Attached files

file filename
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R13.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R27.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R21.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R1.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R20.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R22.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R15.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R19.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R33.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R47.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R7.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R12.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R16.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R42.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R30.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R36.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R35.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R39.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R44.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R23.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R29.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R2.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R5.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R14.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R3.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R45.htm
EXCEL - IDEA: XBRL DOCUMENT - CAM Group, Inc.Financial_Report.xls
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R37.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R32.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R28.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R41.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R9.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R11.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R8.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R6.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R25.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R43.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R31.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R40.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R34.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R46.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R26.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R38.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R18.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R24.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R10.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R4.htm
XML - IDEA: XBRL DOCUMENT - CAM Group, Inc.R17.htm
EX-32.1 - CAM Group, Inc.ex32_1.htm
EX-31.2 - CAM Group, Inc.ex31_2.htm
EX-31.1 - CAM Group, Inc.ex31_1.htm
EX-10.2 - CAM Group, Inc.ex10_2.htm
EX-10.1 - CAM Group, Inc.ex10_1.htm

 

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, 2013


 [ ] 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.

(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 050041

(Address of principal executive offices) (Zip Code)

 

(86) 311-86964264

  (Registrant's telephone number, including area code)

   

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 [ ]     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 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 £ 

Smaller reporting company S

 

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 common stock, par value $.001, outstanding as of November 19, 2013: 25,295,000

 

(1)

 

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.

 

(2)

 

TABLE OF CONTENTS

     
PART I. FINANCIAL INFORMATION    
     
ITEM 1. FINANCIAL STATEMENTS   5
     
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   11
     
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   14
     
ITEM 4. CONTROLS AND PROCEDURES    14
     
PART II. OTHER INFORMATION    
     
ITEM 1. LEGAL PROCEEDINGS   15
     
ITEM 1A. RISK FACTORS   15
     
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS   15
     
ITEM 3. DEFAULTS UPON SENIOR SECURITIES   15
     
ITEM 4. MINE SAFETY DISCLOSURE 15
     
ITEM 5. OTHER INFORMATION   15
     
ITEM 6. EXHIBITS   16
     
SIGNATURES   17
     
INDEX TO EXHIBITS   18

 

(3)

 

ITEM 1. FINANCIAL STATEMENTS

 

FINANCIAL STATEMENTS

(UNAUDITED)

September 30, 2013

 

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.

 

(4)

 

 

CAM Group, Inc. and Subsidiaries
Unaudited Consolidated Balance Sheets
As of September 30, 2013 and December 31, 2012
       
    September 30, 2013    December 31, 2012 
    (Unaudited)      
Current Assets          
           
Cash and cash equivalent  $2,052,881   $1,248,673 
Cash and cash equivalent - restricted   —      300,000 
Advanced to suppliers   3,486,736    1,468,396 
Prepayment and deposits   5,927    1,095 
Other receivable   6,371    4,012 
Total  Current Assets   5,551,915    3,022,176 
           
Non-current Assets          
           
Advanced to related parties   3,419,144    1,335,197 
Plant and Equipment, Net   136,353    156,926 
Total  Non-current Assets   3,555,497    1,492,123 
           
Total Assets  $9,107,412   $4,514,299 
           
Liabilities          
           
Accounts payables and accrued expenses  $72,641   $42,521 
Due to shareholders   782,151    709,497 
Due to related parties   28,156    57,696 
Income Tax Payable   1,502,357    708,453 
Total Liabilities   2,385,305    1,518,167 
           
           
Equity          
           
Preferred stock, $.001 par value, 10,000,000 shares authorized, 1,000,000 shares issued and outstanding as of   1,000    1,000 
September 30, 2013 and December 31, 2012, respectively          
Common stock, $.001 par value, 90,000,000 shares authorized, 25,295,000 and 25,075,000 shares issued and outstanding   25,295    25,075 
as of September 30, 2013 and December 31, 2012, respectively          
Additional paid-in capital   556,790    507,010 
Deferred compensation   (12,500)   —   
Accumulated other comprehensive income   111,802    28,753 
Retained earnings (deficits)   5,989,107    2,385,376 
Total equity   6,671,494    2,947,214 
           
Non-controlling interest   50,613    48,918 
           
Total Liabilities and Equity  $9,107,412   $4,514,299 
           
The accompanying notes are an integral part of these consolidated financial statements

 

(5)

 

                
CAM Group, Inc. and Subsidiaries
Unaudited Consolidated Statements of Operations and Consolidated Comprehensive Income
For The Three and Nine Months Ended September 30, 2013 and 2012
                
For the Three Months Ended For the Nine Months Ended
  September 30, 2013    September 30, 2012    September 30, 2013  September 30, 2012
  (Unaudited)    (Unaudited)    (Unaudited)  (Unaudited)
                
