Attached files
| file | filename |
|---|---|
| EX-32.1 - CERTIFICATION - Theron Resource Group | f10k2019ex32-1_theron.htm |
| EX-31.2 - CERTIFICATION - Theron Resource Group | f10k2019ex31-2_theron.htm |
| EX-31.1 - CERTIFICATION - Theron Resource Group | f10k2019ex31-1_theron.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from ________to __________
Commission file number: 000-53845
THERON RESOURCE GROUP
(Exact name of registrant as specified in its charter)
| Wyoming | 26-0665325 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
23 Yihe Road, Luozhuang District Linyi City, Shandong, P.R.C. |
276000 | |
| (Address of principal executive offices) | (Zip Code) |
Issuer’s telephone number, including area code: (86) 0539-563-1111
Securities Registered Under Section 12(b) of the Exchange Act: None
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Securities Registered Under Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No þ
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 þ
· Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 þ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 þ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer or a smaller reporting Corporation or an emergent growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emergent growth company” in Rule 12b-2 of the Exchange Act (Check One):
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | þ | Smaller reporting company | þ |
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes þ No ☐
As of June 28, 2019, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $1,729,000 by reference to the price at which the common equity was last sold, which was $0.91 on May 4, 2010 and there was no trading activity through the last business day of the registrant’s most recently completed second fiscal quarter.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 7,900,000 shares of Common Stock as of May 13, 2020.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
THERON RESOURCE GROUP
TABLE OF CONTENTS
i
| ITEM 1. | BUSINESS. |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements. These statements relate to future events or our future financial performance. Some information in this report may contain forward-looking statements that involve risk and uncertainty. A number of important factors may cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this report. Forward-looking statements are often identified by words like: “believe,” “expect,” “estimate,” “anticipate,” “intend,” “project,” “goal,” “seek,” “strategy,” “future,” “likely,” and similar expressions or words which, by their nature, refer to future events.
In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “plans,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from future results, levels of activity, performance or achievements stated or implied by these statements.
As used in this report, the terms “we,” “us,” “our,” and “Theron” or “THRO” mean Theron Resource Group, unless otherwise indicated.
Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States Dollars (“USD” or “US$” or “$”) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to “common shares” refer to the “common shares” in our capital stock.
Overview
We were incorporated in the State of Wyoming on April 11, 2006 as Theron Resource Group. There have been no material reclassifications, mergers, consolidations or purchases or sales of any significant amount of assets not in the ordinary course of business since the date of incorporation.
On February 21, 2007, the Company optioned a property containing nine mineral claim blocks in southwestern British Columbia, Canada. Through August 31, 2008, Theron paid $20,000 for exploration expenditures on certain mining claims.
Upon exercise of the option, we would have been required to pay, commencing May 31, 2013, a $25,000 royalty per annum. The Company did not exercise the option on the claim.
| ITEM 1A. | RISK FACTORS. |
Not applicable.
| ITEM 1B. | UNSOLVED STAFF COMMENTS. |
None.
| ITEM 2. | PROPERTIES. |
Our principal office is located at 23 Yihe Road, Luozhuang District, Linyi City, Shandong, 276000, P.R.C., telephone (86) 0539-563-111. Our principal office is provided by an entity run by our Chairman of the board of directors, without charge, but such arrangement may be terminated at any time without notice. We believe that the condition of our principal office is satisfactory, suitable and adequate for current needs.
| ITEM 3. | LEGAL PROCEEDINGS. |
As of the date of this filing, the Company is not a party to any legal proceeding that could reasonably be expected to have a material impact on its operations or finances.
| ITEM 4. | MINE SAFETY DISCLOSURES. |
Not applicable.
1
| ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
Shares of our common stock became available for quotation on the Over-the-Counter Bulletin Board (now OTC Markets Group) under the symbol “THRO” on December 17, 2009. Our common stock is currently quoted on the OTC Pink tier of the OTC Markets Group, an inter-dealer quotation and trading system. These quotations reflect inter-dealer prices without retail mark-up, mark-down or commissions and may not reflect actual transactions.
Holders
As of May 13, 2020, we had 50 holders of record of our common stock. There were 7,900,000 shares outstanding.
Outstanding Options, Conversions, and Planned Issuance of Common Stock.
