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EX-32.2 - CERTIFICATION - China Teletech Holding Incf10k2017ex32-2_chinatele.htm
EX-32.1 - CERTIFICATION - China Teletech Holding Incf10k2017ex32-1_chinatele.htm
EX-31.2 - CERTIFICATION - China Teletech Holding Incf10k2017ex31-2_chinatele.htm
EX-31.1 - CERTIFICATION - China Teletech Holding Incf10k2017ex31-1_chinatele.htm
EX-21.1 - LIST OF SUBSIDIARIES - China Teletech Holding Incf10k2017ex21-1_chinatele.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

 

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

 

For the fiscal year ended December 31, 2017

 

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

 

Registrant's telephone number, including area code (850) 521-1000

 

Securities registered under Section 12(b) of the Act: None

 

Securities registered under Section 12(g) of the Act: None

 

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

 

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 ☐    No ☒

 

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ( 229.405 of this chapter) 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 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, 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)   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 Act). Yes ☒    No ☐

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter, June 30, 2017, $425,219.

 

As of March 29, 2018, the registrant had 204,473,776 shares of its common stock issued and outstanding.

 

Documents Incorporated by Reference: None.

  

 

  

 

 

 

TABLE OF CONTENTS

 

        Page
PART I
 
Item 1.   Business.   1
Item 1A.   Risk Factors.   5
Item 1B.   Unresolved Staff Comments   5
Item 2.   Properties.   5
Item 3.   Legal Proceedings.   6
Item 4.   Mine Safety Disclosures.   6
         
PART II
 
Item 5.   Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.   6
Item 6.   Selected Financial Data.   8
Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations.   8
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.   10
Item 8.   Financial Statements and Supplementary Data.   10
Item 9.   Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.   11
Item 9A.   Controls and Procedures.   11
Item 9B.   Other Information.   12
         
PART III
 
Item 10.   Directors, Executive Officers and Corporate Governance.   13
Item 11.   Executive Compensation.   15
Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.   16
Item 13.   Certain Relationships and Related Transactions, and Director Independence.   17
Item 14.   Principal Accounting Fees and Services.   17
         
PART IV
 
Item 15.   Exhibits, Financial Statement Schedules.   18
SIGNATURES   20

 

 

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This report contains forward-looking statements and information that are based on the beliefs of our management as well as assumptions made by and information currently available to us. Such statements should not be unduly relied upon. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts or that are not present facts or conditions. Forward-looking statements and information can generally be identified by the use of forward-looking terminology or words, such as “anticipate,” “approximately,” “believe,” “continue,” “estimate,” “expect,” “forecast,” “intend,” “may,” “ongoing,” “pending,” “perceive,” “plan,” “potential,” “predict,” “project,” “seeks,” “should,” “views” or similar words or phrases or variations thereon, or the negatives of those words or phrases, or statements that events, conditions or results “can,” “will,” “may,” “must,” “would,” “could” or “should” occur or be achieved and similar expressions in connection with any discussion, expectation or projection of future operating or financial performance, costs, regulations, events or trends. The absence of these words does not necessarily mean that a statement is not forward-looking.

 

Forward-looking statements and information are based on management’s current expectations and assumptions, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. These statements reflect our current view concerning future events and are subject to risks, uncertainties and assumptions. There are important factors that could cause actual results to vary materially from those described in this report as anticipated, estimated or expected, including, but not limited to, general conditions in the economy and capital markets, the “SEC” regulations which affect trading in the securities of “penny stocks,” and other risks and uncertainties. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future. Depending on the market for our stock and other conditional tests, a specific safe harbor under the Private Securities Litigation Reform Act of 1995 may be available. Notwithstanding the above, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), expressly state that the safe harbor for forward-looking statements does not apply to companies that issue penny stock. Because we may from time to time be considered to be an issuer of penny stock, the safe harbor for forward-looking statements may not apply to us at certain times.

 

 

 

 

PART I

 

Item 1. Business.

  

Following the execution of Mutual Rescission Agreement with Shenzhen Jinke Energy Development Co., Ltd. on November 15, 2016, the Company has become an investment holding company without significant assets or operations.

 

CORPORATE HISTORY AND STRUCTURE

 

We were incorporated as Avalon Development Enterprises, Inc. on March 29, 1999, under the laws of the State of Florida.  From inception until January 2007, we engaged in the business of acquiring commercial property and expanding into building cleaning, maintenance services, and equipment leasing as supporting ancillary services and sources of revenue.  On January 10, 2007, the Company, Global Telecom Holdings, Ltd., a British Virgin Islands company ("GTHL"), and the shareholders of GTHL, entered into a share exchange agreement, pursuant to which the Company issued 39,817,500 shares of its restricted common stock to the shareholders of GTHL in exchange for all of the issued and outstanding capital stock of GTHL.  Following the transaction on March 27, 2007, GTHL became our wholly-owned subsidiary and we changed our name to Guangzhou Global Telecom Holdings, Inc. and succeeded to the business of GTHL.

 

In 2007, we established four subsidiaries; namely, Zhengzhou Global Telecom Equipment Limited ("ZGTE"), Macau Global Telecom Company Limited ("MGT"), Huantong Telecom Hongkong Holding Limited ("HTHKH"), and Huantong Telecom Singapore Company PTE Limited ("HTS") with capital of RMB 500,000, Macau Dollar 300,000, Hong Kong Dollar 100 and Singapore Dollar 200,000, respectively. Simultaneously, we established a subsidiary; namely, Guangzhou Huantong Telecom Technology and Consultant Services, Ltd ("GHTTCS") with capital of RMB 8,155,730. Pursuant to a Stock Purchase Agreement dated April 9, 2008 and July 29, 2008, respectively, the Company acquired 50% of the issued and outstanding shares of Beijing Lihe Jiahua Technology and Trading Company Ltd ("BLJ") for a consideration of US$300,000 and 51% of the issued and outstanding shares in Guangzhou Renwoxing Telecom Co., Ltd. ("GRT"), a limited liability company incorporated in China for a consideration of US$291,833.

 

In 2009 and 2010, the Company disposed of its subsidiaries CHTTCS, ZGTE, MGT and BLJ due to their loss in operations. HTHKH and HTS were not able to commence operations since its inception, so the Company deregistered them in 2010.

 

Acquisition of China Teletech Limited

 

On March 30, 2012, the Company completed a share exchange transaction with China Teletech Limited, a British Virgin Islands corporation ("CTL") and the former shareholders of CTL.

 

CTL is a British Virgin Islands Company, incorporated on January 30, 2008 under the British Virgin Islands Business Act 2004.  Its primary business operations were concluded through two wholly owned subsidiaries located in China, namely, (a) Shenzhen Rongxin Investment Co., Ltd. ("Shenzhen Rongxin") and (b) Guangzhou Rongxin Science and Technology Limited ("Guangzhou Rongxin"). 

 

Pursuant to a share exchange agreement dated March 20, 2012 among CTL, its former shareholders and us, we acquired all the outstanding capital stock of CTL from its former shareholders of CTL in exchange for 40,000,000 shares of our common stock. The shares issued to the former shareholders of CTL constituted approximately 68.34% of our issued and outstanding shares of common stock immediately after the commutation of the share exchange transaction. As a result of the share exchange, CTL became our wholly owned subsidiary and Dong Liu and Yuan Zhao, the former shareholders of CTL, became our principal shareholders.