Revenue - related party                       
Advertising revenues from AMP $1,659,221     $1,713,228     $5,009,557   $2,284,453 
Commisson from AMG  3,775      —        17,187    —   
Total revenues  1,662,996      1,713,228      5,026,744    2,284,453 
Cost of revenue  43,009      98,800      95,750    161,485 
Gross profit  1,619,987      1,614,428      4,930,994    2,122,968 
                        
Operating expenses:                       
Selling, General & administrative expenses  170,866      117,778      507,649    284,053 
Advertising expenses  36,031      —        36,556    —   
Total operating expenses  206,897      117,778      544,205    284,053 
                        
Operating income  1,413,090      1,496,650      4,386,789    1,838,915 
                        
Other income (expenses)                       
Interest income (expenses)  3      —        13    —   
(Loss) from currency exchange  (7,553)     —        (7,553)   —   
Total other income (expenses)  (7,550)     —        (7,540)   —   
                        
Income before income tax  1,405,540      1,496,650      4,379,249    1,838,915 
                        
Income tax expense  257,131      261,005      775,518    331,005 
                        
Net income  1,148,409      1,235,645      3,603,731    1,507,910 

Roman, Times, Serif" Less: Net income attributable to noncontrolling interests

 —        —        —      —   
Net income attributable to CAM Group common shareholders  1,148,409      1,235,645      3,603,731    1,507,910 
                        
                        
Basic $0.05     $0.05     $0.14   $0.06 
Diluted $0.01     $0.01     $0.03   $0.01 
                        
Weighted average number of shares                       
Basic  25,295,000      25,075,000      25,182,574    24,045,147 
Diluted  125,295,000      125,740,670      125,182,574    124,039,507 
                        
Comprehensive income:                       
Net income $1,148,409     $1,235,645     $3,603,731   $1,507,910 
Foreign currency translation adjustment  19,943      17,122      84,744    14,666 
Comprehensive income:  1,168,352      1,252,767      3,688,475    1,522,576 
Comprehensive income attributable to noncontrolling interests  398      342      1,695    293 
Comprehensive income attributable to CAM Group $1,167,954     $1,252,425     $3,686,780   $1,522,283 

 

The accompanying notes are an integral part of these consolidated financial statements

 

(6)

 

CAM Group, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
For The Nine Months Ended September 30, 2013 and 2012
       
   For the Nine Months Ended
   September 30, 2013  September 30, 2012
   (Unaudited)  (Unaudited)
       
Cash flows from operating activities:          
Net income (loss)  $3,603,731   $1,507,910 
Adjustments to reconcile net income to net cash          
provided by (used in) operating activities:          
Depreciation   26,121    4,774 
Stock based compensation   37,500    80,393 
Changes in operating assets and liabilities:          
Advanced to suppliers   (1,977,494)   —   
Advance to related parties - business trade   (206,249)   —   
Other receivable and prepayment   (7,047)   64,112 
Other payable and accrued expenses   29,497    8,899 
Taxes Payable   775,518    331,005 
Net cash provided by operating activities   2,281,577    1,997,093 
           
Cash flows from investing activities:          
Purchase of property and equipment   (2,919)   (120,403)
Advance to related party   

(1,838,730

)   - 
Construction in progress   —      (39,205)
Net cash used in investing activities   (1,841,649)   (159,608)
           
Cash flows from financing activities:          
Capital contribution from non controlling interest   —      62,957 
Proceeds from shareholder loan payable   59,547    563,096 
Proceeds from related party loan payable   —      28,419 
Repayment to related party loan payable   (30,346)   —   
Changes in restricted cash   300,000    —   
Net cash provided by financing activities   329,201    654,472 
           
Effect of changes in exchange rate   35,079    18,275 
           
Net increase/(decrease) in cash and cash equivalents   804,208    2,510,232 
           
Cash and cash equivalents at the beginning of the year   1,248,673    4,141 
           
Cash and cash equivalents at the end of the year  $2,052,881   $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

 

(7)

 

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 Annual Report on Form 10-K for the year ended December 31, 2012.

 

 

2. ORGANIZATION AND BUSINESS BACKGROUND 

 

CAM Group Inc. (the “Company” or “CAMG”) was originally incorporated as Savannah River Technologies, Inc. under the laws of the State of South Carolina on March 2, 1995. On July 20, 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 September 13, 2012, the Company changed its name to CAM Group Inc. to more accurately reflect its business after a stock exchange transaction with CAM Group set forth below. 

 

On April 17, 2012, CAMG 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 98% equity interest in China Agriculture Media (Hebei) Co. Ltd. (“CAM Hebei”). CAM Hebei was established in the Hebei Province, PRC on November 28, 2011 as a Chinese domestic enterprise.

 

The stock exchange transaction involved two simultaneous transactions:

 

CAMG issued to CAM Group Shareholders an amount equal to 22,500,000 new investment shares of Common Stock of CAMG and 1,000,000 shares of CAMG 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.

