UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2017

 

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 333-130937

 

CHINA TELETECH HOLDING, INC.

 (Exact name of registrant as specified in its charter)

 

Florida		59-3565377
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Liwan District, No. 145 Enzhou Big Lane, B2 Fuli Square, 8th Zhongshan Road, Unit 505, 5/F, Guangzhou, Guangdong, China		32301
(Address of principal executive offices)		(Zip Code)

 

(850) 521-1000

 (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, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

As of November 20, 2017, there were 196,373,776 shares of common stock, $0.01 par value outstanding.

 

 

 

CHINA TELETECH HOLDINGS, INC.
TABLE OF CONTENTS
FORM 10-Q REPORT
September 30, 2017

 

		Page Number
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements.	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	18
Item 4.	Controls and Procedures.	18
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	19
Item 1A.	Risk Factors.	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	19
Item 3.	Defaults Upon Senior Securities.	19
Item 4.	Mine Safety Disclosures	19
Item 5.	Other Information.	19
Item 6.	Exhibits.	19
SIGNATURES		20

 

 

PART I - FINANCIAL INFORMATION

 

Item 1.

Financial Statements.

 

China Teletech Holding, Inc.

Unaudited Consolidated Balance Sheets

(Stated in US Dollars)

 

				9/30/2017				12/31/2016
		Note		(Unaudited)				(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents				$	-			$	-
Prepaid expenses					200,000				200,000
Total Current Assets					200,000				200,000
TOTAL ASSETS				$	200,000			$	200,000
LIABILITIES & STOCKHOLDERS’ EQUITY
Current Liabilities
Due to related parties		4		$	539,057				413,152
Contingency liabilities					43,219				-
Accrued liabilities and other payables					54,000				54,000
Total Current Liabilities					636,276				467,152
TOTAL LIABILITIES				$	636,276			$	467,152
STOCKHOLDERS’ EQUITY
Common stock US$0.01 par value; 1,000,000,000 authorized, 181,883,776 and 147,213,776 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively.				$	1,818,838			$	1,475,138
Shares to be issued					64,750				-
Additional Paid in capital					5,710,292				5,878,765
Other Comprehensive Income					8,970				8,970
Retained Deficit					(8,039,126	)			(7,630,025	)
TOTAL STOCKHOLDERS’ DEFICIT				$	(436,276	)		$	(267,152	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT				$	200,000			$	200,000

 

See Notes to Unaudited Consolidated Financial Statements

 

 

China Teletech Holding, Inc.

Unaudited Consolidated Statements of Operations and Comprehensive Loss

(Stated in US Dollars)

 

				For the Nine Months Ended September 30, 2017				For the Nine Months Ended September 30, 2016
		Note		(Unaudited)				(Unaudited)
Sales				$	-			$	-
Cost of sales					-				-
Gross profit					-				-
Operating expenses					-				-
Administrative and general expenses					409,101				44,588
Total operating expense					409,101				44,588
Loss From Operations					(409,101	)			(44,588	)
Loss on disposal of subsidiaries					-				(44,588	)
Loss before taxation					(409,101	)			(44,588	)
Income tax					-				-
Net Loss				$	(409,101	)		$	(44,588	)
Other Comprehensive Income:
Foreign currency translation change					-				-
Comprehensive Loss:					-				-
Net Loss Attributable To:
- Non controlling interest				$	-			$	-
- the Company					(409,101	)			(44,588	)
				$	(409,101	)		$	(44,588	)
Earnings/ (Loss) Per Share		5
-Basic				$	(0.002	)		$	(0.0003	)
-Diluted				$	(0.002	)		$	(0.0003	)
Weighted Average Shares Outstanding
-Basic					181,883,776				147,213,776
-Diluted					161,382,605				147,213,776

 

See Notes to Unaudited Consolidated Financial Statements

 

 

China Teletech Holding, Inc.

