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EX-32.2 - CERTIFICATION - VIKING INVESTMENTS GROUP, INC.vkin_ex322.htm
EX-32.1 - CERTIFICATION - VIKING INVESTMENTS GROUP, INC.vkin_ex321.htm
EX-31.2 - CERTIFICATION - VIKING INVESTMENTS GROUP, INC.vkin_ex312.htm
EX-31.1 - CERTIFICATION - VIKING INVESTMENTS GROUP, INC.vkin_ex311.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended: December 31, 2013

OR

¨
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: 000-29219

VIKING INVESTMENTS GROUP, INC.
(Exact name of registrant as specified in its charter)
 
Nevada
 
98-0199508
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification Number)
 
138 Pinxinguan Road, Suite 906
Shanghai, China 200070
 (Address of principal executive offices)

+86 (21) 6034 0015
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $0.001
 
Name of each exchange on which registered: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No ¨

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition 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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨  No x

As of June 30, 2013, the aggregate market value of the shares of the Registrant’s common equity held by non-affiliates was approximately $736,396.05, using the June 2013 closing price of the Registrant’s common stock of $0.15/share. Shares of the Registrant’s common stock held by each executive officer and director and each by each person who owns 10 percent or more of the outstanding common stock have been excluded in that such persons may be deemed to be “affiliates” of the Registrant for purposes of the above calculation. This determination of affiliate status is not a conclusive determination for other purposes.

The number of shares of the Registrant’s common stock outstanding as of December 31, 2013, was 18,758,657.
 


 
 

 
NOTE REGARDING FORWARD LOOKING STATEMENTS
 
This Annual Report on Form 10-K contains statements that constitute "forward-looking statements." These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology like "believes," "anticipates," "expects," "estimates," "may," or similar terms. These statements appear in a number of places in this annual report and include statements regarding the Company’s intent, belief or current expectations and those of its directors or officers with respect to, among other things:(i) trends affecting its financial condition or results of operations, (ii) its business and growth strategies, and (iii) its financing plans. You are cautioned that forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Factors that could adversely affect actual results and performance include, among others, the Company’s need for additional capital, its history of losses, the intense competition the Company faces in its business, the fact that its stock is a “penny stock” and the other material risks described under “Risk Factors”. The accompanying information contained in this annual report, including, without limitation, the information set forth under the heading "Item 1. Business" identifies important additional factors that could materially adversely affect actual results and performance. You are urged to carefully consider these factors. All forward-looking statements attributable to us are expressly qualified in their entirety by the foregoing cautionary statement.
 
 
2

 
 
Table of Contents
 
   
Page
 
       
PART I
   
4
 
         
Item 1.
Business
   
4
 
Item 1A.
Risk Factors
   
4
 
Item 1B.
Unresolved Staff Comments
   
8
 
Item 2.
Properties
   
8
 
Item 3.
Legal Proceedings
   
8
 
Item 4.
Mine Safety Disclsoures
   
8
 
         
PART II
   
9
 
         
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
   
9
 
Item 6.
Selected Financial Data
   
11
 
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
   
11
 
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
   
12
 
Item 8.
Financial Statements and Supplementary Data
   
13
 
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
   
14
 
Item 9A.
Controls and Procedures
   
14
 
Item 9B. Other Information     16  
         
PART III
   
17
 
         
Item 10.
Directors, Executive Officers and Corporate Governance
   
17
 
Item 11.
Executive Compensation
   
20
 
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
   
21
 
Item 13.
Certain Relationships and Related Transactions
   
22
 
Item 14.
Principal Accounting Fees and Services
   
23
 
         
PART IV
   
24
 
         
Item 15.
Exhibits, Financial Statement Schedules
   
24
 
         
SIGNATURES
   
25
 
 
 
3

 

PART I
 
Item 1.
Business

The Registrant, Viking Investments Group, Inc., is sometimes referred to hereinafter as “Viking Investments” or the “Company.” The Company was incorporated under the laws of the State of Florida on May 3, 1989, as Sparta Ventures Corp. and remained inactive until June 27, 1998. The name of the Company was changed to Thermal Ablation Technologies Corporation on October 8, 1998 and then to Poker.com, Inc. on August 10, 1999. On September 15, 2003, the Company changed its name to LegalPlay Entertainment Inc., and on November 8, 2006, the name of the Company was changed to Synthenol Inc. Effective November 3, 2008, the Company merged with and into a wholly-owned subsidiary, SinoCubate, Inc., which remained the surviving entity of the merger. SinoCubate, Inc. was formed in the State of Nevada on September 11, 2008. The merger resulted in a change of name of the Company from Synthenol Inc. to SinoCubate, Inc., and a change in the state of incorporation of the Company from Florida to Nevada. On June 13, 2012, the Company changed its name to Viking Investments Group, Inc.

The Company’s current business plan is to provide incubate resources and services to support the successful development of late stage, non-publicly-listed companies based in the United States and emerging growth countries with the ultimate goal and endeavor for them to become publicly listed in the United States. This incubate service includes professional advisory services before and after financing, board member services, accounting, pre-audit and CFO services, corporate governance advice and general corporate management advisory services to entrepreneurs and their advisers in consideration for a fee, comprised of either cash or equity, or a combination of both (hereinafter referred to as a “Transaction” or plural “Transactions”). Viking Investments is neither an underwriter as the term is defined in Section 2(a)(11) of the Securities Act of 1933, nor an investment company pursuant to the Investment Company Act of 1940. Viking Investments is not an investment adviser pursuant to the Investment Advisers Act of 1940. Viking Investments is not registered with FINRA or SIPC.

During the third quarter of 2012, the Company began developing a new comprehensive Internet-based classified- business website, targeting the Chinese market B2B and b2C segments, to be further incubated and developed in accordance with the Company’s current plan of operations. 

Other Information

Neither the Company nor any of its subsidiaries engaged in any research and development activities during 2013. The Company does not manufacture any products or engage in any activity that requires compliance with environmental laws.

Employees

The Company, through its wholly owned subsidiary, Viking Investments Group, LLC, a Delaware limited liability company (“Viking Delaware”), employs three people (and has retained one outside consultant) involved in business development, business analysis, financial consulting, web programming and designing, execution and support of the Company’s business.

Reports to Securities Holders

The Company provides an annual report that includes its audited financial information to its shareholders upon written request. The Company also makes its financial information equally available to any interested parties or investors through compliance with the disclosure rules of the Exchange Act. The Company is subject to disclosure filing requirements including filing a Form 10-K annually and Form 10-Q quarterly. In addition, the Company will file Form 8-K and other proxy and information statements from time to time as required.

The public may read and copy any materials that the Company files with the SEC at the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
 
Item 1A.
Risk Factors

The following important factors among others, could cause our actual operating results to differ materially from those indicated or suggested by forward-looking statements made in this Form 10-K or presented elsewhere by management from time to time.

There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any of these risks actually occur, our business, financial condition or results of operation may be materially adversely affected. In such case, the trading price of our common stock could decline and investors could lose all or part of their investment.
 
 
4

 
 
Conflicts of Interest

Certain conflicts of interest may exist between the Company and its Chief Executive Officer and Chairman, Tom Simeo, as well as its majority shareholder, Viking Investments Group, LLC, a company organized under the laws of the Federation of St. Kitts and Nevis (“Viking Nevis”). Tom Simeo is also the principal officer of Viking Nevis. As a result, conflicts of interest may arise that can be resolved only through exercise of such judgment as is consistent with fiduciary duties to the Company. See “Certain Relationships and Related Transactions.”
 
Need for Additional Financing

The Company currently has limited funds and the lack of additional funds may negatively impact the Company’s ability to pursue its business strategy of providing incubating services, to include financing, professional advisory services, board member services, CFO services, corporate governance and general corporate management to entrepreneurs seeking to enter the capital markets in the US and elsewhere, or to acquire or enter into contractual arrangements with an entity to either acquire such entity or to enter into a contract arrangement that will enable the Company to manage such an entity. Even if the Company’s funds prove to be sufficient to provide such services or to acquire an interest in, or complete a transaction with, an entity, the Company may not have enough capital to exploit the opportunity. The ultimate success of the Company may depend upon its ability to raise additional capital. The Company may investigate the availability, source, or terms that might govern the acquisition of additional capital but will not do so until it determines a need for additional financing. If additional capital is needed, there is no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to the Company. If not available, the Company’s operations will be limited to those that can be financed with its modest capital.

Regulation of Penny Stocks

The Company’s securities may be subject to a SEC rule that imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than established customers or accredited investors. For purposes of the rule, the phrase “accredited investors” means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth, or joint net worth with spouse, in excess of $1,000,000 excluding the value of the person’s primary residence or having an annual income that exceeds $200,000 (or that, when combined with a spouse’s income, exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written agreement to the transaction prior to the sale. Consequently, the rule may affect the ability of broker-dealers to sell the Company’s securities and also may affect the ability of purchasers in this offering to sell their securities in any market that might develop.

In addition, the SEC has adopted a number of rules to regulate “penny stocks.” Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange Act of 1934, as amended or the Exchange Act. Because the securities of the Company may constitute “penny stocks” within the meaning of the rules, the rules would apply to the Company and to its securities. The rules may further affect the ability of owners of shares to sell the securities of the Company in any market that might develop for them.
 
Shareholders should be aware that, according to SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses.
 
Lack of Operating History

Even though providing incubate services is an area that the Company’s CEO is experienced in, the Company has only recently refocused its efforts on providing incubate services to Chinese companies. Due to the special risks inherent in the implementation of a new business emphasis and plan, the Company must be regarded as a new or start-up venture with all of the unforeseen costs, expenses, problems, and difficulties to which such ventures are subject.
 
 
5

 
 
No Assurance of Success or Profitability, Especially in Light of the Likely Volatility of foreign Capital Markets

There is no assurance that the Company will be able to successfully implement its business plan and provided the contemplated services to its client companies. Even if the Company should be successful in providing its services to its client companies, there is a risk that developments regarding the political climate or capital markets in foreign countries could negatively impact our revenues, and there is no assurance that we will generate revenues or profits, or that the market price of the Company’s common stock will be increased thereby.

Impracticality of Exhaustive Investigation

The Company has limited or no funds and, this, coupled with the lack of full-time management will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of its opportunities with respect to its prospective client companies. Decisions will therefore likely be made without detailed feasibility studies, independent analysis, market surveys and the like which, if the Company had more funds available to it, would be desirable. The Company will be particularly dependent in making decisions upon information provided by its prospective client’s promoter, owner, sponsor, or others associated with the business opportunity seeking the Company’s participation. A significant portion of the Company’s available funds may be expended for investigative expenses and other expenses related to preliminary aspects of providing incubate services to clients, and potential profits would therefore be lessened.