   

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

 

Upon completion of the exchange, CAM Group and its subsidiaries became subsidiaries of CAMG and the former owners of CAM Group then owned a ‘controlling interest’ in CAMG representing 98% of the voting shares of CAMG 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 CAMG whereby CAM Group is deemed to be the accounting acquirer (legal acquiree) and CAMG 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, liabilities, revenues and expenses, of CAMG being included effective from the date of stock exchange transaction. Accordingly, the financial position, results of operations, and cash flows of the accounting acquirer are included 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 are included from the date of stock exchange transaction.

 

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

 

3. RECENTLY ISSUED ACCOUNTING STANDARDS

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements up to ASU 2013-11, 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.

 

4. RECLASSIFICATIONS

 

Certain reclassifications have been made to the prior year consolidated financial statements to conform to the current year presentation. These reclassifications had no effect on reported income or losses.

 

5. CASH AND CASH EQUIVALENTS

 

As of September 30, 2013, the cash balance was $2,052,881, of which $1,686,495 was held in major financial institutions located in Hong Kong, and $362,923 was held in major financial institutions located in the PRC and $3,463 cash in Hong Kong.

 

These bank balances are not insured. The remittance of these funds out of China is subject to exchange control restrictions imposed by the Chinese government. Management believes that the major financial institutions in the PRC and Hong Kong have acceptable credit ratings.

 

6. ADVANCED TO suppliers

 

As of September 30, 2013 and December 31, 2012, the Company had advanced to suppliers in the amount of $3,486,736 and 1,468,396, respectively, representing the deposits made to suppliers pursuant to fertilizer contracts in order to secure lower price of fertilizer. The amount and percentage of each major supplier are set forth below.

 

 

Suppliers

      Advanced to Suppliers        
Supplier A     $ 1,051,290       30.2 %
Supplier B       710,552       20.4 %
Supplier C       1,724,894       49.4 %
  Total   $ 3,486,736       100 %

 

(8)

  

7. ADVANCED TO related parties

 

As of September 30, 2013, the Company had an advanced amount of $3,419,144 to Hebei Agricultural Means of Production Co. Ltd. (“Hebei AMP”), a related party of the Company to secure lower price of fertilizer, see Note 9(a) for $1,566,808 and a loan advance to Parko (Hong Kong) Limited (“Parko”), Hebei AMP’s business affiliate for $1,852,336. The loan advance to Parko is due on December 31, 2013 with interest free for the period from July 25, 2013 through November 20, 2013, and bears interest at a rate of 4.7% for the period from November 20, 2013 through December 31, 2013, pursuant to an amendment entered into on November 20, 2013. The maximum extension of the Loan should not be more than 30 days in any circumstances. The interest rate will be increased to 15% per annum during the extension period.

 

 

8. PROPERTY, PLANT AND EQUIPMENT

 

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

 

    As of
    September 30, 2013   December 31, 2012
Cost:        
Computer equipment and software   $ 13,057     $ 5,334  
Advertising equipment     159,513       161,321  
Total     172,570       166,655  
Accumulated depreciation     (36,217 )     (9,729 )
Net   $ 136,353     $ 156,926  
                 

 

During the nine months ended September 30, 2013 and 2012, the Company had depreciation expenses of $26,121 and $4,774, respectively, included in cost of revenues.

 

 

9. RELATED PARTY BALANCES AND TRANSACTIONS WITH MAJOR SHAREHOLDERS

 

Due to related parties as of September 30, 2013 and December 31, 2012 consisted of following:

 

    As of
    September 30, 2013   December 31, 2012
                 
Hebei AMP (a)   $ 28,156     $ 57,696  
                 
PMI (b)     662,912       592,350  
Shareholder (c)     119,239       117,147  
Total    $ 810,307      $ 709,497  

 

 

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

 

Hebei Agricultural Means of Production Co. Ltd. (“Hebei AMP”) indirectly owns 2% capital interest of CAM Hebei, through its wholly-owned subsidiary, Shijiazhuang Qijin Cultural Presentation Inc. Hebei AMP has common management of the Company as follows:

 

Mr. Chen Lijun, Chairman of the Company is the Chairman and President of Hebei AMP;

Mr. Peng Guo Jiang, General Manager, Director of the Company is the Vice President of Hebei AMP.

 

Mr. Peng Guo Jiang holds approximate 36% of CAMG common stock and 38% of CAM preferred stock as a trustee holding the shares for Hebei AMP.

 

As of September 30, 2013 and December 31, 2012, the balance due to Hebei AMP was $28,156 and $57,696, respectively.

 

(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 former 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, and paid for the Company’s expenses related to daily operations. The agreement expired in March 2013. As of September 30, 2013, the outstanding balance due to PMI was $662,912.

