UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

Securities registered pursuant to Section 12(b) of the Act:

 

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

 

N/A
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 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 last 90 days.
	Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-K (§229.405 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 in Part III of this Form 10-K or any amendment to this Form 10-K.
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company”, in Rule 12b-2 of the Exchange Act.

 

 

The aggregate market value of Common Stock held by non-affiliates of the Registrant on June 30, 2017 was $8,829,391.25 based on a $0.25 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.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.
    

DOCUMENTS INCORPORATED BY REFERENCE

None.

 

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Our business operations are subject to a number of risks and uncertainties, including, but not limited to those set forth below:

Risks Relating To Our Company

We Are Still Considered To Be A Start-Up Company And Have Little Operating History On Which To Evaluate Our Potential For Future Success.

Our company was formed in 1996. During the years ended December 31, 2017 and 2016, we did not derive any revenue from the processing and sale of ore concentrates. We have had limited operating history under our proposed business model upon which you can adequately evaluate our business and prospects. Our limited operating history may prevent a meaningful evaluation of our business, financial performance and prospects.

You must also consider all the risks and uncertainties frequently encountered by developing companies in a very competitive field, such as ours. Our inability to find viable or profitable acquisition candidates and then finding the necessary funding for these purchases may adversely affect our ability to progress.

Our acquisition of Zhen Ding NV provided us with our first business operations.  Despite this acquisition, we are still operating at a loss.  Until we are able to integrate Zhen Ding JV and obtain enough funding to execute our business plan for Zhen Ding JV, we will not generate sufficient revenue to cover our operating expenses.

Doubts exist about our ability to continue as a going concern.

If We Do Not Obtain Additional Capital, We May Be Unable To Sustain Our Business.

Our operating plan for 2017 and 2018 is focused on restarting the Wuxi ore milling operations through the permitting and exploration of further reserves by Xinzhou Gold and the subsequent expansion of the mill. We estimate we will require a minimum of approximately $3,500,000 to support this plan for the next 12 months. We are actively seeking additional funding, but to date have not entered into any agreements or other arrangements for such financing. There can be no assurance that the required additional financing will be available on terms favorable to us, or if found at all.

Without additional funding, our company will not be able to pursue its business model. If adequate funds are not available or are not available on acceptable terms when required, we would be required to significantly curtail our operations and would not be able to fund the development of the business envisioned by our business model. These circumstances could have a material adverse effect on our business and our ability to continue to operate as a going concern.  If additional funds are raised through the issuance of equity or convertible debt securities, our existing shareholders may experience substantial dilution, and such securities may have rights, preferences and privileges senior to those of our common stock.

If we cannot obtain additional funding, we may be required to:

•          reduce or possibly eliminate our expenditures on exploration; and

•          seek other businesses opportunities and other strategic transactions with a view toward diversifying our business and attracting new investment.

Even if we do find a source of additional capital, we may not be able to negotiate acceptable terms and conditions for receiving the additional capital. Any future capital investments could dilute or otherwise materially and adversely affect the holdings or rights of our existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain financing could have rights, preferences and privileges senior to our common stock. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us.

 

We May Have Difficulty Raising Necessary Capital To Fund Operations As A Result Of Market Price Volatility Of Our Shares Of Common Stock.

The price per share of our shares on the OTC market may at any time become subject to volatility resulting from purely market forces over which we will have no control. Such volatility may make it more difficult to find investors willing to invest in our common stock, or to negotiate equity financing or terms that are acceptable to us, furthering hampering our plans of expansion and growth.

We Have Incurred Losses In Certain Prior Periods And May Incur Losses In The Future.

We incurred net losses of approximately $19 million from inception.  As at December 31, 2017 we had a working capital deficit of $8,678,497. We expect to incur additional losses in the future. We expect our costs and expenses to increase as we expand our operations. Our ability to achieve profitability depends on the ability to raise necessary funding, our ability to integrate new projects, the extensiveness of any reserves, and the global pricing of precious and base metals. We may not be able to achieve or sustain profitability on a quarterly or annual basis.

Our Profitability Is Heavily Dependent On The World Price Of Commodities.

The selling price that we will obtain for any metal production is almost totally dependent on the world price. Should the price of gold, silver, or copper, our main interests, fall below the cost of production, we may have to cease all mining and milling activities. Our future, at that point, will become extremely doubtful.