 

In connection with the share exchange, Yankuan Li resigned as our Chief Financial Officer, Secretary and Chairman of the Board of Directors, effective on March 30, 2012. On the same day, Dong Liu, Yuan Zhao, Yau Kwong Lee and Kwok Ming Wai Andrew were appointed as our directors, effective immediately. Ms. Yankuan Li remained  President, Chief Executive Officer and a member of the board of directors of the Company. As of result of the merger, the Company believed that it could enjoy a greater management and capital resources and have a greater network and business opportunities. The Company expected to be able to expand its telecommunications business in Guangzhou and Shenzhen cities in China.

 

 1 

 

 

Sale of the Company's Wholly-Owned Subsidiary, Guangzhou Global Telecommunication Company Limited

 

On June 30, 2012, we entered into a Sales and Purchase Agreement with Mr. Zhu Sui Hui ("Mr. Hui") pursuant to which we sold all the capital stock of Guangzhou Global Telecommunication Company Limited ("GGT"), our wholly-owned subsidiary, to Mr. Hui for RMB 5,000, or approximately $800. Both parties agreed unconditionally to waive the current accounts payable or receivable balances between the Company (and its subsidiaries) and GGT. GGT was engaged in the trading and distribution of cellular phones and accessories, prepaid calling cards, and rechargeable store-value cards before the sale.

 

Disposition of the Company’s variable interest entity, Shenzhen Rongxin Investment Co., Ltd.

 

On September 30, 2012, China Teletech, Limited entered into an agreement with a related party, Liu Yong, brother of Mr. Liu Dong, the Company’s former Chairman, to dispose of the variable interest entity Shenzhen Rongxin for a cash consideration of US$1,579.

 

Sale of the Company's Subsidiary, Global Telecom Holdings Limited

 

On June 30, 2013, the Company’s subsidiary, Global Telecom Holdings Limited, entered into an agreement with an independent third party to dispose of its 51% owned subsidiary Guangzhou Renwoxing Telecom Co., Limited for a cash consideration of US$3,232.

 

Deregistration of the Company’s Wholly-Owned Subsidiaries, Guangzhou Rongxin Science and Technology Limited

 

On December 30, 2013, the Company had its subsidiary, Guangzhou Rongxin, deregistered due to ceased operations.

 

Following the deregistration of the Company’s subsidiary, Guangzhou Rongxin, the Company was a shell company with no operations until the Company entered into the Share Exchange Agreement with Jinke on January 28, 2015.

 

Sale of the Company’s Wholly-Owned Subsidiaries Global Telecom Holdings Limited and China Teletech Limited

 

On January 1, 2015, the Company entered into an agreement with an independent third party to dispose of its wholly-owned subsidiaries, Global Telecom Holdings, Ltd. and China Teletech Limited for a cash consideration of US$2,000.

 

Share Exchange with Jinke

 

On January 28, 2015, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Shenzhen Jinke Energy Development Co., Ltd., a company organized under the laws of the People’s Republic of China (“Jinke”), and Guangyuan Liu, the holder of 97% of the equity interest of Jinke, pursuant to which we acquired 51% of the issued and outstanding equity securities of Jinke (the “Share Exchange”). Both the Company and Jinke believed that the acquisition transaction is in the best interest of their respective shareholders. The Company believed that the acquisition would enhance the value of the Company through the acquisition of a majority equity interest in Jinke’s viable business, and Jinke believes that such transaction will afford Jinke access to the U.S. capital market and other possible financial resources. Prior to the execution of the Cooperation Agreement, there was no material relationship between the company and its affiliates and JinKe and its affiliates=. Jinke was introduced to the Company by Ms. Chen Xiaoqiao, a PRC resident, who is a mutual business contact of Ms. Li Yankuan, the Company’s former CEO and Mr. Liu Guangyuan, Jinke’s former owner. For her role in this, Ms. Chen received 1,000,000 shares of the Company’s common stock subsequent to the closing of the acquisition. Other than the foregoing, no third party played a material role in arranging or facilitating the acquisition.

 

The Company and Jinke had previously entered into a certain cooperation agreement  on June 30, 2014. The Cooperation Agreement was superseded and replaced by the Share Exchange Agreement by and between the Company and Jinke, dated as of January 28, 2015. The parties decided to change from an asset purchase to a share purchase primarily due to the difficulty in ascertaining Jinke’s assets to be acquired based on the percentages as set forth in the previous cooperation agreement. In connection with the Share Exchange, the cooperation agreement dated June 30, 2014 into which Jinke and the Company previously entered, and which was first disclosed on the Company’s current report on Form 8-K filed August 8, 2014, was terminated and superseded in its entirety by the Share Exchange Agreement.

 

 2 

 

 

Pursuant to the Share Exchange Agreement, the Company agreed to issue an aggregate of 20,000,000 shares of its common stock, $0.001 par value per share (the “Common Stock”) to the Jinke Shareholder in exchange for 51% of the issued and outstanding securities of Jinke. Of the 20,000,000 shares to be issued by the Company, 16,000,000 were issued on October 6, 2014 and delivered to the Jinke Shareholder and his designee prior to closing and 4,000,000 were to be issued and delivered at closing. The Share Exchange closed on January 28, 2015.

 

In connection with the Share Exchange, Mr. Guangyuan Liu was appointed a director of the Company, and Ms. Yankuan Li was appointed a director of Jinke. Immediately following the Share Exchange, Mr. Liu beneficially owned 10.87% of the issued and outstanding common stock of the Company, which included shares held by Mr. Liu’s son, Jiexun Liu.

 

Incorporation of Strategic Services Group Limited

 

On November 8, 2016, Strategic Services Group Limited (“SSGL”) was incorporated in the British Virgin Islands and became a wholly owned subsidiary of the Company. SSGL is an investment holding company with no business operation since its incorporation.

 

Rescission Agreement with Jinke

 

On November 15, 2016, the Company, Jinke and Guangyuan Liu 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 restricted shares (the “Rescission Shares”) of the Company’s common stock to be issued to Guangyuan Liu upon closing of the transactions contemplated in the Rescission Agreement.

 

Share Exchange with Liaoning Kuncheng Education Investment Co. Ltd.

 

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”).

 

 3 

 

 

Sale of Strategic Services Group Limited

 

On October 31, 2017, the Company and Ms. Li Yankuan entered into a share exchange agreement (the “Strategic Services Share Exchange Agreement”), pursuant to which Ms. Li Yankuan acquired 100% of the issued and outstanding equity securities of Strategic Services Group Limited for a consideration of $3,000.

 

Rescission Agreement with Liaoning Kuncheng Education Investment Co. Ltd.

  

On December 22, 2017 (the “Effective Date”), the Company, Kuncheng and the Kuncheng Shareholder entered into a certain Mutual Rescission Agreement (the “Rescission Agreement”), whereby the parties agreed to rescind the Kuncheng Exchange Agreement and unwind the Kuncheng Reverse Merger as if they never occurred. Upon closing of the Rescission Agreement on Effective Date, the Kuncheng Shareholder returned and surrendered the Company Shares and the Company returned and surrendered the Kuncheng Shares and return to Kuncheng or its designee the 51% of the ownership in Kunyuan.

 

Pursuant to the Rescission Agreement and in connection with the unwinding of Kuncheng Reverse Merger, Mr. Kunyuan Yang, the Kuncheng Shareholder, has resigned from the Board as of the Effective Date and effective immediately. The Kuncheng Shareholder did not resign as a result of any disagreement with the Company on any matter relating to its operation, policies (including accounting or financial policies), or practices.

