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EXCEL - IDEA: XBRL DOCUMENT - CHINA CHANGJIANG MINING & NEW ENERGY COMPANY, LTD.Financial_Report.xls
EX-31.2 - CERTIFICATION - CHINA CHANGJIANG MINING & NEW ENERGY COMPANY, LTD.chji_ex312.htm
EX-31.1 - CERTIFICATION - CHINA CHANGJIANG MINING & NEW ENERGY COMPANY, LTD.chji_ex311.htm
EX-32.1 - CERTIFICATION - CHINA CHANGJIANG MINING & NEW ENERGY COMPANY, LTD.chji_ex321.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
x QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2013
 
Or
 
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ____________ to_____________
 
Commission File Number: 000-52807
 
China Changjiang Mining & New Energy Co., Ltd.
(Exact name of registrant as specified in its charter)
 
Nevada
 
75-2571032
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
     
Seventeenth Floor, Xinhui Mansion,
Gaoxin Road
Hi-Tech Zone, Xi’An P.R. China 71005
 
+86(29) 8833-1685
(Address of Principal Executive Offices; Zip Code)
 
(Registrant’s Telephone Number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Name of each exchange on which registered
None
 
None
 
Securities registered pursuant to Section 12(g) of the Act:
 
Title of each class
Common Stock, par value $0.01 per share
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o    No x
 
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 such shorter period that the registrant was required to submit and post such files). Yes  o   No 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.
 
(Check one):
     
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
x
(Do not check if a smaller reporting company)
     
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No x
 
The aggregate market value of the voting common stock held by non-affiliates of the issuer, based on the average bid and asked price of such stock, was $484,321 at September 30, 2013.
 
At September 30, 2013, the registrant had outstanding 64,629,559 shares of common stock, $0.01 par value.
 


 
 

 
CHINA CHANGJIANG MINING AND NEW ENERGY COMPANY LTD.
For the Nine Months Ended September 30, 2013
TABLE OF CONTENTS
 
PART I
 
ITEM 1,
FINANCIAL STATEMENTS
   
3
 
           
ITEM 2,
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
   
4
 
           
ITEM 3,
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
9
 
           
ITEM 4,
CONTROLS AND PROCEDURES
    9  
 
PART II
 
ITEM 1,
LEGAL PROCEEDINGS
   
11
 
           
ITEM 2,
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   
11
 
           
ITEM 3,
DEFAULTS UPON SENIOR SECURITIES
   
11
 
           
ITEM 4,
MINE SAFETY DISCLOSURES
   
11
 
           
ITEM 5,
OTHER INFORMATION
   
11
 
           
ITEM 6,
EXHIBITS
   
11
 
           
SIGNATURES    
12
 
           
EX-31.1 (CERTIFICATION)        
EX-31.2 (CERTIFICATION)        
EX-32.1 (CERTIFICATION)        
 
 
2

 
 
PART 1.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
 
CHINA CHANGJIANG MINING & NEW ENERGY CO., LTD.

FINANCIAL REPORT

At September 30, 2013 and December 31, 2012
For the Nine Months Ended September 30, 2013 and 2012
 
INDEX
 
   
PAGE
 
       
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
    F-1 - F-2  
         
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
    F-3  
         
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
    F-4  
         
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
    F-5 - F-9  
 
 
3

 
 
CHINA CHANGJIANG MINING & NEW ENERGY CO., LTD.
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2013 AND DECEMBER 31, 2012
(Stated in US Dollars)
 
   
September 30,
   
December 31,
 
   
2013
   
2012
 
   
(Unaudited)
   
(Audited)
 
ASSETS
           
Current assets
           
Cash and cash equivalents
  $ 537,834     $ 1,763,381  
Restricted cash
    -       1,113,674  
Deferred tax assets
    -       14,326  
Other current assets and prepayments (Note 2)
    166,164       107,217  
Total Current Assets
    703,998       2,998,598  
                 
Property, plant and equipment, net (Note 3)
    394,590       102,280  
Construction in progress (Note 3)
    -       280,178  
Land use rights, net
    16,838,878       16,775,962  
Long-term investment
    316,954       312,931  
Due from related parties (Note 4)
    6,674,626       2,863,074  
TOTAL ASSETS
  $ 24,929,046     $ 23,333,023  
 
 
F-1

 
 
CHINA CHANGJIANG MINING & NEW ENERGY CO., LTD.
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2013 AND DECEMBER 31, 2012 (Continued)
(Stated in US Dollars)
 
   
September 30,
   
December 31,
 
   
2013
   
2012
 
   
(Unaudited)
   
(Audited)
 