 

(c) Due to shareholder

 

In addition, the Company had outstanding balances of $119,239 due to the Company’s former President as of September 30, 2013. The funds borrowed from the Company’s former President were to fund the Company’s operations. The balance due to shareholder was not evidenced by a promissory note, but rather is an oral agreement between the shareholder and the Company and due on demand. On July 29, 2013, the President resigned as President, director and Secretary of the Company due to his personal reason, without any specific disagreement with the Company on any matter.

 

Advertising Revenues – Related Party

After completing the installation of the LCD displays in 2012, the Company has entered an advertising services contract with Hebei AMP, pursuant to which Hebei AMP agreed to purchase a total of 15,768,000 seconds per year for LCD advertising time at a rate of no less than RMB2.54 (USD0.41), starting from June 2012. The contract was renewed on May 30, 2013 for seven months from June 1, 2013 to December 31, 2013. During the three and nine months ended September 30, 2013, the Company generated all its advertising revenues from Hebei AMP in amount of $1,659,221 and $5,009,557, respectively.

Fertilizer Agreements - Related Party

Starting on October 30, 2012 the Company, through its subsidiary CAM Hebei entered into a series of oral and written agreements (collectively the “Agreements”) with Hebei AMP for the purchase and sale of fertilizer in Hebei Province China, pursuant to which, fertilizer products shall be sold by Hebei AMP to CAM Hebei for a purchase price of approximately $2,000,000. Hebei AMP will deliver the fertilizer to CAM Hebei as needed. The Company serves primarily as a trading agent for Hebei AMP during the transactions and therefore recognizes revenue for these transactions on a net rather than a gross basis. During the three and nine months ended September 30, 2013, the Company generated revenues of $3,775 and $17,187, respectively, from trading agent business.

10. STOCK BASED COMPENSATION

On May 20, 2013, the Company issued 220,000 shares of its common stock, which were approved by the Board of Directors on January 16, 2013, at its fair value for one-year professional and accounting services related to the preparation and filing of the Company’s quarterly and annual reports, EDGAR services, and the preparation of corporate tax returns. The value of the shares in amount of $50,000 was determined using the value of the services to be rendered since the Company currently has a limited trading market. Accordingly, the stock based compensation was booked pro rata within the relative service periods, which was $12,500 and $37,500 for the three and nine months ended September 30, 2013, respectively. In addition, the Company recorded deferred compensation of $12,500 to the consolidated balance sheet as of September 30, 2013.

  

(9)

 

11. INCOME TAXES 

 

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, 2013.

 

As of September 30, 2013, the U.S. operation had net operating losses of $406,164 available for federal tax purposes, which are available to offset future taxable income.  The net operating loss carry forwards begin to expire in 2032.  The Company has provided for a full valuation allowance for any future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

The effective income tax expenses for the three and nine months ended September 30, 2013 are as follows:

 

 

For the three months ended

September 30, 2013

 

For the nine months ended

September 30, 2013

         
Current taxes $ 257,131   $ 775,518  
Deferred taxes   0     0  
  $ 257,131   $ 775,518  

 

 

12. EARNINGS PER SHARE

 

Basic net income per share is computed using the weighted average number of the common shares outstanding during the periods.  Diluted net income per share is computed using the weighted average number of all dilutive common stock equivalents during the periods. As of September 30, 2013, the Company had 1,000,000 shares of convertible preferred stock outstanding whose effect was dilutive and included in diluted net income per share during the periods.

 

The following table sets forth the computation of basic and dilutive net income per share for the three and nine months ended September 30, 2013 and 2012, respectively:

 

    For the three months ended   For the nine months ended
    9/30/2013   9/30/2012   9/30/2013   9/30/2012
                 
Net income    $  1,148,409    $  1,235,645    $    3,603,731   $      1,507,910
Net income per share                
    Basic   $   0.05   $  0.05   $    0.14   $0.06
    Diluted   $   0.01   $  0.01   $    0.03   $0.01
Weighted average number of shares outstanding                
    Basic   25,295,000   25,075,000   25,182,574   24,045,147
    Diluted   125,295,000   125,740,670   125,182,574   124,039,507

 

 

13. Warrants

 

The following tables summarize all warrant outstanding as of September 30, 2013, and the related changes during this period.

 

    Number of Warrants   Weighted
Average Exercise Price
Stock Warrants        
Balance at January 1, 2013     2,218,900     $ 2.80  
Granted     0       0  
Exercised     0        
Expired     (2,218,900 )   2.80  
Balance at September 30, 2013     0       0  
Warrants Exercisable at September 30, 2013     0     $ 0  

 

During the third quarter of 2012, the Company issued 2,218,900 one-year warrants at a price of $1.20 per warrant to 166 accredited investors for total proceeds of $2,662,680, of which $2,455,200 was collected through a thirty party escrow account. The Company is not the beneficiary of the escrow account. Since the Company has not received the warrant proceeds, the Company recorded a subscription receivable in amount of $2,662,680 to the accompanying consolidated balance sheets. On April 15, 2013, the Board of Directors approved an amendment to its Warrant Agreements, dated June 28, 2012, pursuant to which the proceeds from the Warrant Offering at the price of $1.20 per warrant will be refunded in the event that the warrants are not exercised on or before June 28, 2013. There were no warrants exercised on or before the expiration. The proceeds of $2,455,200 were refunded to the investors by the escrow agent during the third quarter of 2013.