  

The address of our principal executive offices and corporate offices is Liwan District, No.145 Enzhou Big Lane, B2 Fuli Square, 8th Zhongshan Road, Unit 505, 5/F, Guangzhou, Guangdong, China. Our telephone number is 00852-6873-3117.

 

Recent Developments

 

On December 29, 2017, Yankuan Li resigned from her positions as President, Chairman of the Board, Director of the Board, and Chief Executive Officer of the Company, effective immediately. There shall be no interim Chief Executive Officer.

 

There was no disagreement between Ms. Li and the Company on any matter relating to its operations, policies or practices.

 

BUSINESS

 

After the execution of the Rescission Agreement, we became a shell company with no operations. Additionally, there was no operation at the Company’s wholly-owned subsidiaries, Strategic Services Group Limited.

 

Strategy

 

We are an investment holding company with no operations, but we are actively exploring opportunities to acquire business in both China and the rest of the world.

 

 4 

 

 

Employees

 

As of March 29, 2018, we have three full-time employee and three part-time employee.

 

Emerging Growth Company Status

 

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, (the “JOBS Act”) and we are eligible to take advantage of certain exemptions from various reporting and financial disclosure requirements that are applicable to other public companies, that are not emerging growth companies, including, but not limited to, (1) presenting only two years of audited financial statements and only two years of related management’s discussion and analysis of financial condition and results of operations in our initial public offering, (2) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), (3) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and (4) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We intend to take advantage of these exemptions. As a result, stockholders may have less information then they might otherwise have.

 

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. As a result, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We elected to opt out of such extended transition period and acknowledge such election is irrevocable pursuant to Section 107 of the JOBS Act.

 

We could remain an emerging growth company for up to five years, or until the earliest of (1) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (2) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter and we have been publicly reporting for at least 12 months, or (3) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

 

Item 1A. Risk Factors.

 

Not applicable because we are a smaller reporting company.

 

Item 1B. Unresolved Staff Comments.

 

Not applicable because we are a smaller reporting company. 

 

Item 2. Properties.

 

Our corporate office is located at Liwan District, No.145 Enzhou Big Lane, B2 Fuli Square, 8th Zhongshan Road, Unit 505, 5/F, Guangzhou, Guangdong, China. This office is free of charge as provided by Ms. Yankuan Li, our former President and Chief Executive Officer.

 

We believe that our current facilities are adequate and suitable for our operations.

 

 5 

 

 

Item 3. Legal Proceedings.

 

We have not been involved in any material legal proceedings, other than the ordinary litigation incidental to our business; except for the following:

 

Dong Liu, the former Chairman of the Board of Directors of the Company, individually and on behalf of the Company, commenced the action on October 9, 2014 against Yankuan Li, the Company’s former 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, asserting claims sounding in fraud, civil conspiracy to commit fraud, breach of fiduciary duty and unjust enrichment. Dong Liu never served the complaint on the individual defendants.  Instead, he moved by order to show cause on November 3, 2014, 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, Dong Liu, the plaintiff has made no effort to re-plead the case or challenge the ruling. Under New York court rules, Dong Liu, the plaintiff’s time to re-argue the motion or serve notice to appeal has expired.

 

Other than as disclosed above, there are no proceedings in which any of our directors, officers or any of their respective affiliates, or any beneficial stockholder of more than five percent of our voting securities, is an adverse party or has a material interest adverse to our interest.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

PART II

 

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

 

Market Information

 

Our common stock trades on the OTC Pink Markets under the symbol "CNCT". The OTC Pink is a quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter ("OTC") equity securities. An OTC equity security generally is any equity that is not listed or traded on a national securities exchange.

 

Price Range of Common Stock

 

The following table shows, for the periods indicated, the high and low bid prices per share of our common stock as reported by the OTC Pink quotation service. These bid prices represent prices quoted by broker-dealers on the OTC Pink quotation service. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not represent actual transactions.

 

   High   Low 
Fiscal Year 2016        
First quarter ended March 31, 2016  $0.01   $0.01 
Second quarter ended June 30, 2016  $0.03   $0.01 
Third quarter ended September 30, 2016  $0.03   $0.01 
Fourth quarter ended December 31, 2016  $0.03   $0.01 
Fiscal Year 2017          
First quarter ended March 31, 2017  $0.00   $0.00 
Second quarter ended June 30, 2017  $0.00   $0.00 
Third quarter ended September 30, 2017  $0.00   $0.00 
Fourth quarter ended December 31, 2017  $0.01   $0.01 

 

 6 

 

 

Approximate Number of Equity Security Holders

 

As of March 29, 2018, there were approximately 114 stockholders of record.

 

Dividends

 

Holders of our common stock are entitled to receive dividends if, as and when declared by the Board of Directors out of funds legally available therefore. We have never declared or paid any dividends on our common stock. We intend to retain any future earnings for use in the operation and expansion of our business. Consequently, we do not anticipate paying any cash dividends on our common stock to our stockholders for the foreseeable future.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

We do not have in effect any compensation plans under which our equity securities are authorized for issuance.  

 

Recent sales of unregistered securities

 

The Company's common stocks issued in 2017 and 2016 are summarized as follows

 

Name of Shareholder   Date  

Number of

Shares

 

Value

Per

Share

  Reason for Issuance
Kunyuan Yang   January 3, 2017   10,000,000   $0.0035   Salary compensation
Wei Yuan   January 3, 2017   2,500,000   $0.0035   Salary compensation
Jianhang Li   January 3, 2017   1,000,000   $0.0035   Salary compensation
Jiewei Li   January 3, 2017   2,200,000   $0.0035   Salary compensation
Zefeng Sun   January 3, 2017   1,500,000   $0.0035   Bonus compensation
Wei Wang   January 3, 2017   2,500,000   $0.0035   Commission
Francis San Chuan Wee   January 3, 2017   2,500,000   $0.0035   Salary compensation
Wanping Ye   January 3, 2017   1,000,000   $0.0035   Salary compensation
Di Sun   February 3, 2017   500,000   $0.00215   Bonus compensation
Shaojuan Yang   February 3, 2017   500,000   $0.00215   Bonus compensation
Jiaoyang Zhao   February 3, 2017   490,000   $0.00215   Bonus compensation
Sicheng Wang   February 8, 2017   50,000   $0.00265   Bonus compensation
Wenying Li   February 8,2017   1,000,000   $0.00265   Bonus compensation
Hong Wang   February 8,2017   315,000   $0.00265   Bonus compensation
Xuanming Tao   February 8,2017   95,000   $0.00265   Bonus compensation
Bing Shao   July 12, 2017   200,000   $0.0034   Bonus compensation
Qi Song   July 12, 2017   1,500,000   $0.0034   Bonus compensation
Shengwei Guo   July 12, 2017   1,500,000   $0.0034   Bonus compensation
Yifu Dong   July 12, 2017   50,000   $0.0034   Bonus compensation
Baicheng Yang   September 1, 2017   1,000,000   $0.004   Bonus compensation
Hong Bai   September 1, 2017   970,000   $0.004   Bonus compensation
Rui Xu   September 1, 2017   1,000,000   $0.004   Bonus compensation
Xiang Fu   September 1, 2017   2,000,000   $0.004   Bonus compensation
Cui'e Wang   October 1, 2017   500,000   $0.0033   Bonus compensation
Jiaxuan Sun   October 1, 2017   390,000   $0.0033   Bonus compensation
Yankuan Li   October 1, 2017   10,000,000   $0.0033   Bonus compensation
Guangbin Luo   October 1, 2017   600,000   $0.0033   Bonus compensation
Mengchun Huang   November 1, 2017   800,000   $0.006   Bonus compensation
ANG QIAN FONG JASPER   November 1, 2017   500,000   $0.006   Bonus compensation
LEE SHAO FENG RYAN   November 1, 2017   2,000,000   $0.006   Bonus compensation
Yingyi Liu   November 1, 2017   300,000   $0.006   Bonus compensation
Jiewei Li   December 20 ,2017   3,000,000   0.0027   Bonus compensation
Xiang Fu   December 20 ,2017   2,000,000   0.0027   Bonus compensation
Xindong Kang   December 20 ,2017   500,000   0.0027   Bonus compensation
Total       54,960,000      

       

On January 3, 2017, the Company issued an aggregate of 10 million shares of our Common Stock to Mr. Kunyuan Yang as compensation for services provided..