We Have Not Properly Explored The Potential Resources On The Wuxi Property

We Cannot Assure You That Our Growth Strategy Will Be Successful.

Our growth strategy is primarily through the acquisition of new mines and their expandability. However, many obstacles exist to incorporating any new entity into our existing operations. Acquisitions of businesses or other material operations may require debt financing or additional equity financing, resulting in leverage or dilution of ownership. Integration of acquired business operations could disrupt our business by diverting management away from day-to-day operations. The difficulties of integration may be increased by the necessity of coordinating geographically dispersed organizations, integrating personnel with disparate business backgrounds and combining different corporate cultures. We also may not be able to maintain key employees or customers of an acquired business or realize cost efficiencies or synergies or other benefits we anticipated when selecting our acquisition candidates. In addition, we may need to record write-downs from future impairments of intangible assets, which could reduce our future reported earnings. At times, acquisition candidates may have liabilities or adverse operating issues that we fail to discover through due diligence prior to the acquisition which will be required to comply with laws of PRC, to the extent applicable. There can be no assurance that any proposed acquisition will be able to comply with PRC requirements, rules and/or regulations, or that we will successfully obtain governmental approvals to the extent required, which may be necessary to consummate such acquisitions.

We cannot, therefore, assure you that we will be able to successfully overcome such obstacles and establish these new additions. Our inability to successfully implement our growth strategy may have a negative impact on existing operations and our future financial condition, results of operations or cash flows.

 

If We Are Not Able To Implement Our Strategies To Achieve Our Business Objectives, Our Business Operations And Financial Performance May Be Adversely Affected.

Our business plan and growth strategy is based on currently prevailing circumstances and the assumption that certain circumstances will or will not occur, as well as the inherent risks and uncertainties involved in various stages of development. However, there is no assurance that we will be successful in implementing our strategies or that our strategies, even if implemented, will lead to the successful achievement of our objectives. If we are not able to successfully implement our strategies, our business operations and financial performance may be adversely affected.

We Depend On Our Key Management Personnel And The Loss Of Their Services Could Adversely Affect Our Business.

We place substantial reliance upon the efforts and abilities of our executive officers, Mr. De Gang Wei, our Chairman and key member of Management of our mining operations and CFO; and Ms. Wen Mei Tu, our President and CEO. The loss of the services of any of our executive officers could have a material adverse effect on our business, operations, revenues or prospects. We do not maintain key man life insurance on the lives of these individuals. As well, both Mr. Wei and Ms. Tu have significant activities outside our company that put demands on their time that could detract from their management of our company’s business.

Failure To Attract And Retain Personnel Could Have An Adverse Impact On Our Operations.

Our future success depends on our ability to identify, attract, hire, retain and motivate other well-qualified managerial, technical, and operational personnel.  There is intense competition for these individuals, and there can be no assurance that these professionals will be available in the market or that we will be able to meet their compensation requirements.

We Are An Emerging Growth Company As Defined Under The Jumpstart Our Business Startups Act.

An “emerging growth company” is an issuer whose initial public offering was or will be completed after December 8, 2011, and had total annual gross revenues of less than $1 billion during its most recently completed fiscal year. An issuer’s EGC status terminates on the earliest of:

   

 

Pursuant to the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), as an emerging growth company our Company can elect to opt out of the extended transition period for any new or revised accounting standards that may be issued by the PCAOB or the SEC. Our Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, our Company, as an emerging growth company, can adopt the standard for the private company. This may make comparison of our Company's financial statements with any other public company which is not either an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible as possible different or revised standards may be used.

 

Our Company has elected to use the extended transition period for complying with new or revised financial accounting standards available under Section 102(b)(2)(B) of the JOBS Act. Among other things, this means that our Company's independent registered public accounting firm will not be required, as with smaller reporting companies, to provide an attestation report on the effectiveness of our Company's internal control over financial reporting so long as it qualifies as an emerging growth company, which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go undetected. Likewise, so long as it qualifies as an emerging growth company, our Company may elect not to provide certain information, including certain financial information and certain information regarding compensation of executive officers that would otherwise have been required to provide in filings with the SEC, which may make it more difficult for investors and securities analysts to evaluate our Company. As a result, investor confidence in our Company and the market price of our common stock may be adversely affected.

In addition to qualifying as an emerging growth company, we also currently qualify as a Smaller Reporting Company under Rule 12b-2 of the Securities Exchange Act of 1934, as amended.  Rule 12b-2 defines a Smaller Reporting Company as an issuer that is not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that:

Other Risks Related To Our Business

Reserves And Mineralization Estimates Are Uncertain.

