Large
accelerated filer
|
¨
|
Accelerated
filer
|
¨
|
Non-accelerated
filer
|
¨
|
Smaller
reporting company
|
R
|
(Do
not check if a smaller reporting company)
|
Title
Of Each Class Of
Securities
To Be Registered
|
Amount
To
Be
Registered
|
Proposed
Maximum
Offering
Price
Per
Share
|
Proposed
Maximum
Aggregate
Offering
Price
|
Amount
Of
Registration
fee(3)
|
||||||||||||
Common
stock, par value $0.001 per share (1)
|
16,445,500 | $ | 0.60 | $ | 9,867,300 | $ | 387 | |||||||||
Common
stock, par value $0.001 per share (2)
|
15,113,000 | $ | 0.60 | $ | 9,067,800 | 357 | ||||||||||
31,558,500 | $ | 744 |
(1)
|
Represents
shares of common stock issuable upon the exercise of common stock purchase
warrants with an exercise price of $0.35 per
share.
|
(2)
|
Represents
shares of common stock issuable upon the exercise of common stock purchase
warrants with an exercise price of $0.50 per
share.
|
(3)
|
Previously
paid.
|
• |
up
to 16,445,500 shares issuable upon the possible exercise of our Class A
warrants; and
|
||
• |
up
to 15,113,000 shares issuable upon the possible exercise of our Class B
warrants.
|
Common
Stock:
|
|
Outstanding Prior to this
Offering:
|
34,508,203
shares of common stock on October 8,
2009.
|
Common Stock
Reserved:
|
An
aggregate of 38,058,500 shares of our common stock, including 4,500,000
shares of our common stock issuable upon the possible conversion of
450,000 shares of Series B Convertible Preferred Stock which are
presently issued and outstanding and 33,558,500 shares of our common stock
issuable upon the exercise of common stock purchase
warrants at exercise prices ranging from $.30 per share to $52.00 per share. The resale of up to 31,558,500
shares issuable upon the exercise of warrants are covered by this
prospectus.
|
Common
Stock
|
|
Outstanding After this
Offering:
|
72,566,703
shares of common stock, assuming the issuance of 4,500,000 shares of
common stock underlying 450,000 shares of Series B Convertible Preferred
Stock which are presently outstanding as well as 33,558,500 shares of our
common stock issuable upon the exercise of common stock purchase warrants at exercise prices ranging
from $.30 per share to $52.00 per
share.
|
• |
apply
the lowest such price to the purchase price of shares included in the
units purchased by the holder in the 2008 Unit Offering and still held by
the purchaser, in which event we will automatically issue additional
shares to the purchaser to take into account the amount paid by the
purchaser for the shares included in the units so that the per share price
paid by the purchaser then equals the lower price in the subsequent
issuance,
|
||
• |
apply
the lowest such price to the exercise price of warrants acquired by the
purchaser in the 2008 Unit Offering which were exercised by the purchaser
prior to any such subsequent transaction if the purchaser still owns the
shares of common stock received by the purchaser from the exercise of the
warrants, in which event we will automatically, if necessary, issue
additional shares to the purchaser to take into account the amount paid,
whether in cash or by cashless exercise, by the purchaser so that the per
share exercise price previously paid upon the exercise of warrants equals
the lower price of the subsequent issuance, and
|
||
• |
apply
the lowest such price to the exercise price of any warrants acquired by
the purchaser in the 2008 Unit Offering which the purchaser holds but has
not yet exercised, in which event we will automatically reduce the warrant
exercise price of any unexercised warrants to such lower
price.
|
• |
strategic
license agreements or similar partnering arrangements provided that the
issuances are not for the purpose of raising capital and there are no
registration rights granted,
|
||
• |
strategic
mergers, acquisitions or consolidation or purchase of substantially all of
the securities or assets of a corporation or other entity provided that we
do not grant the holders of such securities registration rights,
and
|
||
• |
the
issuance of common stock or options pursuant to stock option plans and
employee purchase plans at exercise prices equal to or higher than the
closing price of our common stock on the issue/grant date or as a result
of the exercise of warrants issued either in the 2008 Unit Offering or
which were outstanding prior to the 2008 Unit
Offering.
|
• |
until
the earlier of the registration statement of which this prospectus is a
part having been effective for 240 days or the date on which all the
shares of common stock sold in the offering, including the shares
underlying the warrants, have been sold we will not file any additional
registration statements, other than a Form S-8, and
|
||
• |
until
the earlier of two years from the closing date or the date on which all
shares of common stock sold in the offering, including the shares
underlying the warrants, have been sold or transferred we agreed we would
not:
|
||
• |
amend
our articles of incorporation or bylaws so as to adversely affect the
rights of the investors,
|
||
• |
repurchase
or otherwise acquire any of our securities or make any dividends or
distributions of our securities, or
|
||
• |
prepay
any financing related or other outstanding debt obligations.
|
• |
each
selling security holder,
|
||
• |
any
affiliate of a selling security holder, or
|
||
• |
any
person with whom any selling security holder has a contractual
relationship regarding the sale of the units.
|
Selling
Security Holder
|
Payment
Reference
|
Date
|
Amount
|
|||
Osher
Capital Partners, LLC
|
Due
diligence fee(1)
|
Closing
|
$ | 392,512 | ||
Utica
Advisors, LLC
|
Due
diligence fee(2)
|
Closing
|
443,678 | |||
China
Direct Investments, Inc.
|
Advisory
fee (3)
|
Closing
|
369,960 | |||
Legal
counsel for selling shareholders
|
Legal
fees
|
Closing
|
27,500 | |||
Legal
counsel for China Logistics
|
Legal
fees
|
Closing
|
50,000 | |||
All
selling security holders
|
Liquidated
damages (4)
|
Varied
|
1,597,000 | |||
Total
|
$ | 2,880,650 |
1 |
Osher
Capital Partners, LLC was an investor in the offering. Includes a cash
payment of $55,000 and Class A warrants to purchase 440,000 shares of our
common stock which are valued at $337,512. These fees were paid
for due diligence efforts performed by Osher Capital Partners, LLC on
behalf of the investors in the offering.
|
||
2 |
Utica
Advisors, LLC served as an advisor for certain investors in the offering.
Includes a cash payment of $60,625 and Class A warrants to purchase
485,000 shares of our common stock which are valued at $383,053. These
fees were paid for due diligence efforts performed by Utica Advisors, LLC
on behalf of the investors in the offering.
|
||
3 |
China
Direct Investments, Inc. served as an advisor to us on the offering. China
Direct Investments, Inc. received a cash payment of $200,000 and Class A
warrants to purchase 200,000 shares of our common stock which are valued
at $169,960. China Direct Investments, Inc. is a subsidiary of China
Direct Industries, Inc., a principal shareholder of our
company.
|
||
4 | We agreed to file a registration statement with the Securities and Exchange Commission covering the shares of common stock underlying the Class A and Class B warrants issued in the 2008 Unit Offering so as to permit the public resale thereof. In the event the registration statement was not filed within 60 days of the closing or is not declared effective within 180 days following the closing date, we will be required to pay liquidated damages to the investors in that offering in an amount equal to 2% for each 30 days (or such lesser pro rata amount for any period of less than 30 days) of the aggregate cash exercise price of the shares underlying the warrants, but not to exceed 180 days of liquidated damages. While we filed the registration statement prior to 60 days from the closing date, the registration statement was not declared effective within 180 days of the closing date. Accordingly, for the purposes of this table we have assumed the payment of the maximum liquidated damages to the investors. |
Gross
proceeds received
|
$
|
3,778,250
|
||
Less
legal fees
|
(77,500
|
)
|
||
Less
due diligence fees (1)
|
(315,625
|
)
|
||
Less
placement agent fees (1)
|
(25,938
|
)
|
||
Net
proceeds
|
$
|
3,359,187
|
||
Total
possible payments to selling security holders during first year (2)
|
$
|
1,597,000
|
1 |
Includes
cash payments but excludes the value of any warrants issued as set forth
above.
|
||
2 |
Assumes
the payment of the maximum liquidated damages as registration rights
penalties under the terms of the Subscription Agreement as described in
the foregoing table.
|
Total
Shares Underlying the Units
Purchased
in the Offering by the
Selling
Security Holders
|
Combined
Purchase
Price
of the Shares
|
Combined
Market
Price
of Shares
|
Total
Possible Discount
to
the Market Price
on
the Sale Date
|
|||||||||||
15,113,000 | $ | 3,778,250 | $ | 12,230,346 | $ | 8,452,096 |
Total
Possible Shares to be
Received
Upon Exercise
of
the Warrants (1)
|
Combined
Market
Price
of Shares
Underlying
Warrants
|
Combined
Exercise Price
of
the Total Number of
Shares
Underlying the
Warrants
|
Total
Possible
Discount
to the
Market
Price on the
Sale
Date of the Units
|
|||||||||||
30,226,000 | (2) | $ | 24,460,693 | $ | 12,846,050 | $ | 11,614,643 |
1 |
Assumes
the cash exercise of all warrants at their respective initial exercise
prices.
|
||
2 |
Excludes
an aggregate of 1,332,500 shares underlying warrants we issued as
compensation in the 2008 Unit Offering, including an aggregate of 207,500
shares underlying warrants issued to the selling agent and an aggregate of
1,125,000 shares underlying warrants issued as compensation for due
diligence and advisory services.
|
Gross
proceeds to us
|
$
|
3,778,250
|
||
Less
legal fees:
|
(77,500
|
)
|
||
Less
due diligence fees (1)
|
(315,625)
|
|||
Less
placement agent fees (1)
|
(25,938
|
)
|
||
Net
proceeds to us
|
$
|
3,359,187
|
||
Combined
total possible profit of selling security holders (2)
|
$
|
20,066,739
|
||
Approximate
percentage of the net proceeds received by us to the combined total
possible profit of selling security holders.
|
17
|
%
|
1 |
Includes
cash payments but excludes the value of any warrants issued as set forth
above.
|
||
2 |
Includes
a possible profit of $8,452,096 on the shares of our common stock included
in the units and a possible profit of $11,614,643 on the warrants included
in the units as set forth in the tables appearing earlier in this
section.
|
Total
Possible Shares to be
Received
Upon Exercise
of
the Warrants (1)
|
Combined
Market
Price
of Shares
Underlying
Warrants
|
Combined
Exercise Price
of
the Total Number of
Shares
Underlying the
Warrants
|
Total
Possible
Discount
to the
Market
Price on the
Sale
Date of the Units
|
|||||||||||
1,125,000 | $ | 910,418 | $ | 393,750 | $ | 516,668 |
1 |
Assumes
the cash exercise of all warrants at their initial exercise
price.
|
No.
of shares outstanding prior to offering held by persons other than the
selling security holders, our affiliates and affiliates of the selling
security holders
|
No.
of shares registered for resale by the selling security holders or
affiliates of the selling security holders in prior registration
statements
|
No.
of shares registered for resale on behalf of the selling security holders
or affiliates of the selling security holders in this
prospectus
|
||||||||
8,376,283 | — | 31,558,500 |
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(Restated)
|
(Restated)
|
|||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||
Sales
|
$ | 4,607,989 | $ | 8,018,987 | $ | 7,806,561 | $ | 14,792,200 | ||||||||
Gross
profit (loss)
|
314,862 | 456,986 | 223,845 | 714,469 | ||||||||||||
Total
operating expenses
|
206,615 | 127,814 | 526,617 | 34,266 | ||||||||||||
Operating
income (loss)
|
$ | 108,247 | $ | 329,172 | $ | (302,772 | ) | $ | 680,203 | |||||||
Total
other income (expense)
|
35,747 | (85,590 | ) | 36,770 | (100,295 | ) | ||||||||||
Net
income (loss)
|
137,680 | 174,712 | (274,142 | ) | 502,250 | |||||||||||
Net
income (loss) attributable to nonontrolling
interest
|
(72,670 | ) | (131,811 | ) | 71,909 | (359,223 | ) | |||||||||
Net
income (loss) attributable to China Logistics Group,
Inc.
|
$ | 65,010 | $ | 41,902 | $ | (202,223 | ) | $ | 143,027 |
Year
Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
(restated)
|
(restated)
|
|||||||
Sales
|
$ | 35,561,833 | $ | 35,298,453 | ||||
Gross
profit (loss)
|
1,008,895 | 1,262,257 | ||||||
Total
operating expenses
|
1,003,330 | 678,177 | ||||||
Operating
income (loss)
|
5,565 | 584,080 | ||||||
Total
other income (expense)
|
(1,666,094 | ) | 13,575 | |||||
Net
income (loss)
|
$ | (2,086,618 | ) | $ | 275,630 | |||
Other
comprehensive income (loss)
|
38,895 | (228,976 | ) | |||||
Comprehensive
income (loss)
|
$ | (2,047,723 | ) | $ | 46,654 |
June
30,
|
December
31,
|
|||||||||||
2009
|
2008
|
2007
|
||||||||||
(unaudited)
|
(restated)
|
(restated)
|
||||||||||
Working
capital (deficit)
|
$ | 1,439,509 | $ | 1,698,227 | $ | (2,775,652 | ) | |||||
Cash
|
$ | 2,395,469 | $ | 3,156,362 | $ | 1,121,605 | ||||||
Total
current assets
|
$ | 7,040,419 | $ | 6,741,920 | $ | 5,099,936 | ||||||
Total
assets
|
$ | 7,076,586 | $ | 6,786,064 | $ | 5,142,272 | ||||||
Total
current liabilities
|
$ | 5,600,910 | $ | 5,043,693 | $ | 7,785,588 | ||||||
Total
liabilities
|
$ | 5,600,910 | $ | 5,043,693 | $ | 7,785,588 | ||||||
Total
shareholders' equity (deficit)
|
$ | 1,475,676 | $ | 947,485 | $ | (3,334,344 | ) |
• |
none
of the members of our management have any experience in operating a U.S.
public company and the costs associated therewith may adversely impact the
operating results of Shandong Jiajia, and
|
||
• |
we
will need to upgrade the internal accounting systems at Shandong Jiajia,
as well as educating its staff as to the proper collection and recordation
of financial data to cure our material weaknesses in our disclosure
controls and procedures as well as our internal control over financial
reporting which have led to restatements of our financial and ensure that
we can continue to file our annual, quarterly and other reports with the
Securities and Exchange Commission on a timely
basis.
|
• |
quarantines
or closures of some of our offices, which would severely disrupt Shandong
Jiajia’s operations,
|
||
• |
the
sickness or death of our key officers and employees, or
|
||
• |
a
general slowdown in the Chinese
economy.