LIABILITIES & SHAREHOLDERS’ EQUITY
           
Current Liabilities
           
Other payables and accrued liabilities (Note 5)
    1,315,746       705,132  
Notes payable - related parties (Note 6)
    434,137       434,137  
Advance from customer
    -       1,431,867  
Total Current Liabilities
    1,749,883       2,571,136  
                 
Non-current liabilities
               
Due to related parties (Note 6)
    1,855,396       1,858,861  
Due to shareholders (Note 7)
    4,277,506       4,186,907  
Payable on acquisition of a subsidiary
    2,032,035       1,987,583  
Total Long-term Liabilities
    8,164,937       8,033,351  
                 
                 
SHAREHOLDERS’ EQUITY
               
Series C convertible preferred stock ($0.01 par value, 10,000,000 shares authorized, no shares outstanding as of December 31, 2012 and September 30,2013)
    -       -  
Common stock ($0.01 par value, 250,000,000 shares authorized, 64,629,559 shares issued and outstanding as of December 31, 2012 and September 30,2013)
    646,295       646,295  
Treasury stock
    (489,258 )     (489,258 )
Additional paid-in capital
    13,916,844       13,916,844  
Retained earnings
    (3,683,319 )     (4,946,453 )
Non-controlling interests
    2,094,799       1,389,550  
Accumulated other comprehensive income
    2,528,865       2,211,558  
TOTAL SHAREHOLDERS’ EQUITY
    15,014,226       12,728,536  
                 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
    24,929,046     $ 23,333,023  
 
See accompanying notes to the unaudited consolidated financial statement
 
 
F-2

 
 
CHINA CHANGJIANG MINING & NEW ENERGY CO., LTD.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 (Stated in US Dollars)
 
   
For the Three Months Ended
September 30,
   
For the Three Months Ended
September 30,
   
For the Nine
Months Ended
September 30,
   
For the Nine
Months Ended
September 30,
 
   
2013
   
2012
   
2013
   
2012
 
   
Unaudited
   
Unaudited
   
Unaudited
   
Unaudited
 
                         
Sales revenue - related party (Note 8)
  $ 303,091       295,876     $ 904,814       889,898  
Cost of revenue
    16,973       16,569       50,670       49,834  
Gross Profit
    286,118       279,307       854,144       840,064  
                                 
Operating expenses (income)
                               
Administrative expenses
    109,249       111,041       316,334       199,347  
Gain on disposal of asset (Note 9)
    (5,628 )     -       (2,284,956 )     -  
Depreciation
    11,730       6,924       25,261       20,412  
Amortization
    103,449       100,986       308,825       303,734  
Total operating expenses
    218,800       218,951       (1,634,536 )     523,493  
                                 
Income from operations
    67,318       60,356       2,488,680       316,571  
                                 
Other Income (Expenses)
                               
Interest income
    7,219       -       52,680       73  
Interest expenses
    (805 )     757       (1,635 )     757  
Other expenses
    (99 )     (346 )     (7,687 )     (13,107 )
Total Other Income (Expense)
    6,315       411       43,358       (12,277 )
                                 
Income (Loss) before tax
    73,633       60,767       2,532,038       304,294  
Income tax expense (benefit) (Note 10)
    (23,721 )     (5,538 )     563,655       (13,999 )
Net Income
  $ 97,354       66,305     $ 1,968,383       318,293  
                                 
Net income attributable to:
                               
Non-controlling interests
    (8,150 )     (7,172 )     705,249       (12,263 )
Common Stockholders
    105,504       73,477       1,263,134       330,556  
                                 
Other comprehensive income (loss)
                         
Foreign currency translation adjustments
    72,911       (32,283 )     317,307       (82,555 )
Total Comprehensive Income
  $ 170,265       34,022     $ 2,285,690       235,738  
                                 
Weighted average shares-Basic
    64,629,559       64,629,559       64,629,559       64,629,559  
Weighted average shares-Diluted
    64,629,559       64,629,559       64,629,559       64,629,559  
Earnings per share,
                               
Basic
    0.00       0.00       0.03       0.00  
Diluted
    0.00       0.00       0.03       0.00  
 
See accompanying notes to the unaudited consolidated financial statement
 
 
F-3

 
 
CHINA CHANGJIANG MINING & NEW ENERGY CO., LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012
(Stated in US Dollars)
 
   
For the Nine Months Ended
September 30,
 
   
2013
   
2012
 
   
Unaudited
   
Unaudited
 
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net income
  $ 1,968,383     $ 318,293  
Adjustments to reconcile net income to net cash provided by operating activities:
         