Unaudited Consolidated Statements of Changes in Stockholders’ Deficit

(Stated in US Dollars)

 

		Total								Shares				Additional				Other
		Number				Common				To be				Paid in				Comprehensive				Retained
		of Shares				Stock				Issued				Capital				Income (Loss)				Deficit				Total
Balance, January 1, 2016			147,513,776				1,475,138				-				5,878,765				8,970				(7,577,437	)			(214,564	)
Net loss			-												-								(44,588	)			-
Balance at September 30, 2016			147,513,776				1,475,138				-				5,878,765				8,970				(7,550,054	)			(261,151	)
Balance, January 1, 2017			147,513,776				1,475,138				-				5,878,765				8,970				(7,630,025	)			(267,152	)
Common stock issuance			34,370,000				343,700				64,750				(168,473	)											243,077
Net loss			-				-								-				-				(409,101	)			(409,101	)
Balance at September 30, 2017			181,883,776				1,818,838				64,750				5,710,292				8,970				(8,039,126	)			(436,276	)

 

See Notes to Unaudited Consolidated Financial Statements

 

 

China Teletech Holding, Inc.

Unaudited Consolidated Statements of Cash Flows

(Stated in US Dollars)

 

		For the Nine Months Ended September 30, 2017				For the Nine Months Ended September 30, 2016
		(Unaudited)				(Unaudited)
Cash flow from operating activities
Net Loss before tax		$	(409,101	)		$	(44,588	)
Non-cash compensation			239,977
Loss on disposal of subsidiaries			-				44,588
Increase in accrued liabilities and other payables			43,219				-
Increase in amount due to related parties			125,905				-
Net cash provided by operating activities			-				-
Cash flows from investing activities
Net cash provided by investing activities		$	-			$	-
Cash flows from financing activities			-				-
Net cash provided by financing activities			-				-
Net Increase in Cash & Cash Equivalents			-				-
Effect of Currency Translation			-				-
Cash & Cash Equivalents at Beginning of Year			-				-
Cash & Cash Equivalents at End of Year		$	-			$	-
Cash paid for interest		$	-			$	-
Cash paid for income taxes		$	-			$	-

 

 

China Teletech Holding, Inc.

Notes to Unaudited Consolidated Financial Statements

 

1.	ORGANIZATION AND PRINCIPAL ACTIVITIES

 

China Teletech Holding, Inc. (the “Company”) formerly known as Avalon Development Enterprise, Inc. was incorporated in the State of Florida, United States (an OTCBB Company) on March 29, 1999.

 

On June 30, 2014, the Company entered into a cooperation agreement (the “Agreement”) with Shenzhen Jinke Energy Development Co., Ltd. (“SJD”). Pursuant to the Agreement, the Company will purchase, in an aggregate, 51% of all the outstanding capital of SJD in exchange for 20 million newly issued shares of the Company’s common stock. The Company filed Form 8-K with the U.S Securities and Exchange Commission on August 8, 2014 detailing the transaction; the Agreement was filed as an exhibit to the Form 8-K. As of December 31, 2014, 16 million shares of the 20 million shares have been issued, and 4 million shares are pending issuance.

 

The Company has accounted for the transaction with SJD as reverse takeover and recapitalization of the Company; accordingly, the legal acquirer is the accounting acquiree and the legal acquirer is the accounting acquirer. As a result of this transaction, the Company is deemed to be a continuation of the business of SJD. Accordingly, the financial data included in the accompanying consolidated financial statements for all periods prior to June 30, 2014 is that of the accounting acquirer (SJD). The historical stockholders’ equity of the accounting acquirer prior to the share exchange has been retroactively restated as if the share exchange transaction occurred as of the beginning of the first period presented.

 

On November 15, 2016, the Company, SJD and Guangyuan Liu, the holder of 97% of the equity interest of SJD, entered into a certain Mutual Rescission Agreement (the “Rescission Agreement”), whereby the parties agreed to rescind the Jinke Exchange Agreement and unwind the Jinke Reverse Merger as if they never occurred, for a consideration of 10,000,000 newly issued restricted shares (the “Rescission Shares”) of the Company’s common stock to be issued to the Guangyuan Liu, the holder of 97% of the equity interest of SJD upon closing of the transactions contemplated in the Rescission Agreement. Upon closing of the Rescission Agreement on November 15, 2016, the Guangyuan Liu, the holder of 97% of the equity interest of SJD, returned and surrendered 20 million of the Company share and the Company returned and surrendered the 51% of the issued and outstanding securities of SJD and issued the Rescission Shares to Guangyuan Liu, the holder of 97% of the equity interest of SJD. The Company filed Form 8-K with the U.S Securities and Exchange Commission on November 15, 2016 detailing the transaction; the Rescission Agreement was filed as an exhibit to the Form 8-K.

