income taxes

 

Income taxes are determined in accordance with Accounting Standards Codification Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. Income tax periods 2009, 2010 and 2011 are open for tax examination by taxing authority.

 

The Company conducts major businesses in the PRC and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the foreign tax authority. As of September 30, 2012, the Company had no outstanding tax due with its tax authority in the PRC.

 

Comprehensive income (loss)

 

FASB ASC 220, “Reporting Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during the year from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying consolidated balance sheets consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

 

Non-Controlling Interests

 

Non-Controlling interest represent the 3.44% non-controlling interest of shareholder, Hebei Agricultural Means of Production Co. Ltd, which through its fully-owned subsidiary, owns 3.44% interest of CAM Hebei as of September 30, 2012.

 

The Parties shall share the profits, losses and risks of the Company in proportion to and, in the event of losses, to the extent of their respective contributions and contractual commitments to the registered capital of the Company.

  

The rights of Non-Controlling Interest Shareholder: (a) Intellectual property contributed by non-controlling interest shareholder, if any, remains the sole and exclusive property of non-controlling interest shareholder; (b) The Board of Directors shall be composed of five Directors, of whom two shall be appointed by non-controlling interest shareholder.

 

Foreign currency translation

 

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.

 

The reporting currency of the Company is the United States Dollars ("US$"). The Company's subsidiaries in the PRC maintain its books and records in its local currency, Renminbi Yuan ("RMB"), which is functional currency as being the primary currency of the economic environment in which the entity operates.

 

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income.

 

Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective periods:

   

      September 30, 2012  
Period ended RMB:US$1 exchange rate       6.2856  
           

 

   

For the three months ended

September 30, 2012

 

For the nine months ended

September 30, 2012

         
Period average RMB:US$1 exchange rate     6.3514       6.3311  

 

 

Basic and diluted earnings per share

 

The Company reports earnings per share in accordance with FASB ASC 260 “Earnings per Share”. This statement requires dual presentation of basic and diluted earnings with a reconciliation of the numerator and denominator of the earnings per share computations. Basic earnings per share amounts are based on the weighted average shares of common outstanding. If applicable, diluted earnings per share assume the conversion, exercise or issuance of all common stock instruments such as options, warrants and convertible securities, unless the effect is to reduce a loss or increase earnings per share. Accordingly, this presentation has been adopted for the periods presented.

Related parties

 

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence. A material related party transaction has been identified in Note 7 in the financial statements.

 

Recently Issued Accounting Standards

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements up to ASU 2012-07, and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its consolidated financial condition or the consolidated results of its operations.

 

(8)

 

4. CASH AND CASH EQUIVALENTS

 

As of September 30, 2012, the cash balance was $5,269,573, of which $721,059 held in major financial institutions located in Hong Kong, and $2,755,200 held in an escrow account in connection with the sales of common stock and warrants during the three months ended September 30, 2012, see Note 8.

 

Management believes that the major financial institutions in Hong Kong have acceptable credit rating.

 

5. PREPAYMENTS AND DEPOSITS

 

Prepayments and deposits were paid to a manufacturer for the purchase of 300 LCD displays, which would be used to build the advertising network in Hebei province. The 300 LCD displays were completed and delivered to the stores during the three months ended September 30, 2012. According, the amounts were transferred into fixed assets and depreciated over 5 years when the LCD displays were ready for their intended use.

 

6. PROPERTY, PLANT AND EQUIPMENT

 

Property, plant and equipment are comprised of the following amounts at the respective dates:

 

   As of
   September 30, 2012  December 31, 2011
Cost:      
Computer equipment and software  $9,854   $0 
Advertising equipment   111,420    0 
Construction in progress   39,489    0 
Total   160,763    0 
Accumulated depreciation   (4,809)   (0)
Net  $155,954   $0 
           

 

Construction in progress represents the LCD displays received but not installed, which is stated at cost.  No provision for depreciation is made on construction in progress until such time as the relevant assets are completed and put into use.

  

7. RELATED PARTY BALANCES AND TRANSACTIONS

 

(a) Hebei Agricultural Means of Production Co. Ltd.