We rely on Xinzhou Gold for our supply of ores.  There are numerous uncertainties inherent in estimating proven and probable reserves and mineralization, including many factors beyond our control. The estimation of reserves and mineralization is a subjective process and the accuracy of any such estimates is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, metallurgical testing and production and the evaluation of mine plans subsequent to the date of any estimate may justify revision of such estimates. No assurances can be given that the volume and grade of reserves recovered and rates of production will not be less than anticipated. Assumptions about prices are subject to great uncertainty and gold prices have fluctuated widely in the past. Declines in the market price of gold or other precious metals also may render reserves or mineralization containing relatively lower grades of ore uneconomic to exploit. Changes in operating and capital costs and other factors including, but not limited to, short-term operating factors such as the need for sequential development of ore bodies and the processing of new or different ore grades, may materially and adversely affect Xinzhou Gold’s mine reserves and as a result affect our production.

 

We Potentially Face Intense Competition From Other Companies In The Mining Field That Have Greater Resources Than Us.

Most of our potential competitors have substantially greater financial, technical, production and other resources than we do. Greater size in some cases provides them with a competitive advantage with respect to production costs because of their economies of scale and their ability to purchase raw materials at lower prices. These companies may be more attractive for qualified and experienced personnel. Companies with greater financial resources may readily outbid us for potential lucrative acquisitions.

Acts Of Terrorism, Responses To Acts Of Terrorism And Acts Of War May Impact Our Business And Our Ability To Raise Capital.

Future acts of war or terrorism, national or international responses to such acts, and measures taken to prevent such acts may harm our ability to raise capital or our ability to operate, especially to the extent we depend upon activities conducted in foreign countries, such as China.  In addition, the threat of future terrorist acts or acts of war may have effects on the general economy or on our business that are difficult to predict.  We are not insured against damage or interruption of our business caused by terrorist acts or acts of war.

Risks Relating To The People's Republic Of China

Currency Conversion And Exchange Rate Volatility Could Adversely Affect Our Financial Condition.

The PRC government imposes control over the conversion of Renminbi into foreign currencies. Under the current unified floating exchange rate system, the People's Bank of China publishes an exchange rate, which we refer to as the People's Bank of China exchange rate, based on the previous day's dealings in the inter-bank foreign exchange market. Financial institutions authorized to deal in foreign currency may enter into foreign exchange transactions at exchange rates within an authorized range above or below the People's Bank of China exchange rate according to market conditions. Pursuant to the Foreign Exchange Control Regulations of the PRC issued by the State Council which came into effect on April 1, 1996, and the Regulations on the Administration of Foreign Exchange Settlement, Sale and Payment of the PRC which came into effect on July 1, 1996, regarding foreign exchange control, conversion of Renminbi into foreign exchange by Foreign Investment Enterprises, for use on current account items, including the distribution of and profits to foreign investors, is permissible. Conversion of Renminbi into foreign currencies for capital account items, including direct investment, loans, and security investment, is still under certain restrictions. On January 14, 1997, the State Council amended the Foreign Exchange Control Regulations and added, among other things, an important provision, which provides that the PRC government shall not impose restrictions on recurring international payments and transfers under current account items.

Enterprises in the PRC (including Foreign Investment Enterprises) which require foreign exchange for transactions relating to current account items, may, without approval of the State Administration of Foreign Exchange, or SAFE, effect payment from their foreign exchange account or convert and pay at the designated foreign exchange banks by providing valid receipts and proofs.

To The Extent Our Assets Are Located In China, Any Dividends Or Proceeds From Liquidation Is Subject To The Approval Of The Relevant Chinese Government Agencies.

If we pursue our plans to operate mainly in China, our assets will be predominantly located inside China. Under the laws governing foreign invested enterprises in China, dividend distribution and liquidation are allowed but subject to special procedures under the relevant laws and rules. Any dividend payment will be subject to the decision of the board of directors and subject to foreign exchange rules governing such repatriation. Any liquidation is subject to both the relevant government agency's approval and supervision as well the foreign exchange control. This may generate additional risk for our investors in case of dividend payment and liquidation.

 

China’s Economic Policies Could Affect Our Business.

To the extent our assets will be located in China and to the extent our revenue will be derived from our operations in China, our results of business and prospects would be subject to the economic, political and legal developments in China.