 

 7 

 

  

All above securities issued were offered and issued in reliance upon the exemption from registration pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and/or Regulation S promulgated thereunder.

 

Recent purchase of unregistered securities except as otherwise disclosed in this report, there has no recent purchase of unregistered securities by us.

 

Item 6. Selected Financial Data.

 

Not applicable because we are a smaller reporting company.

 

Item 7. 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 years December 31, 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-K for the year ended December 31, 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

 

On November 8, 2016, Strategic Services Group Limited (“SSGL”) was incorporated in the British Virgin Islands and became a wholly owned subsidiary of the Company. SSGL is an investment holding company with no business operation since its incorporation.

 

On November 15, 2016, China Teletech Holding Inc., a Florida corporation (“China Teletech”), Liaoning Kuncheng Education Investment Co. Ltd., a company organized under the laws of the People’s Republic of China (“Kuncheng”), and Kunyuan Yang, the 94.9% shareholder of Kuncheng (the “Mr. Yang”) entered into a share exchange agreement (the “Kuncheng Share Exchange Agreement”), pursuant to which China Teletech would acquire 51% of the issued and outstanding equity securities of Kuncheng (the “Kuncheng Share Exchange”) upon closing of the transactions underlying the Kuncheng Share Exchange.

 

On October 31, 2017, the Company and Ms. Li Yankuan entered into a share exchange agreement (the “Strategic Services Share Exchange Agreement”), pursuant to which Ms. Li Yankuan acquired 100% of the issued and outstanding equity securities of Strategic Services Group Limited for a consideration of $3,000. 

 

 8 

 

 

On December 22, 2017 (the “Effective Date”), the Company, Kuncheng and the Kuncheng Shareholder entered into a certain Mutual Rescission Agreement (the “Rescission Agreement”), whereby the parties agreed to rescind the Kuncheng Exchange Agreement and unwind the Kuncheng Reverse Merger as if they never occurred. Upon closing of the Rescission Agreement on Effective Date, the Kuncheng Shareholder returned and surrendered the Company Shares and the Company returned and surrendered the Kuncheng Shares and return to Kuncheng or its designee the 51% of the ownership in Kunyuan.

 

As such, as of the date of this report, the Company does not have any subsidiaries.

 

Going Concern

 

The yearly 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 December 31, 2017, the Company has an accumulated loss of $8,060,734 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 December 31, 2017 and December 31, 2016 was approximately $0.51 million and $0.41 million 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 December 31, 2017 and December 31, 2016:

 

    December 31,     December 31,  
Due to related parties   2017     2016  
             
Ms. Li, Yankuan   $ 514,550     $ 413,152  

 

Ms. Yankuan Li, former Chief Executive Officer and Director of the Company until December 29, 2017, 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 year ended December 31, 2017 compared with the year ended December 31, 2016

 

Expenses

 

Our general and administrative expenses ("G&A expenses") were $236,138 during the year ended December 31, 2017, as compared to $50,159 during the year ended December 31, 2016, representing an increase of $185,979, or 370.78%. The increase in G&A expenses was mainly due to the increase of share compensation granted and issued, and legal fee, auditing fee and SEC filing fee resulted from the share exchange.

 

Net Income

 

Net loss of $233,138 was recorded during the year ended December 31, 2017 as compared to net loss of $50,150 during the year ended December 31, 2016. The increase of net loss was mainly due to the increase of auditing fee, legal fee, SEC filing fee, and share compensation cost.

 

 9 

 

 

Liquidity and Capital Resources

 

Cash provided by operating activities was Nil during the year ended December 31, 2017, as compared to cash provided operating activities was Nil during the year ended December 31, 2016. Cash provided by operating activities for the year ended December 31, 2017 was mainly resulted from net loss attributable to the Company $233,138, added adjustments of non-cash equity-based compensation $193,569 and net increase in current liabilities (accrued liabilities and other payables and amount due to related parties) $81,140 and net decrease in contingency liabilities $41,571.  Cash provided by operating activities during year 2016 was mainly resulted from net loss attributable to the Company $50,159, added adjustments of current liabilities (accrued liabilities and other payables and amount due to related parties) $48,588, increase in contingency liabilities $41,571 and cancellation of share issuance $40,000.

 

Cash provided by investing activities was Nil for the fiscal year ended December 31, 2017 as compared to cash flows used in investing activities was Nil for the fiscal year ended December 31, 2016.

 

Cash provided by financing activities was Nil for the fiscal year ended December 31, 2017 as compared to cash flows used in financing activities was Nil for the fiscal year ended December 31, 2016.

 

Critical Accounting Policies

 

Our significant accounting policies are summarized in Notes 2 of our financial statements included in this quarter report on Form 10-K for the year ended December 31, 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 Consolidated Financial Statements for the years ended December 31, 2017 and 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 7A. Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable because we are a smaller reporting company.

 

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

 10 

 

  

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

Centurion ZD CPA Limited (“Centurion”) was previously the principal accountants for the Company. On June 28, 2017, Centurion resigned as the Company’s independent accounting firm, effective immediately.

 

The Company initially engaged Centurion in December 2, 2016 as its independent accounting firm to conduct the audit of its financial statements for the fiscal year ended December 31, 2016, the interim reviews of its financial statements for each of the first three quarters of fist year ended December 31, 2017, and the audit and interim reviews, on a consolidated basis, such financial statements pursuant to a Form 8-K to be filed regarding a certain proposed transaction of the Company.

 

Centurion’s audit report on the Company's consolidated financial statements for the years ended December 31, 2016 did not contain an adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles, except in its report dated March 27, 2017 for the fiscal year ended December 31, 2016 with respect to the Company’s ability to continue as a going concern. From December 2, 2016, the date that Centurion was engaged by the Company, to the Company's fiscal year ended December 31, 2016 and during the subsequent interim period through June 28, 2017, the Company had no disagreements with Centurion on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Centurion, would have caused it to make reference to the subject matter of the disagreements in its reports for such periods; and there were no “reportable events” as the term is described in Item 304(a)(1)(v) of Regulation S-K.

 

On July 6, 2017, the Company, in connection with the previously disclosed dismissal of its independent registered accounting firm, entered into an engagement Yu Certified Public Accountant, P.C. (“Yu CPA”) to retain Yu CPA as the Company’s independent public accounting firm. On the same day, Company’s board of directors approved and ratified the engagement of Yu CPA as its new independent registered public accounting firm, effective immediately.

 

During the fiscal years ended December 31, 2016 and 2015, and the subsequent interim period through July 6, 2017, neither the Company nor anyone on its behalf consulted with Yu CPA regarding (i) the application of accounting principles to a specified transaction, (ii) the type of audit opinion that might be rendered on the Company’s financial statements by Yu CPA, in either case where written or oral advice provided by Yu CPA would be an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issues or (iii) any other matter that was the subject of a disagreement between us and our former auditor, Centurion ZD CPA Limited or was a reportable event (as described in Items 304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K, respectively).