 

14. CONCENTRATION AND RISK

 

For the three and nine months ended September 30, 2013, 100% of the Company’s assets were located in the PRC and 100% of the Company’s revenues were derived from Hebei AMP, a related party through common management (see Note 9(a)) located in the PRC.

 

 

15. COMMITMENT AND CONTINGENCIES

 

The Company leases its office space under a 2-year non-cancelable operating lease agreement which expires on June 30, 2014.  The monthly lease payment is approximately $800.

 

Accordingly, the future lease payments required as of December 31 are as follows:

 

Year ended December 31 Lease payment
2013  $                                 9,677
2014  $                                 4,838
Total  $                               14,515

 

For the three and nine months ended September 30, 2013, rental expense was approximately $2,400 and $7,200, respectively. 

16. SEGMENTS

 

The Company determined that it did not operate in any material, separately reportable operating segments as of September 30, 2013.  

17. SUBSEQUENT EVENTS

 

On November 15, 2013, the Chief Financial Officer of the Company resigned from her position as Chief Financial Officer Company due to the expiration of the employment agreement, without any specific disagreement with the Company on any matter.

 

On November 20, 2013, the loan agreement with Parko regarding the principal amount of $1,852,336, dated July 25, 2013, was amended to include the following terms:

 

1) the Loan should bear interest at a rate of 4.7% per annum, effective on November 20, 2013;

2) in the event that Parko fails to repay the principal in full to the Company upon due date, the interest rate of the Loan will be 15% per annum starting on January 1, 2014;

3) the maximum extension of the Loan should not be more than 30 days in any circumstances.

 

 

 

(10)

 

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

 

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 three and nine months ended September 30, 2013, to the items disclosed as significant accounting policies in management's Notes to the Financial Statements in the Company's annual report on Form 10-K for the year ended December 31, 2012.

 

Corporate History

 

As used herein the terms "We", the "Company", "CAMG", the "Registrant," or the "Issuer" refers to CAM Group, Inc., formerly known as “RT Technologies, Inc.”, its subsidiaries and predecessors, unless indicated otherwise. The Company was originally incorporated as Savannah River Technologies, Inc. under the laws of the State of South Carolina on March 2, 1995. On July 20, 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 September 13, 2012, the Company changed its name to CAM Group Inc. (“CAMG”) to more accurately reflect its business after a stock exchange transaction set forth below. 

 

On April 17, 2012, CAMG 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 98% equity interest in China Agriculture Media (Hebei) Co. Ltd. (“CAM Hebei”). CAM Hebei was established in the Hebei Province, PRC on November 28, 2011 as a Chinese domestic enterprise.

 

Immediately upon Closing, CAMG issued to the CAM Group shareholders 22,500,000 new investment shares of CAMG Common Stock and 1,000,000 shares of CAMG super-voting Preferred Stock to the CAMG Shareholders in exchange for all of their shares of registered capital of CAM Group. Upon completion of the exchange, CAM Group and its subsidiaries became subsidiaries of CAMG and the former owners of CAM Group then owned a ‘controlling interest’ in CAMG representing 98% of the voting shares of CAMG and 90% of the issued and outstanding shares of Common Stock. Our corporate structure after closing is set forth as follows:

 

CAM Group, Inc. owns
100% of
China Agriculture Media Group Co., Ltd. owns
100% of
China Agriculture Media (Hong Kong) Group Co., Ltd. owns
98% of
China Agriculture Media (Hebei) Co., Ltd.

 

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

Overview:

 

Since the reverse merger was consummated, we have continued operations of CAM Hebei, a company which is principally engaged in developing the Chinese rural consumer market. We plan to build up our core business into four areas within the next two years: advertising, wholesale and retail sales, store rental and value-added services. Currently, we generate the majority of our revenues from advertising services, which use advertising tools such as LCD displays, posters, and outdoor billboards for potential clients who are intended to popularize their products in Chinese rural market. These tools will also assist clients to build their corporate images, and assist government departments in providing general public service announcements to local residents. 

 

The Company plans to acquire full management and operational rights to a comprehensive retail network composed of up to 16,000 retail stores located in Hebei province (the “Network”), pursuant to a written agreement, dated March 25, 2011. The Network is currently owned and 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”) and has been in operation for 60 years. The Company does not have ownership of stores within the Network, which draws a large percentage of the region’s farming population who are beneficiaries of government subsidized agricultural products only sold within the Network stores. Although farmers are free to visit stores outside the Network, the restrictions on the sale of fertilizer products and subsidized pricing of the Network significantly reduce competition. As a result, the 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.