 

During the nine months ended September 30, 2012, the Company earned all its revenues from Hebei Agricultural Means of Production Co. Ltd. (“Hebei AMP”), a 3.44% shareholder of CAM Hebei. As of September 30, 2012, the balance due to Hebei AMP was $60,945.

 

(b) Precursor Management Inc.

 

On March 30, 2011, the Company entered into an agreement with Precursor Management Inc. (“PMI”) which is controlled by the Company’s President and is also a shareholder of the Company. Since March 2011, PMI has assisted the Company with listing on the over the counter stock market and SEC compliance work in exchange for service fees. The fees accrued as of September 30, 2012 were $257,172. In addition, the Company had a short-term loan payable to PMI in amount of approximately $310,000 as of September 30, 2012, which was used to fund registered capital requirement in China. The loan was an oral agreement between the shareholders and the Company and due on demand. No interest was accrued and any effects of accruing imputed interest would be immaterial to the financial statements taken as a whole.

 

8. CAPITAL STRUCTURE

 

As of September 30, 2012, the Company is authorized to issue 90,000,000 shares of common stock, par value $.001 per share, and 10,000,000 shares of preferred stock, par value $.001 per share. As of September 30, 2012, there were 1,000,000 shares of preferred stock and 25,075,000 common stock issued and outstanding.

 

(9)

 

9. CAPITAL TRANSACTIONS

 

Upon completion of the exchange between the Company and CAM Group, the Company issued to CAM Group Shareholders an amount equal to 22,500,000 new investment shares of Common Stock of the Company and 1,000,000 shares of the Company’s super-voting Preferred Stock in exchange for one hundred percent (100%) of the issued and outstanding share capital of CAM Group from CAM Group Shareholders.

 

During the third quarter of 2012, the Company issued 2,218,900 one-year warrants at a price of $1.20 per warrant to accredited investors for total proceeds of $2,662,680, of which $2,455,200 was collected during the third quarter of 2012 and held in an escrow account until the exercise of warrants by the investors. Accordingly, the Company recorded subscription receivable in amount of $207,480 to the accompanying consolidated balance sheets. The transaction was independently negotiated between the Company and the investors. The Company evaluated the transaction based on the fact that the Company had long-term contract for revenues generation, and positive shareholder equity at the time entering the subscription agreements.

 

The warrants will expire on June 28, 2013 with exercise price of $2.80, the intrinsic value of which was $3,417,368 based on pricing model with the volatility of 0.34.

 

During the third quarter of 2012, the Company issued 75,000 shares at a price of $4.00 per share to accredited investors for total proceeds of $300,000, which was held in an escrow account until all the Certificates of common stock have been printed out and distributed to the investors. The transaction was independently negotiated between the Company and the investors. The Company evaluated the transaction based on the fact that the Company had long-term contract for revenues generation, and positive shareholder equity at the time entering the subscription agreements.

 

10. STOCK BASED COMPENSATION

  

Simultaneously upon completion of the exchange between the Company and CAM Group, the Company issued 1,607,853 shares of Common Stock to the Company’s prior management and an advisor for services previously rendered. The fair value of this stock issuance was determined by the fair value of the Company’s Common Stock on the grant date, at a price of approximately $.05 per share.  Accordingly, the Company calculated the stock based compensation of $80,393 at its fair value.

 

11. INCOME TAXES

 

United States

 

The Company was incorporated in the United States of America and is subject to U.S. tax. No provisions for income taxes have been made as the Company has no taxable income for the years presented.

 

Hong Kong

 

Our subsidiary in Hong Kong, CAM HK, is subject to Hong Kong profit tax. Provisions for profit taxes have been accrued.

 

PRC

 

Our subsidiary, CAM Heibei, is subject to PRC enterprises income tax at the applicable tax rates on the taxable income as reported in its Chinese statutory accounts in accordance with the relevant enterprises income tax laws applicable to domestic enterprises.