Lack of Diversification

Because of the limited financial resources that the Company has, it is unlikely that the Company will be able to diversify its acquisitions or operations. The Company’s probable inability to diversify its activities into more than one area will subject the Company to economic fluctuations within a particular business or industry and therefore increase the risks associated with the Company’s operations.
 
Reliance upon Financial Statements

The Company generally will require audited financial statements from companies with which it seeks to enter into a contractual arrangement. In cases where no audited financials are available, the Company will have to rely upon interim period unaudited information received from a prospective client company’s management that has not been verified by outside auditors. The lack of the type of independent verification which audited financial statements would provide increases the risk that the Company, in evaluating a contractual arrangement with such a company, will not have the benefit of full and accurate information about the financial condition and recent interim operating history of that company. This risk increases the prospect that the contractual arrangement with such a company might prove to be an unfavorable one for the Company or the holders of the Company’s securities.
 
Moreover, the Company will be subject to the reporting provisions of the Exchange Act, and thus will be required to furnish certain information about significant contractual arrangements, including audited financial statements for any business with which it enters into a contractual arrangement for control. Consequently, prospects that do not have, or are unable to provide reasonable assurances that they will be able to obtain, the required audited statements would not be considered by the Company to be appropriate clients so long as the reporting requirements of the Exchange Act are applicable. Should the Company, during the time it remains subject to the reporting provisions of the Exchange Act, complete into a contract for control of an entity for which audited financial statements prove to be unobtainable, the Company would be exposed to enforcement actions by the SEC and to corresponding administrative sanctions, including permanent injunctions against the Company and its management. The legal and other costs of defending an SEC enforcement action would have material, adverse consequences for the Company and its business. The imposition of administrative sanctions would subject the Company to further adverse consequences. In addition, the lack of audited financial statements would prevent the securities of the Company from becoming eligible for listing on NASDAQ, or on any existing stock exchange.
 
Moreover, the lack of such financial statements is likely to discourage broker-dealers from becoming or continuing to serve as market makers in the securities of the Company. Without audited financial statements, the Company would almost certainly be unable to offer securities under a registration statement pursuant to the Securities Act of 1933 or the Securities Act, and the ability of the Company to raise capital would be significantly limited until such financial statements were to become available.
 
 
6

 
 
Other Regulation

A contractual arrangement for acquisition of equity ownership of or control may be of a company that is subject to rules and regulation by federal, state, local or foreign authorities. Compliance with such rules and regulations can be expected to be a time-consuming, expensive process and may limit other opportunities of the Company.
 
Limited Participation of Management

The Company is heavily dependent upon the skills, talents, and abilities of its Chief Executive Officer, Mr. Simeo, who currently has other business interests, to manage and implement its business plan.

Lack of Continuity in Management

The Company does not have any employment agreements with Chief Executive Officer, Mr. Simeo, and as a result, there is no assurance Mr. Simeo will continue to be associated with the Company in the future. In connection with future business opportunities, it is possible that Mr. Simeo may resign as an officer and director of the Company subject to compliance with Section 14f of the Exchange Act. A decision to resign will be based upon the identity of the business opportunity and the nature of the transaction and is likely to occur without the vote or consent of the stockholders of the Company.
 
No Independent Audit Committee

The Company does not have an independent Audit Committee of its Board of Directors. The entire Board of Directors functions as the Company’s Audit Committee. The Sarbanes-Oxley Act of 2002, as amended or the SOX and rules and regulations adopted by the SEC to implement the SOX impose certain standards on listed companies relative to the maintenance and operations of Board of Directors Audit Committees, including but not limited to the requirement that Audit Committees be appointed, that membership of such committees comprise only independent directors, that a financial professional be among the membership of such committee and that such committee be afforded an adequate operating budget and be able to employ independent professional advisors. The SOX also requires that the Audit Committee oversee the work of a company’s outside auditors and that the outside auditors be responsible to the Audit Committee. At this time, the Company is not in compliance with the requirements of the Sarbanes-Oxley Act as they relate to independent Board of Directors Audit Committees. The Company believes that under rules and regulations adopted by the SEC to implement these provisions of the SOX it is not required to comply with its requirements relating to the appointment of an Audit Committee of its Board of Directors and conforming with the enumerated standards and guidelines because the Company is not a “Listed Company” as defined therein. Notwithstanding, the Company may ultimately be determined not to be in compliance therewith and may therefore face penalties and restrictions on its operations until it comes into full compliance. Additionally, the Company’s failure to comply with the provisions of the SOX could preclude it from being listed on NASDAQ or any other stock exchanges until it can show that it is in compliance. The Company’s failure to be in compliance with the SOX could also present an impediment to a potential business combination where the target company intends that the Company apply for listing on NASDAQ or any other applicable stock exchanges.
 
Indemnification of Officers and Directors

Nevada statutes provide for the indemnification of the Company’s directors, officers, employees, and agents, under certain circumstances, against attorney’s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of the Company. The Company will also bear the expenses of such litigation for any of its directors, officers, employees, or agents, upon such person’s promise to repay the Company if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by the Company which it may be unable to recoup.
 
 
7

 
 
Dependence upon Outside Advisors

To supplement the Company’s officers, directors and principal shareholders, the Company may be required to employ accountants, technical experts, appraisers, attorneys, or other consultants or advisors. The selection of any such advisors will be made by the Company without any input from stockholders. Furthermore, it is anticipated that such persons may be engaged on an “as needed” basis without a continuing fiduciary or other obligation to the Company. In the event the Company considers it necessary to hire outside advisors, such persons may be affiliates of the Company, if they are able to provide the required services.
 
No Foreseeable Dividends

The Company has not paid dividends on its common stock and does not anticipate paying such dividends in the foreseeable future.

Loss of Control by Present Management and Shareholders

The Company may consider, as consideration for future business opportunities, an amount of the Company’s authorized but unissued common stock that would, upon issuance, represent the great majority of the voting power and equity of the Company. The result would be that another company’s stockholders and management would control the Company, and the Company’s Board of Directors and management could be replaced by persons unknown at this time. Such a merger would result in a greatly reduced percentage of ownership of the Company by its current shareholders.
 
Rule 144 Sales

The majority of the outstanding shares of common stock held by present stockholders are “restricted securities” within the meaning of Rule 144 under the Securities Act. As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Securities Act and as required under applicable state securities laws. Rule 144 in general requires restricted securities to be held for a particular length of time, and prescribes the conditions which must be satisfied prior to the sale of the securities. Under new amendments to Rule 144, if an issuer of securities, such as the Company, has been subject to reporting requirements of Section 13 or 15(d) of the Exchange Act for at least 90 days, then the restricted securities of such issuer are subject to a six-month holding period. Under the amendments, a non-affiliate that has held restricted securities of a reporting issuer for more than six months but less than one year can resell the securities in reliance on Rule 144, if current information is available for the issuer. After one year, the non-affiliate may freely resell the restricted securities without regard to any Rule 144 condition. A non-affiliate of a non-reporting issuer must hold the securities for one year before any public resale. After one year, a non-affiliate may freely resell such securities without regard to Rule 144 conditions. Under the new amendments, Rule 144 is not available for the resale of securities initially issued by a shell company (reporting or non-reporting) or a former shell company unless certain conditions detailed under Rule 144 are met. A sale under Rule 144 or under any exemption from the Securities Act, if available, or pursuant to subsequent registration of shares of common stock of present stockholders, may have a depressive effect upon the price of the Company’s common stock.
 
Item 1B.
Unresolved Staff Comments
 
None.
 
Item 2.
Properties

The Company leases approximately 200 square meters of office space at 138 Pinxingguan Road, 9th Floor, Shanghai, China, where it operates its emerging market incubation and consulting business.

Item 3.
Legal Proceedings
 
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of December 31, 2013, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.
 
Item 4.
Mine Safety Disclosures
 
Not applicable.
 
 
8

 
 
PART II
 
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

There is no "established trading market" for shares of the Company’s common stock. As of December 31, 2013, the Company’s common stock was quoted on OTC Markets Group’s OTCQB under the symbol "VKIN." No assurance can be given that any "established trading market" for the Company’s common stock will develop or be maintained.

The range of high and low closing bid quotations for the Company’s common stock during each quarter of the calendar years ended December 31 2013 and 2012, is shown below, as quoted by http://finance.yahoo.com. Prices are inter-dealer quotations, without retail mark-up, markdown or commissions and may not represent actual transactions.

Stock Quotations
 
Quarter Ended
 
High
   
Low
 
March 31, 2012
   
0.40
     
0.05
 
June 30, 2012
   
0.80
     
0.07
 
September 30, 2012
   
0.50
     
0.05
 
December 31, 2012
   
0.50
     
0.05
 
March 31, 2013
   
0.74
     
0.25
 
June 30, 2013
   
1.50
     
0.15
 
September 30, 2013
   
0.15
     
0.13
 
December 31, 2013
   
0.20
     
0.08
 
 
The future sale of the Company’s presently outstanding "unregistered" and "restricted" common stock by present members of management and persons who own more than five percent of the Company’s outstanding voting securities may have an adverse effect on any "established trading market" that may develop in the shares of the Company’s common stock.
 
Holders
 
As of December 31, 2013, the Company had 49 shareholders of record of common stock, including shares held by brokerage clearing houses, depositories or otherwise in unregistered form. The Company does not know the beneficial owners of such shares.

Dividend Distributions
 
We have not historically distributed dividends to stockholders, nor do we intend to do so in the foreseeable future.
 
Securities authorized for issuance under equity compensation plans
 
The Company does not have any securities authorized for issuance under equity compensation plans.
 
 
9

 

Penny Stock
 
Our common stock is considered "penny stock" under the rules the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ Stock Market System, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the Commission, that:
 
 
contains a description of the nature and level of risks in the market for penny stocks in both public offerings and secondary trading;
 
contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities' laws; contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;
 
contains a toll-free telephone number for inquiries on disciplinary actions;
 
defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and
 
contains such other information and is in such form, including language, type, size and format, as the Commission shall require   by rule or regulation.
 
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with:
 
 
bid and offer quotations for the penny stock;
 
the compensation of the broker-dealer and its salesperson in the transaction;
 
the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the marker for such stock; and
 
monthly account statements showing the market value of each penny stock held in the customer's account.
 
In addition, the penny stock rules that require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgement of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement.
 
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.

Related Stockholder Matters

None.

Purchase of Equity Securities

None.
 
 
10

 
 
Item 6.
Selected Financial Data

The Company, as a smaller reporting company (as defined by Rule 12b-2 of the Exchange Act), is not required to furnish information required by this item.
 
Item 7. 
Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis in conjunction with the audited consolidated financial statements and notes thereto appearing elsewhere in this annual report on Form 10-K.

In preparing the management’s discussion and analysis, the registrant presumes that you have read or have access to the discussion and analysis for the preceding fiscal year.
 