 

The difference between the beginning balance of 2014 and the ending balance of 2013 is due to the change of organization structure. According to Rescission Agreement, whereby the parties agreed to rescind the Jinke Exchange Agreement and unwind the Jinke Reverse Merger as if they never occurred, for a consideration of 10,000,000 newly issued restricted shares (the “Rescission Shares”) of the Company’s common stock to be issued to the Guangyuan Liu, the holder of 97% of the equity interest of SJD upon closing of the transactions contemplated in the Rescission Agreement.

 

 

China Teletech Holding, Inc.

Notes to Unaudited Consolidated Financial Statements

 

On November 8, 2016, the Company registered a wholly-owned subsidiary, namely Strategic Service Group Limited, which was incorporated in British Virgin Islands.

 

The principal activity of the Company is investment holding company.

 

On November 15, 2016, the Company, Kunyuan Yang, the sole shareholder of Kuncheng (the “Kuncheng Shareholder”), and Liaoning Kuncheng Education Investment Co. Ltd., entered into a certain share exchange agreement (the “Kuncheng Exchange Agreement”) pursuant to which China Teletech agreed to purchase 51% of the equity ownership in Kuncheng, with the purchase price as an aggregate of 30 million shares of Common Stock issued to the Kuncheng Shareholder (the “Kuncheng Share Exchange”). The Company filed Form 8-K with the U.S Securities and Exchange Commission on November 15, 2016 detailing the transaction; the Agreement was filed as an exhibit to the Form 8-K. As of December 31, 2016, 30 million shares are pending issuance upon the completion of all legal procedures.

 

The Kuncheng Exchange Agreement was closed on November 13, 2017. 20 million shares were issued in the first half year of 2017. The remaining 10,000,000 shares common stock of China Teletech will be issued after China Teletech files Form Super 8-K with the U.S Securities and Exchange Commission.

 

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

(a)

Method of Accounting

 

The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements.

 

(b)

Consolidation

 

The consolidated financial statements include the accounts of China Teletech Holdings, Inc. and five wholly and partially owned subsidiaries. The consolidated financial statements were compiled in accordance with generally accepted accounting principles of the United States of America. All significant inter-company accounts and transactions have been eliminated in consolidation.

 

The company owned the following subsidiaries since the reserve-merger and soon thereafter. As of September 30, 2017, detailed identities of the consolidating subsidiaries are as follows:-

 

	Name of Company		Place of Incorporation		Attributable Equity Interest %				Registered Capital
	Strategic Services Group Limited		BVI			100	%			USD 7,800

 

 

China Teletech Holding, Inc.

Notes to Unaudited Consolidated Financial Statements

 

(c)

Economic and Political Risks

 

The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic, legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, restriction on international remittances, and rates and methods of taxation, among other things.

 

(d)

Use of Estimates

 

Our discussion and analysis is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting years. These accounts and estimates include, but are not limited to, the estimation on useful lives of property, plant and equipment. Actual results could differ from those estimates.

 

(e)

Cash and Cash Equivalents

 

The Company considers all cash and other highly liquid investments with initial maturities of three months or less to be cash equivalents.

 

(f)

Accounts Receivable

 

Accounts receivable are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for doubtful accounts is made when recovery of the full amount is doubtful.

 

(g)

Accounting for Impairment of Long-Lived Assets

 

The Company adopted FASB ASC Topic 360-10-05 “Impairment or Disposal of Long-Lived Assets”, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with ASC 360. ASC 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets.

 

 

China Teletech Holding, Inc.

Notes to Unaudited Consolidated Financial Statements

 

The long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Recoverability of assets to be held and used is determined by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets.

 

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the reporting periods, there was no impairment loss.

 

(h)

Revenue Recognition

 

Revenue is measured at the fair value of the consideration received and receivable. Provided it is probable that the economic benefits will flow to the Company and the revenue and costs incurred or to be incurred, if applicable, can be measure reliably, revenue is recognized in profit or loss.

 

(i)

Cost of Sales

 

The Company’s cost of sales is comprised mainly of cost of goods sold.

 

(j)

Selling Expenses

 

Selling expenses are comprised of salaries for the sales force, client entertainment, commissions, advertising, and travel and lodging expenses.

 

(k)

General & Administrative Expenses

 

General and administrative expenses include executive compensation, general overhead such as the finance department and administrative staff, depreciation, office rental and utilities.

 

(l)

Advertising

 

The Company expensed all advertising costs as incurred.