As of December 31, 2019, there were no warrants or options outstanding to acquire any shares of our common stock.
Dividends and Related Policy
We have not declared any dividends since incorporation and do not anticipate that we will do so in the foreseeable future. Although there are no restrictions that limit the ability to pay dividends on our common shares, our intention is to retain future earnings for use in our operations and the expansion of our business.
Transfer Agent and Registrar
Our transfer agent is Olde Monmouth Stock Transfer Co., Inc., located at 200 Memorial Parkway, Atlantic Highlands, NJ 07716. Their telephone number is (732) 872-2727 and their facsimile number is (732) 872-2728.
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
None.
| Item 6. | Selected Financial Data. |
Not applicable.
2
| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS. |
FORWARD-LOOKING STATEMENTS
The following is management’s discussion and analysis of certain significant factors which have affected our financial position and operating results during the periods included in the accompanying financial statements, as well as information relating to the plans of our current management and should be read in conjunction with the accompanying financial statements and their related notes included in this report. References in this section to “we,” “us,” “our,” or the “Company” are to the business of Theron Resource Group.
This report contains forward-looking statements. Generally, the words “believes,” “anticipates,” “may,” “will,” “should,” “expects,” “intends,” “estimates,” “continues,” “project,” “goal,” “seek,” “strategy,” “future,” “likely,” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the SEC from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.
BUSINESS OVERVIEW
We were incorporated in the State of Wyoming on April 11, 2006 as Theron Resource Group. There have been no material reclassifications, mergers, consolidations or purchases or sales of any significant amount of assets not in the ordinary course of business since the date of incorporation.
On February 21, 2007, the Company optioned a property containing nine mineral claim blocks in southwestern British Columbia, Canada. Through August 31, 2008, Theron paid $20,000 for exploration expenditures on certain mining claims. Upon exercise of the option, we would have been required to pay, commencing May 31, 2013, $25,000 per annum, as royalty. The Company did not exercise the option on the claim.
In December 2019, an outbreak of coronavirus disease 2019 (“COVID-19”), caused by severe acute respiratory syndrome coronavirus, was first found in Wuhan, China. The World Health Organization (“WHO”) declared the outbreak to be a Public Health Emergency of International Concern on January 30, 2020 and recognized it as a pandemic on March 11, 2020. The Company currently does not have active business operations. However, the current outbreak of COVID-19 has resulted in a widespread health crisis that could adversely affect the economies and financial markets of China and many other countries, resulting in an economic downturn that could negatively affect the Company’s future efforts to seek new business operations or reclassifications, mergers, consolidations or purchases or sales of any significant amount of its assets.
CRITICAL ACCOUNTING POLICIES, ESTIMATES AND ASSUMPTIONS
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the generally accepted accounting principles in the United States of America (“U.S. GAAP”). The preparation of our financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Actual results could differ materially from those estimates.
Our audited financial statements and the notes thereto contain more details of critical accounting policies and other disclosures required by U.S. GAAP.
RESULTS OF OPERATIONS
REVENUE
No revenue was generated for the years ended December 31, 2019 and 2018.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the years ended December 31, 2019 and 2018 amounted to $54,312 and $59,249, respectively. The general and administrative expenses for the two periods primarily represent professional fees incurred for SEC filings.
INTEREST EXPENSE
Interest expense for each of the years ended December 31, 2019 and 2018 amounted to $2,500. Interest expense for these years is attributable to the $50,000 unsecured promissory note we issued in March 2011 with an annual interest of 5%.
3
INCOME TAX PROVISION
As a result of operating losses, there has been no provision for the payment of income taxes in 2019.
NET LOSS
For the years ended December 31, 2019 and 2018, net losses were $56,812 ($0.01 per share) and $61,451 ($0.01 per share), respectively. The loss per share was based on a weighted average of 7,900,000 common shares outstanding at December 31, 2019 and 2018.
The Company continues to carefully control its expenses and overall costs as it moves its business development plan forward.
PLAN OF OPERATION
As of December 31, 2019, we had a stockholders’ deficiency of $268,650.