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended or the Reform Act. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earning, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions of performance; and statements of belief; and any statements of assumptions underlying any of the foregoing. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: the Company’s ability to raise capital and the terms thereof; and other factors referenced in the Form 10-K.
 
The use in this Form 10-K of such words as “believes”, “plans”, “anticipates”, “expects”, “intends”, and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. These forward-looking statements present the Company’s estimates and assumptions only as of the date of this report. Except for the Company’s ongoing obligation to disclose material information as required by the federal securities laws, the Company does not intend, and undertakes no obligation, to update any forward-looking statements.

Although the Company believes that the expectations reflected in any of the forward-looking statements are reasonable, actual results could differ materially from those projected or assumed or any of the Company’s forward-looking statements. The Company’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.
 
PLAN OF OPERATIONS

Overview

The Company’s current business plan is to provide incubate resources and services to support the successful development of late stage, non-publicly-listed companies based in the United States and emerging growth countries with the ultimate goal and endeavor for them to become publicly listed in the United States. These incubate services include professional advisory services before and after financing, board member services, accounting, pre-audit and CFO services, corporate governance advice and general corporate management advisory services to entrepreneurs and their advisers in consideration for a fee, comprised of either cash or equity, or a combination of both (hereinafter referred to as a “Transaction” or plural “Transactions”). It is believed that successful completion of a business incubation program increases the likelihood that a company will stay in business for the long term. The Company is neither an underwriter as the term is defined in Section 2(a)(11) of the Securities Act of 1933. The Company is not an investment company pursuant to the Investment Company Act of 1940. The Company is not an investment adviser pursuant to the Investment Advisers Act of 1940 nor is it registered with FINRA or SIPC.
 
Going Concern Qualification

The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances; however there is no assurance of additional funding being available.
 
 
11

 
 
RESULTS OF CONTINUING OPERATIONS

The following discussion of the consolidated financial condition and results of operation of the Company should be read in conjunction with the consolidated financial statements and the related Notes included elsewhere in this Report.

Liquidity and Capital Resources
 
At December 31, 2013, the Company had a working capital deficiency of $284,193, compared to a working capital deficiency of $80,891 at December 31, 2012.

Revenue

The Company had no revenue during the year ended December 31, 2013, and $47,066 in revenue during the year ended December 31, 2012.
 
Expenses

The Company’s operating expenses were $448,555 for the year ended December 31, 2013, compared with $465,592 for the corresponding period in 2012. The slight decrease was mainly due to the decrease of office and wage expenses.
 
Net Loss

The Company incurred a net loss of $517,716 for the year ended December 31, 2013, compared with net loss of $429,177 for the year ended December 31, 2012. The increase in net loss was mainly due to the change in fair value of convertible notes during the year ended December 31, 2013, as compared to the year ended December 31, 2012.

Off Balance Sheet Arrangements
 
The Company does not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in the Company’s securities.
 
Seasonality
 
The Company’ operating results are not affected by seasonality.
 
Inflation
 
The Company’s business and operating results are not affected in any material way by inflation.
 
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk.
 
The Company, as a smaller reporting company (as defined by Rule 12b-2 of the Exchange Act), is not required to furnish information required by this item.
 
 
12

 
 
Item 8. 
Financial Statements and Supplementary Data
 
Report of Independent Registered Public Accounting Firm
    F-1  
Consolidated Balance Sheets as at December 31, 2013 and 2012
    F-2  
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2013 and 2012
    F-3  
Consolidated Statements of Cash Flows for the years ended December 31, 2013 and 2012
    F-4  
Consolidated Statements of Changes in Stockholders' Deficiency
    F-5  
Notes to Consolidated Financial Statements
    F-6 – F-20  
 

 
 
13

 
 
Schwartz Levitsky Feldman llp
CHARTERED ACCOUNTANTS
LICENSED PUBLIC ACCOUNTANTS
TORONTO · MONTREAL
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Viking Investments Group, Inc.
 
We have audited the accompanying consolidated balance sheets of Viking Investments Group, Inc. (the “Company”) as of December 31, 2013 and 2012, and the related consolidated statements of operations and comprehensive loss, cash flows and changes in stockholders' equity (deficit) for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the years then ended, in accordance with generally accepted accounting principles in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in note 1 to the consolidated financial statements, the Company has experienced recurring losses and has a deficit accumulated since inception which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
/s/ SCHWARTZ LEVITSKY FELDMAN LLP
 
Toronto, Ontario, Canada 
April 18, 2014 
Chartered Accountants
Licensed Public Accountants
 
2300 Yonge Street, Suite 1500, Box 2434
Toronto, Ontario M4P 1E4
Tel:  416 785 5353
Fax:  416 785 5663
 
 
F-1

 
 
VIKING INVESTMENTS GROUP, INC. 
Consolidated Balance Sheets
As at December 31, 2013 and 2012
(Amounts expressed in US dollars)

 
   
December 31
 
   
2013
   
2012
 
         
(Restated)
 
ASSETS
 
CURRENT ASSETS
               
Cash
 
$
12,239
   
$
159,297
 
Prepaid expenses and deposits
   
9,641
     
7,332
 
     
21,880
     
166,629
 
Leasehold improvements
   
5,053
     
-
 
TOTAL ASSETS
 
$
26,933
   
$
166,629
 
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
 
CURRENT LIABILITIES
               
Other payable
 
$
2,865
   
62,641
 
Accrued liabilities
   
110,247
     
55,830
 
Amount due to director (Note 3)
   
77,715
     
49,767
 
Short term loan (Note 4)
   
-
     
79,282
 
Convertible notes (Note 9)
   
115,246
     
-
 
TOTAL LIABILITIES
   
306,073
     
247,520
 
Going Concern (Note 1)
               
Related Party Transactions (Note 3)
               
Subsequent Events (Note 11)
               
                 
STOCKHOLDERS’ DEFICIENCY
               
Capital Stock (Note 7)
               
Preferred stock, $0.001 par value, 5,000,000 shares authorized, 28,092 shares issued and outstanding as of December 31, 2013 and 2012
 
$
28
 
    
 $
28
 
Common stock, $0.001 par value, 100,000,000 shares
               
Authorized, 18,758,657 shares issued and outstanding
               
as of December 31, 2013, and 24,683,285 shares issued and
               
outstanding as of December 31, 2012
   
18,760
     
24,684
 
Additional Paid-In Capital (Note 7)
   
6,116,054
     
5,790,663
 
Deficit
   
(6,415,793)
     
(5,897,879
)
Accumulated other comprehensive income
   
1,811
     
1,613 
 
TOTAL STOCKHOLDERS’ DEFICIENCY
 
$
(279,140)
   
 $
(80,891)
 
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
 
$
26,933
   
$
166,629
 
 
The accompanying notes are an integral part of these consolidated financial statements
 
 
F-2

 
 
VIKING INVESTMENTS GROUP, INC.
Consolidated Statements of Operations and Comprehensive Loss
For the Years Ended December 31, 2013 and 2012
(Amounts expressed in US dollars)

 
   
For the Year Ended
   
For the Year Ended
 
   
December 31, 2013
   
December 31, 2012
 
         
(Restated)
 
Revenue
 
$
-
   
$
47,066
 
Operating expenses
               
General and administrative expenses
   
45,765
     
68,635
 
Professional fees
   
166,046
     
167,876
 
Rent
   
41,194
     
23,919
 
Wages
   
191,323
     
205,162
 
Amortization
 
4,227
     
-
 
Total operating expenses
   
448,555
     
465,592
 
Loss from operations
   
(448,555)
     
(418,526)
 
Other income (expenses)
               
Interest expense
   
(2,495)
     
(12,322)
 
Change in fair value of convertible notes
   
(62,358)
     
-
 
Gain on extinguishment of debt
   
422
     
-
 
Other expenses
   
72
     
58
 
Bad debt expense
   
(5,000)
     
-
 
Net loss from operations
   
(517,914
)
   
(430,790
)
                 
Foreign currency translation adjustment
   
198
     
1,613
 
                 
Comprehensive loss
 
$
(517,716
)
 
$
(429,177
)
                 
Loss per weighted average number of common shares outstanding  – basic and diluted
   
(0.027
)
   
(0.021
)
Weighted average number of common
               
shares outstanding – basic and diluted
   
18,922,195
     
20,143,212
 
 
The accompanying notes are an integral part of these consolidated financial statements
 
 
F-3

 
 
VIKING INVESTMENTS GROUP, INC.
Consolidated Statement Of Cash Flows
(Amounts expressed in US dollars)

 
   
For the Year Ended
   
For the Year Ended
 
   
December 31, 2013
   
December 31, 2012
 
         
(Restated)
 
Cash flows from operating activities:
           
Net loss
 
$
(517,914
)
 
$
(430,790
)
Adjustments to reconcile net loss to cash used in operating activities:
               
Change in fair value of convertible notes
   
62,358
         
Gain on extinguishment of debt
   
(422)
         
Amortization
   
4,227
         
Expenses and service costs assumed by shareholders
   
27,948
     
46,850
 
Issuance of common stock for services
   
298,777
         
Changes in operating assets and liabilities
               
Increase in accrued liabilities
   
54,417
     
27,091
 
(Decrease) increase in other payable
   
(59,776)
     
62,641
 
Increase in prepaid expenses and deposits
   
(2,309)
     
(1,614
)
Net cash used in operating activities
   
(132,694
)
   
(295,822
)
                 
Cash flows from investing activities:
               
Leasehold improvements
   
(9,093)
     
-
 
                 
Cash flows from financing activities:
               
Proceeds from (repayment of) short term loan
   
(79,282)
     
79,282
 
Amount due to director
   
-
     
49,767
 
Proceeds from issuance of common stock
   
-
     
316,511
 
Proceeds from convertible notes
   
74,000
         
Net cash provided by (used in) financing activities
   
(5,282)
     
445,560
 
                 
Effect of exchange rate changes on cash
   
11
     
1,613 
 
                 
Net increase (decrease) in cash
   
(147,058)
     
151,351
 
                 
Cash at beginning of year
   
159,297
     
7,946
 
                 
Cash at ending of year
 
$
12,239
   
$
159,297
 
 
Supplemental Cash Flow Information (See Note 5)
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
F-4

 
 
VIKING INVESTMENTS GROUP, INC.
Consolidated Statement of Changes in Stockholders' Deficiency
(Amounts expressed in US dollars)

 
   

 
Common Stock
    Preferred Stock      
Additional
Paid-in
    Accumulated
Other
Comprehensive
           
Total Stockholders’
 
 
 
Number
   
Amount
   
Number
   
Amount
   
Capital
   
Income
   
Deficit
   
Deficiency
 
                           
(Restated)
         
(Restated)
   