                 
Depreciation and amortization
    334,086       324,146  
Deferred tax assets
    14,646       (13,867 )
Adjustment for gain on disposal of mine
    (2,284,956 )     -  
Changes in operating assets and liabilities:
               
Other current assets and prepayments
    (56,550 )     88,442  
Other payables and accrued liabilities
    529,914       (42,355 )
Advance from customers
    (321,712 )     315,408  
CASH PROVIDED BY OPERATING ACTIVITIES
    183,811       990,067  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
Purchase of property, plant and equipment
    (63,706 )     (1,004 )
Proceeds from disposal of mines
    2,412,836       -  
Due from related parties
    (3,747,519 )     (313,239 )
CASH USED IN INVESTING ACTIVITIES
    (1,398,389 )     (314,243 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Proceeds from minority interest investment
    -       774,593  
Proceeds from (repayment to) related parties
    (45,039 )     292,209  
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    (45,039 )     1,066,802  
Effect of exchange rate changes on cash and cash equivalents
    34,070       11,316  
                 
NET INCREASE (DECREASE) IN CASH
    (1,225,547 )     1,753,942  
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
  $ 1,763,381     $ 20,932  
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
  $ 537,834     $ 1,774,874  
                 
Supplementary Disclosures for Cash Flow Information:
               
Income taxes paid
  $ -       -  
                 
NON-CASH INVESTING AND FINANCING ACTIVITIES
               
Changes in restricted cash related to advance from customer
  $ -       1,103,927  
 
See accompanying notes to the unaudited consolidated financial statements
 
 
F-4

 
 
CHINA CHANGJIANG MINING & NEW ENERGY CO., LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 
The accounting policies and methods followed in preparing these unaudited condensed consolidated financial statements are those used by China Changjiang Mining And New Energy company Ltd (the ‘Company’) as described in Special Notes of the notes to consolidated financial statements included in Annual Report on Form 10-K for the year ended December 31,2012. The unaudited condensed consolidated financial statements for the nine-month period ended September 30, 2013 and 2012 have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and do not conform in all respects to the disclosure and information that is required for annual consolidated financial statements. The year-end condensed consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all disclosure required by accounting principles generally accepted in the United States of America. These interim condensed consolidated financial statements should be read in conjunction with the most recent annual consolidated financial statements of the Company.
 
In the opinion of management, all adjustments, all of which are of a normal recurring nature, considered necessary for fair statement have been included in these interim condensed consolidated financial statements. Operating results for the nine-month period ended September 30, 2013 are not indicative of the results that may be expected for the full year ending December 31, 2013.
 
(a)
Foreign Currency Translation
 
 
Exchange rates applied for the foreign currency translation during the period are as follows:
 
USD to RMB
 
   
September 30,
2013
   
December 31,
2012
 
Period end USD : RMB exchange rate
   
6.1480
     
6.2855
 
Average periodic USD : RMB exchange rate
   
6.2168
     
6.3125
 
 
USD to HKD
 
   
September 30,
2013
   
December 31,
2012
 
Period end USD : HKD exchange rate
   
7.7538
     
7.7522
 
Average periodic USD : HKD exchange rate
   
7.7531
     
7.7986
 
 
HKD is pegged to USD and hence there is no significant translation adjustment impact on these consolidated financial statements.
 
RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into USD at the rates used in translation.
 
(b)
Earning/Loss per share
 
 
Basic earning/loss per share is computed by dividing earning/loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earning/loss per share is computed in a manner similar to basic earning/loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.
 
 
F-5

 
 
2.
OTHER CURRENT ASSETS AND PREPAYMENTS
 

Other current assets and prepayments of $166,164 mainly represent the small amount of advances to the employees.
 
3.
PROPERTY, PLANT AND EQUIPMENT
 

The following is a summary of property, plant and equipment:

   
September 30,
2013
   
December 31,
2012
 
             
Cost
 
$
-    
$
-  
Motor vehicles
   
264,047
     
258,271
 
Office equipment
   
61,654
     
67,741
 
EPC projects equipment
   
318,394
     
-
 
Total
   
644,095
     
326,012
 
                 
Accumulated depreciation
   
(249,505)
     
(223,732
)
                 
Property, plant & equipment, net
   
394,590
     
102,280
 

The additional EPC projects equipment of $318,394 was the installed solar photovoltaic power generation equipments located in Huanghe Bay, Qiachuan County, Shaanxi Province, PRC. It was transferred from Construction In Progress in June, 2013.
 
4.
DUE FROM RELATED PARTIES – NON CURRENT
 

The balance of $6,674,626 due from related parties represents the loan owed from related parties, which are unsecured and repayable on demand.