We have not generated any revenues and have relied on shareholder advances and debt and equity offerings to finance our operating and capital expenses. We have incurred operating losses since inception. The working capital requirements of any new business activities may be substantial and may depend on the terms of our potential acquisitions, whether for stock, debt or cash, or a combination, as appropriate.
Due to the uncertainty of our ability to meet our current operating and capital expenses, our independent auditors, in their report on our financial statements for the year ended December 31, 2019, included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors. Our issuance of additional equity securities could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further funds required for continued operations. We are pursuing various financing alternatives to meet immediate and long-term financial requirements, but results to date have not been encouraging. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our obligations as they become due.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2019, we have not yet generated any revenues from operations.
The accompanying financial statements have been prepared under the assumption that we will continue as a going concern. Such assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As of December 31, 2019, we had an accumulated deficit of $706,902 and a stockholders’ deficiency of $268,650. We had incurred recurring losses from operations, and utilized cash flow in operating activities of $64,592 during the year ended December 31, 2019. These factors, among others, raise substantial doubt about our ability to continue as a going concern. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2019 financial statements, raised substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.
Since our inception in April 2006, we have used our common stock, promissory notes and loans or advances from our officers, directors and stockholders to raise money for our optioned acquisition and for corporate expenses.
As of December 31, 2019, we had a note payable of $50,000 plus accrued interest of $22,082. The note is unsecured and bears interest at a rate of 5% per annum. The note matured on March 3, 2012 and is currently in default.
As of December 31, 2019, we had outstanding advances of $197,553 from Linyi Yi Cheng Cultural Innovative Industry Zone Management Limited and Shandong Theron Education Management Co., Limited, two affiliates of the Company, in which Mr. Zhaoyu Gu, a director of the Company, holds a beneficial interest. The advances are unsecured, due on demand, and non-interest bearing.
4
As of December 31, 2019, our total assets, consisting entirely of prepayments, amounted to $5,985 and our total liabilities were $274,635, which included a promissory note payable of $50,000 and advances from related companies of $197,553. We had a working capital deficit of $268,650.
NET CASH USED IN OPERATING ACTIVITIES: For the years ended December 31, 2019 and 2018, $64,592 and $51,194 in net cash were used, respectively.
CASH FLOWS FROM FINANCING ACTIVITIES: For the years ended December 31, 2019 and 2018, we received advances from related companies of $64,592 and $51,194, respectively. There was no cash provided by equity financing activities during the years ended December 31, 2019 and 2018. No options or warrants were issued in the most recent period to purchase shares at a later date.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
| Item 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
Not applicable.
5
| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
INDEX TO FINANCIAL STATEMENTS
6
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
| To: | The Board of Directors and Stockholders of |
Theron Resource Group
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Theron Resource Group (the “Company”) as of December 31, 2019 and 2018, and the related statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2019, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2019 and 2018, in conformity with accounting principles generally accepted in the United States of America.
Emphasis of Matter
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company had incurred substantial losses in previous years and has a working capital deficit, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 2. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
| WWC, P.C. | |
| Certified Public Accountants | |
| We have served as the Company’s auditor since 2015. | |
| San Mateo, CA | |
| May 14, 2020 | |