(Restated)
 
    $     $     $     $     $     $     $     $  
                                                                 
Balance at December 31, 2011
    18,553,778       18,554       -       -       5,428,460       -       (5,467,089 )     (20,075 )
Net Loss
    -       -       -       -       -       -       (430,790 )     (430,790 )
Foreign currency translation adjustment
    -       -       -       -       -       1,613       -       1,613  
Expenses assumed by stockholders
    422,778       423       -       -       46,427       -       -       46,850  
Issuance for loan collateral
    879,196       879       -       -       (879 )     -       -       -  
Issuance of preferred stock in exchange of the common stock
    (28,092 )     (28 )     28,092       28       -       -       -       -  
Issuance of new shares to shareholder
    3,205,960       3,206                       155,715                       158,921  
Issuance of new shares to investor
    1,649,665       1,650                       160,940                       162,590  
Balance at December 31, 2012
    24,683,285       24,684       28,092       28       5,790,663       1,613       (5,897,879 )     (80,891 )
Net loss
    -       -       -       -       -       -      
(517,914
)    
(517,914
)
Foreign currency translation adjustment
    -       -       -       -       -       198       -       198  
Issuance of new shares for legal service
    200,000       200       -       -       29,800       -       -       30,000  
Issuance of new shares to shareholders
    2,067,510       2,068       -       -       266,709       -       -       268,777  
Issuance of new shares - convertible notes
    159,151       159       -       -       20,531       -       -       20,690  
Returned loan collateral
    (879,196 )     (879 )     -       -       879       -       -       -  
Cancellation of shares due to repurchase of CNWD
    (7,472,093 )     (7,472 )     -       -       7,472       -       -       -  
Balance at Dec 31, 2013
    18,758,657       18,760       28,092       28       6,116,054       1,811       (6,415,793 )     (279,140 )
 
The accompanying notes are an integral part of these consolidated financial statements. 
 
 
F-5

 
 
VIKING INVESTMENTS GROUP, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in US dollars)

 
Note 1
Nature of Business and Going Concern
 
The Company was incorporated under the laws of the State of Florida on May 3, 1989 as Sparta Ventures Corp. and remained inactive until June 27, 1998. The name of the Company was changed to Thermal Ablation Technologies Corporation on October 8, 1998 and then to Poker.com, Inc. on August 10, 1999. On September 15, 2003, the Company changed its name to Legal Play Entertainment Inc. and on November 8, 2006, the name of the Company was changed to Synthenol Inc. Effective November 3, 2008, the Company merged with and into a wholly-owned subsidiary, SinoCubate, Inc., which remained the surviving entity of the merger. SinoCubate, Inc. was formed in the State of Nevada on September 11, 2008. The merger resulted in a change of name of the Company from Synthenol Inc. to SinoCubate, Inc. and a change in the state of incorporation of the Company from Florida to Nevada. On June 13, 2012, the Company changed its name to Viking Investments Group, Inc., ("Viking Investments" or "the Company") and effective July 16, 2012, the Financial Industry Regulatory Authority (“FINRA”) approved this name change, and the Company’s ticker symbol was changed to “VKIN.”

Beginning in November 2008, the Company sought to enter into contractual arrangements with entities that allow the Company to either purchase outright the assets and/or business operations of such entities or to enter into business arrangements, such as joint ventures or similar combinations with such entities to manage and operate such entities. In 2011, the Company began providing incubation and consulting services to emerging market companies. Commencing from the third quarter of the 2012 fiscal year, the Company started to generate revenue and is no longer considered a development stage enterprise.
 
The company established a registered representative office in Shanghai City, People’s Republic China (“PRC”) and through which the Company carries out certain permitted activities.

These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
 
The Company had a net loss of $517,914 and $430,790 for the years ended December 31, 2013 and December 31, 2012, respectively. The Company had a working capital deficiency in the amount of $284,193 as of December 31, 2013.  The Company has accumulated a negative stockholders’ deficiency of $279,140 and $80,891 as at December 31, 2013 and 2012, respectively. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances; however there is no assurance of additional funding being available.
 
These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company have to curtail operations or be unable to continue in existence.
 
 
F-6

 
 
VIKING INVESTMENTS GROUP, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in US dollars)

 
Note 2.
Summary of Significant Accounting Policies

 
a)
Basis of Presentation

The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year-end is December 31.
 
The foregoing audited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for consolidated financial information and with the instructions to Form 10-K as promulgated by the Securities and Exchange Commission (the “SEC”). Accordingly, these consolidated financial statements include all of the disclosures required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, the audited consolidated financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the period presented.
 
 
b)
Basis of Consolidation
  
The financial statements presented herein reflect the consolidated financial results of the Company and its wholly owned subsidiary, Viking Investments Group LLC, a Delaware limited liability company. All significant intercompany transactions and balances have been eliminated upon consolidation. 
 
 
c)
Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. The Company’s actual results could vary materially from management’s estimates and assumptions. Significant areas requiring the use of management estimates relate to the determination of expected tax rates for future income tax recoveries, stock-based compensation and impairment of long-term investment.
 
 
d)
Financial Instruments
 
ASC Topic 820-10, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 820-10, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for other receivables, other payable, accrued liabilities, short term loan and due to director each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

·
Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

·
Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
 
·
Level 3: inputs to the valuation methodology are unobservable and significant to the fair value measurement.
 
 
F-7

 
 
VIKING INVESTMENTS GROUP, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in US dollars)

 
Assets and liabilities measured at fair value as of December 31, 2013 and 2012 are classified below based on the three fair value hierarchy described above:
 
   
December 31
 
   
2013
   
2012
 
   
Carrying Value
   
Estimated Fair Value
   
Carrying Value
   
Estimated Fair Value
 
Financial Assets
                       
Cash
 
$
12,239
     
12,239
   
$
159,297
     
159,297
 
Other receivables
   
9,641
     
9,641
     
7,332
     
7,332
 
                                 
Financial Liabilities
                               
Short-term loan
   
-
     
-
     
79,282
     
79,282
 
Other payable
   
2,865
     
2,865
     
62,641
     
62,641
 
Accrued liabilities
   
110,247
     
110,247
     
55,830
     
55,830
 
Amount due to director
   
77,715
     
77,715
     
49,767
     
49,767
 
Convertible notes
   
62,000
     
115,246
     
-
     
-
 
 
Cash has been measured using Level 1 and other payable and accrued liabilities as Level 3 of the fair value hierarchy.
 
 
e)
Cash
 
Cash includes bank deposits and cash on hand.
 
 
f)
Loss per Share
 
Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and, adjusted by any effects of warrants and options outstanding, if dilutive, that may add to the number of common shares during the period. There were no common stock equivalent shares outstanding at December 31, 2013 and 2012 that have been included in the diluted loss per share calculation as the effects would have been anti-dilutive.
 
 
g)
Revenue Recognition

Revenues from contracts for consulting services with fees based on time and materials are recognized as the services are performed and amounts are earned in accordance with the Securities and Exchange Commission (the “SEC”) Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition in Financial Statements” (“SAB 101”), as amended by SAB No. 104, “Revenue Recognition” (“SAB 104”). The Company considers amounts to be earned once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable, and collectability is reasonably assured. In such contracts, the Company’s efforts, measured by time incurred, typically represent the contractual milestones or output measure, which is the contractual earnings pattern. For consulting contracts with fixed fees, the Company recognizes revenues in accordance with contract terms, and when the services are delivered, price is determinable and the revenue is earned or collectable.
 
 
F-8

 

VIKING INVESTMENTS GROUP, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in US dollars)

 
 
h)
Comprehensive Income
 
FASB ASC 220 “Comprehensive Income,” establishes standards for the reporting and display of comprehensive income and its components in the consolidated financial statements. For the fiscal years ended December 31, 2013 and 2012, comprehensive loss was $ (517,716) and $ (429,177) respectively.

 
i)
Income Taxes

The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets likely. The Company did not incur any material impact to its financial condition or results of operations due to the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company is subject to U.S federal jurisdiction income tax examinations for the tax years 2006 through 2013. In addition, the Company is subject to state and local income tax examinations for the tax years 2006 through 2013.

 
j)
Stock-Based Compensation
 
The Company may issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs. The Company has adopted ASC Topic 718 (formerly SFAS 123R), “Accounting for Stock-Based Compensation”, which establishes a fair value method of accounting for stock-based compensation plans. In accordance with guidance now incorporated in ASC Topic 718, the cost of stock options and warrants issued to employees and non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period.
 
 The fair value of stock warrants was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instrument. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends.
 
 
F-9

 

VIKING INVESTMENTS GROUP, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in US dollars)

 
 
 
k)
Leasehold Improvements
 
Leasehold improvements are recorded at cost less accumulated amortization and accumulated impairment losses. Costs include expenditures that are directly attributable to the acquisition of the asset. Amortization is recognized in the statement of operations over the estimated useful lives of the related assets using the following annual rate and method:
 
 
Leasehold Improvements
Straight line over period of lease
 
 
l)
Long-term Investment
 
Management determines the appropriate classification of investment securities at the time of purchase. Securities are classified held-to-maturity when the Company has both the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost. Securities that are bought and held principally for the purpose of selling in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings. Securities not classified as held-to-maturity or trading are classified as available-for-sale. Available-for-sale securities are stated at fair value, with the impairment losses, net of income taxes, charged to net income in the period in which it occurs.

The fair value of securities is based on quoted market prices. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. A decline in the market value of any available-for-sale or held-for-maturity security below cost that is deemed to be other-then-temporary results in a reduction in carrying amount to fair value.

Impairments that are considered other-than-temporary are recognized as a loss in the consolidated statements of operations. The Company considers various factors in reviewing impairments, including the length of time and extent to which fair value has been less than the Company’s cost basis, the financial condition and near-term prospects of the issuer, and the Company’s intent and ability to hold the investments for a period of time sufficient to allow for any anticipated recovery in market value.
 
As at December 31, 2013 and 2012, the Company had no trading and held-to-maturity securities. The Company’s long-term investment in the China Wood Shares was written off as of December 31, 2011, and repurchased by Viking Nevis on August 15, 2013. See Note 3 for more information regarding the China Wood Shares.
 
 
F-10

 
 
VIKING INVESTMENTS GROUP, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in US dollars)

 
 
m)
Foreign Currency Exchange
 
An entity's functional currency is the currency of the primary economic environment in which it operates, normally that is the currency of the environment in which the entity primarily generates and expends cash. Management's judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. Functional currency of the parent company is U.S. Dollar. The reporting currency of the Company is U.S. Dollar, and the functional currency of its PRC operation is RMB. PRC is the primary economic environment in which the Representative Office operates. The reporting currency of these consolidated financial statements is the U.S. Dollar.