|
• |
4,500,000
shares of our common stock issuable upon the possible conversion of
450,000 shares of Series B Convertible Preferred Stock which we are
presently issued and outstanding; and
|
||
• |
33,558,500
shares of our common stock issuable upon the exercise of common stock
purchase warrants with exercise prices ranging
from $0.30 per share to $52.00 per
share.
|
• |
risks
from Securities and Exchange Commission litigation;
|
||
• |
risks
from liquidated damages related to warrants sold in our 2008 Unit
Offering;
|
||
• |
risks
associated with our failure to timely register the shares underlying the
warrants sold in the 2008 Unit Offering;
|
||
• |
the
loss of the services of any of our executive officers or the loss of
services of any of our employees responsible for the management, sales,
marketing and operations efforts of our subsidiaries;
|
||
• |
our
ability to successfully transition the internal operations of our
subsidiary as a privately held Chinese company to a subsidiary of a
publicly-held U.S. company;
|
||
• |
continuing
material weaknesses in our disclosure controls and procedures and internal
control over financial reporting which may lead to additional restatements
of our financial statements,
|
||
• |
the
lack of various legal protections customary in certain agreements to which
we are party and which are material to our operations which are
customarily contained in similar contracts prepared in the United
States;
|
||
• |
intense
competition in the freight forwarding and logistics
industries;
|
||
• |
the
impact of economic downturn in the PRC on our revenues from our operations
in the PRC;
|
||
• |
our
lack of significant financial reporting experience, which may lead to
delays in filing required reports with the Securities and Exchange
Commission and suspension of quotation of our securities on the OTCBB,
which will make it more difficult for you to sell your
securities;
|
||
• |
the
impact of changes in the political and economic policies and reforms of
the Chinese government; fluctuations in the exchange rate between the U.S.
dollars and Chinese Renminbi;
|
||
• |
the
limitation on our ability to receive and use our revenue effectively as a
result of restrictions on currency exchange in China;
|
• |
the
impact of changes to the tax structure in the PRC;
|
||
• |
our
inability to enforce our legal rights in China due to policies regarding
the regulation of foreign investments; and
|
||
• |
the
existence of extended payment terms which are customary in China;
uncertainties related to PRC regulations relating to acquisitions of PRC
companies by foreign entities that could restrict or limit our ability to
operate, and could negatively affect our acquisition
strategy.
|
High
|
Low
|
|||||||
2006
|
||||||||
First
quarter ended March 31, 2006
|
$ | 12.00 | $ | 8.00 | ||||
Second
quarter ended June 30, 2006
|
$ | 8.80 | $ | 4.80 | ||||
Third
quarter ended September 30, 2006
|
$ | 7.60 | $ | 4.40 | ||||
Fourth
quarter ended December 31, 2006
|
$ | 4.80 | $ | 2.40 | ||||
2007
|
||||||||
First
quarter ended March 31, 2007
|
$ | 6.80 | $ | 2.40 | ||||
Second
quarter ended June 30, 2007
|
$ | 3.60 | $ | 1.60 | ||||
Third
quarter ended September 30, 2007
|
$ | 2.80 | $ | 0.80 | ||||
Fourth
quarter ended December 31, 2007
|
$ | 2.00 | $ | 0.40 | ||||
2008
|
||||||||
First
quarter ended March 31, 2008
|
$ | 1.20 | $ | 0.40 | ||||
Second
quarter ended June 30, 2008
|
$ | 1.05 | $ | 0.50 | ||||
Third
quarter ended September 30, 2008
|
$ | 0.65 | $ | 0.35 | ||||
Fourth
quarter ended December 31, 2008
|
$ | 0.62 | $ | 0.10 | ||||
2009
|
||||||||
First
quarter ended March 31, 2009
|
$ | 0.19 | $ | 0.05 | ||||
Second
quarter ended June 30, 2009
|
$ | 0.12 | $ | 0.04 | ||||
Third
quarter ended September 30, 2009
|
$ | 0.11 | $ | 0.055 |
June 30 , 2009
|
||||
(unaudited)
|
||||
Long
term liabilities
|
$
|
0
|
||
Preferred
stock, $0.001 par value, 10,000,000 shares authorized:
|
||||
Series
A Convertible Preferred Stock, 1,000,000 shares
authorized , no shares issued and outstanding
|
0
|
|||
Series
B Convertible Preferred Stock, 1,295,000 shares
authorized , 450,000 shares issued and outstanding
|
450
|
|||
Common
stock, $0.001 par value, 500,000,000 shares authorized, 34,508,203 shares
issued and outstanding
|
34,508
|
|||
Additional
paid-in capital
|
19,229,513
|
|||
Accumulated
retained deficit
|
(18,331,724
|
)
|
||
Accumulated
other comprehensive loss
|
(183,697
|
)
|
||
Total
China Logistics Group, Inc. shareholders'
equity
|
$
|
749,050
|
||
Noncontrolling
interest
|
726,626
|
|||
Total
equity
|
$
|
1,475,676
|
||
Total
capitalization
|
$
|
1,475,676
|
• |
a
struggling global economy,
|
||
• |
effective
consolidation of resources among relatively independent
affiliates;
|
||
• |
maintaining
the balance between the collection of accounts receivable and the
extension of longer credit terms offered to our current and prospective
clients in an effort to boost sales;
|
||
• |
our
ability to effectively handle the increases in costs due to lower shipping volumes as a result of a weak demand
for import and exports in the
PRC.
|
Three
months ended June 30,
|
||||||||||||||||
2009
|
2008
|
$
Change
|
%
Change
|
|||||||||||||
Restated
|
||||||||||||||||
Sales
|
$
|
4,607,989
|
$
|
8,018,987
|
$
|
(3,410,998
|
)
|
-43
|
%
|
|||||||
Cost
of Sales
|
4,293,127
|
7,562,001
|
(3,268,874
|
)
|
-43
|
%
|
||||||||||
Gross
Profit
|
314,862
|
456,986
|
(142,124
|
)
|
-31
|
%
|
||||||||||
Total
Operating Expenses
|
206,615
|
127,814
|
78,801
|
62
|
%
|
|||||||||||
Income
(Loss) from Operations
|
108,247
|
329,172
|
(220,925
|
)
|
-67
|
%
|
||||||||||
Total
Other Income
|
35,747
|
(84,590
|
)
|
120,337
|
-142
|
%
|
||||||||||
Net
Income (Loss) attributable to China Logistics Group,
Inc.
|
$
|
65,010
|
$
|
42,901
|
$
|
22,019
|
52
|
%
|
Six
months ended June 30,
|
||||||||||||||||
2009
|
2008
|
$
Change
|
%
Change
|
|||||||||||||
Restated
|
||||||||||||||||
Sales
|
$
|
7,806,561
|
$
|
14,792,200
|
$
|
(6,985,639
|
)
|
-47
|
%
|
|||||||
Cost
of Sales
|
7,582,716
|
14,077,731
|
(6,495,015
|
)
|
-46
|
%
|
||||||||||
Gross
Profit
|
223,845
|
714,469
|
(490,624
|
)
|
-69
|
%
|
||||||||||
Total
Operating Expenses
|
526,617
|
34,266
|
492,351
|
1437
|
%
|
|||||||||||
Income
(Loss) from Operations
|
(302,772
|
)
|
680,203
|
(982,975
|
)
|
-145
|
%
|
|||||||||
Total
Other Income
|
36,770
|
(100,295
|
)
|
137,065
|
-137
|
%
|
||||||||||
Net
Income (Loss) attributable to China Logistics Group,
Inc.
|
$
|
(202,233
|
)
|
$
|
143,027
|
$
|
(345,260
|
)
|
-241
|
%
|
Three
months ended June
30,
|
Six
months ended June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Cost
of sales as a percentage of sales
|
93
|
%
|
94
|
%
|
97
|
%
|
95
|
%
|
||||||||
Gross
profit margin
|
7
|
%
|
6
|
%
|
3
|
%
|
5
|
%
|
||||||||
Total
operating expenses (income) as a percentage of gross
profit
|
66
|
%
|
28
|
%
|
235
|
%
|
5
|
%
|
Year
ended December 31,
|
$
Change
|
%
Change
|
||||||||||||||
2008
|
2007
|
|||||||||||||||
(restated)
|
(restated)
|
|||||||||||||||
Sales
|
$
|
35,561,833
|
$
|
35,298,453
|
263,330
|
*
|
%
|
|||||||||
Cost
of sales
|
34,552,938
|
34,036,196
|
1,516,742
|
4.5
|
%
|
|||||||||||
Gross
profit
|
1,008,895
|
1,262,257
|
(253,362
|
)
|
(20.1)
|
%
|
||||||||||
Total
operating expenses
|
1,003,330
|
678,177
|
325,153
|
47.9
|
%
|
|||||||||||
Operating
income
|
5,565
|
584,080
|
(578,515
|
)
|
(99.0)
|
%
|
||||||||||
Total
other income (expenses)
|
(1,666,094
|
)
|
13,575
|
(1,679,669
|
)
|
(1,237)
|
%
|
|||||||||
Net
income (loss)
|
$
|
(2,086,618
|
)
|
$
|
275,630
|
(2,362,248
|
)
|
(857)
|
%
|
|||||||
Comprehensive
income (loss)
|
$
|
(2,047,723
|
)
|
$
|
46,654
|
(2,094,377
|
)
|
(449)
|
%
|
Year
ended December 31,
|
||||||||
2008
|
2007
|
|||||||
(restated)
|
(restated)
|
|||||||
Cost
of sales as a percentage of sales
|
97 | % | 96 | % | ||||
Gross
profit margin
|
3 | % | 4 | % | ||||
Total
operating expenses as a percentage of gross profit
|
99 | % | 54 | % |
June
30, 2009
|
December
31, 2008
|
|||||||||||||||
United
States
|
$
|
6,409
|
1%
|
$
|
201,605
|
6%
|
||||||||||
China
|
2,389,060
|
99%
|
2,954,757
|
94%
|
||||||||||||
|
$
|
2,395,469
|
100%
|
$
|
3,156,362
|
100%
|
June
30, 2009
|
December
31, 2008
|
Increase/
Decrease
|
%
Change
|
|||||||||||||
(unaudited) | (restated) | |||||||||||||||
Cash
|
$ |
2,395,469
|
$ |
3,156,362
|
$ |
(760,893
|
)
|
-24
|
% | |||||||
Accounts
receivable, net
|
3,240,638
|
2,739,173
|
501,465
|
18
|
% | |||||||||||
Advance
to vendors
|
134,513
|
-
|
134,513
|
100
|
% | |||||||||||
Other
Receivables
|
446,374
|
298,442
|
147,943
|
50
|
% | |||||||||||
Due
from related parties
|
805,085
|
518,433
|
286,652
|
55
|
% | |||||||||||
Prepayments
and other current assets
|
18,340
|
29,510
|
(11,170
|
)
|
-38
|
% | ||||||||||
Total
current assets
|
$ |
7,040,419
|
$ |
6,741,920
|
$ |
298,499
|
4
|
% | ||||||||
Accounts
payable - trade
|
$ |
1,810,476
|
1,752,862
|
57,614
|
3
|
% | ||||||||||
Other
accruals and current liabilities
|
407,554
|
146,953
|
260,601
|
178
|
% | |||||||||||
Advances
from customers
|
1,035,847
|
1,133,283
|
(97,436
|
)
|
-9
|
% | ||||||||||
Accrued registration rights penalty |
1,597,000
|
1,597,000
|
-
|
100
|
% | |||||||||||
Due
to related parties
|
740,466
|
378,697
|
361,769
|
96
|
% | |||||||||||
Foreign
tax payable
|
9,567
|
34,898
|
(25,331
|
)
|
73
|
% | ||||||||||
Total
current liabilities
|
$ |
5,600,910
|
$ |
5,043,693
|
$ |
557,217
|
11
|
% |
• |
when
the cargo departs the shipper's destination if the trade pricing term is
on a CIF (cost, insurance and freight) or CFR (cost and freight cost)
basis;
|
||
• |
when
the cargo departs the shipper’s location when the trade pricing terms are
CFR (cost and freight cost); or
|
||
• |
when
merchandise arrives at the destination port if the trade pricing term is
on a FOB (free on board) basis.
|
||
• |
our
ability to effectively handle the increases in costs due to lower shipping
volumes as a result of a weak demand for import and exports in the
PRC.
|
• |
we
satisfied $448,985 of accrued compensation due our then president and CEO,
Mr. Jeffrey Harrell, through the issuance of 581,247 shares of our common
stock, and
|
||
• |
we
converted a $2,521,380 note payable due a principal shareholder of our
company, Mr. David Aubel, into 2,864,606 shares of our common
stock.
|
• |
$387,023
due us from Shandong Huibo Import & Export Co., Ltd., a 24.3%
shareholder in Shandong Jiajia, a decrease of approximately $131,000 from
December 31, 2008. The loan which was provided in 2005 is
unsecured, non-interest bearing and payable on demand,
and
|
||
• |
$418,062
due us from Tianjin Sincere Logistics Co., Ltd. (“Tianjin Sincere”), a
company of which Mr. Bin Liu, the manager of our Tianjin branch, is a 90%
owner, as compared to $0 at December 31, 2008. These advances
was made during the second quarter of 2009, is unsecured and due on
demand.
|
• |
$109,024
owed to to Xiangfen Chen, general manager of our Xiamen branch, a decrease
of approximately $144,000 from December 31,
2008,
|
||
• |
$615,538
owed to Mr. Bin Liu, an increase of approximately $553,000 from December
31, 2008, and
|
||
• |
$15,904
owed to Tianjin Sincere, a decrease of approximately $167,500 from
December 31, 2008.
|
Period
|
Total
|
|||
Period
Ended December 31, 2009
|
$
|
121,000
|
||
Period
Ended December 31, 2010
|
48,000
|
|||
Period
Ended December 31, 2011
|
23,000
|
|||
Period
Ended December 31, 2012
|
23,000
|
|||
Period
Ended December 31, 2013
|
23,000
|
|||
Thereafter
|
--
|
|||
$
|
238,000
|
• |
the
shipper when the merchandise departs if the trade pricing term is on a CIF
(cost, insurance and freight) or CFR (cost and freight) basis,
or
|
||
• |
from
the recipient when merchandise arrives at destination port if the trade
pricing term is on a FOB (free on board)
basis.
