UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended September 30, 2015

 

☐ 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: 000-53490

 

GRAND CHINA ENERGY GROUP LIMITED

(Exact name of registrant as specified in its charter)

 

British Columbia		N/A
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)

 

Room 1601, 16/F China Taoping Tower Phase II,

8 Sunny Road, Causseway Bay

Hong Kong

(Address of principal executive offices)

 

(852) 3691-8831

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

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 ☒     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 ☒     No ☐

 

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

 

Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☒
		(Do not check if a smaller Reporting company)

 

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

 

There were 373,793,578 shares of the issuer’s common stock outstanding as of November 16, 2015.

 

 

 

GRAND CHINA ENERGY GROUP LIMITED

 

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2015

TABLE OF CONTENTS

 

		PAGE
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14
Item 4.	Controls and Procedures	14
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	15
Item 1A.	Risk Factors	15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3.	Defaults Upon Senior Securities	15
Item 4.	Mine Safety Disclosures	15
Item 5.	Other Information	15
Item 6.	Exhibits	15
SIGNATURES		17

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1.

FINANCIAL STATEMENTS

 

		PAGE
Consolidated Balance Sheets as of September 30, 2015  and December 31, 2014 (unaudited)		4
Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2015 and September 30, 2014 (unaudited)		5
Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and September 30, 2014 (unaudited)		6
Consolidated Statements of Stockholders’ Equity (Deficiency)		7
Notes to Consolidated Financial Statements (unaudited)		8

 

 

GRAND CHINA ENERGY GROUP LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS AT SEPTEMBER 30, 2015 AND DECEMBER 31, 2014

(STATED IN US DOLLARS)

 

				September 30				December 31
				2015				2014
		Note		$				$
ASSETS
Current Assets
Cash and cash equivalents		3			1,479				1,646
Receivables		4			324,141				328,914
Total Current Assets					325,620				330,560
Non-current Assets
Property, plant and equipment		5			195,561				230,746
Total Non-current Assets					195,561				230,746
Total Assets					521,181				561,306
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current Liabilities
Account payable and accrued liabilities		6			335,169				395,667
Amounts due to related parties		7			465,486				328,411
Income tax payable					20,000				20,000
Loan payable – current		8			56,664				58,183
Total Current Liabilities and total liabilities					877,319				802,261
Stockholders’ Deficiency
Common stock		9			9,138,544				9,138,544
Contributed surplus					100,000				100,000
Additional paid-in capital					100,000				100,000
Accumulated deficit					(9,706,963	)			(9,563,913	)
Accumulated other comprehensive income					12,281				(15,586	)
Total Stockholders’ Deficiency					(356,138	)			(240,955	)
Total Liabilities and Stockholders’ Deficiency					521,181				561,306

 

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

 

 

GRAND CHINA ENERGY GROUP LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(STATED IN US DOLLARS)

 

		Three month ended 30 September								Nine months ended 30 September
		2015				2014				2015				2014
		$				$				$				$
Revenue			-				-				-				-
Cost of revenue			-				-				-				-
Gross profit			-				-				-				-
Selling expenses			-				-				-				-
Depreciation & Amortization			(11,728	)			(3,855	)			(35,184	)			(7,710	)
General and administrative			(55,955	)			-				(112,017	)			(121,937	)
Total operating expenses			(67,683	)			(3,855	)			(147,201	)			(129,647	)
Net loss from operations			(67,683	)			(3,855	)			(147,201	)			(129,647	)
Other items:
Interest expense			(1,482	)			(1,729	)			(4,525	)			(5,187	)
Exchange gain			-				-				8,676				5,295
			(1,482	)			(1,729	)			4,151				108
Income(loss) before tax			(69,165	)			(5,584	)			(143,050	)			(129,539	)
Income tax expense			-				-				-				-
Net loss for the period			(69,165	)			(5,584	)			(143,050	)			(129,539	)
Foreign currency translation adjustment			11,807				7,486				27,866				8,427
Comprehensive income(loss)			(57,358	)			1,902				(115,184	)			(121,112	)
Earnings Per Share (cents)
– Basic and diluted			(0.00	)			(0.00	)			(0.00	)			(0.00	)
Weighted Average Shares Outstanding
– Basic and diluted			373,793,578				373,793,578				373,793,578				373,793,578

 

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

 

 

GRAND CHINA ENERGY GROUP LTD.. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(STATED IN US DOLLARS)

 