 

Item 9A. Controls and Procedures.

 

None.

 

Evaluation of Disclosure Controls and Procedures

 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 ("Exchange Act"), the Company carried out an evaluation, with the participation of the Company's management, including the Company's Director (the Company’s principal executive officer) and Chief Financial Officer ("CFO") (the Company's principal financial and accounting officer), of the effectiveness of the Company's disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company's Director and CFO concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including the Company's Director and CFO, as appropriate, to allow timely decisions regarding required disclosure.

 

 11 

 

 

Management's Annual Report on Internal Control over Financial Reporting.

 

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.  Our internal control system was designed to, in general, provide reasonable assurance to the Company's management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, 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.

 

Our management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2017.  The framework used by management in making that assessment was the criteria set forth in the document entitled " Internal Control - Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission. From December 29, 2017 to February 2018, we did not have a CFO, who was responsible for managing and monitoring our financial reporting and certain operational controls. This resulted in a lapse in our internal controls over financial reporting. We have re-hired our CFO mitigate any negative impact on our internal controls over financial reporting resulting from having no CFO for a short period of time. Although our CFO is a part-time employee, and we do not have audit committee, our CFO has appropriate knowledge and experience. Ms. Li, resigned as the Company’s CEO as of December 29, 2017, and we have not currently found a new CEO. Our director, Mr. Chen, assumed the additional role of Principal Executive Officer. Our management has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) as of December 31, 2017, and based on this evaluation, our management concluded the Company's disclosure controls and procedures were not effective to ensure that material information is recorded, processed, summarized and reported by management of the Company on a timely basis in order to comply with the Company's disclosure obligations under the Exchange Act and the rules and regulations promulgated thereunder. The Company has mitigated negative impact on our internal controls over financial reporting by re-hiring our CFO. 

 

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

 

Changes in Internal Control over Financial Reporting

 

Other than the disclosure made above in Management's Annual Report on Internal Control over Financial Reporting, no change in our system of internal control over financial reporting occurred during the period covered by this report and the fourth quarter of the fiscal year ended December 31, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 

 

Item 9B. Other Information.

 

Issuance of Securities

 

Incorporate by reference the details in Item 5, Recent sales of unregistered securities.

 

 12 

 

 

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance.

 

Our executive officers and directors and their ages of the date of this report are as follows:

 

Name   Age   Position   Position Since
             
Lei Chen   36   Chairman and Director   January 2007
Pan Pan   30   Secretary   April 2017
Yuan Zhao   36   Director   March 2012
Jane Yu   45   Chief Financial Officer   March 2018

   

Yuan Zhao was appointed as our Director on March 30, 2012. Mr. Zhao was the Director of Guangzhou Rongxin Science and Technology Limited, a company mainly engaged in distribution of rechargeable phone cards and prepaid subway tickets in Guangzhou City, China since 2010.  Previously, Mr. Zhao studied BBA in Singapore.  He was a business consultant for a Singapore investment company, Huantong Singapore Co. Ltd.

 

Jane Yu, a/k/a Qing Yu, was appointed our Chief Financial Officer and Secretary as of March 5, 2013, and resigned from the Company from both roles on December 29, 2017. In March 2018, Jane Yu was re-appointed as our Chief Financial Officer. She has been a manager in the auditing department of Shanghai KRC Business Consulting Co., Ltd. and Shanghai KRC Certified Public Accountant Co., Ltd. since December 2007. From December 2004 to November 2007, Ms. Yu worked as the Project Manager at Wanlong Certified Public Accountants Co., Ltd. From October 1999 to October 2004, Ms. Yu was an accountant at Rheinland (Shanghai) Co., Ltd. Prior to 1999, Ms. Yu worked for Bartech Data Information Co., Ltd, CITIC Bank and Hong Kong Dao Heng Bank Group Ltd. as an executive assistant, bank teller, and accountant, respectively. Ms. Yu is a Certified Public Accountant and is familiar with U.S. GAAP, IFRS, and PRC GAAP.

 

Pan Pan, was appointed as our Secretary on December 29, 2017. Since 2013 to present, Mr. Pan is serving as the Chairman of the Board of Shenyang Curtis Science and Technology Ltd., a private company focusing on technical research and development. From 2013 to present, he was the Director of Liaoning Shixitang Jewelry& Jade Sales Co., Ltd, a company mainly engaged in the sales of jewelry and jade in China. From 2010 to 2013, he was the General Manager of the financial department in China Raybo International Corporation Ltd., a company engaging in mining, infrastructure construction, trading, and finance operations in China and internationally. Mr. Pan obtained his Bachelor of Business Administration from Liaoning University and his Master of International Finance from Hong Kong University School of Professional and Continuing Education.

 

Lei Chen, was appointed as our Director and Chairman of the Board on December 29, 2017. From 2016 to present, Mr. Chen is serving as the Chairman of the Board of Liaoning Shixitang Jewelry Sales Ltd., a private company focusing on mining. From 2010 to 2016, he was the Chief Executive Officer of Liaoning Shixitang Jewelry& Jade Sales Co., Ltd. and the General Manager of Beijing Shixitang Jewelry& Jade Sales Co., Ltd., both compaines mainly engaging in the sales of jewelry and jade in China. Mr. Chen obtained his Bachelor of Business Administration from Northeastern University and his Master of Business Administration from Singapore Management University.

 

Committees and Meetings

 

We do not have a standing audit committee of the Board of Directors. We do not have a financial expert serving on the Board of Directors or employed as an officer based on management's belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Item 407(d) of Regulation S-K is beyond its limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in its financial statements at this stage of its development.

 

Family Relationships

  

Mr. Yuan Zhao is the son-in-law of Ms. Yankuan Li, our president and chief executive officer.

 

Involvement in Certain Legal Proceedings 

 

To the best of our knowledge, none of our directors or executive officers has, during the past ten years:

 

been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
   
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;

 

 13 

 

 

been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
   
been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
   
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
   
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Dong Liu, the former Chairman of the Board of Directors of the Company, individually and on behalf of the Company, commenced the action on October 9, 2014 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, asserting claims sounding in fraud, civil conspiracy to commit fraud, breach of fiduciary duty and unjust enrichment. Dong Liu never served the complaint on the individual defendants.  Instead, he moved by order to show cause on November 3, 2014, 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, Dong Liu, the plaintiff has made no effort to re-plead the case or challenge the ruling. Under New York court rules, Dong Liu, the plaintiff’s time to re-argue the motion or serve notice to appeal has expired.

 

Other than as disclosed above, the Company is not aware of any legal proceedings in which any director, nominee, officer or affiliate of the Company, any owner of record or beneficially of more than five percent of any class of voting securities of the Company, or any associate of any such director, nominee, officer, affiliate of the Company, or security holder is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.

 

Term of Office

 

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.

 

Code of Ethics

 

We do not have a code of ethics that applies to our officers, employees and directors.

 

 14 

 

 

Corporate Governance

  

The business and affairs of the company are managed under the direction of our board. In addition to the contact information in this annual report, each stockholder will be given specific information on how he/she can direct communications to the officers and directors of the corporation at our annual stockholders meetings. All communications from stockholders are relayed to the members of the board of directors.