While China's economy has experienced a significant growth in the past twenty years, growth has been irregular, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall economy of China, but may also have a negative effect on us. For example, our sales results and financial condition may be adversely affected by the government control over capital investments or changes in tax regulations with our future investors and/or customers.

The economy of China has been transitioning from a planned economy to a more market-oriented economy. In recent years the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform and the reduction of state ownership of productive assets and the establishment of corporate governance in business enterprises; however, a substantial portion of productive assets in China are still owned by the Chinese government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. It also exercises significant control over China's economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

We May Face Obstacles From The Communist System In The People's Republic Of China.

Foreign companies conducting operations in The People's Republic of China face significant political, economic and legal risks. The Communist regime in The People's Republic of China includes a stifling bureaucracy that may discourage Western investment.

We May Have Difficulty Establishing Adequate Management, Legal And Financial Controls In The People's Republic Of China.

The People's Republic of China historically has been deficient in Western style management and financial reporting concepts and practices, as well as in modern banking, computer and other control systems. We may have difficulty in hiring and retaining a sufficient number of qualified employees to work in The People's Republic of China. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards.

Because Our Assets And Operations Are Located In China, You May Have Difficulty Enforcing Any Civil Liabilities Against Us Under The Securities And Other Laws Of The United States Or Any State.

All of our assets are currently located in the Republic of China. In addition, our directors and officers are non-residents of the United States, and all or a substantial portion of the assets of these non-residents are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon these non-residents, or to enforce against them judgments obtained in United States courts, including judgments based upon the civil liability provisions of the securities laws of the United States or any state.

There is uncertainty as to whether courts of the Republic of China would enforce:

   

 

   

The PRC Legal System Embodies Uncertainties, Which Could Limit Law Enforcement Availability.

The PRC legal system is a civil law system based on written statutes. Unlike common law systems, decided legal cases have little precedence. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past 27 years has significantly enhanced the protections afforded to various forms of foreign investment in China. Each of our PRC operating subsidiaries and affiliates is subject to PRC laws and regulations. However, these laws and regulations change frequently and the interpretation and enforcement involve uncertainties. For instance, we may have to resort to administrative and court proceedings to enforce the legal protection that we are entitled to by law or contract. However, since PRC administrative and court authorities have significant discretion in interpreting statutory and contractual terms, it may be difficult to evaluate the outcome of administrative court proceedings and the level of law enforcement that we would receive in more developed legal systems. Such uncertainties, including the inability to enforce our contracts, could affect our business and operation. In addition, intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other countries. Accordingly, we cannot predict the effect of future developments in the PRC legal system, particularly with regard to the industries in which we operate, including the promulgation of new laws. This may include changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. These uncertainties could limit the availability of law enforcement, including our ability to enforce our agreements with the government entities and other foreign investors.

Any Dividends And Other Distributions From Any Subsidiaries In China Are Subject To Various Legal And Contractual Restrictions And Uncertainties, And Our Ability To Pay Dividends Or Make Other Distributions To Our Shareholders Are Negatively Affected By Those Restrictions And Uncertainties.

We plan to operate in China through PRC subsidiaries.  As a result, our profits available for distribution to our shareholders are dependent on the profits available for distribution from PRC subsidiaries.  If the subsidiary incurs debt on its own behalf, the debt instruments may restrict its ability to pay dividends or make other distributions, which in turn would limit our ability to pay dividends on our shares.  Under the current PRC laws, because we are incorporated in the Delaware, any PRC subsidiaries would be regarded as Sino-foreign joint venture enterprises in China.  Although dividends paid by foreign invested enterprises, such as wholly foreign-owned enterprises and Sino-foreign joint ventures, are not subject to any PRC corporate withholding tax, the PRC laws permit payment of dividends only out of net income as determined in accordance with PRC accounting standards and regulations.  Determination of net income under PRC accounting standards and regulations may differ from determination under U.S. GAAP in significant aspects, such as the use of different principles for recognition of revenues and expenses.  In addition, if we make additional capital contributions to PRC subsidiaries, (which may occur through the capitalization of undistributed profits), then additional approval of the PRC government would be required due to an increase in our registered capital and total investment .  Under the PRC laws, a Sino-foreign joint venture enterprise is required to set aside a portion of its net income each year to fund designated statutory reserve funds.  These reserves are not distributable as cash dividends.  As a result, our primary internal source of funds of dividend payments from PRC subsidiaries are subject to these and other legal and contractual restrictions and uncertainties, which in turn may limit or impair our ability to pay dividends to our shareholders.  Moreover, any transfer of funds from us to PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, is subject to registration with or approval by PRC governmental authorities. We currently do not intend on paying any dividends in the future and expect to retain all available funds to support our operations and to finance growth and development of our business. We have never declared dividends or paid cash dividends.  Our board of directors will make any future decisions regarding dividends.  We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate paying any cash dividends in the near future.  Therefore, any gains on an investment in our common stock will likely occur through an increase in our stock price, which may or may not occur.