For financial reporting purposes, the financial statements of the Company's Representative Office which is prepared using the RMB are translated into the Company's reporting currency, the U.S. dollar. Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period, and shareholders' equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in stockholders' equity.
 
 
n)
Convertible Notes Payable
 
The Company accounts for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free standing derivative financial instruments.
 
The Company has evaluated the terms and conditions of the convertible note under the guidance of ASC 815. The conversion feature did not meet the definition of “indexed to a company’s own stock” provided for in ASC 815 due to the down round protection feature. Therefore, the conversion feature requires bifurcation and liability classification. Additionally, the default put requires bifurcation because it is indexed to risks that are not associated with credit or interest risk. As a result, the compound embedded derivative comprises of (i) the embedded conversion feature and (i) the default put. Rather than bifurcating and recording the compound embedded derivative as a derivative liability, the Company elected to initially and subsequently measure the convertible note in its entirety at fair value, with changes in fair value recognized in earnings in accordance with ASC 815-15-25-4.
 
 
o)
Recently Adopted Accounting Pronouncements
 
In July 2012, the FASB issued ASU No. 2012-02, “Intangibles-Goodwill and Other (Topic 350): Testing indefinite-Lived Intangible Assets for Impairment” (ASU 2012-02), allowing entities the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test.  If the qualitative assessment indicates it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, the quantitative impairment test is required. Otherwise, no testing is required. ASU 2012-02 is effective for the Company in the period beginning January 1, 2013. The adoption of this update did not have a material impact on the Company’s financial statements ut may have an impact in the future periods.
 
In October 2012, the FASB issued ASU 2012-04, Technical Corrections and Improvements. The amendments in this update cover a wide range of Topics in the accounting standards codification. These amendments include technical corrections and improvements to the accounting standards codification and conforming amendments related to fair value measurements. The adoption of ASU 2012-04 has no material impact on the Company’s financial position or results of operations.
 
In August 2012, the FASB issued ASU 2012-03, Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC SAB No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22(SEC update) in accounting standards update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 has no material impact on the Company’s financial position or results of operations.
 
In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The adoption of ASU 2013-02 has no material impact on the Company’s financial position or results of operations.
 
 
p)
Recently Accounting Pronouncements
 
In March 2013, the FASB issued ASU 2013-05, Foreign Currency Matter (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon the recognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity a consensus of the FASB Emerging Issues Task Force. The amendments in this Update are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. Early adoption is permitted. If an entity elects to early adopt the amendments, it should apply them as of the beginning of the entity’s fiscal year of adoption.  The Company does not expect the adoption of ASU 2013-05 to have a material impact on the Company’s financial position or results of operations.
 
 
F-11

 
 
VIKING INVESTMENTS GROUP, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in US dollars)

 
In April 2013, the FASB issued ASU 2013-07, Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting. The amendments require an entity to present its financial statements using the liquidation basis of accounting when liquidation is imminent unless the liquidation follows a plan that was specified in the entity’s governing documents at the entity’s inception. Liquidation is imminent when the likelihood is remote that the entity will return from liquidation and either (a) a plan for liquidation is approved by the person or persons with the authority to make such a plan effective or (b) a plan for liquidation is being imposed by other forces. The amendments require financial statements prepared using the liquidation basis of accounting to present relevant information about an entity’s expected resources in liquidation by measuring and presenting assets at the amount of the expected cash proceeds from liquidation. The amendments in this Update are effective for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. Entities should apply the requirements prospectively from the day that liquidation becomes imminent. Early adoption is permitted. The Company does not expect the adoption of ASU 2013-07 to have a material impact on the Company’s financial position or results of operations.
 
In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740) Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This guidance states that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of ASU 2013-11 is not expected to have a material impact on the Company’s consolidated financial position or results of operations.
 
 
F-12

 
 
VIKING INVESTMENTS GROUP, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in US dollars)

 
Note 3.
Related Party Transactions

On April 3, 2009, the Company entered into an agreement with Viking Investments Group, LLC, a Delaware limited liability company (“Viking Delaware”) owned by Viking Investments Group, LLC, a company controlled and managed by the Company’s Chairman, Chief Executive Officer and President, Tom Simeo, incorporated under the laws of The Federation of St. Kitts and Nevis, (“Viking Nevis”), providing that effective August 15, 2008, Viking Delaware would pay for any services performed on behalf of the Company by third parties until such time that Viking Delaware (or Viking Nevis) is no longer the majority shareholder of the Company. On August 2, 2011, effective as of April 1, 2011, Viking Delaware agreed to advance and pay all third party costs for the Company as needed, but the Company had an obligation to reimburse Viking Delaware at a later stage upon demand from Viking Delaware. As of August 29, 2011, Viking Delaware’s rights and obligations were transferred to Viking Nevis.
 
On June 29, 2011, and on August 29, 2011, Viking Investments, LLC, a company controlled and managed by the Company’s Chairman, Chief Executive Officer and President, Tom Simeo, incorporated under the laws of The Federation of St. Kitts and Nevis, (“Viking Nevis”) sold 100,000 and 466,813 shares respectively of China Wood, Inc., publicly listed in the United States with the ticker “CNWD”, (the “China Wood Shares”) owned by Viking Nevis, in exchange for 1,912,000 and 12,569,420 newly issued restricted shares of common stock of the Company respectively. By August 29, 2011, Viking Nevis completed the sale of the China Wood Shares by having delivered a total of 566,813 shares of common stock in China Wood, Inc. to the Company. The China Wood Shares were registered in a Form S-1 Registration Statement declared effective by the SEC on April 7, 2011. The China Wood Shares were subject to a “Leak-Out Provision” whereby only a certain amount of shares could be sold per month up and until the first anniversary of the effective day of the aforementioned registration statement (April 7, 2012).
 
These investments were fully impaired as of December 31, 2011, and were repurchased by Viking Nevis on April 15, 2013.
 
On November 16, 2012, Viking Nevis purchased 3,205,960 restricted shares of common stock of the Company for an aggregate purchase price of $158,921. The purchase price has been paid, and the shares were issued on December 27, 2012.
 
As at December 31, 2013, the Company owed Tom Simeo $77,715, after paying him $54,216 and converting debt owed of $210,601 into common stock during the fiscal year ending December 31, 2013.

Amount due to Director:
 
Balance December 31, 2012
  $ 49,767  
Add: 2013 accrued payroll
    153,000  
Add: 2013 expenses paid on behalf of the Company
    139,765  
Less: 2013 repayments
    (54,216 )
Less: converted into common stock
    (210,601 )
Balance December 31, 2013
  $ 77,715  
 
 
F-13

 
 
VIKING INVESTMENTS GROUP, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in US dollars)

 
Note 4.
Short-term Loan
 
On March 22, 2012, the Company entered into a six-month loan agreement with a third party for the amount of $79,282 (RMB500,000 equivalents) with collateral of 879,196 common shares of the company provided to the third party. The loan was repayable on September 20, 2012. The due date of the loan was extended and was settled on January 10, 2013, and the collateral was returned to the Company accordingly.
 
Note 5.
Supplemental Cash Flow Information
 
   
Years Ended December 31,
 
   
2013
   
2012
 
         
(Restated)
 
Cash paid for:
           
Interest
  $ 55     $ 12,322  
Income taxes
    -       -  
Non-Cash transactions:
               
Common shares issued for expenses and services
    30,000       -  
Conversion of convertible note
    12,000       -  
Common shares issued for balance owed to stockholders
    268,777       -  
Increase in additional paid in capital - repurchase of CNWD shares
    7,472       -  
Decrease in share capital – repurchase of CNWD share
  $ (7,472 )   $ -  
 
 
F-14

 

VIKING INVESTMENTS GROUP, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in US dollars)

 
Note 6.
Income Tax
 
 
a)
Current income tax
 
The income tax expense is reconciled as below:
 
   
2013
   
2012
 
                 
Net Loss
 
$
517,914
   
$
430,790
 
Statutory tax rate
   
35%
     
35
%
Income Tax at Statutory tax rate
   
181,270
     
150,777
 
Non-deductible expenses
   
(129,456)
     
(16,398
)
Change in valuation allowance
   
(51,814)
     
(134,379
)
Total tax expenses
   
-
     
-
 
 
The Company accounts for income taxes under ASC 740. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is "more likely than not" that some component or all of the benefits of deferred tax assets will not be realized.
 
No provision for income taxes has been provided in these consolidated financial statements due to the net loss for the years ended December 31, 2013 and 2012. The net operating loss will expire at various times to December 31, 2032.
 
 
 
b)
Deferred tax
 
   
2013
   
2012
 
             
Non-capital losses carried forward
 
$
2,723,196
   
$
2,205,282
 
Statutory tax rate
   
35%
     
35
%
Income Tax at Statutory tax rate
   
953,119
     
771,849
 
Valuation allowance
   
(953,119)
     
(771,849
 
 
F-15

 

VIKING INVESTMENTS GROUP, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in US dollars)

 
Note 7.
Capital Stock and Additional Paid-in Capital
 
   
December 31, 2013 Number of shares
   
December 31, 2012 Number of shares
 
 
 
Authorized
   
Outstanding
   
Amount
   
Authorized
   
Outstanding
   
Amount
 
                                 
(Restated)
 
Capital Stock
             
$
               
$
 
                                     
Preferred stock, $0.001 par value
   
5,000,000
     
28,092
     
28
     
5,000,000
     
28,092
     
28
 
Common stock, $0.001 par value
   
100,000,000
     
18,758,657
     
18,760
     
100,000,000
     
24,683,285
     
24,684
 
Additional Paid-in Capital
                   
6,107,364
                     
5,790,663
 
 
 
a)
Preferred Stock
 
The Company is authorized to issue 5,000,000 shares of Series C Preferred Stock, par value $.001 per share.
 
On October 3, 2012, the Company issued 28,092 shares of preferred stock to the Chairman of the Company in exchange for the return of the equal amount of shares of common stock, owned by the Chairman, deposited in a brokerage account, to the Company for cancellation. As of December 31, 2013, the Company’s transfer agent has still not received the 28,092 shares of common stock for cancellation, although the Chairman has acknowledged his unconditional obligation to return the 28,092 shares of common stock to the Company and has arranged for his brokerage firm to do so. Thus the 28,092 shares of common stock to be cancelled are shown as no longer issued and outstanding as of December 31, 2012, while the 28,092 shares of preferred stock are shown as issued and outstanding. Neither the common stock, nor the preferred stock were assessed any value.

Each share of such Preferred Stock shall have a par value of $0.001 per share. 
 
Each share of Preferred Stock shall entitle the holder thereof to two thousand (2,000) votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time on or after the date that Preferred Stock has been issued (“Distribution Date) declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction of the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
 
Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for such stock, into one share of fully paid and non-assessable Common Stock (the “Conversion Rate").
 