		Nine months ended 30 September
		2015				2014
Cash flows from operating activities		$				$
Net income for the period			(143,050	)			(129,539	)
Items not involving cash:
Depreciation & amortization			35,185				7,710
Exchange gain
Interest expense			4,524				5,187
Changes in non-cash working capital:			(8,676	)
Receivables			-				(107,348	)
Prepaid expenses, deposit and other receivables			-				-
Accounts payable , accrued liabilities and income tax payables			(35,758	)			462,451
Inventory			-				-
Net cash (used in )generated from operating activities			(147,775	)			238,461
Cash flows from investing activities
Purchase of property, equipment and mine development costs			-				(238,461	)
Acquiring mining rights
Net cash used in investing activities			-				(238,461	)
Cash flows from financing activities
Increase (decrease) of term loan			-				-
Amounts advanced from a related party			147,775				-
Net cash from financing activities			147,775				-
Increase/(decrease) in cash and cash equivalents			-				-
Effect of exchange rate changes on cash			(167	)			(84	)
Cash and cash equivalents – beginning of period			1,646				1,793
Cash and cash equivalents – end of period			1,479				1,709
Supplemental disclosure of cash flow information:
Income tax			-				-
Interest expense			-				-

 

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

 

 

GRAND CHINA ENERGY GROUP LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(DEFICIENCY)

AS AT SEPTEMBER 30,2015

(STATED IN US DOLLARS)

 

		Common shares								Stocks to				Contributed				Additional Paid-in				Retained earnings (Accumulated				Accumulated Other comprehensive				Total Stockholders’ equity
		Shares				Amount				be issued				surplus				capital				Deficit)				income				(deficiency)
						$				$				$				$				$				$				$
Balance at December 31, 2014		373,793,578				9,138,544				-				100,000				100,000				(9,347,096)				(33,780)				(42,332)
Net loss for the year			-				-				-				-				-				(216,817	)			-				(216,817	)
Currency translation			-				-				-				-				-				-				18,195	)			18,195	)
Balance at December 31, 2014			373,793,578				9,138,544				-				100,000				100,000				(9,563,913	)			(15,585	)			(240,954	)
Net loss for the period			-				-				-				-				-				(143,050	)			-				(143,050	)
Currency translation			-				-				-				-								-				27,866				27,866
Balance at September 30, 2015			373,793,578				9,138,544				-				100,000				100,000				(9,706,963	)			12,281				(356,138	)

 

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

 

 

1.      ORGANIZATION AND PRINCIPAL ACTIVITIES

 

Grand China Energy Group Limited, formally known as SGB International Holdings Inc., (“SGB” or the “Company”) was incorporated in British Columbia, Canada on November 6, 1997. Through its subsidiary, the Company is engaged in providing services in relation of the coal business in People’s Republic of China.

 

On May 11, 2011, the Company completed the acquisition of Dragon International Resources Group Co., Limited (“Dragon International”), a Hong Kong corporation incorporated on October 5, 2010, and its wholly-owned subsidiary through a share exchange which resulted in the former shareholders of Dragon International acquiring the control of SGB. This transaction was accounted for as a reverse takeover transaction (“RTO”) for accounting purpose, as Dragon International was deemed to be the acquirer, and these consolidated financial statements are a continuation of the consolidated financial statements of Dragon International. The carrying amounts of SGB’s assets and liabilities are included in these consolidated financial statements.

 

Prior to the above noted RTO, and on February 21, 2011, pursuant to a share transfer agreement, Dragon International completed the acquisition of Fujian Huilong Coal Mine Co., Ltd. (“Fujian Huilong”) (formerly known as Yongding Shangzhai Coal Mine Co., Ltd.), a People’s Republic of China corporation and was incorporated on August 4 2005. Upon the completion of the acquisition, Fujian Huilong became the wholly-owned subsidiary of Dragon International and the control in substance was not changed. For accounting purposes, the acquisition has been accounted for using the continuity of interest method, which recognizes Fujian Huilong as the successor. The net assets of Dragon International prior to the acquisition has been accounted as recapitalization as at the date of acquisition.

 

On October 3, 2013, we incorporated, SGB Investment Limited, which is a wholly owned subsidiary. The principal business of SGB Investment Limited is providing mining related consulting work for the coal mine in Fujian Province as well as engaging in coal trading activities in Fujian Province, People’s Republic of China.

 

On December 19, 2013, the Company disposed of Dragon International and Fujian Huilong.

 

The Company and its subsidiaries are considered to be operating in one segment based on its organizational structure and strategic decision making method.