|
• |
the
prior receipt of all regulatory approvals and licenses from the necessary
governmental agencies in China related to this acquisition,
and
|
||
• |
the
receipt of two years of audited financial statements of Shandong Jiajia
together with the interim period for the nine months ended September 30,
2007.
|
• |
instead
of contributing all $2,000,000 to Shandong Jiajia's registered capital, we
agreed to contribute $1,040,816 to increase the registered capital and the
remaining $959,184 will be made available to Shandong Jiajia for working
capital purposes, and
|
||
• |
the
date by which Shandong Jiajia is required to satisfy various conditions to
the delivery of such funds was extended to April 30,
2008.
|
Location
|
Approximate
Square Feet
|
Annual
Rent
|
Additional
Charges
|
Expiration
of Lease
|
||||||
Shanghai
Branch (1)
|
7,008 |
$43,700
(RMB 300,000
|
$20,440
(RMB 140,622)
|
May
31, 2010
|
||||||
Xiamen
Branch, Xiamen City, Fujian Province (2)
|
1,026 |
$1,459
(RMB 10,800)
|
0 |
December 31,
2009
|
||||||
Lianyuangang
office, Lianyuangang City, Jiangsu Province (3)
|
1,184 |
$4,054
(RMB 30,000)
|
0 |
March 15,
2010
|
||||||
Tianjin
Branch, Tianjin City (4)
|
3,014 |
$21,962
(RMB 150,000)
|
0 |
May
31, 2013
|
(1) |
We
lease the offices for our Shanghai Branch from Mr. Wei Chen, our Chairman
and CEO. The additional charges represent a monthly management
fee paid to an unrelated third party.
|
||
(2) |
We
lease the offices for our Xiamen Branch from Mr. Xiangfen Chen, its
General Manager.
|
||
(3) |
We
lease the offices for our Lianyuangang Branch from an unrelated third
party.
|
||
(4) |
We
lease the offices for our Tianjin Branch from Mr. Bin Liu, its General
Manager.
|
Name
|
Age
|
Positions
|
Wei
Chen
|
39
|
Chairman
of the Board, Chief Executive Officer, President, Secretary and
Treasurer
|
Hui
Liu
|
47
|
Director,
Chief Executive Officer of Shandong
Jiajia
|
Name
(a)
|
Fees
Paid or Earned in Cash
($)
(b)
|
Stock
Awards
($)
(c)
|
Option
Awards
($)
(d)
|
Non-Equity
Incentive Plan Compensation ($)
(e)
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings
($)
(f)
|
All
Other Compensation
($)
(g)
|
Total
($)
(h)
|
|||||||||||||||||||||
Wei
Chen 1
|
0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Hui
Liu 2
|
0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
V.
Jeffrey Harrell 3
|
0 | 0 | 0 | 0 | 0 | 0 | 0 |
1 |
Mr.
Chen has been a member of our Board of Directors since June
2008.
|
||
2 |
Mr.
Liu has been a member of our Board of Directors since July
2008.
|
||
3 |
Mr.
Harrell was a member of our Board of Directors until July
2008.
|
• |
compliance
with laws, rules and regulations,
|
||
• |
conflicts
of interest,
|
||
• |
insider
trading,
|
||
• |
corporate
opportunities,
|
||
• |
competition
and fair dealing,
|
||
• |
discrimination
and harassment,
|
||
• |
health
and safety,
|
||
• |
record
keeping,
|
||
• |
confidentiality,
|
||
• |
protection
and proper use of company assets,
|
||
• |
payments
to government personnel,
|
||
• |
waivers
of the Code of Business Conduct and Ethics,
|
||
• |
reporting
any illegal or unethical behavior, and
|
||
• |
compliance
procedures.
|
• |
disclosures
made in our filings with the Securities and Exchange
Commission,
|
||
• |
deficiencies
in internal controls or fraud involving management or other employees who
have a significant role in our financial reporting, disclosure or internal
controls
|
||
• |
conflicts
of interests, and
|
||
• |
knowledge
of material violations of securities or other laws, rules or regulations
to which we are subject.
|
• |
understands
generally accepted accounting principles and financial
statements,
|
||
• |
is
able to assess the general application of such principles in connection
with accounting for estimates, accruals and reserves,
|
||
• |
has
experience preparing, auditing, analyzing or evaluating financial
statements comparable to the breadth and complexity to our financial
statements,
|
||
• |
understands
internal controls over financial reporting, and
|
||
• |
understands
audit committee functions.
|
• |
our
principal executive officer or other individual serving in a similar
capacity
|
||
• |
our
two most highly compensated executive officers other than our principal
executive officer who were serving as executive officers at December
31
|
||
• |
up
to two additional individuals for whom disclosure would have been required
but for the fact that the individual was not serving as an executive
officer at December 31
|
NAME
AND PRINCIPAL POSITION
(A)
|
YEAR
(B)
|
SALARY
($)
(C)
|
BONUS
($)
(D)
|
STOCK
AWARDS
($)
(E)
|
OPTION
AWARDS
($)
(F)
|
NON-EQUITY
INCENTIVE
PLAN
COMPENSATION
($)
(G)
|
NONQUALIFIED
DEFERRED
COMPENSATION
EARNINGS
($)
(H)
|
ALL
OTHER
COMPENSATION
($)
(I)
|
TOTAL
($)
(J)
|
||||||||||||||||||||||||
V.
Jeffrey Harrell (1)
|
2008
|
61,500 | 0 | 0 | 0 | 0 | 0 | 0 | 61,500 | ||||||||||||||||||||||||
2007
|
200,000 | — | — | — | — | — | — | 200,000 | |||||||||||||||||||||||||
Hui
Liu (2)
|
2008
|
25,854 | 0 | 0 | 0 | 0 | 0 | 0 | 25,854 | ||||||||||||||||||||||||
2007
|
3,732 | 14,785 | — | — | — | — | 11,500 | 30,017 | |||||||||||||||||||||||||
Wei
Chen
|
2008
|
25,854 | 0 | 0 | 0 | 0 | 0 | 0 | 25,854 | ||||||||||||||||||||||||
2007
|
26,642 | — | — | — | — | — | — | 26,642 |
• |
Mr.
Harrell served as our Chief Executive Officer from 1999 until July
2008. During 2007 Mr. Harrell converted $193,500 of
accrued but unpaid compensation into 135,000 shares of our common stock.
At December 31, 2007 we owned Mr. Harrell an aggregate of
approximately $419,000 of accrued but unpaid compensation. As contemplated
by the acquisition agreement for Shandong Jiajia, in March 2008 he
converted all amounts due him into 581,247 shares of our common stock in
full satisfaction of those obligations.
|
||
• |
In
2007 Mr. Liu received a $14,785 bonus. All other compensation included
$10,958 for travel allowance and $542 for a car
allowance.
|
OPTION
AWARDS
|
STOCK
AWARDS
|
|||||||||||||||||||||||||||||||||||
Name
(a)
|
Number
of securities underlying unexercised options
(#)
exercisable
(b)
|
Number
of
Securities
Underlying
Unexercised
options
(#)
unexercisable
(c)
|
Equity
Incentive
plan
awards:
Number
of
Securities
Underlying
Unexercised
Unearned
options
(#)
(d)
|
Option
Exercise
price
($)
(e)
|
Option
Expiration
date
(f)
|
Number
of
shares
or
units
of
stock
that
have
not vested
(#)
(g)
|
Market
value of shares or units of stock that have not vested ($)
(h)
|
Equity
incentive plan awards: Number of unearned shares, units or other rights
that have not vested (#)
(i)
|
Equity
incentive plan awards: Market or payout value of unearned shares, units or
other rights that have not vested (#)
(j)
|
|||||||||||||||||||||||||||
V.
Jeffrey Harrell
|
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Hiu
Liu
|
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Wei
Chen
|
— | — | — | — | — | — | — | — | — |
• |
breach
of the director’s duty of loyalty to us or our
shareholders;
|
||
• |
acts
or omissions not in good faith or which involve intentional misconduct,
fraud or a knowing violation of law;
|
||
• |
a
transaction from which our director received an improper benefit;
or
|
||
• |
an
act or omission for which the liability of a director is expressly
provided under Florida law.
|
• |
for
the first and second quarters of 2005 at $0.01 per
share;
|
||
• |
for
the third quarter 2005 at 20% of the closing price on the date of
conversion; and
|
||
• |
for
the fourth quarter 2005 and beyond at 40% of the closing price on the date
of conversion.
|
Funds
|
Intrinsic
|
|||||||
Year |
Advanced
|
Value
|
||||||
2005
|
$
|
160,000
|
$
|
240,000
|
||||
2006
|
1,730,168
|
2,595,251
|
||||||
2007
|
874,164
|
1,311,246
|
||||||
2008
|
148,200
|
223,300
|
||||||
Totals
|
$
|
2,912,532
|
$
|
4,368,797
|
Year
|
Number
of Shares Converted
|
Amount
of Note Reduction
|
Intrinsic
Value
|
|||||||||
2005
|
802,500
|
$
|
698,000
|
$
|
14,829,000
|
|||||||
2006
|
592,500
|
1,44 5 ,000
|
2,319,000
|
|||||||||
2007
|
1,795,000
|
1,751,720
|
2,821,280
|
|||||||||
2008
|
2,864,606
|
2,521,3 80
|
659,432
|
|||||||||
6,054,606
|
$
|
6,416,100
|
$
|
20,628,712
|
• |
$387,023
due us from Shandong Huibo Import & Export Co., Ltd., a 24.3%
shareholder in Shandong Jiajia, a decrease of approximately $131,000 from
December 31, 2008. The loan which was provided in 2005 is
unsecured, non-interest bearing and payable on demand,
and
|
||
• |
$418,062
due us from Tianjin Sincere Logistics Co., Ltd. (“Tianjin Sincere”), a
company of which Mr. Bin Liu, the manager of our Tianjin branch, is a 90%
owner, as compared to $0 at December 31, 2008. These advance
was made in during the second quarter of 2009, is unsecured and due on
demand.
|
• |
$109,024
owed to Xiangfen Chen, general manager of our Xiamen branch, a decrease of
approximately $144,000 from December 31, 2008,
|
||
• |
$615,538
owed to Mr. Bin Liu, an increase of approximately $553,000 from December
31, 2008, and
|
||
• |
$15,904
owed to Tianjin Sincere, a decrease of approximately $167,500 from
December 31, 2008.
|
• |
each
person known by us to be the beneficial owner of more than 5% of our
common stock;
|
||
• |
each
of our directors;
|
||
• |
each
of our named executive officers; and
|
||
• |
our
named executive officers, directors and director nominees as a
group.
|
Amount
and Nature of Beneficial Ownership (1)
|
||||||||
Name
|
#
of Shares
|
%
of Class
|
||||||
Wei
Chen (2)
|
4,762,500 | 13.0 | % | |||||
Hui
Liu
|
312,500 | * | ||||||
All
named executive officers and directors as a group (two persons)
(2)
|
5,075,000 | 13.9 | % | |||||
China
Direct Industries, Inc. (3)
|
9,512,500 | 24.3 | % |
* |
represents
less than 1%
|
||||||
1 |
The
inclusion of any shares as deemed beneficially owned does not constitute
an admission of beneficial ownership by the named
shareholder.
|
||||||
2 |
The
number of shares beneficially owned by Mr. Chen includes 2,000,000 shares
of our common stock issuable upon the exercise of a warrant with an exercise price of $0.30 per
share.
|
||||||
3 |
The
shares of our common stock shown beneficially owned by China Direct
Industries, Inc. includes:
|
||||||
• |
4,750,000
shares of common stock held of record by Capital One Resource Co., Ltd., a
wholly owned subsidiary of CDI China, Inc., which is in turn a wholly
owned subsidiary of China Direct Industries, Inc.,
|
||||||
• |
62,500
shares of common stock held of record by China Direct Investments, Inc., a
wholly owned subsidiary of China Direct Industries,
Inc.,
|
||||||
• |
200,000
shares of our common stock underlying Class A warrants;
and
|
||||||
• |
450,000
shares of Series B Convertible Preferred Stock held of record by
China Direct Investments, Inc. which has no voting rights but is
convertible at the option of the holder into 4,500,000 shares of common
stock.
|
• |
the
shares have a liquidation preference of $0.001 per share which equals the
par value of the shares,
|
||
• |
holders
of the Series A Convertible Preferred Stock are not entitled to any
dividends and the shares are not subject to redemption,
|
||
• |
each
share entitles the holder to 250 votes at any meeting of our stockholders
and such shares will vote together with our common stockholders,
and
|
||
• |
each
share is convertible into 2.5 shares of our common stock, subject to
proportional adjustment for stock splits and
dividends.
|
• |
the
shares have a liquidation preference of $0.001 per share which equals the
par value of the shares,
|
||
• |
holders
of the Series B Convertible Preferred Stock are not entitled to any
dividends and the shares are not subject to redemption,
|
||
• |
the
shares do not carry any voting rights, and
|
||
• |
each
share is convertible into 10 shares of our common stock, subject to
proportional adjustment for stock splits and
dividends.
|
• |
up
to 16,445,500 shares issuable upon the possible exercise of our Class A
warrants; and
|
||
• |
up
to 15,113,000 shares issuable upon the possible exercise of our Class B
warrants.
|
|
The
following table sets forth:
|
• |
the
name of each selling security holder,
|
||
• |
the
number of common shares owned, and
|
||
• |
the
number of common shares being registered for resale by the selling
security holder.
|
Name
of Selling Security Holder
|
Number
of
Shares
Owned
|
Shares
to be
offered
|
Shares
to be
owned
after
offering
|
Percentage
to
be owned
after
offering
|
||||||||||||
Alfred
R. Kloss and Diana C. Kloss (1)
|
480,000 | 320,000 | 160,000 | * | ||||||||||||
Alejandra
M. Church-Lugo (2)
|
120,000 | 80,000 | 40,000 | * | ||||||||||||
Alicia
B. Church (3)
|
240,000 | 160,000 | 80,000 | * | ||||||||||||
Anna
L. LaPerna (4)
|
240,000 | 160,000 | 80,000 | * | ||||||||||||
Anthony
J. Emmitte, III (5)
|
30,000 | 20,000 | 10,000 | * | ||||||||||||
Christopher
D. Lewis (6)
|
120,000 | 80,000 | 40,000 | * | ||||||||||||
Cynthia
A. Schultz (7)
|
60,000 | 40,000 | 20,000 | * | ||||||||||||
Dennis
Church (8)
|
600,000 | 400,000 | 200,000 | * | ||||||||||||
G.