 
F-16

 
 
VIKING INVESTMENTS GROUP, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in US dollars)

 
 
b)
Common Stock
 
On January 11, 2013, the Company authorized and approved the issuance of 200,000 free trading shares of common stock to the Company’s lawyer for the provision of $30,000 in legal services rendered to the Company, at a fair value of $0.15 per share.
 
On January 10, 2013, 879,196 shares of the Company’s common stock which had been issued to a creditor as the collateral for the loan were returned to the Company for cancellation. See Note 4.
 
On June 6, 2013, 7,472,093 shares of the Company’s common stock were returned by Viking Nevis to the Company for cancellation, pursuant to the Guaranty and Repurchase Agreement. See Note 8.
 
On August 15, 2013, a balance of $147,504 due to Mr. Simeo, the CEO and a director of the Company, was converted into 1,134,646 restricted shares of common stock of the Company at $0.13 per share, which is calculated based on the average bid price of the Company’s stock for the last 30 days preceding the day of conversion. These shares were issued on November 22, 2013.
 
On October 28, 2013, the Board of Directors signed a resolution to convert the balance of $63,097 owed to Mr. Simeo into 485,359 restricted shares of common stock, and the balance of $58,176 owed to Ms. Zhong into 447,505 shares of free trading common stock of the Company at $0.13 per share, which is calculated based on the average bid price of the Company’s stock for the last 30 days preceding the day of conversion. These shares were issued on November 22, 2013.
 
On December 5, 2013, a convertible note holder elected to convert $12,000 principal amount of the convertible note dated May 21, 2013, into 159,151 shares of the Company’s common stock at a fair value of $0.13 per share in accordance with the convertible note agreement. See Note 9.  These shares were issued on December 17, 2013.
 
 
c)
Stock-based Compensation payment
 
The stock warrants granted during 2009 were exercisable immediately and were recorded at the fair value of $24,020 on the grant date using the Black-Scholes option pricing model.
 
The assumptions used to estimate the fair value of stock warrants on the grant date were as follows:

Issuance Date
 
Expected volatility
   
Risk-free rate
   
Expected term (years)
   
Dividend yield
 
                                 
December 16, 2009
   
204.70
%
   
0.11
%
   
3
     
0.00
%

In 2011, the Company cancelled all options and warrants issued in 2009. The Company did not issue any stock options or warrants during fiscal year ending December 31, 2013 and 2012.
 
 
F-17

 

VIKING INVESTMENTS GROUP, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in US dollars)

 
Note 8.
Guarantee and Repurchase Agreement (Disposal of Long-term Investment)
 
On June 29, 2011, and on August 29, 2011, Viking Investment, LLC, a company controlled and managed by the Company’s Chairman, Chief Executive Officer and President, Tom Simeo, incorporated under the laws of The Federation of St. Kitts and Nevis, (“Viking Nevis”) sold 100,000 and 466,813 shares respectively of China Wood, Inc., publicly listed in the United States with the ticker “CNWD”, (the “China Wood Shares”) owned by Viking Nevis, in exchange of 1,912,000 and 12,569,420 newly issued restricted shares of common stock of the Company respectively.
 
On April 11, 2012, Viking Nevis guaranteed that the price of the 566,813 shares of China Wood Inc., (that it had previously sold to the Company in consideration of the Company issuing Viking Nevis 14,481,420 shares of Company common stock), would not be less than $4.50 per share and agreed to repurchase the China Wood Shares by tendering shares of common stock of the Company owned by Viking Nevis to the Company if the 45-day volume weighted average price (“VWAP”) of the China Wood Shares was equal to or less than $4.00 per share. As the 45-day VWAP of the China Wood Shares has been $4.00 or less per share since the fourth quarter of 2012, the Company demanded Viking Nevis repurchase the China Wood Shares, and in a written repurchase agreement executed on April 15, 2013, by both parties, Viking Nevis agreed to do so by returning 7,472,093 shares of the Company’s common stock to the Company for cancellation.
 
The Company, in valuing the China Wood shares (Note 3), had initially relied upon Viking Nevis’s Guaranty and Repurchase Agreement to value the China Wood Shares at $4.00/share in its consolidated financial statements for the year ended December 31, 2011. During the three month period ended September 30, 2013, the Company restated its financial statements as of December 31, 2011, and all financial statements subsequent to that date, to record the China Wood Shares at their carrying value on the transaction date, and such value was fully impaired as of December 31, 2011.
 
On April 15, 2013, pursuant to the Guaranty and Repurchase Agreement, Viking Nevis agreed to repurchase the China Wood Shares from the Company by returning 7,472,093 shares of the Company’s common stock to the Company’s transfer agent for cancellation.  Those 7,472,093 shares were returned to the Company and cancelled on June 7, 2013.
 
Note 9.
Convertible Notes
 
 
(a)
May 21, 2013 Convertible Note
 
On May 21, 2013, the Company issued a $58,000 8% convertible note with a term expiring on February 28, 2014 (the “Maturity Date”). The principal amount of the note and interest is payable on the maturity date. The note is convertible into common stock beginning 180 days after the issuance date, at the holder’s option, at a 42% discount to the average of the five lowest closing bid prices of the common stock during the 10 trading day period prior to conversion. In the event the Company prepays the note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by (i) 110% if prepaid during the period commencing on the closing date through 30 days thereafter, (ii) 115% if prepaid 31 days following the closing through 60 days following the closing, (iii) 120% if prepaid 61 days following the closing through 90 days following the closing, (iv) 125% if prepaid 91 days following the closing through 120 days following the closing, (v) 130% if prepaid 121 days following the closing through the 150 days following the closing, (vi) 135% if prepaid 151 days following the closing through the 180 days following the closing, and (vii) the Company shall have no right of prepayment after the expiration of 180 days following the closing. The terms of the convertible note provide for certain redemption features which include features indexed to equity risks. In the event of default, the amount of principal and interest not paid when due bear interest at the rate of 22% per annum and the note becomes immediately due and payable.
 
 
F-18

 
 
VIKING INVESTMENTS GROUP, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in US dollars)

 
The Company has evaluated the terms and conditions of the convertible note under the guidance of ASC 815. The conversion feature did not meet the definition of “indexed to a company’s own stock” provided for in ASC 815 due to the down round protection feature. Therefore, the conversion feature requires bifurcation and liability classification. Additionally, the default put requires bifurcation because it is indexed to risks that are not associated with credit or interest risk. As a result, the compound embedded derivative comprises of (i) the embedded conversion feature and (i) the default put. Rather than bifurcating and recording the compound embedded derivative as a derivative liability, the Company elected to initially and subsequently measure the convertible note in its entirety at fair value, with changes in fair value recognized in earnings in accordance with ASC 815-15-25-4.
 
The following table reflects the allocation of the purchase on the inception date:
 
Convertible Note, Face Value
 
$
58,000
 
Convertible promissory note, Fair Value
   
106,522
 
Day-one derivative loss
   
(48,522
)
 
On December 5, 2013, the note holder elected to convert $12,000 principal amount of the convertible note dated May 21, 2013 into 159,151 shares of the Company’s common stock at a fair value of $0.13 per share in accordance with the agreement.  These shares were issued on December 17, 2013. A gain of $422 was recorded on the extinguishment of the debt.
 
On December 31, 2013, the remaining principal balance is $46,000 with a fair value of $73,177.  A loss of $36,289 associated with the changes in the fair value of convertible note was recorded during the year ended December 31, 2013.
 
 
(b)
October 23, 2013 Convertible Note
 
On October 28, 2013, the Company issued a $16,000 8% convertible note with a term expiring on July 30, 2014 (the “Maturity Date”). The principal amount of the note and interest is payable on the maturity date. The note is convertible into common stock beginning 180 days after the issuance date, at the holder’s option, at a 60% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion. The terms of the convertible note provide for certain redemption features which include features indexed to equity risks. In the event of default, the amount of principal and interest not paid when due bear interest at the rate of 22% per annum and the note becomes immediately due and payable.
 
The Company has evaluated the terms and conditions of the convertible note under the guidance of ASC 815. The conversion feature did not meet the definition of “indexed to a company’s own stock” provided for in ASC 815 due to the down round protection feature. Therefore, the conversion feature requires bifurcation and liability classification. Additionally, the default put requires bifurcation because it is indexed to risks that are not associated with credit or interest risk. As a result, the compound embedded derivative comprises of (i) the embedded conversion feature and (i) the default put. Rather than bifurcating and recording the compound embedded derivative as a derivative liability, the Company elected to initially and subsequently measure the convertible note in its entirety at fair value, with changes in fair value recognized in earnings in accordance with ASC 815-15-25-4.
 
The following table reflects the allocation of the purchase on the inception date:
 
Convertible Note, Face Value
 
$
16,000
 
Convertible promissory note, Fair Value
   
44,410
 
Day-one derivative loss
   
(28,410
)
 
On December, 2013, the convertible note has a fair value of $42,069.  A loss of $26,069 associated with the changes in the fair value of convertible note was recorded during the year ended December 31, 2013.
 
 
F-19

 
 
VIKING INVESTMENTS GROUP, INC.
Notes to Consolidated Financial Statements
(Amounts expressed in US dollars)


Note 10.
Risk Management
 
The Company is exposed to financial risks due to the nature of its business and the financial assets it holds. A summary of the Company’s risk exposures as it relates to financial instruments are reflected below:
 
 
(a)
Market risk

Market risk is the risk that the fair value from a financial instrument will fluctuate because of changes in market prices. The Company will be exposed to potential losses if the price of the long-term investment it hold decreases.
 
 
(b)
Liquidity risk

The Company manages liquidity risk by maintaining sufficient cash balances to meet operation expense requirement in additional to expenses assumed by majority shareholders.
 
 
(c)
Credit Risk

Credit risk also arises from cash and deposits with banks and financial institutions. To minimize the credit risk the Company places these instruments with a high credit quality financial institution.
 
Note 11.
Subsequent Events
 
On March 13, 2014, Tom Simeo (the “Seller”), the Chief Executive Officer and a director of the Company, entered into a stock purchase agreement with MHR Enterprises LLC (the “Buyer”), for the sale of 28,092 shares (the “Shares”) of the Company’s Series C Preferred Stock (the “Preferred Stock”) to the Buyer. Such shares have been delivered to escrow and will be released from escrow to the Buyer after (a) the Company has filed its Annual Report on Form 10-K for the year ending December 31, 2013, (b) the Buyer has received satisfactory evidence that Company liabilities have been satisfied, and (c) the Seller has received payment for the Shares. As each share of the Preferred Stock has 2,000 votes, the delivery of the Shares to the Buyer will constitute a change of control of the Company.
 
 
F-20

 
 
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
 
None.

Item 9A.
Controls and Procedures.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Management must evaluate its internal controls over financial reporting, as required by Sarbanes-Oxley Act Section 404 (a). The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles or GAAP.