 

Our business activities during the quarter ended September 30, 2015, and the subsequent period consisted principally of engaging in due diligence activities on coal mining properties in China, Uzbekistan and Kyrgyzstan and searching for potential coal entities, properties and assets for acquisition. We are also looking into potential acquisition of businesses, properties and/or assets in unrelated fields including but not limited to, the tourism medical business and businesses engaged in finding medical solutions for diabetes.

 

These financial statements have been prepared in accordance with U.S. generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As at September 30, 2015 and December 31, 2014, the Company had working capital deficiencies of $551,699 and $471,701 respectively, and requires additional funds to maintain its operations. In view of the working capital deficiency, the management has reviewed the cash position as at the balance sheet date and the cash flow forecast for the next twelve months and taken into factors that (i) to raise equity financing as required; and (ii) to obtain the principle shareholder’s support in funding the required working capital.

 

After taking the above circumstances and facts into consideration, the management of the Company is satisfied that the Company will have sufficient funds to complete the current development and to meet in full its financial obligation and operations or capital expenditure as they fall due for the foreseeable future.

 

 

2.      SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation and preparation

 

The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by generally accepted accounting principles in the United States for complete financial statements. In the opinion of management, all of the normal and recurring adjustments necessary to fairly present the interim financial information set forth herein have been included. The results of operations for interim periods are not necessarily indicative of the operating results of a full year or of future years.

 

These interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and follow the same accounting policies and methods of their application as the most recent annual financial statements. The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. These interim financial statements should be read in conjunction with the financial statements and related footnotes included in the Annual Report on Form 10-K of the Company for the year ended December 31, 2014.

 

3.      CASH AND CASH EQUIVALENTS

 

		September 30,				December 31,
		2015				2014
		$				$
Cash			1,479				1,646

 

4.      RECEIVABLES

 

		September 30,				December 31,
		2015				2014
		$				$
Receivable from disposal of subsidiaries(i)			124,141				128,914
Others (i)			200,000				200,000
			324,141				328,914

 

Notes:

 

(i)     Unsecured, interest free and repayable on demand.

 

5.      PROPERTY, PLANT AND EQUIPMENT

 

						Accumulated				Net book
		Cost				amortization				value
		$				$				$
September 30, 2015
Motor vehicles			260,626				65,065				195,561
Total			260,626				65,065				195,561
December 31, 2014
Motor vehicles			260,626				29,880				230,746
Total			260,626				29,880				230,746

 

 

6.      ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

 

The following is a summary of accounts payable and accrued liabilities:

 

		September 30,				December 31,
		2015				2014
		$				$
Accounts payable			7,994				8,893
Staff costs / wage payable			24,448				27,196
Accrued liabilities			130,000				168,674
Other payable			172,727				190,904
			335,169				395,667

 

7.      AMOUNTS DUE TO RELATED PARTIES

 

		September 30,				December 31,
		2015				2014
		$				$
Amounts due to SGB C&C Investment			10,077				11,210
Amounts due to a director - Gu Chang			455,409				317,201
			465,486				328,411

 

The amounts as at September 30, 2015 and December 31, 2014 are unsecured, non-interest bearing and due on demand.

 

8.      LOAN PAYABLE

 

The following is a summary of term loan:

 

		September 30,				December 31,
		2015				2014
		$				$
Interest bearing loan at 15% per annum, unsecured and due on demand			56,664				58,183
Total			56,664				58,183
Current portion			56,664				58,183
Non-current			-				-

 

 

 

9.      STOCKHOLDERS’ EQUITY

 

Authorized:

 

Unlimited number of common shares without par value and an unlimited number of preferred shares without par value.

 

Issued and outstanding

 

As at September 30, 2015 and December 31, 2014, there were 373,793,578 shares of common stock issued and outstanding which were derived from the following transactions:

 

Prior to the RTO with Dragon International and as at May 11, 2011, SGB had 24,502,446 common shares issued and outstanding.

 

On May 11, 2011, SGB completed a reverse acquisition transaction with the shareholders of Dragon International pursuant to which SGB acquired 100% of the issued and outstanding capital stock of Dragon International in exchange for an aggregate of 220,522,000 common shares of SGB, which constituted 90% of SGB’s issued and outstanding capital stock on a fully-diluted basis as of and immediately after the consummation of the reverse acquisition. Prior to the acquisition, SGB has no business with a minimal assets and liabilities which did not meet the definition of a business, therefore, the reverse take-over of SGB by Dragon International has been accounted for as a capital transaction which is deemed Dragon International acquired SGB by issuance of 24,502,446 common shares (issued and outstanding prior to the RTO) for its net assets of $10,789.