 

We May Be Exposed To Liabilities Under The Foreign Corrupt Practices Act, And Any Determination That We Violated The Foreign Corrupt Practices Act Could Have A Material Adverse Effect On Our Business.

We are subject to the Foreign Corrupt Practice Act, or FCPA, and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute, for the purpose of obtaining or retaining business.  We have operations, agreements with third parties and we make sales in China.  Our activities in China create the risk of unauthorized payments or offers of payments by the employees, consultants, sales agents or distributors of our Company, even though they may not always be subject to our control.  It is our policy to implement safeguards to discourage these practices by our employees.  However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents or distributors of our Company may engage in conduct for which we might be held responsible.  Violations of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the U.S. government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

Risks Related To Corporate And Stock Matters

Our Common Stock Is A Penny Stock. Trading Of Our Stock May Be Restricted By The SEC’s Penny Stock Regulations That May Limit A Stockholder’s Ability To Buy And Sell Our Stock.

Our common shares are deemed “a penny stock”. The SEC has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

In addition, we intend to apply for our common stock to be quoted on NASDAQ (FINRA)’s the Over-the-Counter Bulletin Board (OTCBB).  There can be no assurance that we will succeed in this effort.  Failure to list our shares on the OTCBB may impair the liquidity of our common stock.

NASD Sales Practice Requirements May Also Limit A Stockholder’s Ability To Buy And Sell Our Stock.

Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2 promulgated thereunder by the SEC require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor’s account.

 

Potential investors in our common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be “penny stock.” Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

Shares Eligible For Future Sale May Adversely Affect The Market Price Of Our Common Stock, As The Future Sale Of A Substantial Amount Of Our Restricted Stock In The Public Marketplace Could Reduce The Price Of Our Common Stock.

From time to time, certain of our stockholders may be eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act (“Rule 144”), subject to certain limitations. In general, pursuant to Rule 144, a stockholder (or stockholders whose shares are aggregated) who has satisfied a one-year holding period may, under certain circumstances, sell within any three-month period a number of securities which does not exceed the greater of 1% of the then outstanding shares of common stock or the average weekly trading –volume of the class during the four calendar weeks prior to such sale. Rule 144 also permits, under certain circumstances, the sale of securities, without any limitations, by a non-affiliate of our company that has satisfied a two-year holding period. Any substantial sale of common stock pursuant to Rule 144 or pursuant to any resale prospectus may have an adverse effect on the market price of our securities.

You May Not Be Able To Liquidate Your Investment Since There Is No Assurance That A Public Market Will Develop For Our Common Stock Or That Our Common Stock Will Ever Be Approved For Trading On A Recognized Exchange.

There is no established public trading market for our securities. After this document is declared effective by the U.S. Securities and Exchange Commission, we intend to seek a market maker to apply for a quotation on the OTCBB in the United States. We cannot assure you that a market maker will agree to file the necessary documents with the OTCBB, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, you may be unable to liquidate its investment, which will result in the loss of your investment.

Our Directors And Executive Officers, Collectively, Own Approximately 34% Of Our Outstanding Common Stock And May Be Able To Control Our Management And Affairs.

    

As of December 31, 2017, our executive officers and directors beneficially owned an aggregate of approximately 34.0% of our outstanding common stock. As a result, our directors and executive officers, acting together, may be able to control our management and affairs, including the election of directors and approval of significant corporate transactions, such as mergers, consolidation, and sale of all or substantially all of our assets. Consequently, this concentration of ownership may have the effect of delaying or preventing a change of control, including a merger, consolidation or other business combination involving us, even if such a change of control would benefit our stockholders. It could also deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and it may affect the market price of our common stock. In deciding how to vote on such matters, those shareholders’ interests may conflict with yours.