F-1
BALANCE SHEETS
(Expressed in U.S. dollars)
| December 31, | December 31, | |||||||
| 2019 | 2018 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Prepayments | $ | 5,985 | - | |||||
| Total assets | 5,985 | - | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | 5,000 | 9,295 | ||||||
| Promissory note payable – in default | 50,000 | 50,000 | ||||||
| Interest due on promissory notes payable | 22,082 | 19,582 | ||||||
| Advances from related companies | 197,553 | 132,961 | ||||||
| Total current liabilities | 274,635 | 211,838 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ deficiency | ||||||||
| Common stock, $0.001 par value, 500,000,000 shares authorized, 7,900,000 shares issued and outstanding | 7,900 | 7,900 | ||||||
| Additional paid-in capital | 430,574 | 430,574 | ||||||
| Accumulated other comprehensive loss | (222 | ) | (222 | ) | ||||
| Accumulated deficit | (706,902 | ) | (650,090 | ) | ||||
| Total stockholders’ deficiency | (268,650 | ) | (211,838 | ) | ||||
| Total liabilities and stockholders’ deficiency | $ | 5,985 | $ | - | ||||
The accompanying notes are an integral part of these financial statements
F-2
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in U.S. dollars)
| For the Years Ended December 31, | ||||||||
| 2019 | 2018 | |||||||
| Revenue | $ | - | $ | - | ||||
| General and administrative expenses | (54,312 | ) | (59,249 | ) | ||||
| Loss from operations | (54,312 | ) | (59,249 | ) | ||||
| Other income | - | 298 | ||||||
| Interest expense | (2,500 | ) | (2,500 | ) | ||||
| Net loss | (56,812 | ) | (61,451 | ) | ||||
| Other comprehensive loss | ||||||||
| Currency exchange loss | - | - | ||||||
| Comprehensive loss | $ | (56,812 | ) | $ | (61,451 | ) | ||
| Basic and diluted loss per common share | $ | ** | $ | ** | ||||
| Weighted average number of common shares used in per share calculations – basic and diluted | 7,900,000 | 7,900,000 | ||||||
** less than $0.01
The accompanying notes are an integral part of these financial statements
F-3
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIENCY
(Expressed in U.S. dollars)
Common stock outstanding | Common stock | Additional paid-in Capital | Other comprehensive loss | Accumulated deficit | Total
| |||||||||||||||||||
| Balance, December 31, 2017 | 7,900,000 | $ | 7,900 | $ | 430,574 | $ | (222 | ) | $ | (588,639 | ) | $ | (150,387 | ) | ||||||||||
| Net loss for the year | - | - | - | - | (61,451 | ) | (61,451 | ) | ||||||||||||||||
| Balance, December 31, 2018 | 7,900,000 | 7,900 | 430,574 | (222 | ) | (650,090 | ) | (211,838 | ) | |||||||||||||||
| Net loss for the year | - | - | - | - | (56,812 | ) | (56,812 | ) | ||||||||||||||||
| Balance, December 31, 2019 | 7,900,000 | $ | 7,900 | $ | 430,574 | $ | (222 | ) | $ | (706,902 | ) | $ | (268,650 | ) | ||||||||||
The accompanying notes are an integral part of these financial statements
F-4
STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollars)
For the Years Ended December 31, | ||||||||
| 2019 | 2018 | |||||||
| Cash flows used from operating activities | ||||||||
| Net loss | $ | (56,812 | ) | $ | (61,451 | ) | ||
| Changes in operating assets and liabilities | ||||||||
| Increase in prepayments | (5,985 | ) | - | |||||
| (Decrease) Increase in accounts payable and accrued expenses | (4,295 | ) | 7,757 | |||||
| Increase in interest accrued on promissory note payable | 2,500 | 2,500 | ||||||
| Cash flows used in operating activities | (64,592 | ) | (51,194 | ) | ||||
| Cash flows from financing activities | ||||||||
| Advances from related companies | 64,592 | 51,194 | ||||||
| Cash flows provided by financing activities | 64,592 | 51,194 | ||||||
| Decrease in cash and cash equivalents | - | - | ||||||
| Cash and cash equivalents – Beginning of year | - | - | ||||||
| Cash and cash equivalents – End of year | $ | - | $ | - | ||||
| Supplementary information | ||||||||
| Income tax paid | $ | - | $ | - | ||||
| Interest paid | - | - | ||||||
The accompanying notes are an integral part of these financial statements
F-5
NOTES
TO FINANCIAL STATEMENTS
| 1. | NATURE OF OPERATIONS |
Theron Resource Group (the “Company”, “Theron”, or “THRO”) was incorporated in the State of Wyoming on April 11, 2006. There have been no material reclassifications, mergers, consolidations or purchases or sales of any significant amount of assets not in the ordinary course of business since the date of incorporation. The Company has not yet commenced any revenue-generating operations, does not have any cash flows from operations, and is dependent on debt and equity funding to finance its operations.