 

Prior to the RTO and on February 21, 2011, Dragon International completed the acquisition of Fujian Huilong and for accounting purpose, the acquisition has been accounted for using the continuity of interest method, which recognizes Fujian Huilong as the successor. The net assets of Dragon International totaling $1,277,694 as at the date of acquisition have been accounted as recapitalization into Fujian Huilong.

 

Fujian Huilong has a registered and paid-in capital of $123,913 (RMB 1,000,000) prior to being acquired by Dragon International.

 

As the consolidated financial statements is the continuation of Fujian Huilong, therefore, the share capital of Fujian Huilong has been restated to reflect the 220,522,000 common shares that effected the RTO for the purpose of financial statements presentation and earnings per share calculation.

 

On September 21, 2011, Fujian Huilong’s registered and paid-in capital was increased by $1,925,447 (RMB 12,278,945) to a total of $2,049,360 (RMB 13,278,945) as at December 31, 2012.

 

On December 29, 2011, the Company settled $7,726,148 by agreeing to issue 128,769,132 shares of the common stock of the Company at a deemed price of $0.06 per share. The Company has allotted and issued the shares in 2012.

 

10.      RELATED PARTY TRANSACTIONS

 

During the nine month period ended September 30, 2015, we received additional loans from a director resulting in an increase of $138,108 in amounts due to related parties as of September 30, 2015. The loans are unsecured, non-interest bearing and are payable upon demand. The loan proceeds were used to support business operations.

 

During each of the periods ended September 30, 2015 and 2014, the Company accrued or paid $ nil in salaries and bonuses to executive officers and directors of the Company.

 

As at September 30, 2015 and December 31, 2014

 

●

No accounts payable or accrued liabilities were payable to any executive officers and directors of the Company and no accounts receivable were receivable from any executive officers and directors of the Company.

 

11.      COMMITMENTS

 

As at December 31, 2014 and September 30, 2015, the Company does not have any capital or operating commitments.

 

 

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

 

Statement Regarding Forward-Looking Information

 

The following management’s discussion and analysis should be read in conjunction with the historical financial statements and the related notes thereto contained in this report. The management’s discussion and analysis contains forward-looking statements, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. The Company’s actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report.

 

The following discussion highlights the Company’s results of operations and the principal factors that have affected our financial condition, as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on the Company’s unaudited financial statements contained in this Quarterly Report, which we have prepared in accordance with United States generally accepted accounting principles. You should read this discussion and analysis together with such financial statements and the related notes thereto.

 

Our Business

 

Prior to the December 19, 2013 disposal of Dragon International and its subsidiary, Fujian Huilong, our principal operations were those of Fujian Huilong which was engaged in coal production and sales involving the exploration, development and mining of coal properties. Fujian Huilong owns and operates a coal mine, located in Shangzhai Village, Yongding County, Longyan City of Fujian Province, People’s Republic of China.

 

On October 3, 2013, we incorporated a wholly owned subsidiary, SGB Investment Limited. The principal business of SGB Investment Limited is providing mining related consulting work for coal mines in Fujian Province, People’s Republic of China. The areas of business SGB Investment Limited also include assisting other mining operations to set up sales chain management systems as well as providing advisory services for mining exploration management.

 

During the quarter ended September 30, 2015, we conducted no consulting activities related to the mines in Fujian Province, choosing instead to devote our resources to engaging in due diligence on coal mining properties elsewhere in China and in Uzbekistan and Kyrgyzstan. We continue to search for potential coal mining entities, properties and assets for acquisition. We are also looking into potential acquisitions of businesses, properties and/or assets in unrelated fields including, but not limited to, the tourism medical business and businesses engaged in finding medical solutions for diabetes.

 

Results of Operations for the three and nine months ended September 30, 2015 compared with the three and nine months ended September 30, 2014.

 

Gross Revenues

 

Our revenues for the three and nine months ended September 30, 2015 and September 30, 2014 were nil.

 

Operating Expenses

 

Operating expenses for the three and nine months ended September 30, 2015 and three and nine months ended September 30, 2014 were $67,683 and $147,201 and $3,855 and $129,647, respectively. The expenses consisted of filing fees, professional fees, payroll and benefits and other general expenses. The increases in operating expenses were attributable to increases in general and administrative expenses.

 

 

We expect that our general and administrative expenses will continue to increase as we incur additional costs to support the growth of the business.