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The overview of milling process is for the ore to be extracted and brought to the plant and initially passed through two crushers, one coarse and one more refined, which is then fed into one of three grinding mills, where the ore is ground into powder form. At the grinding process, the powdered ore is mixed with chemicals and then fed into a floatation machine. After the chemical treatment, output from the floatation machine goes through a filter and drying machine. The output of the drying produces our final product, which is a gold, silver, lead, zinc and copper concentrate. We do not produce pure metal. We estimate our extracted ore is 65-80% pure and is sold to refineries that further purify and separate the concentrate. Tailing are sent directly to a tailing pond near the entrance side of the plant. There is no hazardous waste produced by our concentration plant and we recycle nearly all of the waste water.

At the beginning of fiscal 2015, we idled our mineral processing plant due to an overall downturn in the demand and market prices for our concentrates.  This downturn has coincided with an overall economic recession in China and downturn in the global commodities market over the past 12 months.  At the beginning of fiscal 2017, we shut down the mineral processing plant in China due to insufficient working capital.

We intend to resume selling processed ore concentrate as soon as possible in order to supply Zhen Ding JV with the cash flow needed to keep its plant running and to maintain a viable work force for future expansion.  However, we are not able to predict at this time when economic conditions will allow us to resume our ore refinery operation.

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As at the date of this report, Xinzhou Gold and we continue to seek investment of approximately $3,500,000, which would allow Xinzhou Gold to resume drilling under its anticipated permit, and allow us to resume refinery activities.  In anticipation of financing and permit approval, our joint venture engaged contractors during the year ended December 31, 2017 to conduct safety inspections and repairs, and to plan anticipated drilling locations.  We also engaged Mr. Dai Honglin as Chief Engineer and general manager of Xinzhou Gold’s and our gold mining operations.

          

Going forward, we will continue to seek sufficient financing to re-establish our mineral extraction and refining operations.  We will also seek to identify and evaluation businesses opportunities and other strategic transactions on an ongoing basis with a view toward diversifying our business and optimizing shareholder value.

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(1)

extend and expand permitted mining area of Xinzhou Gold to access higher concentrate ore veins;

(2)

resume ore exploration and extraction activities;

(3)

re-start the mill;

(4)

re-test the mill;

(5)

develop expansion plans for our plant capacity;

(6)

drill additional holes near the concentration plant; and

(7)

undertake at least three deep drill holes in the permitted area to re-commence greater milling operations as soon as possible.

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Zhen Ding Resources Inc.

Consolidated Balance Sheets As of December 31, 2017 and 2016

		December 31,				December 31,
		2017				2016
Assets
Current Assets:
Cash and cash equivalents		$	7,669			$	6,918
Total current assets			7,669				6,918
Total assets		$	7,669			$	6,918
Liabilities and Equity (Deficit)
Current Liabilities:
Accounts payable and accrued liabilities		$	313,787			$	305,804
Accounts payable and accrued liabilities-related parties			3,479,101				2,737,056
Deferred revenues			154,619				144,926
Due to related parties			799,282				749,219
Short-term debt-related parties			3,939,377				3,642,110
Total current liabilities			8,686,166				7,579,115
Equity (Deficit):
Common stock, 150,000,000 authorized, $0.0001 par value, 63,968,798 shares issued and outstanding			6,397				6,397
Additional paid-in capital			12,762,875				12,762,875
Subscriptions receivables			(5,431	)			(5,431	)
Accumulated other comprehensive loss			193,802				524,801
Accumulated deficit			(19,011,152	)			(18,530,405	)
Total deficit attributable to Zhen Ding Resources Inc.			(6,053,509	)			(5,241,763	)
Non-controlling interests			(2,624,988	)			(2,330,434	)
Total equity (deficit)			(8,678,497	)			(7,572,197	)
Total liabilities and equity (deficit)		$	7,669			$	6,918