Due from related parties consists of the following:

   
September 30,
2013
   
December 31,
2012
 
Interest
Du Kang Liquor Development Co., Ltd
 
$
813,273
     
795,482
 
interest free for the first year and bear interest in the benchmark lending rate over the same period afterwards
Shaanxi Du Kang Liquor Group Co., Ltd
 
$
2,879,489
     
-
 
bearing interest in the benchmark lending rate over the same period
Zhongke Aerospace & Agriculture Development Stock Co., Ltd
 
$
459,499
     
449,447
 
interest free
Shaanxi Huanghe Bay Springs Lake Theme Park Ltd
 
$
2,134,841
   
 
1,193,222
 
interest free
Shaanxi Changfa Industrial Co., LTD
 
$
374,105
     
365,922
 
interest free
Mr. Chen Weidong
 
$
-
     
45,876
 
interest free
Shaanxi Changjiang Zhongxiayou Investment Co.,Ltd
 
$
13,419
     
13,125
 
interest free
Total
   
6,674,626
     
2,863,074
   
 
The balance of $45,876 as of December 31, 2012 was the advance to our CEO for the Company's business.
 
 
F-6

 
 
5.
OTHER PAYABLES AND ACCRUED LIABILITIES
 
The following is a summary of other payables and accrued liabilities:
 
   
September 30,
2013
   
December 31,
2012
 
             
Tax payable
 
$
1,135,420
   
$
510,173
 
Salary and welfare payable
   
25,288
     
24,734
 
Other payable
   
155,038
     
170,225
 
   
$
1,315,746
   
$
705,132
 
 
 The tax payable of $1,135,420 includes income tax payable of $849,030, business tax payable of $278,953 and other tax payable of $7,437.
 
6.
DUE TO RELATED PARTIES
 
 
The current liability related party notes payable of $434,137 represents the notes payable to a related party, interest rate of 8% per annum, guaranteed by a note receivable from a third party.

The non-current liability balance of $1,855,396 due to related parties represents the loan owed to related parties, which are interest free, unsecured and repayable on demand twelve months after September 30, 2013.
 
Due to related parties consists of the following.

   
September 30,
2013
   
December 31,
2012
 
             
Due to Huiton World Property Superintendent Company
 
$
406,637
   
 
397,741
 
Due to Zhongke Lvxiang Development Stock Co., Ltd
 
$
1,138,582
     
1,113,674
 
Due to Shaanxi Changjiang Electricity & New Energy Co.,Ltd
 
$
299,426
     
292,876
 
Due to Baishui Du Kang Brand Management Co.,Ltd
 
$
9,759
     
9,546
 
Due to Shaanxi Xidenghui Technology Co. Ltd.
 
$
992
     
970
 
Due to Shaanxi Dukang Liquor Group Co.,Ltd
 
$
-
     
44,054
 
Total
 
$
1,855,396
     
1,858,861
 
 
7.
DUE TO SHAREHOLDERS
 

The balance of $4,277,506 due to shareholders represents the loan owed to the shareholders, which are interest free, unsecured and repayable on demand twelve months after September 30, 2013.
 
 
F-7

 
 
Due to shareholders consists of the following:

   
September 30,
2013
   
December 31,
2012
 
             
Due to Wang Shengli
 
$
2,242,011
     
2,192,966
 
Due to Zhang Hongjun
   
1,425,993
     
1,394,798
 
Due to Chen Min
 
$
609,502
     
599,143
 
     
4,277,506
     
4,186,907
 
 
8.
SALES REVENUE – RELATED PARTY
 
 
The Company entered into a lease and complementary agreements with the related company Huanghe dated July 26, 2010. According to the agreements, a piece of land with the area of 5,706,666.67 square meters was leased to Huanghe for traveling and amusement from January 1, 2011 to December 31, 2029. The annual rent in US dollars is approximately $1.2 million (equivalent to RMB7, 500,000). The rent revenue of $904,814 was recognized for the nine months ended September 30, 2013, compared with the rent revenue of $889,898 for the nine months ended September 30, 2012.
 
9.
GAIN ON DISPOSAL OF ASSETS
 

At the beginning of 2013, the Company transferred its mines exploration rights to Xunyang County Yongjin Mining Co.,Ltd for business purpose with a consideration of $2,412,836 (RMB15,000,000). The transaction procedures were completed and the outstanding amount was settled as of September 30, 2013.

The gain on disposal of assets consists of the consideration and the total of $127,880 for the related business tax and the surcharges.
 