 

Net Loss

 

Net Loss from operations for the three and nine months ended September 30, 2015 and three and nine months ended September 30, 2014 was $67,683 and $147,201 and $3,855 and $129,647, respectively. The increases in net loss were attributable to increases in general and administrative expenses.

 

Liquidity and Capital Resources

 

As at September 30, 2015 and December 31, 2014, the Company had a working capital deficiency of $551,699 and $471,701, respectively,

 

Current liabilities increased by $75,058 from $802,261 as at December 31, 2014 to $877,319 at September 30, 2015, principally due to related party loans to the Company.

 

Net cash provided by (used in) operating activities for the nine months ended September 30, 2015 was ($147,775) as compared to net cash provided by (used in) operating activities of $238,461 for the nine months ended September 30, 2014.

 

Net cash provided by (used in) investing activities was $0 for the nine months ended September 30, 2015 and ($238,461) for the nine months ended September 30, 2014.

 

Net cash provided by financing activities was $147,775 for the nine months ended September 30, 2015 as compared to $0 for the nine months ended September 30, 2014.

 

General

 

We will only commit to capital expenditures for any future projects requiring us to raise additional capital as and when adequate capital or new lines of finance are made available to us. There is no assurance that we will be able to obtain any financing or enter into any form of credit arrangement. Although we may be offered such financing, the terms may not be acceptable to us. If we are not able to secure financing or it is offered on unacceptable terms, then our business plan may have to be modified or curtailed or certain aspects terminated. There is no assurance that even with financing we will be able to achieve our goals.

 

Going Concern

 

Our financial statements have been prepared on a going concern basis which assumes that we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future. We have incurred losses since inception resulting in an accumulated deficit accumulated deficit of approximately $9,706,963 as of September 30, 2015 and further losses are anticipated in the development of our business raising substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our generating profitable operations in the future and/or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and/or private placements of equity debt securities. These financials do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts, or amounts and classifications of liabilities that might result from this uncertainty.

 

Critical Accounting Policies and Estimates

 

There are no material changes from the critical accounting policies set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our December 31, 2014 financial statements included in our Annual Report on Form 10-K filed with the SEC on July 16, 2015. Please refer to that document for disclosures regarding the critical accounting policies related to our business.

 

 

Off-Balance Sheet Arrangements

 

None.

 

Contractual Obligations

 

Not applicable.

 

ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

ITEM 4.      CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer as appropriate, to allow timely decisions regarding required disclosure. At the end of the quarter ended September 30, 2015 we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) and Rule 15d-15(e) under the 1934 Act. Based on this evaluation, management concluded that as of September 30, 2015 our disclosure controls and procedures were effective.

 

Limitations on Effectiveness of Controls and Procedures

 

Our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), does not expect that our disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

Changes in Internal Controls

 

During the fiscal quarter ended September 30, 2015, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.      

 

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

From time to time, we may be a defendant and plaintiff in various legal proceedings arising in the normal course of our business. We are currently not a party to any material legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, we are not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations. Furthermore, as of the date of this Quarterly Report, our management is not aware of any proceedings to which any of our directors, officers, or affiliates, or any associate of any such director, officer, affiliate, or security holder is a party adverse to our company or has a material interest adverse to us.

 

ITEM 1A. RISK FACTORS

 

There were no material changes to the Risk Factors disclosed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2014. For more information concerning our risk factors, please see “Item 1A. Risk Factors” of our Annual Report on Form 10-K.

 

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

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

Not applicable.

 

ITEM 6. EXHIBITS

 

In reviewing the agreements included as exhibits to this Form 10-Q, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:

 

●

should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

 

●

have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

 

●

may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

 

●

were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

 

 

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Form 10-Q and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.

 

The following exhibits are included as part of this report:

 

Exhibit Number		Description of Exhibit
31.1		Certification of Principal Executive Officer and Pursuant to Rule 13a-14
31.2		Certification of Principal Financial Officer Pursuant to Rule 13a-14
32.1*		CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
32.2*		CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Labels Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

 

* This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference

 

 

SIGNATURES

 

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Grand China Energy Group Limited
November 20, 2015	By:	/s/ Shibi Chen
	Shibi Chen, Chief Executive Officer and Director (Principal Executive Officer)
	Grand China Energy Group Limited
November 20, 2015	By:	/s/ Peifeng Huang
	Peifeng Huang, Chief Financial Officer and Secretary (Principal Financial Officer and Principal Accounting Officer)

 

 

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