Russell Church (9)
|
84,000 | 56,000 | 28,000 | * | ||||||||||||
George
L. Church or Dorothy R. Church (10)
|
480,000 | 320,000 | 160,000 | * | ||||||||||||
Gwen
Ross (11)
|
120,000 | 80,000 | 40,000 | * | ||||||||||||
Harry
L. Church (12)
|
60,000 | 40,000 | 20,000 | * | ||||||||||||
Leonor
DuBose (13)
|
60,000 | 40,000 | 20,000 | * | ||||||||||||
Matt
Rohira (14)
|
60,000 | 40,000 | 20,000 | * | ||||||||||||
Michael
E. Tanner (15)
|
300,000 | 200,000 | 100,000 | * | ||||||||||||
Michael
L. Mead (16)
|
120,000 | 80,000 | 40,000 | * | ||||||||||||
Mohammed
Tily (17)
|
600,000 | 400,000 | 200,000 | * | ||||||||||||
Peter
Pitre (18)
|
210,000 | 140,000 | 70,000 | * | ||||||||||||
Richard
J. Church (19)
|
4,800,000 | 3,200,000 | 1,600,000 | 4.2 | % | |||||||||||
Southwestern
Manufacturing, Inc. (20)
|
300,000 | 200,000 | 100,000 | * | ||||||||||||
Wen
Zhang (21)
|
30,000 | 20,000 | 10,000 | * | ||||||||||||
China
Discovery Investors, Ltd. (22)
|
1,500,000 | 1,000,000 | 500,000 | 1.4 | % | |||||||||||
Terry
Max and Linda Max (23)
|
750,000 | 500,000 | 250,000 | * | ||||||||||||
Whalehaven
Capital Fund Limited (24)
|
4,877,246 | 3,200,000 | 1,677,246 | 4.4 | % | |||||||||||
Alpha
Capital Anstalt (25)
|
4,500,000 | 3,000,000 | 1,500,000 | 3.9 | % | |||||||||||
Osher
Capital Partners, LLC (26)
|
1,940,000 | 1,440,000 | 500,000 | 1.4 | % | |||||||||||
Ellis
International, Ltd. (27)
|
2,400,000 | 1,600,000 | 800,000 | 2.2 | % | |||||||||||
Mulkey
II Limited Partnership (28)
|
1,500,000 | 1,000,000 | 500,000 | 1.4 | % | |||||||||||
Cranshire
Capital, L.P. (29)
|
3,600,000 | 2,400,000 | 1,200,000 | 3.2 | % | |||||||||||
Richard
G. David (30)
|
750,000 | 500,000 | 250,000 | * | ||||||||||||
Octagon
Capital Partners (31)
|
375,000 | 250,000 | 125,000 | * | ||||||||||||
Catpat
Holdings Inc.(32)
|
1,500,000 | 1,500,000 | — | n/a | ||||||||||||
Monarch
Capital Fund, Ltd. (33)
|
4,500,000 | 3,000,000 | 1,500,000 | 3.9 | % | |||||||||||
CMS
Capital (34)
|
1,500,000 | 1,000,000 | 500,000 | 1.4 | % |
Name
of Selling Security Holder
|
Number
of
Shares
Owned
|
Shares
to be
offered
|
Shares
to be
owned
after
offering
|
Percentage
to
be owned
after
offering
|
||||||||||||
Double
U Master Fund, LP (35)
|
1,500,000 | 1,000,000 | 500,000 | 1.4 | % | |||||||||||
Brio
Capital L.P. (36)
|
750,000 | 500,000 | 250,000 | * | ||||||||||||
WEC
Partners LLC (37)
|
1,800,000 | 1,200,000 | 600,000 | 1.7 | % | |||||||||||
Utica
Advisors, LLC (38)
|
485,000 | 485,000 | — | n/a | ||||||||||||
China
Direct Investments, Inc. (39)
|
200,000 | 200,000 | — | n/a | ||||||||||||
Skyebanc,
Inc. (40)
|
61,125 | 61,125 | — | n/a | ||||||||||||
Peter
Fulton (41)
|
136,000 | 136,000 | — | n/a | ||||||||||||
Robert
Wolfang (42)
|
10,375 | 10,375 | — | n/a | ||||||||||||
Polar
Securities Inc.(43)
|
1,500,000 | 1,500,000 | — | n/a | ||||||||||||
Total
|
31,558,500 |
* |
represents
less than 1%
|
||
1 |
Mr. and
Mrs. Kloss are the record holders of 160,000 shares of our common
stock, Class A warrants to purchase 160,000 shares of our common
stock and Class B warrants to purchase 160,000 shares of our common
stock. The number of shares offered includes 320,000 shares which are
issuable upon the exercise of the Class A and Class B
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the
warrants.
|
||
2 |
Ms. Church-Lugo
is the record holder of 40,000 shares of our common stock, Class A
warrants to purchase 40,000 shares of our common stock and Class B
warrants to purchase 40,000 shares of our common stock. The number of
shares offered includes 80,000 shares which are issuable upon the exercise
of the Class A and Class B warrants. The warrants are not
exercisable to the extent that (i) the number of shares of our common
stock beneficially owned by the holder and (ii) the number of shares of
our common stock issuable upon the exercise of the warrants would result
in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This provision, however, is waived during the
final 45 days of the exercise period of the warrants.
|
||
3 |
Ms. Church
is the record holder of 80,000 shares of our common stock, Class A
warrants to purchase 80,000 shares of our common stock and Class B
warrants to purchase 80,000 shares of our common stock. The number of
shares offered includes 160,000 shares which are issuable upon the
exercise of the Class A and Class B warrants. The warrants
are not exercisable to the extent that (i) the number of shares of our
common stock beneficially owned by the holder and (ii) the number of
shares of our common stock issuable upon the exercise of the warrants
would result in the beneficial ownership by holder of more than 4.99% of
our then outstanding common stock. This provision, however, is waived
during the final 45 days of the exercise period of the
warrants.
|
||
4 |
Ms. LaPerna
is the record holder of 80,000 shares of our common stock, Class A
warrants to purchase 80,000 shares of our common stock and Class B
warrants to purchase 80,000 shares of our common stock. The number of
shares offered includes 160,000 shares which are issuable upon the
exercise of the Class A and Class B warrants. The warrants
are not exercisable to the extent that (i) the number of shares of our
common stock beneficially owned by the holder and (ii) the number of
shares of our common stock issuable upon the exercise of the warrants
would result in the beneficial ownership by holder of more than 4.99% of
our then outstanding common stock. This provision, however, is waived
during the final 45 days of the exercise period of the
warrants.
|
||
5 |
Mr. Emmitte
is the record holder of 10,000 shares of our common stock, Class A
warrants to purchase 10,000 shares of our common stock and Class B
warrants to purchase 10,000 shares of our common stock. The number of
shares offered includes 20,000 shares which are issuable upon the exercise
of the Class A and Class B warrants. The warrants are not
exercisable to the extent that (i) the number of shares of our common
stock beneficially owned by the holder and (ii) the number of shares of
our common stock issuable upon the exercise of the warrants would result
in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This provision, however, is waived during the
final 45 days of the exercise period of the warrants.
|
||
6 |
Mr. Lewis
is the record holder of 40,000 shares of our common stock, Class A
warrants to purchase 40,000 shares of our common stock and Class B
warrants to purchase 40,000 shares of our common stock. The number of
shares offered includes 80,000 shares which are issuable upon the exercise
of the Class A and Class B warrants. The warrants are not
exercisable to the extent that (i) the number of shares of our common
stock beneficially owned by the holder and (ii) the number of shares of
our common stock issuable upon the exercise of the warrants would result
in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This provision, however, is waived during the
final 45 days of the exercise period of the
warrants.
|
7 |
Ms. Schultz
is the record holder of 20,000 shares of our common stock, Class A
warrants to purchase 20,000 shares of our common stock and Class B
warrants to purchase 20,000 shares of our common stock. The number of
shares offered includes 40,000 shares which are issuable upon the exercise
of the Class A and Class B warrants. The warrants are not
exercisable to the extent that (i) the number of shares of our common
stock beneficially owned by the holder and (ii) the number of shares of
our common stock issuable upon the exercise of the warrants would result
in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This provision, however, is waived during the
final 45 days of the exercise period of the warrants.
|
||
8 |
Mr. Church
is the record holder of 200,000 shares of our common stock, Class A
warrants to purchase 200,000 shares of our common stock and Class B
warrants to purchase 200,000 shares of our common stock. The number of
shares offered includes 400,000 shares which are issuable upon the
exercise of the Class A and Class B warrants. The warrants
are not exercisable to the extent that (i) the number of shares of our
common stock beneficially owned by the holder and (ii) the number of
shares of our common stock issuable upon the exercise of the warrants
would result in the beneficial ownership by holder of more than 4.99% of
our then outstanding common stock. This provision, however, is waived
during the final 45 days of the exercise period of the warrants.
Southwestern Manufacturing, Inc. is an affiliate of Mr. Church. The
number of shares owned and offered by Mr. Church excludes securities
owned by Southwestern Manufacturing Inc. See footnote
20.
|
||
9 |
Mr. Church
is the record holder of 28,000 shares of our common stock, Class A
warrants to purchase 28,000 shares of our common stock and Class B
warrants to purchase 28,000 shares of our common stock. The number of
shares offered includes 56,000 shares which are issuable upon the exercise
of the Class A and Class B warrants. The warrants are not
exercisable to the extent that (i) the number of shares of our common
stock beneficially owned by the holder and (ii) the number of shares of
our common stock issuable upon the exercise of the warrants would result
in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This provision, however, is waived during the
final 45 days of the exercise period of the warrants.
|
||
10 |
Mr. and
Mrs. Church are the record holders of 160,000 shares of our common
stock, Class A warrants to purchase 160,000 shares of our common
stock and Class B warrants to purchase 160,000 shares of our common
stock. The number of shares offered includes 320,000 shares which are
issuable upon the exercise of the Class A and Class B
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the
warrants.
|
||
11 |
Ms. Ross
is the record holder of 40,000 shares of our common stock, Class A
warrants to purchase 40,000 shares of our common stock and Class B
warrants to purchase 40,000 shares of our common stock. The number of
shares offered includes 80,000 shares which are issuable upon the exercise
of the Class A and Class B warrants. The warrants are not
exercisable to the extent that (i) the number of shares of our common
stock beneficially owned by the holder and (ii) the number of shares of
our common stock issuable upon the exercise of the warrants would result
in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This provision, however, is waived during the
final 45 days of the exercise period of the warrants.
|
||
12 |
Mr. Church
is the record holder of 20,000 shares of our common stock, Class A
warrants to purchase 20,000 shares of our common stock and Class B
warrants to purchase 20,000 shares of our common stock. The number of
shares offered includes 40,000 shares which are issuable upon the exercise
of the Class A and Class B warrants. The warrants are not
exercisable to the extent that (i) the number of shares of our common
stock beneficially owned by the holder and (ii) the number of shares of
our common stock issuable upon the exercise of the warrants would result
in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This provision, however, is waived during the
final 45 days of the exercise period of the warrants.
|
||
13 |
Ms. DuBose
is the record holder of 20,000 shares of our common stock, Class A
warrants to purchase 20,000 shares of our common stock and Class B
warrants to purchase 20,000 shares of our common stock. The number of
shares offered includes 40,000 shares which are issuable upon the exercise
of the Class A and Class B warrants. The warrants are not
exercisable to the extent that (i) the number of shares of our common
stock beneficially owned by the holder and (ii) the number of shares of
our common stock issuable upon the exercise of the warrants would result
in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This provision, however, is waived during the
final 45 days of the exercise period of the
warrants.
|
14 |
Mr. Rohira
is the record holder of 20,000 shares of our common stock, Class A
warrants to purchase 20,000 shares of our common stock and Class B
warrants to purchase 20,000 shares of our common stock. The number of
shares offered includes 40,000 shares which are issuable upon the exercise
of the Class A and Class B warrants. The warrants are not
exercisable to the extent that (i) the number of shares of our common
stock beneficially owned by the holder and (ii) the number of shares of
our common stock issuable upon the exercise of the warrants would result
in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This provision, however, is waived during the
final 45 days of the exercise period of the warrants.
|
||
15 |
Mr. Tanner
is the record holder of 100,000 shares of our common stock, Class A
warrants to purchase 100,000 shares of our common stock and Class B
warrants to purchase 100,000 shares of our common stock. The number of
shares offered includes 200,000 shares which are issuable upon the
exercise of the Class A and Class B warrants. The warrants
are not exercisable to the extent that (i) the number of shares of our
common stock beneficially owned by the holder and (ii) the number of
shares of our common stock issuable upon the exercise of the warrants
would result in the beneficial ownership by holder of more than 4.99% of
our then outstanding common stock. This provision, however, is waived
during the final 45 days of the exercise period of the
warrants.
|
||
16 |
Mr. Mead
is the record holder of 40,000 shares of our common stock, Class A
warrants to purchase 40,000 shares of our common stock and Class B
warrants to purchase 40,000 shares of our common stock. The number of
shares offered includes 80,000 shares which are issuable upon the exercise
of the Class A and Class B warrants. The warrants are not
exercisable to the extent that (i) the number of shares of our common
stock beneficially owned by the holder and (ii) the number of shares of
our common stock issuable upon the exercise of the warrants would result
in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This provision, however, is waived during the
final 45 days of the exercise period of the warrants.
|
||
17 |
Mr. Tily
is the record holder of 200,000 shares of our common stock, Class A
warrants to purchase 200,000 shares of our common stock and Class B
warrants to purchase 200,000 shares of our common stock. The number of
shares offered includes 400,000 shares which are issuable upon the
exercise of the Class A and Class B warrants. The warrants
are not exercisable to the extent that (i) the number of shares of our
common stock beneficially owned by the holder and (ii) the number of
shares of our common stock issuable upon the exercise of the warrants
would result in the beneficial ownership by holder of more than 4.99% of
our then outstanding common stock. This provision, however, is waived
during the final 45 days of the exercise period of the
warrants.
|
||
18 |
Mr. Pitre
is the record holder of 70,000 shares of our common stock, Class A
warrants to purchase 70,000 shares of our common stock and Class B
warrants to purchase 70,000 shares of our common stock. The number of
shares offered includes 140,000 shares which are issuable upon the
exercise of the Class A and Class B warrants. The warrants
are not exercisable to the extent that (i) the number of shares of our
common stock beneficially owned by the holder and (ii) the number of
shares of our common stock issuable upon the exercise of the warrants
would result in the beneficial ownership by holder of more than 4.99% of
our then outstanding common stock. This provision, however, is waived
during the final 45 days of the exercise period of the
warrants.
|
||
19 |
Mr. Church
is the record holder of 1,600,000 shares of our common stock, Class A
warrants to purchase 1,600,000 shares of our common stock and Class B
warrants to purchase 1,600,000 shares of our common stock. The number of
shares offered includes 3,200,000 shares which are issuable upon the
exercise of the Class A and Class B warrants. The warrants
are not exercisable to the extent that (i) the number of shares of our
common stock beneficially owned by the holder and (ii) the number of
shares of our common stock issuable upon the exercise of the warrants
would result in the beneficial ownership by holder of more than 4.99% of
our then outstanding common stock. This provision, however, is waived
during the final 45 days of the exercise period of the
warrants.
|
||
20 |
Southwestern
Manufacturing, Inc. is the record holder of 100,000 shares of our common
stock, Class A warrants to purchase 100,000 shares of our common
stock and Class B warrants to purchase 100,000 shares of our common
stock. The number of shares offered includes 200,000 shares which are
issuable upon the exercise of the Class A and Class B
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the warrants.