10.
INCOME TAX
 

The provision for taxes on earnings consisted of:

 
For the three months ended
September 30,
 
For the nine months ended
September 30,
 
 
2013
   
2012
 
2013
   
2012
 
                                 
PRC Enterprise Income Tax (Benefit)
 
$
(23,721)
     
(5,538)
   
$
563,655
     
(13,999)
 
United States Federal Income Tax
           
-
     
-
     
-
 
Income tax, net
   
(23,721)
     
(5,538)
     
563,655
     
(13,999)
 

The income taxes expense (benefit), which is all incurred in PRC, consists of the following:

   
For the three months ended
September 30,
   
For the nine months ended
September 30,
 
   
2013
   
2012
   
2013
   
2012
 
                         
Current income tax expense
 
$
(23,721)
     
-
   
$
563,655
     
-
 
Deferred income tax expense (benefit)
           
(5,538)
             
(13,999)
 
Income tax, net
   
(23,721)
     
(5,538)
     
563,655
     
(13,999)
 
 
 
F-8

 
 
11.
RELATED PARTY TRANSACTIONS - REVENUE
 
 
In addition to the other transactions and balances disclosed elsewhere in the financial statements, the Company leased the land use right to Huanghe, a company with the same controlling person, and generated rent revenue of $904,814 for the nine months ended September 30, 2013.
 
12.
SEGMENT INFORMATION
 

The Company operates in two reportable segments, land use right leasing and solar PV energy. Summarized information by business segment for the three and nine months ended September 31, 2013 and 2012 is as follows.
 
   
For the three months ended
September 30,
   
For the nine months ended
September 30,
 
   
2013
   
2012
   
2013
   
2012
 
Revenue
                       
Land use right leasing
 
$
303,091
     
295,876
   
$
904,814
     
889,898
 
Solar PV energy
                               
Cost of revenue
                               
Land use right leasing
   
16,973
     
16,569
     
50,670
     
49,834
 
Solar PV energy
                               
Gross Profits
                               
Land use right leasing
   
286,118
     
279,307
     
854,144
     
840,064
 
Solar PV energy
                               
 
The Company evaluates segment performance based on income from operations. As a result, the components of operating income for one segment may not be comparable to another segment.
 
13.
SUBSEQUENT EVENT
 
 
The Baisui Project was approved by the Development & Reform Commission of Baisui County, Weinan City, Shaanxi Province, and is applying for the approval of the Development & Reform Commission of Weinan City, Shaanxi Province as of the report date. The Company expects to commence construction upon obtaining the approval of Development & Reform Commission of Weinan City at the end of 2013.
 
 
F-9

 
 
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In addition to the historical information contained herein, we make statements in this Quarterly Report on Form 10-Q that are forward-looking statements. Sometimes these statements will contain words such as "believes," "expects," "intends," "should," "will," "plans," and other similar words. Forward-looking statements include, without limitation, assumptions about our future ability to increase income streams, reduce and control costs, to grow revenue and earnings, and our ability to obtain additional debt and/or equity capital on commercially reasonable terms, none of which is certain. These statements are only predictions and involve known and unknown risks, uncertainties and other factors included in our periodic reports with the SEC. Although forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment, actual results could differ materially from those anticipated in such statements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.
 
The following discussion and analysis should be read in conjunction with our September 30, 2013 unaudited consolidated financial statements and related notes thereto included in the quarterly report and with our consolidated financial statements and notes thereto for the year ended December 31, 2012.
 
Overview
 
We have transitioned our business from mining to clean new energy in the middle of 2012, and mainly focused on the solar PV downstream market at the present stage. Though the solar PV business did not generate revenue for the nine months ended September 30, 2013, our Huanghe Bay Project was expected to begin the operation in 2013. And at the end of 2013, our Baisui Project is expected to commence its construction works. In the near future, we plan to gradually increase the resource devoted to marketing.
 
We also hold land use rights in a land parcel and we lease a portion of the land use rights on the 5.7 square kilometer parcel to Shaanxi Huanghe Bay Springs Lake Theme Park Ltd. (“Huanghe”), a company with a common control person. The term of the lease agreement is from January 1, 2011 to December 31, 2029. Our land use rights are amortized over their 50 year term. The land use right was not only our largest asset, but also the stable operating income to support our other business, with an annual rent of approximately $ 1.2 million (RMB7,500,000).
 
The following is a summary of the book value of our land use rights as of September 30, 2013:
 
Cost
 
$
20,818,543
 
Less: Accumulated amortization
   
(3,979,665)
 
Land use rights, net
 
$
16,838,878
 
 
Amortization expenses were approximately $308,825 and $303,734 for the nine months ended September 30, 2013, and 2012, respectively.
 
As reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit of $3,683,319 as of September 30, 2013, which includes net income for common stockholders of $1,263,134 for the nine months ended September 30, 2013. The Company’s operations provided cash of $183,811 for the nine months ended September 30, 2013.
 
We began to generate revenue for the year ended December 31, 2011, of which the revenue from land use right leasing was expected to provide stable cash flow. In the future, we expect that there will no longer be a need for us to continue to rely on loans from our directors and other related parties. We believe that we have adequate capital to assure that we will be able to meet our obligations or obtain sufficient capital to complete our plan of operations for the next twelve (12) months.
 
 
4

 
 
RESULTS OF OPERATIONS

Comparison of the Three Months Ended September 30, 2013 and September 30, 2012
 
Sales revenue
 
We generated total revenue of $303,091 for the three months ended September 30, 2013, compared with the revenue of $295,876 for the three months ended September 30, 2012. The revenue was the rent of land use rights for both of the periods and was related party transactions.

Operating Expenses
 
Total operating expense for the three months ended September 30, 2013 was $218,800 compared with operating expense of $218,951 for the three months ended September 30, 2012. There was little fluctuation of administrative expense for the third quarter of 2013. The amortization expense for the three months ended September 30, 2013 remained stable, as no addition or disposal occurred for land use rights. The depreciation for the three months ended September 30, 2013 increased by $4,806 or 69%, compared with the same period of 2012, as the additional EPC project equipment of $318,394 began its depreciation in July, 2013.
 
Income before taxes for the three months ended September 30, 2013 was $73,633, compared to an income of $60,767 for the three months ended September 30, 2012.
 
Net Income

We achieved a net income of $97,354 for the three months ended September 30, 2013, compared to a net income of $66,305 for the three months ended September 30, 2012. The slight increase was primarily due to the 2% increase in revenue for the three months ended September 30, 2013.

Comprehensive Income

Our comprehensive income for the three months ended September 30, 2013 was $170,265 compared with comprehensive income of $34,022 for the three months ended September 30, 2012. The comprehensive income (loss) for each period only referred to the foreign currencies translation gain (loss), between the U.S. Dollar and the Chinese Yuan RMB (or Hong Kong Dollar for Wah Bon).

Comparison of the Nine Months Ended September 30, 2013 and September 30, 2012

Sales revenue

We generated total revenue of $904,814 for the nine months ended September 30, 2013, compared with the revenue of $889,898 for the nine months ended September 30, 2012. The revenue was the rent of land use rights for both of the periods and was related party transactions.
 
 
5

 
 
Operating Expenses

Total operating income for the nine months ended September 30, 2013 was $1,634,536 compared with operating expense of $523,493 for the nine months ended September 30, 2012. The increase was partially due to a gain of $2,284,956 recognized and an increase in the administrative expense, which increased to $316,334 from $199,347. The amortization expense for the nine months ended September 30, 2013 remained stable, as no addition or disposal occurred for land use rights. The depreciation for the nine months ended September 30, 2013 only increased by $4,849 or 24%, compared with the same period of 2012, as the additional EPC project equipment of $318,394 began its depreciation in July, 2013.
 
Income before taxes for the nine months ended September 30, 2013 was $2,532,038 compared to an income of $304,294 for the nine months ended September 30, 2012. The significant increase for our operating results was attributable to the transaction for the disposal of mines recognized in the first quarter of 2013.

Net Income

We achieved a net income of $1,968,383 for the nine months ended September 30, 2013, compared to a net income of $318,293 for the nine months ended September 30, 2012. The significant increase was primarily due to the transaction for the disposal of mines recognized in the first quarter of 2013. The Company transferred its mines exploration rights to Xunyang County Yongjin Mining Co.,Ltd for business purpose with a consideration of $2,412,836 (RMB15,000,000). The transaction was completed and the outstanding amount was settled as of September 30, 2013. The gain on disposal of assets consists of the considerations and the total of $127,880 for the related business tax and the surcharges.
 
Comprehensive Income

Our comprehensive income for the nine months ended September 30, 2013 was $2,285,690 compared with comprehensive income of $235,738 for the nine months ended September 30, 2012. The comprehensive income (loss) for each period only referred to the foreign currencies translation gain (loss), between the U.S. Dollar and the Chinese Yuan RMB (or Hong Kong Dollar for Wah Bon).
 
Stockholders’ Equity

Stockholders' equity increased to $15,014,226 as of September 30, 2013, or approximately 18%, from $12,728,536 as of December 31, 2012. The significant increase was primarily due to our net income of $1,968,383 generated for the nine months ended September 30, 2013.
 