 

The Company uses the asset and liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. There are no material timing differences and therefore no deferred tax asset or liability at September 30, 2012 and December 31, 2011. There are no net operating loss carry forwards at September 30, 2012 and December 31, 2011.

 

The effective income tax expenses for the three and nine months ended September 30, 2012 are as follows:

 

   For the three months ended
September 30, 2012
  For the nine months ended
September 30, 2012
       
Current taxes  $261,005   $331,005 
Deferred taxes   0    0 
   $261,005   $331,005 

 

(10)

 

12. SUBSEQUENT EVENTS

 

In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to September 30, 2012 to the date these financial statements were issued, and has determined that it does not have other material subsequent events to disclose in these financial statements, other than the followings:

 

On September 11, 2012, the Company received an approval from the Chinese authority in connection with the increase in registered capital of CAM Hebei to RMB 20,000,000 (approximately USD$3,200,000), of which CAM HK will invest RMB 19,600,000 (approximately USD$3,136,000) and Hebei Agricultural Means of Production Co. Ltd will keep the original investment amount unchanged.

 

On November 9, 2012 the Company entered into a Financial Advisory Service Agreement (the “Agreement”) with China International Capital Corporation Limited (“CICC”). Pursuant to the terms of the Agreement, CICC will introduce private investors to the Company and assist with a restructuring, subject to shareholder approval and applicable law. It is contemplated that after the restructuring, the Company will issue A-shares and conduct a public offering in the domestic Chinese market (the restructuring and public offering in China shall hereinafter be referred to as the “Engagement”). The Agreement further states that CICC has been engaged as the sole and exclusive financial advisor to the Company and will assist and participate in the Company’s potential private financing and provide financial advisory services and analysis for the Engagement.

 

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

Special Note Regarding Forward-Looking Statements

 

This periodic report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the Plan of Operations provided below, including information regarding the Company’s financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive positions, growth opportunities, and the plans and objectives of management. The statements made as part of the Plan of Operations that are not historical facts are hereby identified as "forward-looking statements."

 

Critical Accounting Policies and Estimates

 

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the unaudited Financial Statements and accompanying notes.  Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.  Actual results could differ from these estimates under different assumptions or conditions.  The Company believes there have been no significant changes during the nine month period ended September 30, 2012, to the items disclosed as significant accounting policies in management's Notes to the Financial Statements in the Company's current report on Form 8-K filed with Securities and Exchange Commission on April 24, 2012.

 

Corporate History

 

As used herein the terms "We", the "Company", "RTTE", the "Registrant," or the "Issuer" refers to CAM Group, Inc., formerly known as “RT Technologies, Inc.”, its subsidiaries and predecessors, unless indicated otherwise. Since the termination of its prior business in 1998, the Company has had no operations and has been seeking an acquisition or merger to bring an operating entity into the Company. The Company did not propose to restrict its search for a business opportunity to any particular industry or geographical area and may, therefore, engage in essentially any business in any industry. The Company had unrestricted discretion in seeking and participating in a business opportunity, subject to the availability of such opportunities, economic conditions, and other factors.

 

On April 17, 2012, we, a Nevada corporation, and China Agriculture Media Group Co., Ltd, a company organized and existing under the laws of the Hong Kong (including its successors and assigns “CAMG”) entered into a Plan of Exchange (the “POE” or “Agreement”) for the 100% acquisition of CAMG by RTTE. Subsequent to closing of the POE, RTTE beneficially owned 100% of the issued and outstanding shares of CAMG. Immediately upon the Closing date, RTTE issued to the CAMG shareholders 22,500,000 new investment shares of RTTE Common Stock and 1,000,000 shares of RTTE super-voting Preferred Stock to the CAMG Shareholders.