 

By utilizing existing resources, such as the facilities, network and experience of our strategic partners, Hebei Agricultural Means of Production Co. Ltd. (“Hebei AMP”) and Hebei Supply and Marketing Cooperative Association (“China Co-Op Hebei”), both of which are the subsidiaries of China Co-Op in Hebei province, the Company is able to establish its access to the rural retail market. We plan to act as the exclusive sales and advertising agents for up to 16,000 retail outlets located in Hebei province and strive to assist our clients to promote suitable products attractive to the rural consumer. Our estimated cost would require about $10 million USD which we intend to raise in the US capital markets through road shows or investor presentation meetings. In October 2012 we hosted two seminars at San Francisco and New York City respectively to let attendees meet with our management team and know about our marketing and growth strategies. Regarding fund raising, we intend to hold road shows in different U.S. cities and reach various institutional investors to present our business development plan during 2013. To assist us in these financings we have engaged Axiom Capital Management, Inc. as our advisor. 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 the number of stores in our Network

·

 

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

 

(11)

 

Results of Operations

 

Revenues – Related Party

 

We had revenues of $1,662,996 and $5,026,744 for the three and nine months ended September 30, 2013, respectively, of which $1,659,221 and $5,009,557, respectively, were from the sales of air time through the LCD display network. We currently gained all of our advertising revenues from Hebei AMP; our related party and major shareholder through a trustee holding; pursuant to the Agreement, dated June 1, 2012. We charged Hebei AMP RMB2.54 ($0.41) per second for the air time they used for their advertisement.

 

We installed the first batch of 300 LCD displays in the Network during 2012 and will continue to roll-out more installations in 2014.

 

We charge at least RMB 2.54 ($0.41) per second for a 30-second video broadcasting 60 times per day within the Network when the number of LCD display is less than 3,000. The price per second will be increased when the number of LCD display exceeds 3,000 to reflect the increasing influence from the Network. The LCD displays will operate up to 12 hours a day in some locations and allow a maximum capacity of 15.8 million seconds per year available for sale. However, the sole advertising revenue contract with Hebei AMP will expire on December 31, 2013. There is no assurance that such contract will be renewed in the subsequent year. Our revenues will drop significantly without the renewal of the contract.

 

In addition, pursuant to the terms of the Agreements entered into between the Company and Hebei AMP, fertilizer products shall be sold by Hebei AMP to CAM Hebei for a purchase price of approximately $2,000,000. Hebei AMP will deliver the fertilizer to CAM Hebei as needed. We serve primarily as a trading agent for Hebei AMP during the transactions. During the three and nine months ended September 30, 2013, the Company generated revenues of $3,775 and $17,187, respectively, from our trading agent business.

Comparatively, we had revenues of $1,713,228 and $2,284,453 for the three and nine months ended September 30, 2012, respectively, all of which were from the sales of air time for the clients’ advertisement through the LCD display network commencing since June of 2012.

  

Cost of Revenues

 

Cost of revenues recorded at $43,009 and $95,750 for the three and nine months ended September 30, 2013, respectively. Cost of revenues consists primarily of the cost related to LCD display, direct labor, depreciation and overhead, which are directly attributable to revenue generation and the provision of services. The depreciation expense in connection with equipment for advertising and broadcasting was included in cost of revenues, which was $26,121 and $4,774 for the three and nine months ended September 30, 2013, respectively.

 

Comparatively, we had cost of revenues in the amount of $98,800 and $161,485 for the three and nine months ended September 30, 2012, respectively, all of which were related to the sales of air time for the clients’ advertisement through the LCD display network commencing since June of 2012.

 

Operating Expenses

 

We had operating expenses of $206,897 and $544,205 for the three and nine months ended September 30, 2013, respectively, compared to operating expenses of $117,778 and $284,053 for the three and nine months ended September 30, 2012, respectively. The increase of $260,152 during the nine months ended September 30, 2013 was due primarily to the increase in expenses in being a public company in US.

 

Our operating expenses were primarily composed of professional fees, recruitment, marketing, advertising, travelling expenses, and non-cash stock based compensation, which was $37,500 and $80,393 during the nine months ended September 30, 2013 and 2012, respectively.

 

On May 20, 2013, the Company issued 220,000 shares of its common stock at its fair value for one-year professional and accounting services related to the preparation and filing of the Company’s quarterly and annual reports, EDGAR services, and the preparation of corporate tax returns. The value of the shares in amount of $50,000 was the fair value of the services to be rendered since the Company currently has a limited trading market. Accordingly, the stock based compensation was booked pro rata within the relative service periods.