| 2. | BASIS OF PRESENTATION AND GOING CONCERN |
Basis of Presentation
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Going Concern
The accompanying financial statements have been prepared under the assumption that we will continue as a going concern. Such assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As of December 31, 2019, the Company has an accumulated deficit of $706,902 and a stockholders’ deficiency of $268,650. The Company has incurred recurring losses from operations, and utilized cash flow in operating activities of $64,592 during the year ended December 31, 2019. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Additionally, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2019 financial statements, raised substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
Management’s plan to support the Company in operations and to maintain its business strategy is to raise funds through public and private offerings and to rely on officers and directors to perform essential functions with minimal compensation. If the Company does not raise the money it needs from such offerings, it will have to find alternative sources, such as a private placement of securities or loans or advances from its officers, directors or others. Such additional financing may not become available on acceptable terms, and there can be no assurance that any additional financing that the Company does obtain will be sufficient to meet its needs in the long term. Even if the Company is able to obtain additional financing, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stockholders, in the case of equity financing. If the Company requires additional cash and cannot raise it, it will either have to suspend operations or cease business entirely.
The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
| 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Fair value of Financial Instruments
Effective January 1, 2008, fair value measurements are determined by our adoption of authoritative guidance issued by the Financial Accounting Standards Board (“FASB”), with the exception of the application of the statement to non-recurring, non-financial assets and liabilities as permitted. The adoption of the authoritative guidance did not have a material impact on the Company’s fair value measurements. Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.
Level 3—Unobservable inputs based on our assumptions.
F-6
The Company is required to use observable market data if such data is available without undue cost and effort.
At December 31, 2019 and 2018, the fair values of accounts payable approximate their carrying values.
Comprehensive Loss
Comprehensive loss consists of net loss and other gains and losses affecting stockholders’ equity that, under U.S. GAAP, are excluded from net loss. There was no recorded other comprehensive income or loss for both the years ended December 31, 2019 and 2018.
Use of Estimates
In preparing financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses in the statement of operations. Actual results could differ from those estimates.
Basic and Diluted Net Loss Per Share
The Company’s computation of earnings per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income (loss) available to common stockholders divided by the weighted average common shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution, using the treasury stock method, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income (loss) of the Company as if they had been converted at the beginning of the periods presented, or issuance date, if later. In computing diluted income (loss) per share, the treasury stock method assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common stock at the average market price during the period. Options and warrants may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.
Income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the respective periods. Basic and diluted (loss) per common share is the same for periods in which the company reported an operating loss because all warrants and stock options outstanding are anti-dilutive.
There were no adjustments to net loss required for purposes of computing diluted earnings per share.
For the years ended December 31, 2019 and 2018, there were no potentially dilutive securities.
Stock Based Compensation
The Company may periodically issue stock options and warrants to officers, directors and consultants for services rendered. Options and warrants vest and expire according to terms established at the grant date. The Company accounts for share-based payments to officers and directors by measuring the cost of services received in exchange for equity awards based on the grant date fair value of the awards, with the cost recognized as compensation expense in our financial statements over the vesting period of the awards. The Company accounts for share-based payments to consultants and non-employees by determining the value of the stock compensation based upon the measurement date at either (a) the date at which a performance commitment is reached or (b) at the date at which the necessary performance to earn the equity instruments is complete. Certain share based awards may contain milestones that need to be achieved before the option begins vesting. Management estimates the probability of achievement of such milestones at each reporting date in calculating the estimate of the share-based cost.
F-7
The fair value of the Company’s common stock option grants is estimated using the Black-Scholes-Merton option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton option pricing model, and based on actual experience. The assumptions incorporated in the Black-Scholes-Merton option pricing model could materially affect compensation expense recorded in future periods.
Recently Issued Accounting Pronouncements
In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820)”, reducing certain disclosures concerning the fair value hierarchy. The guidance is effective for the Company in annual periods beginning after December 15, 2019, and interim periods within those annual periods. The Company does not expect the adoption of this guidance to have a material impact on our financial statements.
Other accounting pronouncements did not or are not believed by management to have a material impact on the Company’s present or future financial statements.
| 4. | RELATED PARTY TRANSACTIONS |
During the years ended December 31, 2019 and 2018, Linyi Yi Cheng Cultural Innovative Industry Zone Management Limited and Shandong Education Management Co., Limited, two affiliates of the Company, in which Mr. Zhaoyu Gu, a director of the Company, holds a beneficial interest, provided net advances of $64,592 and $51,194, respectively, to finance the Company’s working capital requirements.