 

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PLAN OF OPERATIONS

 

Overview:

 

Since the reverse merger was consummated, we have continued operations of China Agriculture Media Group Co., Ltd (“CAMG), a company which is principally engaged in store rental, media, wholesale and retail, and value-added services in the PRC. CAMG aims to fully develop a network (the “Network”) of retail stores located in the Chinese rural market. The stores are currently operating under the state owned system of China Supply and Marketing Cooperative Association (“China Co-Op”) and China National Agricultural Means of Production Group Corporation (“National AMP”). Both are directly owned by Chinese Central Government. The existing Hebei Network has been operating for 60 years and draws a large percentage of the Hebei rural population consisting of farmers who visit the pre-existing National AMP Group and China Co-op stores in order to take advantage of government subsidies on state controlled agriculture products only sold within Hebei Network stores. Although farmers are free to visit stores outside of the Hebei Network, the restrictions on the sale of fertilizer products and subsidized pricing of the Hebei Network significantly reduce competition. As a result, our Network has a “captive” audience consisting of farmers who would otherwise be priced out of purchasing fertilizer at other locations because these government subsidies are only available within the Network stores.

 

The Company’s plan of operation is to build and operate an outdoor advertising network via retail stores throughout the rural market of China. The Company is also authorized as a provincial distributor for advertisement in these retail stores within Hebei province. The stores are currently operated by the China Supply and Marketing Cooperative Association and China National Agricultural Means of Production Group Corporation, both of which are directly owned by Chinese Central Government. The retail network in Hebei province covers more than 40 million rural populations. The Company also plans to implement the same business model in different provinces throughout China.

 

RTTE had no revenue activities until June of 2012. On June 1, 2012, the Company entered into an agreement with Hebei Agricultural Means of Production Co. Ltd. (“Hebei AMP”), a 3.44%-interest shareholder of CAM Hebei. Pursuant to the Agreement, the Company provides air time for Hebei AMP’s advertisement through the Network at a price of approximately $.42 per second.

 

Results of Operations

 

Revenues - Related Party

 

We had revenue of $1,713,228 and $2,284,453 for the three and nine months ended September 30, 2012, respectively. We currently gained all our revenues from Hebei AMP pursuant to the Agreement, dated June 1, 2012. We charged Hebei AMP $.42 per second for the air time they used for their advertisement.

 

Cost of Revenues

 

Cost of revenues recorded at $98,800 and $161,485 during the three and nine months ended September 30, 2012, respectively. Cost of revenues consists primarily of material costs, direct labor, depreciation and overheads, which are directly attributable to the provision of air time. The depreciation expenses in connection with equipments for advertising and broadcasting were included in cost of revenues, which were $3,687 for the nine months ended September 30, 2012.

 

Net Income

 

We had net income of $1,235,645 and $1,507,910 for the three and nine months ended September 30, 2012, respectively, due to sufficient gross profit to cover our operating expenses.

 

General and Administrative Expenses

 

We had general and administrative expenses of $117,778 and $284,053 for the three and nine months ended September 30, 2012, respectively. The expenses were mainly composed of the expense of recruitment, travelling expenses and expenses related to expansion of its network. It also included $80,393 resulting from the issuance of 1,607,853 shares of common stock at closing of the exchange between the Company and CAM Group to the Company’s prior management and an advisor for services previously rendered. The fair value of this stock issuance was determined by the fair value of the Company’s Common Stock on the grant date, at a price of approximately $.05 per share.

 

Liquidity and Capital Resources

 

Cash flows provided by operating activities were $1,997,093 for the nine months ended September 30, 2012. Positive cash flows from operations were due primarily to the net income of $1,507,910, the increase in taxes payable in amount of $331,005, plus the non-cash stock compensation expense of $80,393, prepayment and deposit for 67,271. 

 

Cash flows used in investing activities were $159,608 during the nine months ended September 30, 2012, consisting of 159,608 used to purchase advertising equipment and construction in progress

 

Cash flows provided by financing activities were $654,472 during the nine months ended September 30, 2012 due primarily to proceeds of $28,419 from related parties loan, and $563,096 from the shareholder loan, both of which bears zero interest and due on demand, and capital contribution from non controlling interest in amount of $62,957. In addition, the Company had proceeds of $300,000 from sales of stock at a price of $4.00, and $2,455,200 from sales of 2,218,900 one-year warrants at a price of $1.20 per warrant. The warrants will expire on June 28, 2013 with exercise price of $2.80. Since the total proceeds of 2,755,200 were held in escrow, there were no effects on cash flow from financing activities.