As of December 31, 2013, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of the Company’s internal controls over financial reporting that adversely affected its internal controls and that may be considered to be material weaknesses.

The matters involving internal controls and procedures that the Company’s management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by the Company's chief financial officer in connection with the audit of the Company’s financial statements as of December 31, 2013 and communicated the matters to the Company’s management.

Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an effect on the Company's financial results. However, management believes that the lack of outside directors on the Company's board of directors can resulting in oversight in the establishing and monitoring of required internal controls and procedures which can affect the process of preparing Company's financial statements.
 
Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on the Company's Board. In addition, management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result in proper segregation of duties and provide more checks and balances within the financial reporting department. Additional personnel will also provide the cross training needed to support the Company if personnel turn over issues within the financial reporting department occur. This coupled with the appointment of additional outside directors will greatly decrease any control and procedure issues the Company may encounter in the future.
 
 
14

 
 
Management will continue to monitor and evaluate the effectiveness of its internal controls and procedures and its internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
 
(a)
Disclosure Controls and Procedures; Changes in Internal Control Over Financial Reporting

Management has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of December 31, 2012. Based on this evaluation, Management concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2013.

(b)
Management 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 Rule 13a-15(f) and Rule 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our 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 and includes those policies and procedures that:
 
 
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
 
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
 
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013. Based on this assessment, management concluded that, as of December 31, 2013, the Company’s internal control over financial reporting was not effective based on those criteria.
 
 
15

 
 
To remediate our internal control weaknesses, management intends to implement the following measures:
 
The Company will add sufficient number of independent directors to the board and appoint an audit committee.
 
 
The Company will add sufficient knowledgeable accounting personnel to properly segregate duties and to effect a timely, accurate preparation of the financial statements.
 
 
Upon the hiring of additional accounting personnel, the Company will develop and maintain adequate written accounting policies and procedures.
 
The additional hiring is contingent upon the Company’s efforts to obtain additional funding through equity or debt for its continued operational activities and corporate expenses. Management expects to secure funds in the coming fiscal year but provides no assurances that it will be able to do so.
 
We understand that remediation of material weaknesses and deficiencies in internal controls are a continuing work in progress due to the issuance of new standards and promulgations. However, remediation of any known deficiency is among our highest priorities. Our management will periodically assess the progress and sufficiency of our ongoing initiatives and make adjustments as and when necessary.
 
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant rules of the SEC that permit us to provide only management’s report in this annual report. On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act. Included in the Act is a provision that permanently exempts smaller public companies that qualify as either a Non-Accelerated Filer or Smaller Reporting Company from the auditor attestation requirement of Section 404(b) of the Sarbanes-Oxley Act of 2002.

There was no change in our internal control over financial reporting during the quarter ended December 31, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
Item 9B.
Other Information.
 
None.
 
 
16

 
 
PART III
 
Item 10.
Directors, Executive Officers and Corporate Governance.

Identification of Directors and Executive Officers

The name of the officers and directors of the Company as of April 15, 2014, as well as certain information about them, are set forth below:
 
Name
 
Age
 
Position
         
Tom Simeo
 
59
 
Director/CEO/Treasurer
Guangfang Yang
 
37
 
Director/CFO
Townsend Tang
 
36
 
Director
 
Background of Officers and Directors

Tom Simeo
Mr. Simeo has been the Company’s chief executive officer and a director since August 15, 2008, when Viking Investments Group, LLC (a Nevis limited liability company) acquired control of the Company. Mr. Simeo has been the Chairman of the Board of Directors of the Company since August of 2008. Mr. Simeo, a corporate lawyer and investment banker, is the founder and managing partner of Viking Investments Group, LLC, the Company’s subsidiary and a Delaware limited liability company established in 1993. Between 1990 and 1993, Mr. Simeo advised on the financing and private acquisition of state-owned companies in former Soviet Bloc countries. During the years of 1993 through 2004, Mr. Simeo initiated, advised and helped structure investments in the United States to foreign private and publicly listed companies. From the early 1980's through 1990, Mr. Simeo was a practicing lawyer in Sweden. Mr. Simeo is a graduate Jur. kand. (American LLM equivalent) from the University of Lund, Sweden. Mr. Simeo also studied law at Stockholm University and International Economy at Uppsala University in Sweden. Mr. Simeo is not a director of any other public company.
 
Guangfang “Cecile” Yang
On February 7, 2013, Ms. Yang was appointed as the chief financial officer of the Company and was appointed to the Board of Directors of the Company.

Ms. Yang brings to the Company 15 years of general accounting and auditing experience, auditing private and publicly held companies in China, the United Kingdom and the United States.
 
Most recently before joining the Company, Ms. Yang was from 2009, director of finance and administration for the Grassroots Community Association where she was the financial controller for 5 major projects and the executive body of the association, responsible for cash flow forecast and management and budget control. Ms. Yang was also in charge of overseeing the fund-raising process and managing sponsor relationships. From 2007- 2009, Ms. Yang was a Senior Manager for Acquisition Audits with Moores Rowland CEC, where she among other things, led the acquisition audit team for Sinolog Logistic Group, a company consisting of six entities headquartered in Singapore. Ms. Yang was also an annual auditor for Acer during that time.
 
 
17

 
 
From 1998-2006, Ms. Yang was with KPMG where she held various positions, from auditor to manager. While Ms. Yang initially held a position as an auditor, she later led a field audit with multiple team members and later became an audit team member for middle- to large-size audit projects. She coordinated auditing for the Sinopec IPO, and worked in various capacities on the China Mobil IPO and annual audit as well as the China Constructional Bank and CITIC Bank IPO’s.
 
Ms. Yang graduated from Hult International Business School, UK, London, from the MBA Executive Track Program. Ms. Yang also graduated from Fudan University, Shanghai, China with a bachelor degree, major in International Finance.

Townsend Tang
On July 10, 2012, Mr. Townsend Tang was appointed to the Board of Directors of the Company. Mr. Townsend Tang, a seasoned executive and entrepreneur, has more than 10 years of experience in the finance industry in China, including Venture Capital, Private Equity, Mergers and Acquisitions, Initial Public Offerings and Private Investments in Public Equity, and various forms of debt financing. Before joining the Company, Mr. Tang was from 2007, a partner and managing director with Beijing Capital Fund Management Co., Ltd, Beijing, where he was instrumental in raising RMB100 million, plus additional debt and equity financings for a number of the firm’s clients. Between the years of 2001 to 2006, Mr. Tang owned and managed Ou Shang Investments, Co., Ltd., a financing consultant firm focused on assisting various domestic Chinese and South East Asian companies to obtain debt and equity financing, ranging from RMB10 million to RMB100 million to a total of 13 clients, of which three clients obtained a listing in A Market, Shanghai.

Mr. Tang graduated from Nanjing Industry University where he received an MBA. Mr. Tang also holds a Chinese securities business qualification certificate.
 
Family Relationships

There are no family relationships between any of the Company’s officers and directors.

Audit Committee and Audit Committee Financial Expert
 
The Company does not currently have an audit committee financial expert, nor does it have an audit committee. The Company’s entire board of directors handles the functions that would otherwise be handled by an audit committee. The Company does not currently have the capital resources to pay director fees to a qualified independent expert who would be willing to serve on its board and who would be willing to act as an audit committee financial expert. As its business expands and as it appoints others to its board of directors, the Company expects that it will seek a qualified independent expert to become a member of its board of directors. Before retaining any such expert the Company’s board would make a determination as to whether such person is independent.
 
Code of Ethics
 
The Company has not yet formally adopted a written code of ethics to be applied to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Based on its small size, limited financial and human resources, the Company has not adopted written code of ethics. 
 
 
18

 
 
Involvement in Certain Legal Proceedings

To the best of the registrant's knowledge, during the past five years, no director, executive officer, promoter or control person of the Company:

(1)
has filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or present of such a person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer within two years before the time of such filing;

(2)
were convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
 
(3)
were the subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of the following activities:
 
 
(i)
acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, associated person of any of the foregoing, or as an investment advisor, underwriter, broker or dealer in securities, or as an affiliated person, director of any investment company, or engaging in or continuing any conduct or practice in connection with such activity;
 
 
(ii)
engaging in any type of business practice;

 
(iii)
engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodity laws.
 
(4)
were the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity;

(5)
were found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any federal or state securities law and the judgment in such civil finding or find by the Securities and Exchange Commission has not been subsequently reversed, suspended or vacated;

(6)
were found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.
 
Compliance with Section 16(A) of the Exchange Act

To the best of the knowledge of the Company, persons who beneficially owned more than ten percent of the Company’s common stock filed timely reports in compliance with Section 16(a).
 
 
19

 
 
Item 11.
Executive Compensation

Summary Compensation Table— Fiscal Years Ended December 31, 2013 and 2012
 
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the noted periods. No other executive officers received total annual salary and bonus compensation in excess of $100,000.
 
Name and
Principal
Position
 
Year
 
Salary
($)
   
Bonus
($)
   
Stock
Awards
($)
   
Option
Awards
($)
   
Non-Equity
Incentive Plan
Compensation
Earnings
($)
   
Non-Qualified
Deferred
Compensation
Earnings
($)
   
All Other
Compensation
($)
   
Total
($)
 
                                                                     
Tom Simeo
 
2013
   
153,000
     
0
     
0
     
0
     
0
     
0
     
0
     
153,000
 
   
2012
   
135,000
     
0
     
0
     
0
     
0
     
0
     
0
     
135,000
 
                                                                     
Guangfang Yang (1)
 
2013
   
7,100
     
0
     
0
     
0
     
0
     
0
     
0
     
7,100
 
   
2012
   
0
     
0
     
0
     
0
     
0
     
0
     
0
     
0
 
                                                                     
Gordon
 
2013
   
0
     
0
     
0
      0      
0
     
0
     
0
     
0
 
SanFu Lin (2)
 
2012
   
0
     
0
     
0
      0      
0
     
0
     
0
     
0
 
                                                                     
Jiyun Ge (3)
 
2013
   
0
     
0
     
0
      0      
0
     
0
     
0
     
0
 
   
2012
   
15,634
     
0
     
2,000
      0      
0
     
0
     
0
     
17,634
 
 
Narrative to Summary Compensation Table
 
1.
On February 7, 2013, Ms. Guangfang “Cecile” Yang was appointed as the Company’s Chief Financial Officer and a director.
 
2.
On March 29, 2012, Mr. Gordon SanFu Lin resigned as the Company’s Chief Financial Officer and a director.
 
3.
On March 29, 2012, Ms. Jiyun Ge was appointed as the Company’s Chief Financial Officer and a director, and served as such until February 7, 2013, when she resigned her positions with the Company.