 

(m)

Foreign Currency Translation

 

The Company maintains its financial statements in the functional currency, which is the Renminbi (RMB). Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.

 

 

China Teletech Holding, Inc.

Notes to Unaudited Consolidated Financial Statements

 

For financial reporting purposes, the financial statements of the Company, which are prepared using the functional currency, have been translated into United States dollars. Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and stockholders’ equity is translated at historical exchange rates. Translation adjustments are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity.

 

	Exchange Rates		9/30/2017				9/30/2016
	For the nine months period end RMB : US$ exchange rate			6.6369				6.6778
	Average nine months period RMB : US$ exchange rate			6.7983				6.6415

 

RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

 

(n)

Income Taxes

 

The Company uses the accrual method of accounting to determine and report its taxable reduction of income taxes for the year in which they are available. The Company has implemented FASB ASC Topic 740 “Income Taxes”. Income tax liabilities computed according to the United States, People’s Republic of China (PRC), and British Virgin Islands (BVI) tax laws are provided for the tax effects of transactions reported in the financial statements and consists of taxes currently due plus deferred taxes related primarily to differences between the basis of fixed assets and intangible assets for financial and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future income taxes. A valuation allowance is created to evaluate deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize that tax benefit, or that future realization is uncertain.

 

In respect of the Company’s subsidiaries domiciled and operated in China, the taxation of these entities are summarized below:

 

	Subsidiary		Country of Domicile		Income Tax Rate
	Strategic Services Group Limited		British Virgin Islands			0.00	%

 

 

China Teletech Holding, Inc.

Notes to Unaudited Consolidated Financial Statements

 

	●	Effective January 1, 2008, PRC government implements a new 25% tax rate for all enterprises regardless of whether domestic or foreign enterprise thereby eliminating any tax holiday which is defined as “two-year exemption followed by three-year half exemption” hitherto enjoyed by tax payers. As a result of the new tax law of a standard 25% tax rate, tax holidays terminated as of December 31, 2007. However, PRC government has established a set of transition rules to allow enterprises already started tax holidays before January 1, 2008, to continue enjoying the tax holidays until being fully utilized.
	●	Since China Teletech Holding, Inc. is primarily a holding company without any business activities in the United States. The Company does not have taxable income to be reported in the United States income tax for the nine months ended September, 2017 and 2016.

 

(o)

Statutory Reserve

 

Statutory reserve refers to the amount appropriated from the net income in accordance with PRC laws or regulations, which can be used to recover losses and increase capital, as approved, and, are to be used to expand production or operations. PRC laws prescribe that an enterprise operating at a profit, must appropriate, on an annual basis, from its earnings, an amount to the statutory reserve to be used for future company development. Such an appropriation is made until the reserve reaches a maximum equalling 50% of the enterprise’s registered capital.

 

(r)

Fair Value of Financial Instruments

 

For certain of the Company’s financial instruments, including cash and equivalents, accounts and other receivables, accounts and other payables, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “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 consolidated balance sheets for receivables and current liabilities 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 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.

 

 

China Teletech Holding, Inc.

Notes to Unaudited Consolidated Financial Statements

 

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.

 

As of September 30, 2017 and December 31, 2016, the Company did not identify any assets and liabilities that were required to be presented on the balance sheet at fair value.

 

(s)

Other Comprehensive Income (Loss)

 

The Company’s functional currency is the Renminbi (“RMB”). For financial reporting purposes, RMB were translated into United States Dollars (“USD” or “$”) as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive income”.

 

Gains and losses resulting from foreign currency transactions are included in income. There has been no significant fluctuation in exchange rate for the conversion of RMB to USD after the balance sheet date.

 

The Company uses FASB ASC Topic 220, “Reporting Comprehensive Income”. Comprehensive income is comprised of net income and all changes to the statements of stockholders’ equity, except the changes in paid-in capital and distributions to stockholders due to investments by stockholders. Comprehensive income for the years ended December 31, 2016 and 2015 included net income and foreign currency translation adjustments.

 

(t)

Goodwill

 

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable assets acquired in a business combination. In accordance with FASB ASC Topic 350 “Intangibles and Other”, goodwill is no longer subject to amortization. Rather, goodwill is subject to at least an annual assessment for impairment, applying a fair-value based test. Fair value is generally determined using a discounted cash flow analysis.

 

(u)

Segment Reporting

 

FASB ASC Topic 280, “Disclosures about Segments of an Enterprise and Related Information” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manners in which management disaggregates a company.