 

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Capital Expenditures

 

We project that we will need additional capital to fund operations over the next 12 months. We anticipate we will need a minimum of $1,000,000 additional funds after the year of 2012 to meet our expansion objectives. 

 

Overall, we have funded our cash needs from inception through September 30, 2012 with a series of debt and equity transactions, primarily with related parties. If we are unable to receive additional cash from our related parties, we may need to rely on financing from outside sources through debt or equity transactions. Our related parties are under no legal obligation to provide us with capital infusions. Failure to obtain such financing could have a material adverse effect on our operations and financial condition.

    

We had cash of $5,269,573 on hand as of September 30, 2012, of which $2,755,200 was restricted until the exercise of warrants by the investors. Currently, we have enough cash to fund our operations for the next 6 months. This is based on current positive cash flows from operation and working capital surplus. Our current level of operations would require capital of approximately $1,000,000 per year starting in 2013.  Modifications to our business plans may require additional capital for us to operate. For example, if we are unable to raise additional capital in the future we may need to curtail our number of stores in the Network or limit our marketing efforts to the most profitable geographical areas. This may result in lower revenues and market share for us. In addition, there can be no assurance that additional capital will be available to us when needed or available on terms favorable to us.

 

On a long-term basis, liquidity is dependent on continuation and expansion of operations, receipt of revenues, and additional infusions of capital and debt financing. Our current capital and revenues are insufficient to fund such expansion. If we choose to launch such an expansion campaign, we will require substantially more capital. However, there can be no assurance that we will be able to obtain additional equity or debt financing in the future, if at all. If we are unable to raise additional capital, our growth potential will be adversely affected and we will have to significantly modify our plans. For example, if we are unable to raise sufficient capital to develop our business plan, we may need to:

 

·

 

Curtail number of stores in the Network

·

 

Limit our future marketing efforts to areas that we believe would be the most profitable.

 

Demand for the products and services will be dependent on, among other things, market acceptance of our services, advertising market in Hebei Province, PRC, and general economic conditions, which are cyclical in nature. Inasmuch as a major portion of our activities is the receipt of revenues from the sales of our products, our business operations may be adversely affected by our competitors and prolonged recession periods.

        

Our success will be dependent upon implementing our plan of operations and the risks associated with our business plans. We provide air time for the clients’ advertisement through our own media network. We plan to strengthen our position in these markets. We also plan to expand our operations through aggressively marketing our concept. 

 

Off-balance sheet arrangements

 

The Company does not have any off-balance sheet arrangements and it is not anticipated that the Company will enter into any off-balance sheet arrangements.

 

Forward-looking Statements

 

The Private Securities Litigation Reform Act of 1995 (the “Act”) provides a safe harbor for forward-looking statements made by or on behalf of our Company.  Our Company and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this Quarterly Report and other filings with the Securities and Exchange Commission and in reports to our Company’s stockholders. Management believes that all statements that express expectations and projections with respect to future matters, as well as from developments beyond our Company’s control including changes in global economic conditions are forward-looking statements within the meaning of the Act.  These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and business performance. There can be no assurance, however, that management’s expectations will necessarily come to pass. Factors that may affect forward-looking statements include a wide range of factors that could materially affect future developments and performance, including the following:

 

Changes in Company-wide strategies, which may result in changes in the types or mix of businesses in which our Company is involved or chooses to invest; changes in U.S., global or regional economic conditions, changes in U.S. and global financial and equity markets, including significant interest rate fluctuations, which may impede our Company’s access to, or increase the cost of, external financing for our operations and investments; increased competitive pressures, both domestically and internationally, legal and regulatory developments, such as regulatory actions affecting environmental activities, the imposition by foreign countries of trade restrictions and changes in international tax laws or currency controls; adverse weather conditions or natural disasters, such as hurricanes and earthquakes, labor disputes, which may lead to increased costs or disruption of operations.

This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative, but by no means exhaustive.  Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

N/A-Smaller Reporting Company

 

ITEM 4. CONTROLS AND PROCEDURES.