 

Role in Risk Oversight

  

Our board of directors is primarily responsible for overseeing our risk management processes. The board of directors receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our company's assessment of risks. The board of directors focuses on the most significant risks facing our company and our company's general risk management strategy, and also ensures that risks undertaken by our company are consistent with the board's appetite for risk. While the board oversees our company's risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our company and that our board leadership structure supports this approach.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

The Company does not have a class of securities registered under the Exchange Act and therefore its directors, executive officers, and any persons holding more than ten percent of the Company's common stock are not required to comply with Section 16 of the Exchange Act.

  

Item 11. Executive Compensation.

  

The following executives of the Company received compensation in the amounts set forth in the chart below for the fiscal years ended December 31, 2017 and 2016. No other item of compensation was paid to any officer or director of the Company other than reimbursement of expenses.

 

Summary 
Compensation
Table Name 
and 
Principal 
Position
  Year   Salary 
($)
   Bonus 
($)
   Stock 
Awards 
($)
   Option 
Awards 
($)
   Non-Equity Incentive Plan Compensation ($)   Non-Qualified Deferred Compensation Earnings 
($)
   All Other Compensation ($)   Totals 
($)
 
Jane Yu CFO   2017   $10,588    0    0    0    0    0    0   $10,588 
    2016   $6,556    0    0    0    0    0    0   $6,556 

 

Outstanding Equity Awards at Fiscal Year-End Table

 

There were no outstanding equity awards for the year ended December 31, 2017.

 

 15 

 

 

Compensation of Directors

  

The Company has not compensated any of its directors for service on the Board of Directors. Management directors are not compensated for their service as directors; however they may receive compensation for their services as employees of the Company. The compensation received by our management directors is shown in the "Summary Compensation Table" above.

  

Employment Agreements

  

In connection with Ms. Jane Yu's appointment as Chief Financial Officer and Secretary, we entered into an employment agreement (the "Agreement") with Ms. Yu to serve in those positions for a period of one year, on a part-time basis. Ms. Yu's Agreement expires on September 30, 2018 and calls for a monthly salary of RMB 6,000, or approximately $960. Additionally, the Company agreed to issue Ms. Yu 2,000,000 shares of the Company's common stock after the Company finish the share exchange with Liaoning Kuncheng.

 

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

 

The following table sets forth certain information regarding the ownership of our capital stock, as of the date of this report, for: by (i) each person known by us to be the beneficial owner of 5% or more of the outstanding common stock, (ii) each executive officer and director of the Company, and (iii) all of our executive officers and directors as a group.

 

Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of Common Stock that such person has the right to acquire within 60 days of March 29, 2018. For purposes of computing the percentage of outstanding shares of our Common Stock held by each person or group of persons named below, any shares that such person or persons has the right to acquire within 60 days of March 29, 2018 is deemed to be outstanding for such person, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership. 

 

Unless otherwise indicated, the Company believes that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.

 

Unless otherwise specified, the address of each of the persons set forth below is in care of the Company, Room 03/04, 16/F, Jinke Building, No.17-19, Guangwei Road, Guangzhou, China 510030.

 

Title of Class   Name and Address   Number of 
Common Shares 
Beneficially 
Owned
     Percent of 
Class (1)  
 
    Directors and Officers            
Common Stock   Lei Chen, Chairman and Director     0       0.000 %
Common Stock   Yuan Zhao, Director     23,600,000 (2)     11.542 %
Common Stock   Jane Yu, Chief Financial Officer     2,000,000       0.978 %
Common Stock   Pan Pan, Secretary     0       0.000 %
Common Stock   All directors and executive officers as a group (4 persons)     25,600,000       12.520 %
                     
    5% Holders                
Common Stock   Yankuan Li     21,419,394       10.475%  
Common Stock   Liu Dong 
Flat R 10/F 
Block D, Wylie Court 
19 Wylie Path, Yaumatei 
Kowloon 
Hong Kong
    12,500,000       6.113 %
Common Stock   Kunyuan Yang     10,000,000       6.47 %
Common Stock   PAMRIA LLC 
Pacific Asset Management 
Two Union Square 
601 Union Street 
Sute #4200 
Seattle, WA98101
    10,000,000       4.891 %
Common Stock   Guangyuan Liu     16,000,000 (3)     7.825 %

 

*   less than 1%.
(1) Based on 204,473,776 shares of common stock issued and outstanding as of March 29, 2018
(2) Includes 3,500,000 shares held by Mr. Zhao’s wife.
(3) Includes 6,000,000 shares held by Mr. Liu’s son, Jiexun Liu, and 10,000,000 shares held by Mr. Liu.  Mr. Liu is obligated to send back 4,000,000 shares to the Company for cancellation pursuant to the Rescission Agreement, and is expected to do so upon closing of the Kuncheng Share Exchange.

 

 16 

 

 

Item 13. Certain Relationships and Related Transactions, and Director Independence.

 

The following table presents the balances the Company due to and from related parties.

 

   As of
12/31/2017
  As of
12/31/2016
Due from related parties  $-   $- 
Due to related parties   (514,550)   (413,152)
Net due from (due to)   (514,550)   (413,152)

    

Amounts owing to Ms. Yankuan Li, the Company’s former CEO and director, by the Company are non-interest-bearing and payable on demand. The Company did not make any repayment of the loans due in the fiscal year ended December 31, 2017 and the fiscal year ended December 31, 2016. 

 

Director Independence

 

We do not have any independent directors. Because our common stock is not currently listed on a national securities exchange, we have used the definition of "independence" of The NASDAQ Stock Market to make this determination.  

 

We do not currently have a separately designated audit, nominating or compensation committee.

 

Item 14. Principal Accounting Fees and Services.

 

Audit Fees

 

For the two year ended December 31, 2017 and 2016, the audit fees were approximately $6,000 and $6,000 for the audit of our financial statements, respectively.

 

Audit Related Fees

 

For the two year ended December 31, 2017 and 2016, the audit related services fees were nil and nil, respectively.

 

Tax Fees

 

For the two year ended December 31, 2017 and 2016, there were no fee for professional services rendered for tax compliance, tax advice, and tax planning.

 

All Other Fees

 

The Company did not incur any other fees related to services rendered by our principal accountant for the two year ended December 31, 2017 and 2016.

 

Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:

 

approved by our audit committee; or
   
●   entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular  service,  the  audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.

 

We do not have an audit committee.  Our entire board of directors pre-approves all services provided by our independent auditors. The pre-approval process has just been implemented in response to the new rules. Therefore, our board of directors does not have records of what percentage of the above fees was pre- approved.  However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.

 

 17 

 

 

PART IV

 

Item 15. Exhibits, Financial Statement Schedules.

 

(a) The following documents are filed as part of this report:

 

(1) Financial Statements and Report of Independent Registered Public Accounting Firm, which are set forth in the index to Consolidated Financial Statements on pages F-1 through F-17 of this report.

 

Report of Independent Registered Public Accounting Firm - Centurion ZD CPA Limited F-2
Consolidated Balance Sheets F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Shareholders' Equity F-5
Consolidated Statements of Cash Flows F-6
Notes to Consolidated Financial Statements F-7

 

(2) Financial Statement Schedule: None.