Mr. Dennis Church has voting and dispositive control over securities
owned by Southwestern Manufacturing, Inc. The number of shares owned and
offered by Southwestern Manufacturing Inc. excludes securities owned by
Mr. Church. See footnote 8.
|
||
21 |
Mr. Zhang
is the record holder of 10,000 shares of our common stock, Class A
warrants to purchase 10,000 shares of our common stock and Class B
warrants to purchase 10,000 shares of our common stock. The number of
shares offered includes 20,000 shares which are issuable upon the exercise
of the Class A and Class B warrants. The warrants are not
exercisable to the extent that (i) the number of shares of our common
stock beneficially owned by the holder and (ii) the number of shares of
our common stock issuable upon the exercise of the warrants would result
in the beneficial ownership by holder of more than 4.99% of our then
outstanding common stock. This provision, however, is waived during the
final 45 days of the exercise period of the
warrants.
|
22 |
China
Discovery Investors, Ltd. is the record holder of 500,000 shares of our
common stock, Class A warrants to purchase 500,000 shares of our
common stock and Class B warrants to purchase 500,000 shares of our
common stock. The number of shares offered includes 1,000,000 shares which
are issuable upon the exercise of the Class A and Class B
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the warrants.
China Discovery Advisors, LLC is the fund advisory for China Discovery
Investors, Ltd. Mr. Marc Siegel, the sole officer of China Discovery
Advisors, LLC, holds voting and dispositive control over securities held
by China Discovery Investors, Ltd.
|
||
23 |
Mr. and
Mrs. Max are the record holders of 250,000 shares of our common
stock, Class A warrants to purchase 250,000 shares of our common
stock and Class B warrants to purchase 250,000 shares of our common
stock. The number of shares offered includes 500,000 shares which are
issuable upon the exercise of the Class A and Class B
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the
warrants.
|
||
24 |
Whalehaven
Capital Fund Limited is the holder of 1,677,246 shares of our common
stock, Class A warrants to purchase 1,600,000 shares of our common
stock and Class B warrants to purchase 1,600,000 shares of our common
stock. The number of shares offered includes 3,200,000 shares which are
issuable upon the exercise of the Class A and Class B
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the warrants.
Messrs. Brian Mazzella, Arthur Jones and Trevor Williams have voting
and dispositive control over securities held by Whalehaven Capital Fund
Limited.
|
||
25 |
Alpha
Capital Anstalt is the record holder of 1,500,000 shares of our common
stock, Class A warrants to purchase 1,500,000 shares of our common
stock and Class B warrants to purchase 1,500,000 shares of our common
stock. The number of shares offered includes 3,000,000 shares which are
issuable upon the exercise of the Class A and Class B
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the warrants.
Messrs. Konrad Ackerman and Rainer Posch have voting and dispositive
control over securities held by Alpha Capital Anstalt.
|
||
26 |
Osher
Capital Partners, LLC is the record holder of 500,000 shares of our common
stock, Class A warrants to purchase 940,000 shares of our common
stock and Class B warrants to purchase 500,000 shares of our common
stock. The number of shares offered includes 1,440,000 shares which are
issuable upon the exercise of the Class A and Class B
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the warrants.
Mr. Yisroel Kluger has voting and dispositive control over securities
held by Osher Capital Partners, LLC.
|
||
27 |
Ellis
International, Ltd. is the record holder of 800,000 shares of our common
stock, Class A warrants to purchase 800,000 shares of our common
stock and Class B warrants to purchase 800,000 shares of our common
stock. The number of shares offered includes 1,600,000 shares which are
issuable upon the exercise of the Class A and Class B
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the warrants.
Mr. Wilhelm Unger has voting and dispositive control over securities
held by Ellis International, Ltd.
|
||
28 |
Mulkey
II Limited Partnership is the record holder of 500,000 shares of our
common stock, Class A warrants to purchase 500,000 shares of our
common stock and Class B warrants to purchase 500,000 shares of our
common stock. The number of shares offered includes 1,000,000 shares which
are issuable upon the exercise of the Class A and Class B
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the warrants.
Dr. David Mulkey has voting and dispositive control over securities held
by Mulkey II Limited Partnership.
|
29 |
Cranshire
Capital, L.P. ("Cranshire") is the record holder of 1,200,000 shares of
our common stock, Class A warrants to purchase 1,200,000 shares of
our common stock and Class B warrants to purchase 1,200,000 shares of
our common stock. The number of shares offered includes 2,400,000 shares
which are issuable upon the exercise of the Class A and Class B
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the warrants.
Downsview Capital, Inc. ("Downsview") is the general partner of Cranshire
and consequently has voting and investment discretion over securities held
by Cranshire. Mr. Mitchell P. Kopin, President of Downsview, has
voting control over Downsview. As a result, each of Mr. Kopin,
Downsview and Cranshire may be deemed to have beneficial ownership (as
determined under Section 13(d) of the Securities Exchange Act of
1934, as amended) of the shares owned by Cranshire which are being
registered hereunder.
|
||
30 |
Mr. David
is the record holder of 250,000 shares of our common stock, Class A
warrants to purchase 250,000 shares of our common stock and Class B
warrants to purchase 250,000 shares of our common stock. The number of
shares offered includes 500,000 shares which are issuable upon the
exercise of the Class A and Class B warrants. The warrants
are not exercisable to the extent that (i) the number of shares of our
common stock beneficially owned by the holder and (ii) the number of
shares of our common stock issuable upon the exercise of the warrants
would result in the beneficial ownership by holder of more than 4.99% of
our then outstanding common stock. This provision, however, is waived
during the final 45 days of the exercise period of the
warrants.
|
||
31 |
Octagon
Capital Partners is the record holder of 125,000 shares of our common
stock, Class A warrants to purchase 125,000 shares of our common
stock and Class B warrants to purchase 125,000 shares of our common
stock. The number of shares offered includes 250,000 shares which are
issuable upon the exercise of the Class A and Class B
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the warrants.
Mr. Steven Hart has voting and dispositive control over securities
held by Octagon Capital Partners.
|
||
32 |
Catpat
Holdings Inc. is the record holder of Class A warrants to purchase
750,000 shares of our common stock and Class B warrants to purchase
750,000 shares of our common stock. The number of shares offered includes
3,000,000 shares which are issuable upon the exercise of the Class A
and Class B warrants. The warrants are not exercisable to the
extent that (i) the number of shares of our common stock beneficially
owned by the holder and (ii) the number of shares of our common stock
issuable upon the exercise of the warrants would result in the beneficial
ownership by holder of more than 4.99% of our then outstanding common
stock. This provision, however, is waived during the final 45 days of the
exercise period of the warrants. Mr. Glenn Hunt, President of Catpat
Holdings Inc., has voting and dispositive control over securities held by
that company.
|
||
33 |
Monarch
Capital Fund, Ltd. is the record holder of 1,500,000 shares of our common
stock, Class A warrants to purchase 1,500,000 shares of our common
stock and Class B warrants to purchase 1,500,000 shares of our common
stock. The number of shares offered includes 3,000,000 shares which are
issuable upon the exercise of the Class A and Class B
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the warrants.
Monarch Capital Fund, Ltd. is a British Virgin Islands investment fund
managed by Beacon Fund Advisors Ltd. and advised by Monarch Managers Ltd.
Messrs. David Sims and Joseph Franck, are the principals respectively
of the Manager and the Advisor. Neither Mr. Sims nor Mr. Franck
have any beneficial interest in the shares being registered
hereunder.
|
||
34 |
CMS
Capital is the record holder of 500,000 shares of our common stock,
Class A warrants to purchase 500,000 shares of our common stock and
Class B warrants to purchase 500,000 shares of our common stock. The
number of shares offered includes 1,000,000 shares which are issuable upon
the exercise of the Class A and Class B warrants. The
warrants are not exercisable to the extent that (i) the number of shares
of our common stock beneficially owned by the holder and (ii) the number
of shares of our common stock issuable upon the exercise of the warrants
would result in the beneficial ownership by holder of more than 4.99% of
our then outstanding common stock. This provision, however, is waived
during the final 45 days of the exercise period of the warrants.
Mr. Howard Weiss has voting and dispositive control over securities
held by CMS Capital.
|
35 |
Double
U Master Fund, LP is the record holder of 500,000 shares of our common
stock, Class A warrants to purchase 500,000 shares of our common
stock and Class B warrants to purchase 500,000 shares of our common
stock. The number of shares offered includes 1,000,000 shares which are
issuable upon the exercise of the Class A and Class B
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the warrants.
Double U Master Fund L.P. is a master fund in a master-feeder structure
with B&W Equities, LLC as its general partner. Mr. Isaac
Winehouse is the manager of B&W Equities, LLC and Mr. Winehouse
has ultimate responsibility of trading with respect to Double U Master
Fund L.P. Mr. Winehouse disclaims beneficial ownership of the shares
being registered hereunder.
|
||
36 |
Brio
Capital L.P. is the record holder of 250,000 shares of our common stock,
Class A warrants to purchase 250,000 shares of our common stock and
Class B warrants to purchase 250,000 shares of our common stock. The
number of shares offered includes 500,000 shares which are issuable upon
the exercise of the Class A and Class B warrants. The
warrants are not exercisable to the extent that (i) the number of shares
of our common stock beneficially owned by the holder and (ii) the number
of shares of our common stock issuable upon the exercise of the warrants
would result in the beneficial ownership by holder of more than 4.99% of
our then outstanding common stock. This provision, however, is waived
during the final 45 days of the exercise period of the warrants.
Mr. Shaye Hirsch has voting and dispositive control over securities
held by Brio Capital L.P.
|
||
37 |
WEC
Partners LLC is the record holder of 600,000 shares of our common stock,
Class A warrants to purchase 600,000 shares of our common stock and
Class B warrants to purchase 600,000 shares of our common stock. The
number of shares offered includes 1,200,000 shares which are issuable upon
the exercise of the Class A and Class B warrants. The
warrants are not exercisable to the extent that (i) the number of shares
of our common stock beneficially owned by the holder and (ii) the number
of shares of our common stock issuable upon the exercise of the warrants
would result in the beneficial ownership by holder of more than 4.99% of
our then outstanding common stock. This provision, however, is waived
during the final 45 days of the exercise period of the warrants.
Mr. Jaime Hartman exercises investment and voting control over the
securities owned by WEC Partners LLC. Mr. Hartman disclaims
beneficial ownership of the securities owned by WEC Partners
LLC.
|
||
38 |
Utica
Advisors, LLC is the record holder of Class A warrants to purchase
485,000 shares of our common stock. The number of shares offered includes
485,000 shares which are issuable upon the exercise of the Class A
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the warrants.
Mr. Solomon Eisenberg has voting and dispositive control over
securities held by Utica Advisors, LLC.
|
||
39 |
China
Direct Investments, Inc. is the record holder of Class A warrants to
purchase 200,000 shares of our common stock. The number of shares offered
includes 200,000 shares which are issuable upon the exercise of the
Class A warrants. The warrants are not exercisable to the extent
that (i) the number of shares of our common stock beneficially owned by
the holder and (ii) the number of shares of our common stock issuable upon
the exercise of the warrants would result in the beneficial ownership by
holder of more than 4.99% of our then outstanding common stock. This
provision, however, is waived during the final 45 days of the exercise
period of the warrants. China Direct Investments, Inc. is a wholly-owned
subsidiary of China Direct Industries, Inc. The number of securities owned
by China Direct Investments, Inc. excludes any securities owned by China
Direct Industries, Inc. or its other subsidiaries. Dr. James Wang, Chief
Executive Officer of China Direct Industries, Inc. holds voting and
dispositive control over securities owned by China Direct Investments,
Inc. in his capacity as Chief Executive Officer.
|
||
40 |
Skyebanc,
Inc. is the record holder of Class A warrants to purchase 61,125
shares of our common stock. The number of shares offered includes 61,125
shares which are issuable upon the exercise of the Class A
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the warrants.
Mr. Vincent Labarbara has voting and dispositive control over
securities held by Skyebanc, Inc.
|
||
41 |
Mr. Fulton
is the record holder of Class A warrants to purchase 136,000 shares
of our common stock,. The number of shares offered includes 136,000 shares
which are issuable upon the exercise of the Class A
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the warrants.
Mr. Peter Fulton has the voting and dispositive control over
securities held by Mr. Fulton.
|
42 |
Mr. Wolfang
is the record holder of Class A warrants to purchase 10,375 shares of
our common stock,. The number of shares offered includes 10,375 shares
which are issuable upon the exercise of the Class A
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the warrants.
Mr. Robert Wolfang has the voting and dispositive control over
securities held by Mr. Wolfang.
|
||
43 |
Polar
Securities Inc. is the record holder of Class A warrants to purchase
750,000 shares of our common stock and Class B warrants to purchase
750,000 shares of our common stock. The number of shares offered includes
1,500,000 shares which are issuable upon the exercise of the
warrants. The warrants are not exercisable to the extent that (i) the
number of shares of our common stock beneficially owned by the holder and
(ii) the number of shares of our common stock issuable upon the exercise
of the warrants would result in the beneficial ownership by holder of more
than 4.99% of our then outstanding common stock. This provision, however,
is waived during the final 45 days of the exercise period of the warrants.