Zhen Ding Resources Inc.
Consolidated Statements of Operations and Comprehensive Loss
For the years ended December 31, 2017 and 2016
		2017				2016
Operating expenses:
General and administrative		$	71,317			$	115,373
Total operating expenses			71,317				115,373
Operating loss			(71,317	)			(115,373	)
Other expense:
Interest expenses			(562,585	)			(540,227	)
Other income (expenses)			458				(899	)
Net loss			(633,444	)			(656,499	)
Loss attributable to non-controlling interests			152,697				160,894
Net loss attributable to Zhen Ding Resources Inc.		$	(480,747	)		$	(495,605	)
Basic and diluted loss per common share		$	(0.01	)		$	(0.01	)
Basic and diluted weighted average number   of common shares outstanding			63,968,798				63,968,798
Comprehensive loss:
Net loss		$	(633,444	)		$	(656,499	)
Other comprehensive income (loss):
Foreign currency translation adjustments			(472,856	)			462,742
Total comprehensive loss			(1,106,300	)			(193,757	)
Comprehensive loss attributable to non- controlling interest			294,554				22,071
Comprehensive loss attributable to Zhen Ding Resources Inc.		$	(811,746	)		$	(171,686	)

Zhen Ding Resources Inc.
Consolidated Statement of Stockholders’ Deficit
For the years ended December 31, 2017 and 2016
		Common Stock								Additional Paid in				Subscriptions				Accumulated Other Comprehensive				Accumulated				Non- controlling				Total Stockholders'
		Shares				Par				Capital				Receivable				Income				Deficit				Interest				Deficit
Balances, December 31, 2015			63,968,798			$	6,397			$	12,762,875			$	(5,431	)		$	200,882			$	(18,034,800	)		$	(2,308,363	)		$	(7,378,440	)
Foreign currency translation  adjustment			-				-				-				-				323,919				-				138,823				462,742
Net loss			-				-				-				-				-				(495,605	)			(160,894	)			(656,499	)
Balances, December 31, 2016			63,968,798			$	6,397			$	12,762,875			$	(5,431	)		$	524,801			$	(18,530,405	)		$	(2,330,434	)		$	(7,572,197	)
Foreign currency translation  adjustment			-				-				-				-				(330,999	)			-				(141,857	)			(472,856	)
Net loss			-				-				-				-				-				(480,747	)			(152,697	)			(633,444	)
Balances, December 31, 2017			63,968,798			$	6,397			$	12,762,875			$	(5,431	)		$	193,802			$	(19,011,152	)		$	(2,624,988	)		$	(8,678,497	)

Zhen Ding Resources Inc.
Consolidated Statements of Cash Flows For the years ended December 31, 2017 and 2016
		2017				2016
Cash flows from operating activities
Net loss		$	(633,444	)		$	(656,499	)
Adjustment to reconcile net loss to net cash used in operating activities:
Accounts payable and accrued liabilities			(10,571	)			(2,613	)
Accounts payable and accrued liabilities-related parties			562,585				541,931
Net cash used in operating activities			(81,430	)			(117,181	)
Cash flows from financing activities
Net change in advances from related parties			(45	)			38,751
Proceeds from borrowings on short-term debt – related parties			82,180				81,068
Net cash provided by financing activities			82,135				119,819
Foreign currency translation			46				(40	)
Net change in cash			751				2,598
Cash and cash equivalents - beginning of the year			6,918				4,320
Cash and cash equivalents - end of the year		$	7,669			$	6,918
Supplement cash flows information:
Cash paid for interest		$	-			$	-
Cash paid for income tax		$	-			$	-

Name	Relationship to the Company		Amount				Interest Rate			Start Date	Maturity
Shor-term debt
Wei De Gang	CEO & Legal person of JXZD		$	2,761,708				15	%	May 31, 2011	May 31, 2014
Zhao Yan Ling	Former office manager of JXZD, wife of Zhou Zhi Bin			16,128				15	%	January 1, 2011	December 31, 2013
Zhou Zhi Bin	Former CEO & Legal person of JXZD			7,680				15	%	January 1, 2011	December 31, 2013
Tang Yong Hong	Manager of JXZD			330,628				15	%	February 28, 2015	February 28, 2016
Yan Chun Yan	Accountant of JXZD			9,345				15	%	August 31, 2014	August 31, 2015
Wen Mei Tu	President & shareholder of ZDRI			370,800				12	%	Various	Various
Importation Tresor Plus Inc	Shareholder of ZDRI			30,000				12	%	July 9, 2012	July 12, 2013
Tony Ng Man Kin	Shareholder of ZDRI			25,000				12	%	February 27, 2013	February 27, 2014
Wei Tai Trading Inc.	Shareholder of ZDRI			12,000				12	%	June 3, 2015	September 3, 2015
JYS Technologies Inc.	Wen Mei Tu’s brother in law owned			6,000				12	%	May 22, 2015	July 19, 2016
Philip Pak	Shareholder of ZDRI			41,000				12	%	Various	Various
Victor Sun	Consultant & shareholder of ZDRI			3,923				0	%	January 1, 2013	On Demand
Helen Chen	President of Z&W CA			17,965				0	%	January 1, 2011	On Demand
Current portion of long-term debt
Zhou Qiang	Office manager of JXZD			307,200				15	%	December 18, 2012	December 18, 2015
Total			$	3,939,377