 

Net Income

 

We had net income of $1,148,409 and $3,603,731 for the three and nine months ended September 30, 2013, respectively, compared to net income of $1,235,645 and $1,507,910 for the three and nine months ended September 30, 2012, respectively. The net income during the periods was due to sufficient gross profit from advertising business to cover our operating expenses. The increase in net income by $2,095,821 during the nine months ended September 30, 2013 was because we had no sales activities until June 2012. 

 

Liquidity and Capital Resources

 

Cash flows provided by operating activities were $2,281,577 and $1,997,093 for the nine months ended September 30, 2013 and 2012, respectively. Cash flows from operations during the nine months ended September 30, 2013 were due primarily to net income of $3,603,731, plus the increase in taxes payable by $775,518, partially offset by the increase in advance to related parties in connection with business trade by $206,249, and the increase in advance to suppliers by $1,977,494. Positive cash flows from operations during the nine months ended September 30, 2012 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, and the decrease in prepayment and deposit by $64,112. 

 

Cash flows used in investing activities were $1,841,649 during the nine months ended September 30, 2013 due primarily to purchase of accounting software and advance to Parko, Hebei AMP’s business affiliate for $1,838,730. The original loan agreement with Parko was amended on November 20, 2013 to include interest at a rate of 4.7% per annum effective on the date of amendment. Comparatively, Cash flows used in investing activities were $159,608 during the nine months ended September 30, 2012, consisting of $120,403 used to purchase advertising equipment and construction in progress in amount of $39,205.

 

Cash flows provided by financing activities were $329,201 and $654,472 during the nine months ended September 30, 2013 and 2012, respectively. Cash flows from financing activities during the nine months ended September 30, 2013 were due primarily to the release of restricted cash of $300,000, which was in connection with the sales of common stock during the third quarter of 2012, plus the proceeds of $59,547 from shareholder loan, offset by the repayment of $30,346 to the related parties loan. Both shareholder loan and related parties loan bear zero interest and due on demand. Comparatively, 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.

 

During the third quarter of 2012, the Company issued 2,218,900 one-year warrants at a price of $1.20 per warrant to 166 accredited investors for total proceeds of $2,662,680, of which $2,455,200 was collected through a third party escrow account. The Company is not the beneficiary of the escrow account. On April 15, 2013, the Board of Directors approved an amendment to its Warrant Agreements, dated June 28, 2012, pursuant to which the proceeds from the Warrant Offering at the price of $1.20 per warrant was to be refunded in the event that the warrants are not exercised on or before June 28, 2013. There were no warrants exercised on or before the expiration. The proceeds of $2,455,200 were refunded to the investors by the escrow agent during the third quarter of 2013.

 

We had cash of $2,052,881 on hand as of September 30, 2013. Currently, we have enough cash to fund our operations for the next 12 months. This is based on our self-generated income and cash inflow from operations. However, our expansion objectives are significantly affected by our ability to obtain extra funds. We estimate we would require about $10 million to meet our expansion objectives. We intend to raise the funds in the US capital markets through road shows or investor presentation meetings. In October 2012 we hosted two seminars at San Francisco and New York City respectively to let attendees meet with our management team and our marketing and growth strategies. With regards to fund raising, we intend to hold road shows in different U.S. cities and reach various institutional investors to present our business development plan in year 2014. To assist us in our financing plans we have engaged Axiom Capital Management, Inc. as our advisor.

 

Overall, we have funded our cash needs from inception through September 30, 2013 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.

 

(12)

 

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 selling advertising time to Hebei AMP, our related party and major shareholder through a trustee holding, our business operations may be adversely affected if the relationship with Hebei AMP is broken.

        

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.

 

(13)

  

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable to 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, who also serves as our principal financing and accounting 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, 2013, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive 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 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, which is also a material weakness in our disclosure controls, will not be considered remediated until we hire financial and accounting personnel with the requisite knowledge and experience concerning US GAAP.

 

We may have inadvertently violated Section 402 of the Sarbanes-Oxley and Section 13(k) of the Exchange Act and may be subject to sanctions for such violations.

 

Section 13(k) of the Exchange Act provides that it is unlawful for a company such as ours, which has a class of securities registered under Section 12(g) of the Exchange Act, to directly or indirectly, including through any subsidiary, extend or maintain credit in the form of a personal loan to or for any director or executive officer of the company. Issuers violating Section 13(k) of the Exchange Act may be subject to civil sanctions, including injunctive remedies and monetary penalties, as well as criminal sanctions. The imposition of any of such sanctions on the Company may have a material adverse effect on our business, financial position, results of operations or cash flows.

 

As of September 30, 2013, the Company had an advance to Heibei AMP in the amount of $3,419,144, representing the deposits made pursuant to fertilizer contracts in order to secure lower price of fertilizer for $1,566,808 and a loan advance to Parko (Hong Kong) Limited (“Parko”), Hebei AMP’s business affiliate for $1,852,336. The loan advance to Parko is due on December 31, 2013 with interest free for the period from July 25, 2013 through November 20, 2013, and bears interest at a rate of 4.7% for the period from November 20, 2013 through December 31, 2013, pursuant to an amendment entered into on November 20, 2013. The maximum extension of the Loan should not be more than 30 days in any circumstances. The interest rate will be increased to 15% per annum during the extension period.