Mr. Robin Schulz has voting and dispositive control over securities
held by Polar Securities, Inc.
|
• |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
||
• |
block
trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
||
• |
purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
|
||
• |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
||
• |
privately
negotiated transactions;
|
||
• |
settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a part;
|
||
• |
broker-dealers
may agree with the selling security holders to sell a specified number of
such shares at a stipulated price per share;
|
||
• |
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;
|
||
• |
a
combination of any such methods of sale; or
|
||
• |
any
other method permitted pursuant to applicable
law.
|
Public
Reference Room Office
|
100
F Street, N.E.
|
Room
1580
|
Washington,
D.C. 20549
|
TABLE
OF CONTENTS
|
||
Page
|
||
Prospectus
Summary
|
2 |
CHINA
LOGISTICS GROUP, INC.
———————
PROSPECTUS
———————
________________,
2009
31,558,500
Shares of Common Stock
|
Selected
Consolidated Financial Data
|
8 | |
Risk
Factors
|
10 | |
Cautionary
Statement Regarding Forward-Looking Information
|
17 | |
Market
for Common Equity and Related Stockholder Matters
|
18 | |
Capitalization
|
19 | |
Use
of Proceeds
|
19 | |
Management’s
Discussion and Analysis or Plan or Operation
|
19 | |
Our
Business
|
28 | |
Management
|
35 | |
Executive
Compensation
|
38 | |
Certain
Relationships and Related Transactions
|
39 | |
Principal
Shareholders
|
41 | |
Description
of Securities
|
42 | |
Selling
Security Holders
|
44 | |
Plan
of Distribution
|
51 | |
Legal
Matters
|
52 | |
Experts
|
53 | |
Where
You Can Find Additional Information
|
53 | |
Financial
Statements
|
F-1 | |
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR PERIOD ENDING JUNE 30, 2009 |
Page
No.
|
|||
Consolidated
Balance Sheet
|
F-2
|
|||
Consolidated
Statements of Operations
|
F-3
|
|||
Consolidated
Statements of Cash Flows
|
F-4
|
|||
Consolidated
Statements of Changes in (Deficit) Equity
|
F-5
|
|||
Notes
to Consolidated Financial Statements
|
F-6
|
|||
CONSOLIDATED
FINANCIAL STATEMENTS FOR YEARS ENDING DECEMBER 31, 2008 AND 2007
|
||||
Report
of Independent Registered Public Accounting Firm
|
F-20
|
|||
Consolidated
Balance Sheet
|
F-21
|
|||
Consolidated
Statements of Operations
|
F-22
|
|||
Consolidated
Statements of Stockholders' (Deficit)
Equity
|
F-23
|
|||
Consolidated
Statements of Cash Flows
|
F-24
|
|||
Notes
to Consolidated Financial Statements
|
F-25
|
June
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Unaudited
|
Restated
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
|
$ | 2,395,469 | $ | 3,156,362 | ||||
Accounts
receivable, net
|
3,240,638 | 2,739,173 | ||||||
Other
receivables
|
446,374 | 298,442 | ||||||
Advances
to vendors
|
134,513 | - | ||||||
Due
from related parties
|
805,085 | 518,433 | ||||||
Prepaid
expenses and other current assets
|
18,340 | 29,510 | ||||||
Total
current assets
|
7,040,419 | 6,741,920 | ||||||
Property
and equipment, net
|
36,167 | 44,144 | ||||||
Total
assets
|
$ | 7,076,586 | $ | 6,786,064 | ||||
LIABILITIES AND
EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
1,810,476 | 1,752,862 | ||||||
Accrued
registration rights penalty
|
1,597,000 | 1,597,000 | ||||||
Other
accruals and current liabilities
|
407,554 | 146,953 | ||||||
Advances
from customers
|
1,035,847 | 1,133,283 | ||||||
Due
to related parties
|
740,466 | 378,697 | ||||||
Foreign
tax payable
|
9,567 | 34,898 | ||||||
Total
current liabilities
|
5,600,910 | 5,043,693 | ||||||
Equity:
|
||||||||
China
Logistics Group, Inc. shareholders' equity
|
||||||||
Preferred
stock - $0.001 par value, 10,000,000 shares
authorized
|
||||||||
Series
B convertible preferred stock - 450,000 issued and
|
||||||||
outstanding
at June 30, 2009 and December 31, 2008
|
450 | 450 | ||||||
Common
stock, $.001 par value, 500,000,000 shares authorized; 34,508,203
shares
|
||||||||
issued
and outstanding at June 30, 2009 and December 31,
2008
|
34,508 | 34,508 | ||||||
Additional
paid-in capital
|
19,229,513 | 19,229,513 | ||||||
Accumulated
deficit
|
(18,331,724 | ) | (18,129,491 | ) | ||||
Accumulated
other comprehensive loss
|
(183,697 | ) | (187,495 | ) | ||||
Total
China Logistics Group, Inc. shareholders' equity
|
749,050 | 947,485 | ||||||
Noncontrolling
interest
|
726,626 | 794,886 | ||||||
Total
equity
|
1,475,676 | 1,742,371 | ||||||
Total
liabilities and equity
|
$ | 7,076,586 | $ | 6,786,064 |
CHINA
LOGISTICS GROUP, INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(UNAUDITED)
|
For
the Three Months Ended
|
For
the Six Months Ended
|
|||||||||||||||
June
30, 2009
|
June
30, 2008
|
June
30, 2009
|
June
30, 2008
|
|||||||||||||
Restated
|
Restated
|
|||||||||||||||
Sales
|
$ | 4,607,989 | $ | 8,018,987 | $ | 7,806,561 | $ | 14,792,200 | ||||||||
Cost
of sales
|
4,293,127 | 7,562,001 | 7,582,716 | 14,077,731 | ||||||||||||
Gross
profit
|
314,862 | 456,986 | 223,845 | 714,469 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Selling,
general and administrative
|
201,880 | 144,644 | 518,288 | 427,849 | ||||||||||||
Depreciation
and amortization
|
4,735 | 3,935 | 7,085 | 8,160 | ||||||||||||
Bad
debt expense (recovery of bad debt)
|
- | (20,765 | ) | 1,244 | (401,743 | ) | ||||||||||
Total
operating expenses
|
206,615 | 127,814 | 526,617 | 34,266 | ||||||||||||
Income
(loss) from operations
|
108,247 | 329,172 | (302,772 | ) | 680,203 | |||||||||||
Other
income (expenses):
|
||||||||||||||||
Realized
exchange gain (loss)
|
35,957 | 4,135 | 35,957 | (12,407 | ) | |||||||||||
Non-operating
bad debt expense
|
- | (87,221 | ) | - | (87,221 | ) | ||||||||||
Interest
income (expense)
|
(210 | ) | (1,504 | ) | 813 | (667 | ) | |||||||||
Total
other income (expenses)
|
35,747 | (84,590 | ) | 36,770 | (100,295 | ) | ||||||||||
Income
(loss) before income taxes
|
143,994 | 244,582 | (266,002 | ) | 579,908 | |||||||||||
Foreign
taxes
|
6,314 | 69,870 | 8,140 | 77,658 | ||||||||||||
Net
Income (loss)
|
137,680 | 174,712 | (274,142 | ) | 502,250 | |||||||||||
Less:
Net income (loss) attributable to the noncontrolling
interest
|
(72,670 | ) | (131,811 | ) | 71,909 | (359,223 | ) | |||||||||
Net
income (loss) attributable to China Logistics Group,
Inc.
|
$ | 65,010 | $ | 42,901 | $ | (202,233 | ) | $ | 143,027 | |||||||
Earnings
(loss) per common share:
|
||||||||||||||||
Basic
|
$ | 0.00 | $ | 0.00 | $ | (0.01 | ) | $ | 0.01 | |||||||
Diluted
|
$ | 0.00 | $ | 0.00 | $ | (0.01 | ) | $ | 0.00 | |||||||
Weighted
average number of shares outstanding:
|
||||||||||||||||
Basic
|
34,508,203 | 31,931,829 | 34,508,203 | 19,053,778 | ||||||||||||
Diluted
|
39,008,203 | 47,635,943 | 34,508,203 | 34,596,664 |
For
the Six Months Ended
|
||||||||
June
30,
|
||||||||
2009
|
2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
Restated
|
|||||||
Net
income (loss) attributable to China Logistics Group,
Inc.
|
$ | (202,233 | ) | $ | 143,027 | |||
Adjustments
to reconcile net income (loss):
|
||||||||
Depreciation
expense
|
7,085 | 8,160 | ||||||
Noncontrolling
interest
|
(71,909 | ) | 359,223 | |||||
Allowance
for doubtful accounts
|
1,244 | (401,743 | ) | |||||
Amorization
of deferred cost
|
- | 5,450 | ||||||
Changes
in assets and liabilities:
|
||||||||
(Increase)
decrease in accounts receivable
|
(502,824 | ) | 1,190,760 | |||||
Decrease
in accounts receivable - related party
|
- | 7,000 | ||||||
(Increase)
in advances to vendors
|
(134,513 | ) | - | |||||
Decrease
(increase) in prepaid expenses and other current
assets
|
(136,762 | ) | (639,239 | ) | ||||
Increase
(decrease) in accounts payable
|
57,614 | (2,708,329 | ) | |||||
Increase
(decrease) in other accruals and current
liabilities
|
260,601 | (251,871 | ) | |||||
Increase
(decrease) increase in taxes payable
|
(25,331 | ) | 43,131 | |||||
Increase
in accrued consulting fee
|
- | 50,082 | ||||||
Increase
(decrease) in advances from customers
|
(97,435 | ) | 926,775 | |||||
NET
CASH (USED IN) OPERATING ACTIVITIES
|
(844,463 | ) | (1,267,574 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Capital
expenditures
|
- | (5,824 | ) | |||||
Increase
in short-term loan receivable
|
(1,614,000 | ) | - | |||||
Repayment
of short-term loan receivable
|
1,614,000 | - | ||||||
Advances to related parties
|
(418,062 | ) | - | |||||
Repayment
from related parties
|
131,410 | - | ||||||
NET
CASH (USED IN) INVESTING ACTIVITIES
|
(286,652 | ) | (5,824 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds
convertible note payable - related party
|
- | 148,200 | ||||||
Proceeds
from loan payable - shareholder
|
- | 2,622 | ||||||
Proceeds
from 2008 unit offering
|
- | 3,778,250 | ||||||
2008
unit offering private placement expenses
|
- | (419,063 | ) | |||||
Advances from related parties
|
552,886 | - | ||||||
Repayment
of advances from related parties
|
(191,118 | ) | (12,633 | ) | ||||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
361,768 | 3,497,376 | ||||||
EFFECT
OF EXCHANGE RATE ON CASH
|
8,454 | 90,367 | ||||||
NET
INCREASE (DECREASE) IN CASH
|
(760,893 | ) | 2,314,345 | |||||
CASH -
beginning of year
|
3,156,362 | 1,121,605 | ||||||
CASH
- end of period
|
$ | 2,395,469 | $ | 3,435,950 | ||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash
paid during the period for foreign taxes
|
$ | 31,361 | $ | 34,524 | ||||
Convertible
note payable converted to common stock -related
party
|
$ | - | $ | 2,521,380 | ||||
Accrued
compensation converted to common stock - related
party
|
$ | - | $ | 448,985 |
CHINA
LOGISTICS GROUP, INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CHANGES IN (DEFICIT) EQUITY
|
FOR
THE YEAR ENDED DECEMBER 31, 2008 and SIX MONTH PERIOD ENDING JUNE 30,
2009
|
China
Logistics Group, Inc. Shareholders' Equity
|
||||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||||
Additional
|
Other
|
|||||||||||||||||||||||||||||
Preferred
A Stock
|
Preferred
B Stock
|
Common
Stock
|
Paid-In
|
Accumulated
|
Comprehensive
|
Noncontrolling
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Loss
|
Interest
|
Total
|
||||||||||||||||||||
Balance
December 31, 2007
|
1,000,000 | $ | 1,000 | 1,295,000 | $ | 1,295 | 4,999,350 | $ | 4,999 | $ | 12,927,625 | $ | (16,042,873 | ) | $ | (226,390 | ) | $ | 601,028 | $ | (2,733,316) | |||||||||
Convertible
note payable to related party converted to capital to
capital
|
- | - | - | - | 2,864,606 | 2,865 | 2,518,514 | - | - | - | 2,521,379 | |||||||||||||||||||
Conversion
of Series A Preferred to common stock
|
(1,000,000 | ) | (1,000 | ) | - | - | 2,500,000 | 2,500 | (1,500 | ) | - | - | - | - | ||||||||||||||||
Conversion
of Series B Preferred to common stock
|
- | - | (845,000 | ) | (845 | ) | 8,450,000 | 8,450 | (7,605 | ) | - | - | - | - | ||||||||||||||||
Accrued
salary for president converted to stock
|
- | - | - | - | 581,247 | 581 | 448,404 | - | - | - | 448,985 | |||||||||||||||||||
Private
placement
|
- | - | - | - | 15,113,000 | 15,113 | 3,344,075 | - | - | - | 3,359,188 | |||||||||||||||||||
Net
(loss) income
|
- | - | - | - | - | - | - | (2,086,618 | ) | - | 156,489 | (1,930,129) | ||||||||||||||||||
Unrealized
gain on foreign currency translation adjustment
|
- | - | - | - | - | - | - | - | 38,895 | 37,369 | 76,264 | |||||||||||||||||||
Balance
December 31, 2008
|
- | - | 450,000 | 450 | 34,508,203 | 34,508 | 19,229,513 | (18,129,491 | ) | (187,495 | ) | 794,886 | 1,742,371 | |||||||||||||||||
Net
loss (loss) -- unaudited
|
- | - | - | - | - | - | - | (202,233 | ) | - | (71,909 | ) | (274,142) | |||||||||||||||||
Unrealized
gain on foreign currency translation adjustment -- unaudited
|
- | - | - | - | - | - | - | - | 3,798 | 3,649 | 7,447 | |||||||||||||||||||
Balance
June 30, 2009 -- unaudited
|
- | $ | - | 450,000 | $ | 450 | 34,508,203 | $ | 34,508 | $ | 19,229,513 | $ | (18,331,724 | ) | $ | (183,697 | ) | $ | 726,626 | $ | 1,475,676 |
As
filed
|
Adjustment
to Restate
|
Restated
|
||||||||||
Equity
|
||||||||||||
Series
B Convertible Preferred Stock- 450,000 shares issued and outstanding at
December 31, 2008
|
450
|
-
|
450
|
|||||||||
Common
Stock, $0.001 par value 500,000,000 shares authorized, 34,508,203 shares
issued and outstanding December 31, 2008
|
34,508
|
-
|
34,508
|
|||||||||
Additional
Paid-in-capital
|
$ |
3,572,042
|
$ |
15,657,471
|
$ |
19,229,513
|
||||||
Accumulated
Deficit
|
(2,472,020)
|
|
(15,657,471)
|
|
(18,129,491)
|
|
||||||
Accumulated
other comprehensive income loss
|
(187,495)
|
|
-
|
(187,495)
|
|
|||||||
Total
China Logistics Group, Inc. shareholders
equity
|
947,485
|
-
|
947,485
|
|||||||||
Noncontrolling
Interest
|
794,886
|
-
|
794,886
|
|||||||||
Total
equity
|
1,742,371
|
-
|
1,742,371
|
|||||||||
Total
liabilities and equity
|
$
|
6,786,064
|
-
|
$
|
6,786,064
|
• |
Recognize
adjustment to the initially reported carrying values of assets and
liabilities of MediaReady, Inc. as of December 31,
2007;
|
||
• |
Correct
the classification of $401,743 in recovery of bad debt in the consolidated
statements of operations from a component of other income (expense) to a
component of operating income;
|
||
• |
Recognize
$87,221 in non-operating bad debt resulting from a cash advance made in
the second quarter 2008, to Mr. David Aubel, a related party and
significant shareholder, subsequently deemed
uncollectable.