Advances from the affiliates are unsecured, due on demand, and non-interest bearing. The outstanding advances from these two related companies totaled $197,553 and $132,961 as of December 31, 2019 and 2018, respectively.
During the years ended December 31, 2019 and 2018, the Company’s office facility has been provided without charge by the Company’s major stockholder. Such cost was not material to the financial statements and accordingly, has not been reflected therein. In view of the Company’s limited operations and resources, the major stockholder did not receive any compensation from the Company during the years ended December 31, 2019 and 2018.
| 5. | NOTE PAYABLE-IN DEFAULT |
On March 3, 2011, the Company obtained a $50,000 loan from an unrelated party as evidenced by a promissory note (the “Promissory Note”). The loan is unsecured and bears interest at 5% per annum and matured on March 3, 2012. The funds were used to repay all outstanding stockholder loans and accounts payable and to provide working capital through November 30, 2012.
In connection with a share purchase agreement dated May 23, 2016 entered into by the Company and Horizon Investment Club Limited (“Horizon”), Horizon entered into a Deed of Waiver and Assumption of Debt (the “Waiver”) with the Company pursuant to which Horizon and the Company agreed and confirmed that the Company shall novate and transfer to Horizon all its obligations and liabilities under the Promissory Note including all principal amount, accrued interests, or default interests arising thereunder and such other liabilities accrued or incurred by the Company prior to the closing of the share purchase on July 2, 2016.
However, the assignment of the Promissory Note has not been consented by the creditor because the Company’s efforts to contact the creditor have not been successful. Therefore, the Company may still be liable until the earlier of (i) the loan is paid off, (ii) the creditor consents to the Waiver or (iii) the statute of limitation on the Promissory Note expires (which is set to occur on March 3, 2022). Therefore, the Promissory Note is currently deemed to be in default despite the Waiver.
During each of the years ended December 31, 2019 and 2018 the Company accrued $2,500 in interest payable under the note.
| 6. | COMMITMENTS |
On February 21, 2007, the Company optioned a property containing nine mineral claim blocks in southwestern British Columbia, Canada. Upon exercise of the option, we would have been required to pay, commencing May 31, 2013, $25,000 per annum, as royalty. The Company did not exercise the option on the claim.
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| ITEM 9. | CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES |
None.
| ITEM 9A. | CONTROLS AND PROCEDURES |
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. This information is accumulated to allow our management to make timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Our management, including our principal executive officer and principal accounting officer, does not expect that our disclosure controls or our internal controls over financial reporting will prevent all error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, but not absolute, assurance that the objectives of a control system are met. Further, any control system reflects limitations on resources and the benefits of a control system must be considered relative to its costs. These limitations also include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of a control. The design of a control system is also based upon certain assumptions about potential future conditions; over time controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.
As of December 31, 2019, the year covered by this report, we carried out an evaluation, under the supervision and participation of our management, including our principal executive officer and our principal financial officer, to determine the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer, who serves as our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures were not effective as of the end of the year covered by this report.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”) as defined in Rule 13a-15(f) under the Exchange Act. Our management assessed the effectiveness of our ICFR as of December 31, 2019. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework in 2013 (the “2013 COSO Framework”). A material weakness is a deficiency or a combination of deficiencies, in ICFR, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. We have identified the following material weaknesses.
| 1. | As of December 31, 2019, we did not maintain effective controls over the control environment. Specifically, we have not developed a framework for accounting policies and procedures given we have only one officer. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness. |
| 2. | As of December 31, 2019, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness. |
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Because of these material weaknesses, our Chief Executive Officer, who serves as our principal executive officer and principal financial officer, has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2019, based on the criteria established in 2013 COSO Framework. Due to the size and operations of the Company, we are unable to remediate these deficiencies until we acquire or merge with another company.
The Company believes that the financial statements fairly present, in all material respects, the Company’s balance sheets as of December 31, 2019 and 2018 and the related statements of operations and comprehensive loss, stockholders’ deficiency, and cash flows for the years ended December 31, 2019 and 2018 in conformity with U.S. GAAP, notwithstanding the material weaknesses we identified.
This annual report on Form 10-K (the “Annual Report”) does not include an attestation report of the Company’s registered public accounting firm regarding ICFR. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act that permit the Registrant to provide only management’s report in this Annual Report.