 

(b) Changes in Internal Control over Financial Reporting

 

Since the first quarter of 2013, we have begun to engage consultants to advise management on the preparation of Sarbanes-Oxley Section 404 compliance with internal controls over financial reporting for 2013, providing relevant training to our staff, implementing more rigorous policies and procedures relating to period-end financial reporting and other key processes, strengthening key controls such as journal-entry approval, reconciliation procedures and maintaining relevant supporting documentation. We expect to continue to implement additional financial and management controls and procedures going forward. As results of these measures and until we have completed the remediation process, there has been and will be changes and further improvement to our internal controls over financial reporting. Except as set forth herein, there have been no changes in our internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

(14)

 

PART II. OTHER INFORMATION

 

ITEM 1.      LEGAL PROCEEDINGS.

 

None.

 

ITEM 1A. RISK FACTORS.

 

The information to be reported under this item has not changed since the previously filed 10K, for the year ended December 31, 2012, other than the followings: 

We may have inadvertently violated Section 402 of the Sarbanes-Oxley and Section 13(k) of the Exchange Act and may be subject to sanctions for such violations.

 

Section 13(k) of the Exchange Act provides that it is unlawful for a company such as ours, which has a class of securities registered under Section 12(g) of the Exchange Act, to directly or indirectly, including through any subsidiary, extend or maintain credit in the form of a personal loan to or for any director or executive officer of the company. Issuers violating Section 13(k) of the Exchange Act may be subject to civil sanctions, including injunctive remedies and monetary penalties, as well as criminal sanctions. The imposition of any of such sanctions on the Company may have a material adverse effect on our business, financial position, results of operations or cash flows.

 

As of September 30, 2013, the Company had an advance to Heibei AMP in the amount of $3,419,144, representing the deposits made pursuant to fertilizer contracts in order to secure lower price of fertilizer for $1,566,808 and a loan advance to Parko (Hong Kong) Limited (“Parko”), Hebei AMP’s business affiliate for $1,852,336. The loan advance to Parko is due on December 31, 2013 with interest free for the period from July 25, 2013 through November 20, 2013, and bears interest at a rate of 4.7% for the period from November 20, 2013 through December 31, 2013, pursuant to an amendment entered into on November 20, 2013. The maximum extension of the Loan should not be more than 30 days in any circumstances. The interest rate will be increased to 15% per annum during the extension period.

 

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

 

 

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4.      MINE SAFETY DISCLOSURE

 

Not applicable.

 

ITEM 5.      OTHER INFORMATION.

 

None.

 

(15)

 

ITEM 6. EXHIBITS.

 

31.1   Certification of Chief Executive Officer*
     
31.2   Certification of Principal Financial and Accounting Officer*
     
     
32.1   Certification of Chief Executive Officer and Principal Financial and Accounting Officer required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.*
     
10.1   Translation of loan agreement with Parko (Hong Kong) Limited, dated July 25, 2013*
     
10.2   Translation of addendum to Loan agreement with Parko (Hong Kong) Limited, dated November 20, 2013*
     
101    
     
 101.INS XBRL    Instance Document**
 101.SCH XBRL    Taxonomy Extension Schema**
 101.CAL XBRL    Taxonomy Extension Calculation Linkbase**
 101.DEF XBRL    Taxonomy Extension Definition Linkbase**
 101.LAB XBRL    Taxonomy Extension Label Linkbase**
 101.PRE XBRL    Taxonomy Extension Presentation Linkbase**

    

* filed herewith

** In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 to this report shall be deemed furnished and not filed.

 

(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. 

(Registrant)

 

 

Date: November 21, 2013

By: /s/ Kit Ka

         Kit Ka

         Chief Executive Officer

 

 

 

(17)

 

INDEX TO EXHIBITS

 

Exhibit No.   Description
     
31.1   Certification of Chief Executive Officer*
31.2   Certification of Principal Financial and Accounting Officer*
     
32.1   Certification of Chief Executive Officer and Principal Financial and Accounting Officer required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
     
10.1   Translation of loan agreement with Parko (Hong Kong) Limited, dated July 25, 2013*
     
10.2   Translation of Addendum to Loan agreement with Parko (Hong Kong) Limited, dated November 20, 2013*
     
     
   101.INS XBRL Instance Document**
  101.PRE XBRL Taxonomy Extension Presentation Linkbase **
  101.LAE XBRL Taxonomy Extension Label Linkbase **
  101.DEF XBRL Taxonomy Extension Definition Linkbase **
  101.SCH XBRL Taxonomy Extension Schema **