|
||
• |
Correct
components of equity as initially recorded in the reverse recapitalization
transaction with Shandong
Jiajia.
|
As
Filed
|
Adjustment
to Restate
|
Restated
|
||||||||||
Statements
of Operations
Data Three
months ended June 30, 2008
|
||||||||||||
General
and administrative
|
$
|
184,135
|
$
|
(39,491
|
)
|
$
|
144,644
|
|||||
Depreciation
and amortization
|
201,981
|
(198,046
|
)
|
3,935
|
||||||||
Recovery
of bad debt, net
|
-
|
(20,765)
|
(20,765
|
)
|
||||||||
Total
operating expenses
|
386,116
|
(258,302
|
)
|
127,814
|
||||||||
Income
(loss) from operations
|
70,870
|
258,302
|
329,172
|
|||||||||
Forgiveness
of bad debt
|
764,220
|
(764,220
|
)
|
-
|
||||||||
Recovery
of bad debt
|
20,765
|
(20,764
|
)
|
-
|
||||||||
Non-operating
bad debt
|
-
|
(87,221)
|
(87,221)
|
|||||||||
Total
other income (expense)
|
787,616
|
(872,206
|
)
|
(84,590
|
)
|
|||||||
Income
(loss) before income taxes
|
858,486
|
(613,904
|
)
|
244,582
|
||||||||
Net
income (loss)
|
788,616
|
(613,904
|
)
|
174,712
|
||||||||
Net
income (loss) attributable to China Logistics Group,
Inc.
|
656,805
|
(613,904
|
)
|
42,901
|
||||||||
Foreign
currency translation adjustment
|
45,376
|
(9,422
|
)
|
35,954
|
||||||||
Comprehensive
income (loss)
|
$ |
702,181
|
$
|
(623,326
|
)
|
$
|
78,855
|
|||||
Earnings
per share:
|
||||||||||||
Basic
|
$ |
0.04
|
$
|
(0.04
|
)
|
$ |
0.00
|
|||||
Diluted
|
$ |
0.02
|
$ |
(0.02
|
)
|
$ |
0.00
|
|||||
Basic
weighted average shares outstanding
|
17,898,577
|
14,033,252
|
31,931,829
|
|||||||||
Diluted
weighted average shares outstanding
|
34,572,859
|
13,063,084
|
47,635,943
|
Six
Months ended June 30, 2008
|
As
Filed
|
Adjustment
to Restate
|
Restated
|
|||||||||
Selling,
general and administrative
|
$
|
579,731
|
$
|
(151,882
|
)
|
$
|
427,849
|
|||||
Depreciation
and amortization
|
403,594
|
(395,434
|
)
|
8,160
|
||||||||
Fair
value of equity instruments
|
5,450
|
(5,450
|
)
|
-
|
||||||||
Recovery
of bad debt
|
-
|
(401,743
|
)
|
(401,743
|
)
|
|||||||
Total
operating expenses
|
988,775
|
(954,509
|
)
|
34,266
|
||||||||
Income
(loss) from operations
|
(274,306
|
)
|
956,509
|
680,203
|
||||||||
Change
in fair value of derivative liability
|
74,347
|
(74,347
|
)
|
-
|
||||||||
Forgiveness
of debt
|
764,220
|
(764,220
|
)
|
-
|
||||||||
Recovery
of bad debts
|
401,743
|
(401,743
|
)
|
-
|
||||||||
Non-operating
bad debt
|
-
|
(87,221
|
)
|
(87,221
|
)
|
|||||||
Total
other income (expense)
|
1,227,236
|
(1,327,531
|
)
|
(100,295
|
)
|
|||||||
Income
(Loss) before income taxes
|
952,930
|
(373,022
|
)
|
579,908
|
||||||||
Net
Income (loss)
|
875,272
|
(373,022
|
)
|
502,250
|
||||||||
Net
income (loss) attributable to China Logistics Group,
Inc.
|
516,049
|
(373,022
|
)
|
143,027
|
||||||||
Foreign
currency translation adjustment
|
68,697
|
(20,850
|
)
|
47,847
|
||||||||
Comprehensive
income (loss)
|
$ |
584,746
|
$ |
(393,872
|
)
|
$ |
190,874
|
|||||
Earnings
(loss) per share:
|
||||||||||||
Basic
|
$ |
0.03
|
$ |
(0.02
|
)
|
$ |
0.01
|
|||||
Diluted
|
$ |
0.02
|
$ |
(0.02
|
)
|
$ |
0.00
|
|||||
Basic
weighted average shares outstanding
|
18,968,085
|
85,693,
|
19,053,778
|
|||||||||
Diluted
weighted average shares outstanding
|
29,109,526
|
5,487,138
|
34,596,664
|
Statement
of cash flows data
|
||||||||||||
Net
income attributable to China Logistics Group, Inc.
|
$ |
516,049
|
$ |
(373,022
|
)
|
$ |
143,027
|
|||||
Depreciation
and amortization
|
403,594
|
(395,434
|
)
|
8,160
|
||||||||
Forgiveness
of debt
|
(764,220
|
)
|
764,220
|
-
|
||||||||
Change
in fair value of derivative liability
|
(74,347
|
)
|
74,347
|
-
|
||||||||
Decrease
in accounts receivable
|
1,061,815
|
128,945
|
1,190,760
|
|||||||||
Decrease
in accounts receivable- related party
|
160,350
|
153,350
|
7,000
|
|||||||||
(Increase)
decrease in prepaid expenses and other assets
|
(622,971
|
)
|
(16,268
|
)
|
(639,239
|
)
|
||||||
Increase
(decrease) in accounts payable
|
(2,940,986
|
)
|
232,657
|
(2,708,329
|
)
|
|||||||
Decrease
in deposits
|
12,000
|
(12,000
|
)
|
-
|
||||||||
Increase
in accrued compensation
|
2,000
|
(2,000
|
)
|
-
|
||||||||
(Decrease)
in other accruals and other current assets
|
(110,071
|
)
|
(141,800
|
)
|
(251,871
|
)
|
||||||
Net
cash (used in) operating activities
|
(1,373,869
|
)
|
106,295
|
(1,267,574
|
)
|
|||||||
Net
cash (used in) investing activities
|
(5,824
|
)
|
-
|
(5,824
|
)
|
|||||||
2008
unit offering expenses
|
(420,863
|
)
|
1,800
|
(419,863
|
)
|
|||||||
Net
cash provided by financing activities
|
3,495,576
|
1,800
|
3,497,376
|
|||||||||
Net
increase in cash
|
2,115,883
|
108,095
|
2,223,978
|
|||||||||
Foreign
current translation adjustment
|
198,462
|
(108,095
|
)
|
90,367
|
||||||||
Cash
at end of period
|
$ |
3,435,950
|
$ |
-
|
$ |
3,435,950
|
• |
When
the cargo departs the shipper's location if the trade pricing term is on a
CIF (cost, insurance and freight) or CFR (cost and freight cost)
basis;
|
||
• |
When
the cargo departs the shipper’s location when the trade pricing terms are
CFR (cost and freight cost); or
|
||
• |
When
merchandise arrives at the destination port if the trade pricing term is
on a FOB (free on board)
basis.
|
June
30, 2009
|
December
31, 2008
|
|||||||
Loans
receivable
|
$ | 317,715 | $ | 229,742 | ||||
Legal
deposit
|
38,716 | 38,662 | ||||||
Deferred
expense
|
59,890 | 23,561 | ||||||
Other
|
30,053 | 6,477 | ||||||
$ | 446,374 | $ | 298,442 |
Level 1:
|
Observable
inputs such as quoted market prices in active markets for identical assets
or liabilities
|
Level 2:
|
Observable
market-based inputs or unobservable inputs that are corroborated by market
data
|
Level 3:
|
Unobservable
inputs for which there is little or no market data, which require the use
of the reporting entity’s own
assumptions.
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(Restated)
|
(Restated)
|
|||||||||||||||
Numerator:
|
||||||||||||||||
Net
Income (loss) applicable to common stockholders (A)
|
$ | 65,010 | $ | 42,901 | $ | (202,233 | ) | $ | 143,027 | |||||||
Denominators:
|
||||||||||||||||
Denominator
for basic earnings per share:
|
||||||||||||||||
Weighted
average shares outstanding (B)
|
34,508,203 | 31,931,829 | 34,508,203 | 19,053,778 | ||||||||||||
Denominator
for diluted earnings per share
|
||||||||||||||||
Treasury
stock method
|
||||||||||||||||
Warrants
issued to Mr. Wei Chen
|
- | 1,250,000 | - | 1,250,000 | ||||||||||||
Series
B preferred stock - unconverted
|
4,500,000 | 4,500,000 | - | 4,500,000 | ||||||||||||
Series
A and B preferred stock
|
- | 9,954,114 | - | 9,792,886 | ||||||||||||
39,008,203 | 47,635,943 | - | 34,596,664 | |||||||||||||
Denominator
for diluted earnings (loss) per share:
|
||||||||||||||||
adjusted
weighted average shares outstanding (C)
|
39,008,203 | 47,635,943 | 34,508,203 | 34,596,664 | ||||||||||||
Basic
and diluted earnings per common share:
|
||||||||||||||||
Earnings
(loss) per share- basic (A)/(B)
|
$ | 0.00 | $ | 0.00 | $ | (0.01 | ) | $ | 0.01 | |||||||
Earnings
(loss) per share- diluted (A)/(C)
|
$ | 0.00 | $ | 0.00 | $ | (0.01 | ) | $ | 0.00 |
Six Months
Ended June 30,
|
||||
2009
|
2008
|
|||
Warrants
issued to Mr. Wei Chen
|
2,000,000
|
-
|
||
Warrants
|
5,000
|
117,500
|
||
Class
A and B warrants
|
31,558,500
|
-
|
||
Series
B convertible preferred stock
|
4,500,000
|
-
|
||
38,063,500
|
117,500
|
• |
issue
additional shares to the purchasers to take into account the amount paid
by the purchaser as of the closing date for the shares included in the
units so that the per share price paid by the purchaser equals the lower
price in the subsequent issuance;
|
||
• |
reduce
the warrant exercise price of any unexercised warrants then held by the
purchaser to such lower price; and
|
||
• |
if
necessary, issue additional shares to purchaser to take into account the
amount paid, whether in cash or by cashless exercise, by the purchaser if
the purchaser has exercised any warrants so that the per share exercise
price and to the exercise price for the exercised warrants equals the
lower price of the subsequent
issuance.
|
• |
strategic
license agreements or similar partnering arrangements provided that the
issuances are not for the purpose of raising capital and there are no
registration rights granted;
|
||
• |
strategic
mergers, acquisitions or consolidation or purchase of substantially all of
the securities or assets of a corporation or other entity provided that we
do not grant the holders of such securities registration rights;
and
|
||
• |
the
issuance of common stock or options pursuant to stock option plans and
employee purchase plans at exercise prices equal to or higher than the
closing price of our common stock on the issue/grant date or as a result
of the exercise of warrants issued either in the unit offering or which
were outstanding prior to the unit
offering.
|
• |
until
the earlier of the registration statement having been effective for 240
days or the date on which all the shares of common stock sold in the 2008
Unit Offering, including the shares underlying the warrants, have been
sold we will not file any additional registration statements, other than a
Form S-8; and
|
||
• |
until
the earlier of two years from the closing date or the date on which all
shares of common stock sold in the 2008 Unit Offering, including the
shares underlying the warrants, have been sold or transferred we agreed we
would not:
|
||
• amend
our articles of incorporation or bylaws so as to adversely affect the
rights of the investors;
|
|||
• repurchase
or otherwise acquire any of our securities or make any dividends or
distributions of our securities; or
|
|||
• prepay
any financing related or other outstanding debt
obligations.
|
No.
of Shares issued
during
six month period ended June 30,
|
||||||||
2009
|
2008
|
|||||||
Settlement
of obligation to former President and CEO, Mr. V. Jeffrey
Harrell
|
-
|
581,247
|
||||||
Settlement
(conversion) of note payable to principal shareholder, David
Aubel
|
-
|
2,864,606
|
||||||
Conversion
1,000,000 shares of Series A Convertible Preferred
Stock
|
-
|
2,500,000
|
||||||
Conversion
of 845,000 shares of Series B Convertible Preferred
Stock
|
-
|
8,450,000
|
||||||
2008 Unit Offering | 15,113,000 | |||||||
-
|
29,508,853
|
No.
of Shares Underlying Warrants
|
Weighted
Average Exercise Price
|
Weighted
Average Contractual Term (years)
|
Aggregate Intrinsic
Value
|
|||||||||||||
Outstanding
at December 31, 2008
|
2,000,000
|
$
|
0.30
|
1.5
|
$
|
-
|
||||||||||
Granted
|
-
|
-
|
-
|
-
|
||||||||||||
Exercised
|
-
|
-
|
-
|
-
|
||||||||||||
Outstanding
at June 30, 2009
|
2,000,000
|
$
|
0.30
|
1.5
|
$
|
-
|
No.