Changes in Internal Control Over Financial Reporting
There had been no changes in the Company’s ICFR identified in connection with the above evaluation that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s ICFR.
| ITEM 9B. | OTHER INFORMATION |
None.
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| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
Information about our directors and executive officers as of December 31, 2019 and as of the date of this Annual Report is set forth as follows.
| Name | Position Held | Age | Date of Appointment | |||
| GU, Zhaoyu | Chairman of the Board, Chief Executive Officer, Chief Financial Officer and Secretary | 30 | July 2, 2016 |
Zhaoyu Gu, Chairman of the Board, Chief Executive Officer, Chief Financial Officer and Secretary
Mr. Gu has served as founder and director of Sansheng Technology Co., Ltd. (“Sansheng Technology”) since February 3, 2016. Sansheng Technology is engaged in the research, development and application of technology intelligence, development in the area of computer information technology, technology consultation, development of computer software and network projects. He has served as director of HK Guangfa Technology Limited (“Guangfa Technology”) since December 29, 2014. Guangfa Technology is engaged in the development of technology products, research, development, manufacture and sale of precision machinery, precision instruments.
Mr. Gu has financial management and audit experience, including supervising financial staffs, accountants and auditors, and reviewing financial statements. He holds a bachelor’s degree in Economics from Henan University in China.
Meetings of Our Board of Directors
Our sole director took all actions by written consent during the years ended December 31, 2019 and 2018.
Director Compensation
The Company did not provide any compensation to its director in the year ended December 31, 2019, but reimbursed director for reasonable out-of-pocket expenses incurred. The Company may establish certain compensation plans (e.g. options, cash for attending meetings, etc.) with respect to directors in the future.
Significant Employees
Other than the director and officer described above, we do not expect any other individuals to make a significant contribution to our business.
Involvement in Legal Proceedings
None of our directors, persons nominated to become a director, executive officers or control persons have been involved in any of the following events during the past 10 years:
| ● | Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of bankruptcy or within two years prior to that time; or |
| ● | Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences); or |
| ● | Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or |
| ● | Being found by a court of competent jurisdiction (in a civil violation), the SEC or the Commodity Future Trading Commission to have violated a federal or state securities or commodity law, and the judgment has not been reversed, suspended, or vacated; or |
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| ● | Being 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, relating to an alleged violation of: any Federal or State securities or commodities law or regulation; or 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. This violation does not apply to any settlement of a civil proceeding among private litigants; or |
| ● | Being 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 (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors, executive officers and persons who own more than 10% of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Directors, officers and greater than 10% stockholders are required to furnish the Company with copies of all Section 16(a) forms they file.
To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company, with respect to the year ended December 31, 2019, there was not any triggering event that requires any filing under Section 16(a) by the Company’s officers, directors and beneficial owners of more than 10% of our common stock.
Code of Ethics
We currently do not have a Code of Ethics because we presently only have one director and one officer. We plan to adopt a Code of Ethics when the size of the Board and management increases.
Audit Committee and Audit Committee Financial Expert
Our sole director has determined that it does not have a member of its audit committee that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K, and is “independent” as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.
We believe that our sole director is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date. In addition, we currently do not have nominating, compensation or audit committees or committees performing similar functions nor do we have a written nominating, compensation or audit committee charter. Our sole director does not believe that it is necessary to have such committees because he believes the functions of such committees can be adequately performed by our sole director.
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| ITEM 11. | EXECUTIVE COMPENSATION |
Summary Compensation Table
Name and Principal Position | Period | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||
| GU, Zhaoyu Chairman of the Board, | Year ended December 31, 2019 | - | - | - | - | - | - | - | - | |||||||||||||||||
| and Secretary CEO, CFO | Year ended December 31, 2018 | - | - | - | - | - | - | - | - |
As of December 31, 2019, the Company did not have any “Grants of Plan-Based Awards”, “Outstanding Equity Awards”, “Option Exercises and Stock Vested”, “Pension Benefits”, “Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans”, or “Potential Payments Upon Termination or Change in Control” to report.