LIQUIDITY AND CAPITAL RESOURCES

Cash Flows From Operating Activities

Net cash provided by operating activities of $183,811 for the nine months ended September 30, 2013, decreased by $806,256,or 81%, compared with net cash provided of $990,067 for the nine months ended September 30, 2012. The decrease of net cash provided was primarily attributable to receiving a payment of $315,408 (RMB2,000,000) for the deposit of mines exploration rights transfer transaction for the nine months ended September 30,2012. The adjustments to reconcile our net income to net cash flow include adjustment for disposal proceeds of mine of $2,284,956, depreciation expense of $25,261, amortization of $308,825 for land use rights, an increase in operating assets of $56,550, an increase in operating liability of $529,914 and the decrease in advance from customers of $321,712.
 
 
6

 
 
Cash Flows From Investing Activities
 
Net cash used in investing activities of $1,398,389 for the nine months ended September 30, 2013 was the result of the proceeds from disposal of mine of $2,412,836, additional cash provided to the related parties of $3,747,519, and the cash paid for the EPC project of $63,706. 

Cash Flows From Financing Activities

Net cash of $45,039 used in financing activities for the nine months ended September 30, 2013 resulted from the repayment to related parties.

General

Collectability of our account receivable for the land use right leasing is important to our continuation of operation. In addition, we have access to short and long term loans of cash from our directors or other related parties.
 
We provided loans of $3,747,519 to our related parties for the nine months ended September 30, 2013.
 
We returned cash of $45,039 to our related parties for the nine months ended September 30, 2013.
 
Our current assets decreased by $2,294,600 and total assets increased by $1,596,023 respectively.
 
We have cash of $537,834 and $1,763,381 as of September 30, 2013 and December 31, 2012 respectively.
 
We believe that we have sufficient cash to fund operations for the next 12 months.
 
FINANCING

We anticipated the cash generated from operating activities will be sufficient to sustain our daily operations for the next twelve months.
 
INFLATION
 
Our management believes that inflation did not have a material effect on our results of operations for the nine months ended September 30, 2013.
 
OFF-BALANCE SHEET ARRANGEMENTS
 
We do not have any off-balance sheet arrangements.
 
 
7

 
 
CONTRACTUAL OBLIGATIONS
 
None
 
CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities to comply with generally accepted accounting principles. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from our estimates, which would affect the related amounts reported in our financial statements.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimates are made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur, could materially impact the consolidated financial statements. We believe that the following critical accounting policies reflect the significant estimates and assumptions which are used in the preparation of the consolidated financial statements and affect our financial condition and results of operations.
 
Revenue Recognition

The Company recognizes revenue when the earnings process is complete, both significant risks and rewards of ownership are transferred or services have been rendered and accepted, the selling price is fixed or determinable, and collectability is reasonably assured.

We are currently leasing the land use right to Huanghe for the development and operation of a theme park. We generally collect the annual rent every year, and then recognize land use right leasing revenue over the beneficial period described by the agreement, as the revenue is realized or realizable and earned.
 
Related Party

A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, member of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting party might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
 
Our related parties are the following individuals and entities: (i) Mr. Wang Shengli (a director of the Company), Mr. Chen Weidong (our President, Chief Executive Officer and Chairman of the Board), Ms. Li Ping (a director of the Company), and Ms. Chen Min (a director of the Company), all of whom are shareholders of the Company; (ii) Mr. Zhang Hong Jun, who is currently a director of the Company; (iii) Ms. Li Ping (our Chief Financial Officer and who has the same name with our Director Ms. Li Ping); and (iv) the following companies: Du Kang Liquor Development Co., Ltd., Huiton World Property Superintendent Company, Xi Deng Hui Development Stock Co., Ltd., Zhongke Lvxiang Development Stock Co., Ltd., Shaanxi Du Kang Liquor Group Co., Ltd., Shaanxi Bai Shui Du Kang Brand Management Co., Ltd., Shaanxi Changjiang electricity & new energy Co.,Ltd, Shaanxi Huanghe Bay Springs Lake Theme Park Ltd., Shaanxi Changfa Industrial Co.,LTD., Shaanxi Tangrenjie Advertising Media Co.,Ltd. and Zhongke Aerospace & Agriculture Development Stock Co., Ltd.
 
Cash flows from due from related parties are classified as cash flows from investing activities. Cash flows from due to related parties are classified as cash flows from financing activities.
 
 
8

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Not required for a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures
 
In connection with the preparation of this Quarterly Report on Form10-Q, an evaluation was carried out by the Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2013. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2013.
 