							Annual
Name	Relationship to the Company		Amount				Interest Rate			Start Date	Maturity
Shor-term debt
Wei De Gang	CEO & Legal Person of JXZD		$	2,588,518				15	%	May 31, 2011	May 31, 2014
Zhao Yan Ling	Former Office Manager in JXZD, wife of Zhou Zhi Bin			15,117				15	%	January 1, 2011	December 31, 2013
Zhou Zhi Bin	Former CEO & Legal Person of JXZD			7,200				15	%	January 1, 2011	December 31, 2013
Tang Yong Hong	Manager of JXZD			309,901				15	%	February 28, 2015	February 28, 2016
Yan Chun Yan	Accountant of JXZD			6,686				15	%	August 31, 2014	August 31, 2015
Wen Mei Tu	President & shareholder of ZDRI			331,800				12	%	Various	Various
Importation Tresor Plus Inc	Shareholder of ZDRI			30,000				12	%	July 9, 2012	July 12, 2013
Tony Ng Man Kin	Shareholder of ZDRI			25,000				12	%	February 27, 2013	February 27, 2014
Wei Tai Trading Inc	Shareholder of ZDRI			12,000				12	%	June 3, 2015	September 3, 2015
JYS Technologies Inc.	Owned by Wen Mei Tu’s brother- in-law			6,000				12	%	May 22, 2015	July 19, 2016
Victor Sun	Consultant & shareholder of ZDRI			3,923				0	%	January 1, 2013	On Demand
Helen Chen	President of Z&W CA			17,965				0	%	January 1, 2011	On Demand
Current portion of long-term debt
Zhou Qiang	Office manager of JXZD			288,000				15	%	December 18, 2012	December 18, 2015
Total			$	3,642,110

Name	Position Held with the Company	Age	Date First Elected or Appointed
Wei, De Gang	Chairman, Chief Financial Officer and Director	61	August 13, 2012
Tu, Wen Mei	President, Chief Executive Officer, Treasurer, Secretary and Director	66	August 13, 2012
Zhou, Qiang	Director	70	August 13, 2012
Zhou, Zhi Bin	Director	68	August 13, 2012

SUMMARY COMPENSATION TABLE
Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensa- tion ($)	Change in Pension Value and Nonqualifie d Deferred Compensa- tion Earnings ($)	All Other Compensa- tion ($)	Total ($)
De Gang Wei Chairman and Director	2017 2016	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil
Wen Mei Tu President, CEO, Treasurer, Secretary and Director	2017 2016	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percentage of Class(1)
De Gang Wei Gong Shan Zhen, DagongcunAPPX Anhui Province  244011  China	8,400,000(2) Common Shares	9.69%
Qiang Zhou No. 6 Long 774 Chang Le Lu, Jing An Qu Shanghai China	5,100,000(3) Common Shares	8.0%
Zhi Bin Zhou 5-37 Hao du guo ji hua yuan qing pu qu, Xu jin zhen Shanghai  China	7,000,000(4) Common Shares	9.38%

		ZHEN DING RESOURCES INC.
		(Registrant)
Dated:  April 10, 2018		/s/ Wen Mei Tu
		Wen Mei Tu
		President, Treasurer, Secretary and Director
		(Principal Executive Officer)
Dated:  April 10, 2018		/s/ De Gang Wei
		De Gang Wei
		Chairman, Chief Financial Officer and Director
		(Principal Financial Officer and Principal Accounting Officer)

Dated:  April 10, 2018		/s/ Wen Mei Tu
		Wen Mei Tu
		President, Treasurer, Secretary and Director
		(Principal Executive Officer)
Dated:  April 10, 2018		/s/ De Gang Wei
		De Gang Wei
		Chairman, Chief Financial Officer and Director
		(Principal Financial Officer and Principal Accounting Officer)
Dated:  April 10, 2018		/s/ Qiang Zhou
		Qiang Zhou
		Director
Dated:  April 10, 2018		/s/ Zhi Bin Zhou
		Zhi Bin Zhou
		Director

 

 

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