Director Compensation
The Company did not provide any compensation to its directors in the year ended December 31, 2019, but reimbursed our directors for reasonable out-of-pocket expenses incurred. The Company may establish certain compensation plans (e.g. options, cash for attending meetings, etc.) with respect to directors in the future.
| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
The following table sets forth information regarding the beneficial ownership of our common stock as of May 13, 2020 for each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock, each director; each executive officer; and all executive officers and directors as a group. Unless otherwise indicated, we believe 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.
As of May 13, 2020, an aggregate of 7,900,000 shares of our common stock were outstanding.
| Name and Address of Beneficial Owner* | Amount of Beneficial Ownership | Percentage of Class | ||||
Red Point Holdings L.P.(1) Floor 4, Willow House, Cricket Square, P.O. Box 268, Grand Cayman KY1-1103, Cayman Islands | 6,000,000 Common Stock | 75.9 | % | |||
| Zhaoyu Gu | 0 | - | ||||
| (1) | Ms. Yan Yan Yue, sole director of Red Point Holdings L.P. (“Red Point”) has dispositive and voting power over the shares held by Red Point. |
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| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
There were no related transactions with our director, executive officer, or stockholder holding at least 5% of shares of our common stock, or any family member thereof during the years ended December 31, 2019 and 2018 that exceeds $120,000 other than the following:
During the years ended December 31, 2019 and 2018, Linyi Yi Cheng Cultural Innovative Industry Zone Management Limited and Shandong Education Management Co., Limited, two affiliates of the Company, in which Mr. Zhaoyu Gu, a director of the Company, holds a beneficial interest, provided net advances of $64,592 and $51,194, respectively, to finance the Company’s working capital requirements.
Advances from the affiliates are unsecured, due on demand, and non-interest bearing. The outstanding advances from these two related companies totaled $197,553 and $132,961 as of December 31, 2019 and 2018, respectively.
During the years ended December 31, 2019 and 2018, the Company’s office facility has been provided without charge by the Company’s major stockholder. Such cost was not material to the financial statements and accordingly, has not been reflected therein. In view of the Company’s limited operations and resources, the major stockholder did not receive any compensation from the Company during the years ended December 31, 2019 and 2018.
| ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
Our independent accountant is WWC P.C., Certified Public Accountants (“WWC”). Set forth below are aggregate fees billed by WWC for professional services rendered for the audits of the Company’s annual financial statements during the fiscal years ended December 31, 2019 and 2018.
Audit Fees
During the years ended December 31, 2019 and 2018, the fees billed and paid to WWC were $26,000 and $26,000, respectively.
Audit Related Fees
The aggregate fees billed in the years ended December 31, 2019 and 2018 for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported under item (1) above were $0.
Tax Fees
The aggregate fees billed in the years ended December 31, 2019 and 2018 for professional services rendered by our principal accountants for tax compliance, tax advice, and tax planning were $0.
All Other Fees
The aggregate fees billed in the years ended December 31, 2019 and 2018 for products and services rendered by WWC other than the services reported in the items above were $0.
No fees were billed by WWC in the years ended December 31, 2019 and 2018 for products and services provided by our principal accountants other than the services reported in the items above.
The Company does not currently have a separate audit committee. Rather, our sole director serves as the audit committee. Our sole director has reviewed and approved the above fees for all of the services described this Item 14), and believes such fees are compatible with the independent registered public accountants’ independence.
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| ITEM 15. | EXHIBITS |
(a)(1) Financial Statements
See “Index to Financial Statements” set forth on page 10.
(a)(2) Financial Statement Schedules
None. The financial statement schedules are omitted because they are inapplicable or the requested information is shown in our financial statements or related notes thereto.
Exhibits
The following exhibits of the Company are included herein.
| * | Filed herewith |
| ** | Information is furnished and not filed or a part of a registration statement or prospectus for the purpose of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| THERON RESOURCE GROUP | ||
| Date: May 14, 2020 | BY: | /s/ Zhaoyu Gu |
| Zhaoyu Gu | ||
Chief Executive Officer and Chief Financial Officer | ||
(Principal Executive Officer, Principal Financial Officer and Principal Accounting) | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
BY: |
/s/ Zhaoyu Gu |
Director, Chief Executive Officer and Chief Financial Officer | Date: May 14, 2020 | ||
| Zhaoyu Gu | (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) |
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