 

 

China Teletech Holding, Inc.

Notes to Unaudited Consolidated Financial Statements

 

(v)

Recent Accounting Pronouncements

 

In March 2016, the FASB issued ASU No. 2016-07, Simplifying the Transition to the Equity Method of Accounting, which eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. The amendments in ASU 2016-07 are effective for public companies for fiscal years beginning after December 15, 2016 including interim periods therein. Early adoption is permitted. The new standard should be applied prospectively for investments that qualify for the equity method of accounting after the effective date. We do not expect that the adoption will have a material impact on our financial statements.

 

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which includes amendments to accounting for income taxes at settlement, forfeitures, and net settlements to cover withholding taxes. The amendments in ASU 2016-09 are effective for public companies for fiscal years beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted but requires all elements of the amendments to be adopted at once rather than individually. We are evaluating the effect that ASU No. 2016-09 will have on our financial statements and related disclosures.

 

In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 clarifies the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. This ASU is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. We are currently assessing the potential impact of ASU 2016-15 on our financial statements and related disclosures.

 

In October 2016, the FASB issued ASU No. 2016-16—Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This ASU improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. This ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted. We do not anticipate that the adoption of this ASU to have a significant impact on our financial statements.

 

In October 2016, the FASB issued ASU No. 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are Under Common Control. The amendments in this ASU change how a reporting entity that is the single decision maker of a variable interest entity should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that variable interest entity. The ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2016. We do not expect the adoption of this ASU to have a material impact on our financial statements.

 

 

China Teletech Holding, Inc.

Notes to Unaudited Consolidated Financial Statements

 

In November 2016, the FASB issued Accounting Standards Update 2016-18 (ASU 2016-18), Statement of Cash Flows: Restricted Cash. This ASU provides guidance on the classification of restricted cash in the statement of cash flows. The amendments in this ASU are effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. The amendments in the ASU should be adopted on a retrospective basis. We do not expect that adoption of this ASU to have a material effect on our financial statements.

 

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.

 

3.	OTHER RECEIVABLES

 

			As of 9/30/2017				As of 12/31/2016
	Other receivables			800,000				800,000
	Less: provision of impairment			(800,000	)			(800,000	)
			$	-			$	-

 

The Company issued 1,000,000 shares, 5,000,000 shares, 6,000,000 shares and 6,000,000 shares of common stock to Appinero LLC, Chunling Au, IT Appraiser Corp. and Surf Financial Group LLC in March 2013 respectively for the cancellation and purchase of debt. Since the Company has not received payment for these issuances, the Company recorded them as subscription receivables. The Company authorized Mr. Hinman Au to collect on behalf of the Company the subscription proceeds and he entered into a Letter of Commitment with the Company assuring the collection of such proceeds. In the third quarter of 2013, the Company determined that the subscription receivable was impaired, and accordingly, has written off the amount from its accounts; however, should the Company deem further action is necessary, the Company reserves the right to pursue Mr. Hinman Au in the future for the delinquent subscription proceeds.

 

The payment date of stock subscription receivables cannot be determined as there is no payment received prior to the publication of financial statements.

 

4.	DUE TO RELATED PARTIES

 

			As of 9/30/2017				As of 12/31/2016
	Ms. Li, Yankuan			539,057				413,152
			$	539,057			$	413,152

 

Ms. Yankuan Li, Chief Executive Officer and Director of the Company, made advances to the Company to help fund the Company’s prior operations. These advances are unsecured and interest free. There is no due date for repayment.

 

 

China Teletech Holding, Inc.

Notes to Unaudited Consolidated Financial Statements

 

5.	EARNINGS PER SHARE

 

			2017				2016
	Basic and diluted loss per share numerator
	Net loss		$	(409,101	)		$	(44,588	)
	Loss attributable to non-controlling interest			-				-
	Loss attributable to common stockholders		$	(409,101	)		$	(44,588	)
	Original Shares:			147,213,776				147,213,776
	Additions from Actual Events
	- Issuance of shares			34,670,000				-
	Basic weighted average shares outstanding			181,883,776				147,213,776
	Loss Per Share
	- Basic		$	-			$	-
	- Diluted		$	-			$	-
	Weighted Average Shares Outstanding
	- Basic			181,883,776				147,213,776
	- Diluted			161,382,605				147,213,776

 

6.	GOING CONCERN UNCERTAINTIES

 

These consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

 

For the nine months ended September 30, 2017, the Company reported a net loss of $409,101 and working capital deficit of $436,276. The Company had an accumulated deficit of $8,039,126 as of September 30, 2017 due to the fact that the Company continued to incur losses over the past several years.