 

(a) Evaluation of Disclosure Controls and Procedures

 

We maintain "disclosure controls and procedures," as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in reports

 

that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

As of September 30, 2012, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer, Kit Ka, and Chief Financial Officer, Weixuan Luo, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in our periodic reports is recorded, processed, summarized and reported, within the time periods specified for each report and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our financial statements are prepared by our financial and accounting staff under the direction of our Chief Financial Officer in accordance with generally accepting accounting principles in effect in the PRC; however we engage an outside consultant to convert our financial statements for presentation in accordance with generally accepted accounting principles in effect in the United States ("US GAAP"). We believe our internal controls over financial reporting in accordance with PRC GAAP are adequate for the proper supervision of the conduct of our business. Nevertheless, the need to convert our financial statements into US GAAP and the lack of familiarity of our accounting staff with US GAAP and US securities laws and regulations is a deficiency in our internal controls over financial reporting and disclosure controls and procedures. This deficiency will not be considered remediated until we hire financial and accounting personnel with the requisite knowledge and experience concerning US GAAP.

 

(b) Changes in Internal Control over

 

Financial Reporting. There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during our most recently completed fiscal quarter which is the subject of this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

(15)

 

PART II. OTHER INFORMATION

 

ITEM 1.      LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTORS

 

The information to be reported under this item has been reported in the Company's current report on Form 8-K filed with Securities and Exchange Commission on April 24, 2012. They have not changed since then.

 

ITEM 2.      UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

Simultaneously upon completion of the exchange between the Company and CAM Group, the Company issued 1,607,853 shares of Common Stock to the Company’s prior management and an advisor for services previously rendered. The fair value of this stock issuance was determined by the fair value of the Company’s Common Stock on the grant date, at a price of approximately $.05 per share.  Accordingly, the Company calculated the stock based compensation of $80,393 at its fair value.

 

During the third quarter of 2012, the Company issued 75,000 shares of the Company’s Common Stock at a price of $4.00 per share to accredited investors for total proceeds of $300,000. The transaction was independently negotiated between the Company and the investors. The Company evaluated the transaction based on the fact that the Company had long-term contract for revenues generation, and positive shareholder equity at the time entering the subscription agreements.

 

During the third quarter of 2012, the Company issued 2,218,900 warrants at a price of $1.20 per warrant to accredited investors for total proceeds of $2,662,680, of which $2,455,200 was collected during the third quarter of 2012. The warrants will expire on June 28, 2013 with exercise price of $2.80, the intrinsic value of which was $3,417,368 based on pricing model with the volatility of 0.34. The transaction was independently negotiated between the Company and the investors. The Company evaluated the transaction based on the fact that the Company had long-term contract for revenues generation, and positive shareholder equity at the time entering the subscription agreements.

 

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4.      MINE SAFETY DISCLOSURE

 

Not applicable.

 

ITEM 5.      OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

2 Plan of Exchange, dated April 17, 2012 (previously filed on April 24, 2012)

10 Agreement with Hebei AMP, dated June 1, 2012 (previously filed on September 14, 2012)

31.1 Certification of Chief Executive Officer

31.2 Certification of Chief Financial Officer

32.1 Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the S arbanes-Oxley Act of 2002.

101 The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 formatted in Extensible Business Reporting Language (XBRL).

 

(16)

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

  

CAM Group, Inc. 

f/k/a RT Technologies, Inc.

(Registrant)

 

 

Dated: November 19, 2012

By:  /s/ Kit Ka

        Kit Ka

        Chief Executive Officer

 

(17)

 

 

INDEX TO EXHIBITS

 

Exhibit No.   Description
     
2   Plan of Exchange, dated April 17, 2012 (previously filed on April 24, 2012)
     
10   Agreement with Hebei AMP, dated June 1, 2012 (previously filed on September 14, 2012)
     
31.1   Certification of Chief Executive Officer.
     
31.2   Certification of Chief Financial Officer.
     
32.1   Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
     
32.2   Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
     
101   The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 formatted in Extensible Business Reporting Language (XBRL).