 

(3) Exhibits

 

Exhibit No.   Description
2.1   Share Exchange Agreement with Jinke (12)
2.2   Share Exchange Agreement with Kuncheng dated November 15, 2016 (13)
3.1   Articles of Incorporation (1)
    Amendment to Articles of Incorporation
3.2   Bylaws (1)
3.3   Certificate of Amendment to Articles of Incorporation. (9)
10.1   Securities Purchase Agreement (2)
10.2   Registration Rights Agreement (2)
10.3   Subsidiary Guarantee (2)
10.4   Security Agreement (2)
10.5   Form of Senior Secured Convertible Debenture (2)
10.6   Form of Common Stock Purchase Warrant (2)
10.7   Amendment Agreement among the Company and certain investors, dated February 21, 2008 (3)
10.8   Share Transfer Agreement between Huantong Telecom Singapore Company Pte. Ltd. and TCAM Technology Pte.  Ltd., dated February 14, 2008 (4)
10.9   Share Transfer Agreement between Global Telecom Holdings Limited and Guangzhou Renwoxing Telecom, dated July 29, 2008 (5)
10.10   Amendment Agreement between the Company and certain investors, dated November 3, 2008 (6)
10.11   Settlement Agreement, dated December 29, 2009 (7)
10.12   Settlement Agreement, dated November 28, 2011 (8)
10.13   Share Exchange Agreement, by and among the Company, CTL and the former shareholders of CTL. (9)
10.14   Employment Agreement with Ms. Yu Effective as of March 5, 2013(10)
10.15   Cooperation Agreement with Shenzhen Jinke Energy Development Co., Ltd., dated as of June 30, 2014 (11)
10.16   Mutual Rescission Agreement dated November 15, 2016 by and among the Company, Liu Guangyuan and Jinke (13)
10.17   Share Transfer Agreement with Wee San Chuan, Francis, dated January 1, 2015
10.18   Employment Agreement with Jane Yu dated September 30, 2016
10.19   Mutual Recission Agreement Dated December 22, 2017 by and among China Teletech Holding Inc., Liaoning Kuncheng Education Investment Co., Ltd., and Kunyuan Yang
21.1   List of Subsidiaries

 

 18 

 

  

31.1   Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2   Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1   Certifications of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350*
32.2   Certifications of CFO pursuant to 18 U.S.C. Section 1350*
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Schema
101.CAL   XBRL Taxonomy Calculation Linkbase
101.DEF   XBRL Taxonomy Definition Linkbase
101.LAB   XBRL Taxonomy Label Linkbase
101.PRE   XBRL Taxonomy Presentation Linkbase

 

*In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed.

 

(1) Incorporated by reference to Form SB-2 filed on January 6, 2006.
(2) Incorporated by reference to Form 8-K/A filed on August 8, 2007.
(3) Incorporated by reference to Form 8-K filed on February 28, 2008.
(4) Incorporated by reference to Form 8-K filed on March 11, 2008.
(5) Incorporated by reference to Form 8-K filed on July 31, 2008.
(6) Incorporated by reference to Form 8-K filed on November 5, 2008.
(7) Incorporated by reference to the Form 8-K filed on January 4, 2010.
(8) Incorporated by reference to the Form 8-K filed on December 1, 2011.
(9) Incorporated by reference to the Form 8-K filed on April 5, 2012.

(10)

(11)

(12)

Incorporated by reference to the Form 8-K filed on March 27, 2013
Incorporated by reference to the Form 8-K filed on August 8, 2014.

Incorporated by reference to the Form 8-K filed on January 29, 2015.

(13) Incorporated by reference to the Form 8-K/A filed on November 15, 2016.

 

 19 

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  CHINA TELETECH HOLDING, INC.
     
  By: /s/ Lei Chen
    Lei Chen
Date: April 2, 2018 Director
    (Principal Executive Officer)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacities and on the dates indicated.

 

Name   Title   Date
         
/s/ Lei Chen   Director    
Lei Chen   (Principal Executive Officer)   April 2, 2018
         
/s/ Jane Yu   Chief Financial Officer    
Jane Yu   (Principal Financial and Accounting Officer)   April 2, 2018

 

 20 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

China Teletech Holding, Inc.

 

Audited Consolidated Financial Statements

 

December 31, 2017 and 2016

 

(Stated in US Dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

China Teletech Holding, Inc.

 

Contents Pages
   
Report of Independent Registered Public Accounting Firm F-2
   
Consolidated Balance Sheets F-3
   
Consolidated Statements of Operations and Comprehensive Loss F-4
   
Consolidated Statements of Changes in Stockholders’ Deficit F-5
   
Consolidated Statements of Cash Flows F-6
   
Notes to Consolidated Financial Statements F-7 – F-17

 

 F-1 

 

 

Yu Certified Public Accountant, P.C.

Professionalism, Expertise, Integrity

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the board of Directors and Shareholders of
China Teletech Holding, Inc.

 

We have audited the accompanying consolidated balance sheets of China Teletech Holding, Inc. (the “Company”) as of December 31, 2017 and 2016 and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for the years ended December 31, 2017 and 2016. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (Untied States). Those standards require that we plan and perform the audit 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 internal control over financial reporting. Our audit 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 financial statements referred to above present fairly, in all material respects, the financial position of China Teletech Holding Inc. as of December 31, 2017 and 2016, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 7 to the financial statements, the Company has suffered operating loss and has experienced negative cash flows from operations, which raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to those matters are also described in Note 7 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. 

 

New York, New York

April 2, 2018

 

 

Certified Public Accountants

99 Madison Avenue, Suite 601, New York NY 10016

Tel: 347-618-9237, 516-778-6818

Email: Info@ywlcpa.com

 F-2 

 

 

China Teletech Holding, Inc.

Consolidated Balance Sheets

As of December 31, 2017, and 2016

(Stated in US Dollars)

 

ASSETS Note  12/31/2017   12/31/2016 
          
Current Assets     -    - 
Total Current Assets     -    - 
             
TOTAL ASSETS    $-   $- 
             
LIABILITIES & STOCKHOLDERS' EQUITY            
             
Current Liabilities            
Due to related parties 3  $514,550    413,152 
Accrued liabilities and other payables     29,742    50,000 
Contingency liabilities 4   -    41,571 
Total Current Liabilities     544,292    504,723 
             
TOTAL LIABILITIES    $544,292   $504,723 
             
STOCKHOLDERS' EQUITY            
Common stock US$0.01 par value; 1,000,000,000 authorized, 202,473,776 and 147,513,776 shares issued and outstanding at December 31, 2017 and 2016, respectively.    $2,024,738   $1,475,138 
Additional Paid in capital     5,838,765    5,838,765 
Discount on issuance of common stock     (356,031)   - 
Retained Deficit     (8,060,734)   (7,827,596)
Other Comprehensive Loss     8,970    8,970 
TOTAL STOCKHOLDERS' EQUITY    $(544,292)  $(504,723)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $-   $- 

 

See Notes to Consolidated Financial Statements

 

 F-3 

 

 

China Teletech Holding, Inc.

Consolidated Statements of Operations and Comprehensive Loss

For the Years Ended December 31, 2017 and 2016

(Stated in US Dollars)

 

  Note 

For the
Year Ended
December 31,
2017

  

For the
Year Ended
December 31,
2016

 
Sales    $-   $- 
Cost of sales     -    - 
Gross profit     -    - 
             
Operating expenses     -    - 
Administrative and general expenses     236,138    50,159 
Total operating expense     236,138    50,159 
             
Loss from Operations     (236,138)   (50,159)
             
Gain on disposal of subsidiary 5   3,000    - 
Loss before taxation     (233,138)   (50,159)
Income tax     -    - 
Net Loss    $(233,138)  $(50,159)
             
Other Comprehensive Income:            
Foreign currency translation change     -    - 
Comprehensive Loss:     (233,138)   (50,159)
             
Net Loss Attributable To:            
- Non controlling interest    $-   $- 
- the Company     (233,138)   (50,159)
     $(233,138)  $(50,159)
Earnings Loss Per Share 6          
- Basic    $-   $- 
- Diluted    $-   $- 
             
Weighted Average Shares Outstanding            
- Basic     202,473,776    147,513,776 
- Diluted     202,473,776    147,513,776 

 

See Notes to Consolidated Financial Statements

 

 F-4 

 

 

China Teletech Holding, Inc.