 

The continuation of the Company as a going concern is dependent upon improving the profitability and the continuing financial support from its stockholders or other capital sources. Management believes that the continuing financial support from the existing shareholders or external debt financing will provide the additional cash to meet the Company’s obligations as they become due.

 

These consolidation financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of the Company’s ability to continue as a going concern.

 

 

China Teletech Holding, Inc.

Notes to Unaudited Consolidated Financial Statements

 

7.	SUBSEQUENT EVENTS

 

The company has evaluated the period after the balance sheet date up through the day that the financial statements were issued, and determined that there were no subsequent events or transactions that required recognition or disclosure in the financial statements except the following:

 

On November 15, 2016, the Company, Liaoning Kuncheng Education Investment Co. Ltd., a company organized under the laws of the People’s Republic of China (the “Kuncheng”), and Kunyuan Yang, the sole shareholder of Kuncheng (the “Kuncheng Shareholder”), entered into a certain share exchange agreement (the “Kuncheng Exchange Agreement”) pursuant to which the Company agreed to purchase 51% of the equity ownership in Kuncheng, with the purchase price as an aggregate of 30 million shares of Common Stock issued to the Kuncheng Shareholder (the “Kuncheng Share Exchange”). The Company filed Form 8-K with the U.S Securities and Exchange Commission on November 13, 2017 detailing the transaction; the Agreement was filed as an exhibit to the Form 8-K. As of September 30, 2017, 10 million shares are pending issuance.

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion and analysis of the results of operations and financial condition of the Company for the nine months ended September 30, 2017 and 2016 shall be read in conjunction with its financial statements and notes. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results of the timing of events could differ materially from those projected in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Special Note Regarding Forward-Looking Statements and Business sections in our Form 10-Q for the nine months ended September 30, 2017. We use words such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "believe," "intend," "may," "will," "should," "could," and similar expressions to identify forward-looking statements.

 

Company Overview

 

As a result of the Kuncheng Share Exchange, we are a limited liability company primarily engaged in providing education-related services and investment in education services and education entities.

 

Kuncheng acquired the Center pursuant to Project Acquisition Agreement dated April 20, 2016, where Kuncheng acquired the Center as well as the education programs, International A-Level test preparation program and tutoring program that the Center has operated. Via the Center, Kuncheng’s revenue includes tuition fees and boarding fee from the International A-Level test preparation program, and tutoring fees from the tutoring program.

 

Going Concern

 

The quarterly consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

 

As of September 30, 2017, the Company has an accumulated loss of $8,039,126 due to the fact that the Company incurred losses over the past several years.

 

These losses have affected the Company’s ability to pay PRC government tax and outstanding loans. So far, no tax payment has been in arrears. The balance of related party loans as of September 30, 2017 and December 31, 2016 was approximately $0.54 million and $0.41 million respectively, which accounted for 270% and 207% of total assets as of September 30, 2017 and December 31, 2016, respectively. The Company has significantly relied on related party loans to meet the liquidity and capital resource requirements. The table below provides a description of our related party loans outstanding as of September 30, 2017 and December 31, 2016:

 

		September 30,				December 31,
Due to related parties		2017				2016
Ms. Li, Yankuan		$	539,057			$	413,152

 

Ms. Yankuan Li, Chief Executive Officer and Director of the Company, made advances to the Company to help fund the Company’s prior operations. These advances are unsecured and interest free. There is no due date for repayment.

 

 

Results of Operations

 

Results of Operation for the nine months ended September 30, 2017 compared with the nine month ended September 30, 2016

 

Expenses

 

Our general and administrative expenses ("G&A expenses") were $409,101 during the nine months ended September 30, 2017, as compared to $44,588 during the nine months ended September 30, 2016, representing an increase of $364,513, or 817.5%. The increase in G&A expenses was mainly due to the increase of auditing fee, legal fee and compensation cost.

 

Net Income

 

Net loss of $409,101 was recorded during the nine months ended September 30, 2017 as compared to net loss of $44,588 during the nine months ended September 30, 2016. The increase of net loss was mainly due to the increase of auditing fee, legal fee and compensation cost.