Internal Control over Financial Reporting

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
 
Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2013. 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 and Internal Control over Financial Reporting-Guidance for Smaller Public Companies. As a result of this assessment, management identified a material weakness in internal control over financial reporting.
 
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 our annual or interim financial statements will not be prevented or detected on a timely basis.
 
 
9

 
 
We note the following deficiencies that management believes to be material weaknesses:
 
a)
Various members of the Company’s executive management are also members of its board of directors, including the board’s chairman. This situation prevents a truly independent review of the actions of the Company’s management. 
 
b)
The Company does not have an independent audit committee to oversee the external financial reporting process and the internal control over financial reporting as required by the Sarbanes-Oxley Act of 2002. This, in combination with the lack of an independent board of directors, creates a material weakness in the oversight of the Company’s management, its internal control and its financial reporting process.
 
c)
The Company does not have sufficient knowledge of all the necessary financial statement disclosures that are required to be made in accordance with U.S. generally accepted accounting principles.
 
Based on the material weakness described above, management has concluded that, as of September 30, 2013, the Company's internal control over financial reporting was not effective based on the criteria in Internal control - Integrated framework issued by the COSO.
 
The Company intends to take the following steps as soon as practicable to remediate the material weaknesses we identified as follows:

1.
We intend to recruit independent directors such that at least a majority of our Board is independent.
 
2.
We intend to constitute audit, nominating and compensation committees comprised entirely of independent directors and to adopt committee charters for those committees, in accordance with the corporate governance standards of the New York Stock Exchange. We intend that at least one member of our Audit Committee will qualify as an “Audit Committee financial expert.”

Changes in Internal Controls over Financial Reporting

There has been no significant change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)- 15(f) of the Exchange Act) that occurred during the nine months ended September 30, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
 
10

 
 
PART II

ITEM 1.  LEGAL PROCEEDINGS

We received a document subpoena dated April 4, 2011, pursuant to which the Enforcement Division of the SEC informed us that it was conducting an investigation of the Company to determine whether the Company has committed a violation of the federal securities laws. The subpoena required us to produce certain documents to the SEC, and we complied and responded on May 2, 2011.
 
On June 7, 2011, the SEC issued another subpoena in furtherance of its investigation and required the Company to produce additional documents relating to its land use right. We complied with the subpoena and responded on June 24, 2011 to the Los Angeles Regional Office of the SEC.
 
On September 5, 2012, the Securities and Exchange Commission officially notified us of its termination of the investigation against us that began in April 2011. The SEC also confirmed that it had no intention of recommending any enforcement action by the Commission.

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

On December 25, 2009, the Company issued an aggregate of 4,500,000 shares of common stock to Messrs. Donald R. Monroe and Stanley F. Wilson, the principals of Capital Advisory Services, Inc., in connection with our share exchange transaction. To the best of our knowledge, each of them now holds 2,250,000 shares of common stock the shares were issued without registration in reliance on section 4(2) of the Securities Act. All issued and outstanding shares of series C Preferred Stock have been converted into an aggregate amount of 609 million shares of our common stock which were issued without registration in reliance on SEC Regulation S and section 3(a)(9) of the Securities Act.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
 
None
 
ITEM 4.  MINE SAFETY DISCLOSURES
 
None.
 
ITEM 5.  OTHER INFORMATION
 
None
 
ITEM 6.  EXHIBITS
 
31.1
 
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule15d-14(a) of the Securities Exchange Act of 1934, as amended
Filed herewith.
       
31.2
 
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
Filed herewith.
       
32.1
 
Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Filed herewith.
 
101.INS **
 
XBRL Instance Document
Filed herewith.
       
101.SCH **
 
XBRL Taxonomy Extension Schema Document
Filed herewith.
       
101.CAL **
 
XBRL Taxonomy Extension Calculation Linkbase Document
Filed herewith.
       
101.DEF **
 
XBRL Taxonomy Extension Definition Linkbase Document
Filed herewith.
       
101.LAB **
 
XBRL Taxonomy Extension Label Linkbase Document
Filed herewith.
       
101.PRE **
 
XBRL Taxonomy Extension Presentation Linkbase Document
Filed herewith.

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 
 
11

 
  
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
  CHINA CHANGJIANG MINING AND NEW ENERGY COMPANY, LTD. (Registrant)  
       
Date: November 14, 2013
By
/s/ Chen Wei Dong
 
   
Chen Wei Dong
 
   
Chief Executive Officer and President
 
       
Date: November 14, 2013
By
/s/ Li Ping
 
   
Li Ping
 
   
Chief Financial Officer
(Principal Financial Officer)
 
 
12