Consolidated Statements of Changes in Stockholders’ Deficit

For the Years Ended December 31, 2017 and 2016

(Stated in US Dollars)

 

    Total Number of Shares     Common Stock     Discount on
Issuance of
Common Stock
    Additional Paid in Capital     Shares To be issued     Other Comprehensive Income (Loss)     Retained Deficit     Total
Balance, January 1, 2016     147,513,776       1,475,138       -       5,838,765       40,000       8,970       (7,777,437 )   (414,564)
Net loss     -       -       -       -       -       -       (50,159 )   (50,159)
Share issuance cancellation     -       -       -       -       (40,000 )     -       -     (40,000)
Balance at December 31, 2016     147,513,776       1,475,138       -       5,838,765       -       8,970       (7,827,596 )   (504,723)
                                                             
Balance, January 1, 2017     147,513,776       1,475,138       -       5,838,765       -       8,970       (7,827,596 )   (504,723)
Common stock issuance     54,960,000       549,600       (356,031 )     -       -       -       -     193,569
Net loss     -       -       -       -       -       -       (233,138 )   (233,138)
Balance at December 31, 2017     202,473,776       2,024,738       (356,031 )     5,838,765       -       8,970       (8,060,734 )   (544,292)

 

See Notes to Consolidated Financial Statements

 

 F-5 

 

 

China Teletech Holding, Inc.

Consolidated Statements of Cash Flows

As of December 31, 2017 and 2016

(Stated in US Dollars)

 

   For the
Year Ended
December 31,
2017
   For the
Year Ended
December 31,
2016
 
Cash flow from operating activities        
Net Loss before tax  $(233,138)  $(50,159)
           
Non-cash share compensation   193,569    - 
(Decrease)/Increase in accrued liabilities and other payables   (20,258)   38,000 
Increase in amount due to related parties   101,398    10,588 
(Decrease)/Increase in contingency liabilities   (41,571)   41,571 
Cancellation of share issuance   -    (40,000)
           
Net cash provided by operating activities   -    - 
           
Cash flows from investing activities          
Net cash inflow from disposal of subsidiaries   -    - 
           
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  $-   $- 

 

See Notes to Consolidated Financial Statements

 

 F-6 

 

 

China Teletech Holding, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2017, and 2016

 

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.

 

On November 8, 2016, the Company registered a wholly-owned subsidiary, namely Strategic Service Group Limited, which was incorporated in British Virgin Islands. On October 31, 2017, the Company transferred 100% equity of Strategic Service Group Limited to Ms. Li Yankuan with the consideration of $3,000.

 

The principal activity of the Company is investment holding company.

 

 F-7 

 

 

China Teletech Holding, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2017, and 2016

 

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 December 31, 2016, detailed identities of the consolidating subsidiaries are as follows:

 

  Name of Company   Place of Incorporation   Attributable Equity Interest %
           
  Strategic Services Group Limited   BVI   100%

 

As of December 31, 2017, the Company did not own any subsidiary.

 

(c)Economic and Political Risks

 

The Company is 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.

 

 F-8 

 

 

China Teletech Holding, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2017, and 2016

 

(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.

 

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.

 

 F-9 

 

 

China Teletech Holding, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2017, and 2016

 

(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

 

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.

 

 F-10 

 

 

China Teletech Holding, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2017, and 2016

 

(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, 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, the taxation of these entities are summarized below:

 

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

 

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 year ended December 31, 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.

 

 F-11 

 

 

China Teletech Holding, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2017, and 2016

 

(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.

 

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 December 31, 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)

 

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".

  

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.

 

(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.

 

 F-12 

 

 

China Teletech Holding, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2017, and 2016

 

(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.

 

(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.

 

 F-13 

 

 

China Teletech Holding, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2017, and 2016

 

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.

 

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.DUE TO RELATED PARTIES

 

     As of
12/31/2017
   As of
12/31/2016
 
           
  Ms. Li, Yankuan   514,550    413,152 
     $514,550   $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.

 

 F-14 

 

 

China Teletech Holding, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2017, and 2016

 

4.Contingency liabilities

 

     As of
12/31/2017
   As of
12/31/2016
 
           
  Disputed Legal Service Fee    -    41,571 
     $     -   $41,571 

 

On November 4, 2016, according to the Case Index Number 157901/2015 under the Supreme Court of the State of New York, New York County, the Company was ordered to pay the legal service to Ellenoff Grossman & Schole. The payment should include the principal of USD $36,626.25, and the interest using annual interest rate of 9%, starting from June 30, 2015. To reflect such impact, the Company had accrued contingency liability using best estimate, as of the date of December 31, 2016.

 

As mentioned in Note 8, on March 19, 2018, the Company and Ellenoff Grossman & Schole, entered into the reconciliation agreement, and the aggregate payment was reduced to USD $ 15,000. Therefore, the Company had made corresponding adjustment upon such contingency liability, and recorded accruals accordingly, as of the date of December 31, 2017.

 

5.Gain on disposal of subsidiary

 

As mentioned in Note 1, on October 31, 2017, the Company transferred 100% equity of Strategic Service Group Limited (the “Subsidiary”) to Ms. Li Yankuan with the consideration of $3,000.

 

The subsidiary had no operation activity in both USA and BVI, and had no assets or liability. Therefore, the fair value of the subsidiary was deemed zero, and the gain on disposal of subsidiary was $3,000.

 

 F-15 

 

 

China Teletech Holding, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2017, and 2016

 

6.EARNINGS PER SHARE

 

     2017   2016 
  Basic and diluted loss per share numerator        
  Net loss  $(233,138)  $(50,159)
  Loss attributable to non-controlling interest   -    - 
  Loss attributable to common stockholders  $(233,138)  $(50,159)
             
  Original Shares:   147,513,776    147,513,776 
  Additions from Actual Events          
  - Issuance of shares   54,960,000    - 
  Basic weighted average shares outstanding   202,473,776    147,513,776 
             
  Loss Per Share          
  - Basic  $-   $- 
  - Diluted  $-   $- 
             
  Weighted Average Shares Outstanding          
  - Basic   202,473,776    147,513,776 
  - Diluted   202,473,776    147,513,776 

 

7.GOING CONCERN UNCERTAINTIES

 

These 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 year ended December 31, 2017, the Company reported a net loss of $233,138. The Company had an accumulated deficit of $8,060,734 as of December 31, 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 or potential shareholders or external debt or equity financing will provide the additional cash to meet the Company’s obligations as they become due. Also, the management team will focus on acquiring potential operation which can generate stable cash flows, to meet the need of working capital of the Company.

 

These 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.

 

 F-16 

 

 

China Teletech Holding, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2017, and 2016

 

8.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 March 19, 2018, the Company and Ellenoff Grossman & Schole, entered into the Confidential Settlement Agreement and Release (the “Agreement”) pursuant to which the Company agreed to pay $15,000 to Ellenoff Grossman & Schole within ten business days as the release of an action decided by the Supreme Court of the State of New York, New York County under the Index Number 157901/2015.

 

 

F-17