 

Liquidity and Capital Resources

 

Cash used in operating activities was $Nil during the nine months ended September 30, 2017, as compared to cash used in operating activities was $Nil during the nine months ended September 30, 2017. Cash used in operating activities for the nine months ended September 30, 2017 was mainly resulted from net loss attributable to the Company $409,101, added adjustments of non-cash equity-based compensation $239,977 and net increase in current liabilities (accrued liabilities and other payables and amount due to related parties) $169,124. Cash used in operating activities during the nine months ended September 30, 2016 was mainly resulted from net loss attributable to the Company $44,588, added adjustments of loss on disposal of subsidiaries $44,588.

 

Critical Accounting Policies

 

Our significant accounting policies are summarized in Notes 2 of our financial statements included in this quarter report on Form 10-Q for the nine months ended September 30, 2017. Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("GAAP"). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

 

Recent Accounting Pronouncements

 

Please refer to Note (v) to Unaudited Consolidated Financial Statements for the nine months ended September 30, 2017 and December 31, 2016.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as "special purpose entities" (SPEs).

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

 

Smaller reporting companies are not required to provide the information required by this item.

 

Item 4.

Controls and Procedures.

 

Disclosure of Controls and Procedures

 

Our disclosure controls and procedures are designed to ensure (i) that information required to be disclosed by us in the reports we file or submit under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms; and (ii) that information required to be disclosed by us in the reports it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of September 30, 2017 we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were not effective at the reasonable assurance level.

 

Changes in Internal Controls Over Financial Reporting

 

There has been no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this quarterly report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 

 

 

PART II - OTHER INFORMATION

 

Item 1.

Legal Proceedings.

 

On October 9, 2014, Dong Liu, the Chairman of the Board of Directors of the Company, commenced an action individually and on behalf of the Company, against Yankuan Li, the Company’s President, Chief Executive Officer and director, Jiewen Li, Yuan Zhao, a director of the Company, and Jane Yu, the Company’s Chief Financial Officer and Secretary.  In this action, Dong Liu v. Yankuan Li et al., New York County Supreme Court, Index No. 653084/2014, Dong Liu asserted claims sounding in fraud, civil conspiracy to commit fraud, breach of fiduciary duty and unjust enrichment.

 

Mr. Liu never served the complaint on the individual defendants.  Instead, on November 3, 2014, Dong Liu, by order to show cause, moved for a temporary restraining order and preliminary injunction to enjoin the Company from proceeding with a merger with Jinke, granting Dong Liu unfettered access to the Company’s books and records and permitting him to serve the individual defendants by a method other than those permitted by the New York State Civil Practice and Laws or the Hague Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters.  On November 6, 2014, the New York Supreme Court denied the temporary restraining order and set up a briefing schedule to determine the preliminary injunction.

 

On February 18, 2015, the court issued a decision denying Dong Liu’s motion for a preliminary injunction and granting the defendants’ motion by dismissing the complaint without prejudice. Since that time, plaintiff has made no effort to re-plead the case or challenge the ruling. Under New York court rules, plaintiff’s time to re-argue the motion or serve notice to appeal has expired.

 

Except as described above, Kuncheng is not involved in any material legal proceedings outside of the ordinary course of its business.

 

Item 1A.

Risk Factors.

 

We are a smaller reporting company and therefore, we are not required to provide information required by this Item of Form 10-Q.

 

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

 

None.

 

Item 6.

Exhibits

 

Exhibit No.		Description
31.1		Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
31.2		Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
32.1		Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
32.2		Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
101.INS (1)		XBRL Instance Document
101.SCH (1)		XBRL Taxonomy Schema
101.CAL (1)		XBRL Taxonomy Calculation Linkbase
101.DEF (1)		XBRL Taxonomy Definition Linkbase
101.LAB (1)		XBRL Taxonomy Label Linkbase
101.PRE (1)		XBRL Taxonomy Presentation Linkbase

 

*	Filed herewith.
**	In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are furnished and not filed.
(1)	Furnished herewith. XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 

SIGNATURES

 

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

 

	CHINA TELETECH HOLDING, INC.
Date: November 21, 2017	By:	/s/ Yankuan Li
		Yankuan Li
		President and Chief Executive Officer   (Principal Executive Officer)

 

Date: November 21, 2017	By:	/s/ Jane Yu
		Jane Yu
		Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)

 

 

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