Outstanding Equity Awards at Fiscal Year End
 
As of December 31, 2013, the Company did not maintain an equity incentive plan or other plan, including but not limited to bonus, deferred compensation or retirement plan under which the Company’s securities may be issued to its named executive officers as compensation.
 
Employment Agreements
 
The company employs three people and has retained the services of one outside accounting consultant. While the Company has compensation arrangements with Tom Simeo and Guangfang Yang, and has previously compensated certain of its other directors shares of common stock for their service as directors of the Company, the Company has no formal employment or similar agreement with any of its employees, and it is not anticipated that the Company will enter into any employment or similar agreement.
 
 
20

 
 
Compensation of Directors
 
The directors of the Company were compensated as such during the fiscal years ended December 31, 2013, and December 31, 2012, respectively, as follows:
 
Name
 
2013
Compensation
   
2012
Compensation
 
                 
Tom Simeo
 
$
153,000
   
$
0
 
Guangfang Yang
  $
7,100
    $
0
 
We-Wei Zhang
 
$
0
   
$
0
 
Gordon SanFu Lin
 
$
0
   
$
0
 
Jiyun Ge (1)
 
$
0
   
$
2,000
 
Townsend Tang (1)
 
$
0
   
$
2,000
 
Tejesh Srivastav (1)
 
$
0
   
$
2,000
 
 
1.
25,000 shares of common stock.
 
Directors of the Company may be reimbursed for any out-of-pocket expenses incurred by them for each regular or special meeting attendance. The Company presently has no pension, health, annuity, insurance or profit sharing plans.

Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information regarding beneficial ownership of the Company’s common stock (and preferred stock) as of December 31, 2013, (i) by each person who is known by us to beneficially own more than 5% of the Company’s common stock; (ii) by each of our officers and directors as of such date; and (iii) by all of our officers and directors as a group.
 
Unless otherwise specified, the address of each of the persons set forth below is in care of the Company at 138 Pinxinguan Road, 9th Floor, Shanghai, China, 200070.
 
Title of Class
 
Name & Address of Beneficial Owners
 
Amount & Nature
of Beneficial Ownership (1)
   
Percent of
Class (2)
 
                 
Common Stock, $0.001 par value
 
Viking Investments Group, LLC (Nevis) (3)
   
8,794,534
     
46.9
%
Common Stock, $0.001 par value
 
Shenlin Xu
   
2,000,575
     
10.7
%
Common Stock, $0.001 par value
 
Tom Simeo (3)
   
3,585,005
     
19.1
%
Series C Preferred Stock, $0.001 par value
 
Tom Simeo (3)
   
28,092
     
100
%
Common Stock, $0.001 par value
 
Dr. Wei-Wei Zhang (4)
   
25,000
     
*
%
Common Stock, $0.001 par value
 
Tejesh Srivastav (4)
   
25,000
     
*
%
Common Stock, $0.001 par value
 
Townsend Tang
   
25,000
     
*
%
Common Stock, $0.001 par value
 
All officers and directors as a Group
   
12,479,539
     
66.5
%
Series C Preferred Stock, $0.001 par value   All officers and directors as a Group    
28,092
     
100
%
_______________
*Less than 1%
 
 
21

 
 
1.
Beneficial Ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to the shares of the Company’s common stock.

2.
As of December 31, 2013, a total of 18,758,657 shares of the Company’s common stock are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1). For each Beneficial Owner above, any options exercisable within 60 days have been included for purposes of calculating the relevant percentage.
   
3.
Tom Simeo has sole voting power over the shares owned by Viking Investments Group, LLC (Nevis), and hence is deemed to be the beneficial owner of shares held in its name as well as the shares held in his own name.
   
4.
Dr. Wei-Wei Zhang and Mr. Tejesh Srivastav resigned as directors on February 28, 2014.

Changes in Control

On March 13, 2014, Tom Simeo (the “Seller”), the Chief Executive Officer and a director of the Company, entered into a stock purchase agreement with MHR Enterprises LLC (the “Buyer”), for the sale of 28,092 shares (the “Shares”) of the Company’s Series C Preferred Stock (the “Preferred Stock”) to the Buyer. Such shares have been delivered to escrow and will be released from escrow to the Buyer after (a) the Company has filed its Annual Report on Form 10-K for the year ending December 31, 2013, (b) the Buyer has received satisfactory evidence that Company liabilities have been satisfied, and (c) the Seller has received payment for the Shares. As each share of the Preferred Stock has 2,000 votes, the delivery of the Shares to the Buyer will constitute a change of control of the Company.

Item 13.
Certain Relationships and Related Transactions

Related Transactions
 
On April 3, 2009, the Company entered into an agreement with Viking Investments Group, LLC, a Delaware limited liability company (“Viking Delaware”) owned by Viking Investments Group, LLC, a company controlled and managed by the Company’s Chairman, Chief Executive Officer and President, Tom Simeo, incorporated under the laws of The Federation of St. Kitts and Nevis, (“Viking Nevis”), providing that effective August 15, 2008, Viking Delaware would pay for any services performed on behalf of the Company by third parties until such time that Viking Delaware (or Viking Nevis) is no longer the majority shareholder of the Company. On August 2, 2011, effective as of April 1, 2011, Viking Delaware agreed to advance and pay all third party costs for the Company as needed, but the Company had an obligation to reimburse Viking Delaware at a later stage upon demand from Viking Delaware. As of August 29, 2011, Viking Delaware’s rights and obligations were transferred to Viking Nevis.
 
On June 29, 2011, and on August 29, 2011, Viking Investments, LLC, a company controlled and managed by the Company’s Chairman, Chief Executive Officer and President, Tom Simeo, incorporated under the laws of The Federation of St. Kitts and Nevis, (“Viking Nevis”) sold 100,000 and 466,813 shares respectively of China Wood, Inc., publicly listed in the United States with the ticker “CNWD”, (the “China Wood Shares”) owned by Viking Nevis, in exchange for 1,912,000 and 12,569,420 newly issued restricted shares of the Company respectively. By August 29, 2011, Viking Nevis completed the sale of the China Wood Shares by having delivered a total of 566,813 shares of common stock in China Wood, Inc. to the Company.  The China Wood Shares were registered in a Form S-1 Registration Statement declared effective by the SEC on April 7, 2011. The China Wood Shares were subject to a “Leak-Out Provision” whereby only a certain amount of shares could be sold per month up and until the first anniversary of the effective day of the aforementioned registration statement (April 7, 2012).  These investments were fully impaired by the Company as of December 31, 2011, and were repurchased by Viking Nevis on April 15, 2013, and Viking Nevis returned 7,472,093 shares for cancellation on June 7, 2013.
 
 
22

 
 
On November 16, 2012, Viking Nevis purchased 3,205,960 restricted shares of common stock of the Company for an aggregate purchase price of $158,921. The purchase price has been paid, and the shares were issued on December 27, 2012.
 
At December 31, 2013, the Company owed Tom Simeo $77,715, after paying him $54,216 and converting debt owed of $210,601 into common stock during the fiscal year ending December 31, 2013.

Amount due to Director:
 
Balance December 31, 2012
 
$
49,767
 
Add: 2013 Accrued payroll
   
153,000
 
Add: 2013 Expenses paid on behalf of the Company
   
139,765
 
Less: 2013 Repayments
   
(54,216)
 
Less: Converted into common stock
   
(210,601)
 
Balance December 31, 2013
 
$
77,715
 
 
Other than as disclosed, there were no material transactions, series of similar transaction, current transactions, or series of similar transactions, to which the Company or any of its subsidiaries was or is to be a party, in which the amount involved exceeded $120,000 or 1% of the Company’s total assets as of December 31, 2013, and in which any director or executive officer, or any security holder who is known to the Company to own of record or beneficially more than five percent of the Company's common stock, or any member of the immediate family of any of the foregoing persons, had a material interest.
 
Item 14.
Principal Accounting Fees and Services
 
The following table sets forth the fees billed by our principal independent accounting firm, Schwartz Levitsky Feldman LLP, for each of our last two fiscal years for the categories of services indicated.
 
   
Years Ended December 31,
 
Category
 
2013
   
2012
 
Audit Fees
 
$
72,008
   
$
33,950
 
Audit Related Fees
    -      
-
 
Tax Fees
    -      
-
 
All Other Fees
    -      
4,200
 
Total
 
 $
72,008
   
 $
38,150
 
 
Audit fees. Consists of fees billed for the audit of our annual financial statements and review of our interim financial information and services that are normally provided by the accountant in connection with year-end and quarter-end statutory and regulatory filings or engagements.
 
Audit-related fees. Consists of fees billed for services relating to review of other regulatory filings including registration statements, periodic reports and audit related consulting.
 
Tax fees. Consists of professional services rendered by our principal accountant for tax compliance, tax advice and tax planning.
 
Other fees. Other services provided by our accountants.
 
 
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PART IV
 
Item 15.
Exhibits, Financial Statement Schedules.
 
Number
 
Description
     
3.1
 
Articles of Incorporation (incorporated by reference to our Definitive Information Statement on Schedule 14C filed on October 14, 2008)
     
3.2
 
Bylaws (incorporated by reference to our Definitive Information Statement on Schedule 14C filed on October 14, 2008)
     
3.3
 
Certificate of Amendment to Articles of Incorporation (incorporated by reference to our Definitive Information Statement on Schedule 14C filed on May 23, 2012)
     
31.1
 
Certification of Principal Executive Officer required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
31.2
 
Certification of Principal Financial Officer required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
32.1
 
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63
     
32.2
 
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63
     
99.1
 
Guaranty and Repurchase Agreement dated April 11, 2012 (incorporated by reference to our Annual Report on Form 10-K filed on April 18, 2013)
     
99.2
 
Repurchase Agreement dated April 15, 2013 (incorporated by reference to our Annual Report on Form 10-K filed on April 18, 2013)
     
101.INS**
 
XBRL Instance Document
     
101.SCH**
 
XBRL Taxonomy Extension Schema Document
     
101.CAL**
 
XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF**
 
XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB**
 
XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE**
 
XBRL Taxonomy Extension Presentation Linkbase Document
__________________
** 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.
 
 
24

 
 
SIGNATURES
 
In accordance with the requirements of Section 13 or 15(d) of the Securities Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
VIKING INVESTMENTS GROUP, INC.
(Registrant)
 
       
Date: April 18, 2014
By:
/s/ Tom Simeo
 
   
Tom Simeo
 
   
Chief Executive Officer, Director and Treasurer
 
 
In accordance with the Securities Exchange Act this report has been signed below by the following person(s) on behalf of the registrant and in the capacities and on the dates indicated.
 
Date: April 18, 2014
By:
/s/ Guangfang Yang
 
   
Guangfang Yang
 
   
Chief Financial Officer & Director
 
 
 
 
 
25