of Shares Underlying Warrants
|
Weighted Average
Exercise Price
|
Weighted
Average Contractual Term (years)
|
Aggregate Intrinsic
Value
|
||||||||
Outstanding
at December 31, 2008
|
31,676,000
|
$
|
0.46
|
3.75
|
-
|
||||||
Granted
|
-
|
-
|
-
|
-
|
|||||||
Exercised
|
-
|
-
|
-
|
-
|
|||||||
Expired | (112,500 | ) | |||||||||
Outstanding
at June 30, 2009
|
31,563,500
|
$
|
0.46
|
3.75
|
-
|
June
30, 2009
|
December
31, 2008
|
|||||||
Due
to Xiangfen Chen
|
$
|
109,024
|
$
|
123,458
|
||||
Due
to Bin Liu
|
615,538
|
62,652
|
||||||
Due
to Tianjin Sincere Logistics Co., Ltd.
|
15,904
|
183,448
|
||||||
Other
|
--
|
9,139
|
||||||
$
|
740,466
|
$
|
378,697
|
For
the Three Months Ended June 30,
|
For
the Six Months Ended June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Restated
|
Restated
|
|||||||||||||||
Net
(loss) income
|
$ | 137,680 | $ | 174,712 | $ | (274,142 | ) | $ | 502,250 | |||||||
Other
comprehensive (loss) income, net of tax
|
||||||||||||||||
Foreign
currency translation gain, net of tax
|
3,445 | 70,498 | 7,449 | 93,818 | ||||||||||||
Total
other comprehensive (loss) income, net of tax
|
3,445 | 70,498 | 7,449 | 93,818 | ||||||||||||
Comprehensive
Income
|
141,125 | 245,210 | (266,693 | ) | 596,068 | |||||||||||
Comprehensive
Income attributable to the noncontrolling interests
|
(74,358 | ) | (166,355 | ) | 68,259 | (405,194 | ) | |||||||||
Comprehensive
(loss) Income attributable to China Logistics Group,
Inc.
|
$ | 66,767 | $ | 78,855 | $ | (198,434 | ) | $ | 190,874 |
For
the three months ended
|
||||||||||||||||
June
30, 2009
|
June
30, 2008
|
|||||||||||||||
Revenues
|
||||||||||||||||
Revenues
|
Assets
|
Restated
|
Assets
|
|||||||||||||
United
States
|
$ | -- | $ | 6,409 | $ | -- | $ | 558,745 | ||||||||
People's
Republic of China
|
4,607,989 | 7,070,177 | 8,018,987 | 6,680,959 | ||||||||||||
Totals
|
$ | 4,607,989 | $ | 7,076,586 | $ | 8,018,987 | $ | 7,239,704 |
For
the six months ended
|
||||||||||||||||
June
30, 2009
|
June
30, 2008
|
|||||||||||||||
Revenues
|
||||||||||||||||
Revenues
|
Assets
|
Restated
|
Assets
|
|||||||||||||
United
States
|
$ | -- | $ | 6,409 | $ | -- | $ | 558,745 | ||||||||
People’s
Republic of China
|
7,806,561 | 7,070,177 | 14,792,200 | 6,680,959 | ||||||||||||
Totals
|
$ | 7,806,561 | $ | 7,076,586 | $ | 14,792,200 | $ | 7,239,704 |
Period
|
Total
|
|||
Period
Ended December 31, 2009
|
$
|
121,000
|
||
Period
Ended December 31, 2010
|
48,000
|
|||
Period
Ended December 31, 2011
|
23,000
|
|||
Period
Ended December 31, 2012
|
23,000
|
|||
Period
Ended December 31, 2013
|
23,000
|
|||
Thereafter
|
--
|
|||
$
|
238,000
|
(Except
as to Note 2 as to the effects of the Restatement of the Financial
Statements as to which the date is September 25,
2009)
|
December
31,
|
|||||||
2008
|
2007
|
||||||
Restated
|
Restated
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
|
$
|
3,156,362
|
$
|
1,121,605
|
|||
Accounts
receivable, net
|
2,739,173
|
3,131,831
|
|||||
Accounts
receivable - related party
|
-
|
7,000
|
|||||
Due
from related parties
|
518,433
|
511,435
|
|||||
Prepaid
expense and other current assets
|
327,952
|
328,065
|
|||||
Total
current assets
|
6,741,920
|
5,099,936
|
|||||
Property
and equipment, net
|
44,144
|
42,336
|
|||||
Total
assets
|
$
|
6,786,064
|
$
|
5,142,272
|
|||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Cash
overdraft
|
$
|
-
|
$
|
12,633
|
|||
Accounts
payable - trade
|
1,752,862
|
3,608,885
|
|||||
Accrued
compensation - related party
|
-
|
446,985
|
|||||
Accrued
registration rights penalty
|
1,597,000
|
-
|
|||||
Other
accruals and current liabilities
|
146,953
|
485,101
|
|||||
Convertible
note payable/related party
|
-
|
2,373,179
|
|||||
Advances
from customers
|
1,133,283
|
683,436
|
|||||
Due
to related parties
|
378,697
|
229,252
|
|||||
Foreign
tax payable
|
34,898
|
36,117
|
|||||
Total
current liabilities
|
5,043,693
|
7,875,588
|
|||||
Minority
interest
|
794,886
|
601,028
|
|||||
Shareholders'
deficit:
|
|||||||
Preferred
stock - $0.001 par value, 10,000,000 shares
authorized
|
|||||||
Series
A Convertible Preferred Stock - 1,000,000 shares
issued
|
|||||||
and
oustanding at December 2007
|
-
|
1,000
|
|||||
Series
B Convertible Preferred Stock - 450,000 and 1,295,000
shares
|
|||||||
issued
and oustanding at December 31, 2008 and 2007,
respectively
|
450
|
1,295
|
|||||
Common
stock, $.001 par value, 500,000,000 shares
authorized;
|
|||||||
34,508,203
shares and 4,999,350 shares issued and outstanding
|
|||||||
at
December 31, 2008 and 2007, respectively
|
34,508
|
4,999
|
|||||
Additional
paid-in capital
|
19,229,513
|
12,927,625
|
|||||
Accumulated
deficit
|
(18,129,491
|
)
|
(16,042,873
|
)
|
|||
Accumulated
other comprehensive loss
|
(187,495
|
)
|
(226,390
|
)
|
|||
Total
shareholders' equity (deficit)
|
947,485
|
(3,334,344
|
)
|
||||
Total
liabilities and shareholders' equity
|
$
|
6,786,064
|
$
|
5,142,272
|
For
the Years Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Restated
|
Restated
|
|||||||
Sales
|
$
|
35,561,833
|
$
|
35,298,453
|
||||
Cost
of sales
|
34,552,938
|
34,036,196
|
||||||
Gross
profit
|
1,008,895
|
1,262,257
|
||||||
Operating
expenses:
|
||||||||
Selling
expenses
|
-
|
37,546
|
||||||
General
and administrative
|
1,333,769
|
640,631
|
||||||
Recovery
of bad debt
|
(330,439
|
)
|
-
|
|||||
Total
operating expenses
|
1,003,330
|
678,177
|
||||||
Income
from operations
|
5,565
|
584,080
|
||||||
Other
income (expenses):
|
||||||||
Other
income
|
15,218
|
13,575
|
||||||
Registration
rights penalty
|
(1,597,000
|
)
|
-
|
|||||
Non-operating
bad debt expense
|
(85,844
|
)
|
-
|
|||||
Interest
income
|
1,532
|
-
|
||||||
Total
other income (expenses)
|
(1,666,094
|
)
|
13,575
|
|||||
Income
(loss) before income taxes and minority interest
|
(1,660,529
|
)
|
597,655
|
|||||
Foreign
taxes
|
269,600
|
57,205
|
||||||
Income
(loss) before minority interest
|
(1,930,129
|
)
|
540,450
|
|||||
Minority
interest in income of subsidiary
|
156,489
|
264,820
|
||||||
Net
income (loss)
|
(2,086,618
|
)
|
275,630
|
|||||
Other
comprehensive income (loss):
|
||||||||
Foreign
currency translation adjustments
|
38,895
|
(228,976
|
)
|
|||||
Comprehensive
(loss) income
|
$
|
(2,047,723
|
)
|
$
|
46,654
|
|||
Net
loss per common share per common share:
|
||||||||
Basic
|
$
|
(0.08
|
)
|
$
|
20.12
|
|||
Diluted
|
$
|
(0.08
|
)
|
$
|
0.05
|
|||
Weighted
average number of shares outstanding:
|
||||||||
Basic
|
26,823,216
|
13,697
|
||||||
Diluted
|
26,823,216
|
5,617,314
|
Accumulated
|
|||||||||||||||||||||||||||||||
Additional
|
Other
|
||||||||||||||||||||||||||||||
Preferred
A Stock
|
Preferred
B Stock
|
Common
Stock
|
Paid-In
|
Accumulated
|
Comprehensive
|
||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Income/Loss
|
Total
|
||||||||||||||||||||||
Restated
|
Restated
|
Restated
|
Restated
|
Restated
|
Restated
|
Restated
|
|||||||||||||||||||||||||
Balance
December 31, 2006
|
1,000,000
|
$
|
1,000
|
120,000
|
$
|
120
|
-
|
$
|
-
|
$
|
3,058,800
|
$
|
(661,032
|
)
|
$
|
2,586
|
$
|
2,401,474
|
|||||||||||||
Recapitalization for reverse merger
|
-
|
-
|
1,175,000
|
1,175
|
4,999,350
|
4,999
|
9,868,825
|
(15,657,471
|
)
|
-
|
(5,782,472
|
)
|
|||||||||||||||||||
Foreign
currency translation adjustments
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(228,976
|
)
|
(228,976
|
)
|
|||||||||||||||||||
Net
loss for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
275,630
|
-
|
275,630
|
|||||||||||||||||||||
Balance
December 31, 2007
|
1,000,000
|
1,000
|
1,295,000
|
1,295
|
4,999,350
|
4,999
|
12,927,625
|
(16,042,873
|
)
|
(226,390
|
)
|
(3,334,344
|
)
|
||||||||||||||||||
Convertible
note payable to related party converted to
capital
|
-
|
-
|
-
|
-
|
2,864,606
|
2,865
|
2,518,514
|
-
|
-
|
2,521,379
|
|||||||||||||||||||||
Conversion
of Series A Preferred to common stock
|
(1,000,000
|
)
|
(1,000
|
)
|
-
|
2,500,000
|
2,500
|
(1,500
|
)
|
-
|
-
|
-
|
|||||||||||||||||||
Conversion
of Series B Preferred to common stock
|
-
|
-
|
(845,000
|
)
|
(845
|
)
|
8,450,000
|
8,450
|
(7,605
|
)
|
-
|
-
|
-
|
||||||||||||||||||
Accrued
salary for president converted to stock
|
-
|
-
|
-
|
-
|
581,247
|
581
|
448,404
|
-
|
-
|
448,985
|
|||||||||||||||||||||
Private
placement
|
-
|
-
|
-
|
-
|
15,113,000
|
15,113
|
3,344,075
|
-
|
-
|
3,359,188
|
|||||||||||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
38,895
|
38,895
|
|||||||||||||||||||||
Net
loss for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(2,086,618
|
)
|
-
|
(2,086,618
|
)
|
|||||||||||||||||||
Balance
December 31, 2008
|
-
|
$
|
-
|
450,000
|
$
|
450
|
34,508,203
|
$
|
34,508
|
$
|
19,229,513
|
(18,129,491
|
)
|
$
|
(187,495
|
)
|
$
|
947,485
|
For
the Year Ended
|
||||||||
December
31,
|
||||||||
2008
|
2007
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
Restated
|
Restated
|
||||||
Net
(loss) income
|
$
|
(2,086,618
|
)
|
$
|
275,630
|
|||
Adjustments
to reconcile net income (loss) to net cash provided by (used in) operating
activities:
|
||||||||
Depreciation
expense
|
35,438
|
18,406
|
||||||
Minority
interest
|
156,489
|
264,820
|
||||||
Allowance
for doubtful accounts
|
(330,439
|
)
|
68,149
|
|||||
Registration
rights penalty
|
1,597,000
|
|||||||
Changes
in assets and liabilities:
|
||||||||
(Increase)
decrease in accounts receivable
|
723,098
|
(1,227,947
|
)
|
|||||
(Increase)
in accounts receivable - related party
|
7,000
|
-
|
||||||
(Increase)
decrease in other receivables
|
-
|
114,158
|
||||||
Decrease
in other assets
|
-
|
(419
|
)
|
|||||
Decrease
(increase) in prepaid expenses and other current
assets
|
114
|
(313,237
|
)
|
|||||
(Decrease)
increase in accounts payable
|
(1,856,023
|
)
|
1,054,327
|
|||||
(Decrease)
in other accruals and current liabilities
|
(338,148
|
)
|
(162,440
|
)
|
||||
(Decrease)
increase in taxes payable
|
(1,220
|
)
|
27,245
|
|||||
Increase
in advances from customers
|
449,848
|
572,877
|
||||||
NET
CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
|
(1,643,461
|
)
|
691,569
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Capital
expenditures
|
(37,246
|
)
|
(13,504
|
)
|
||||
Advances
to related parties
|
(6,998
|
)
|
(419,940
|
)
|
||||
NET
CASH USED IN FINANCING ACTIVITIES
|
(44,244
|
)
|
(433,444
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds
from 2008 Unit Offering
|
3,778,250
|
-
|
||||||
2008
Unit Offering expenses
|
(420,863
|
)
|
-
|
|||||
Proceeds
from convertible note payable - related party
|
148,200
|
-
|
||||||
Repayment
of short-term financing
|
(12,633
|
)
|
-
|
|||||
Advances
from related parties
|
256,879
|
|||||||
Repayments of advances from related parties
|
(105,794
|
)
|
-
|
|||||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
3,644,039
|
-
|
||||||
EFFECT
OF EXCHANGE RATE ON CASH
|
78,423
|
40,572
|
||||||
NET
INCREASE IN CASH
|
2,034,757
|
298,697
|
||||||
CASH -
beginning of year
|
1,121,605
|
822,908
|
||||||
CASH
- end of year
|
$
|
3,156,362
|
$
|
1,121,605
|
||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash
paid during the period for foreign taxes
|
$
|
34,524
|
$
|
31,361
|
||||
Convertible
note payable converted to common stock -related
party
|
$
|
2,521,379
|
$
|
-
|
||||
Accrued
compensation converted to common stock - related
party
|
$
|
448,985
|
$
|
-
|
•
|
the
prior receipt of all regulatory approvals and licenses from the necessary
governmental agencies in China related to this acquisition,
and
|
|
•
|
the
receipt of two years of audited financial statements of Shandong Jiajia
together with the interim period for the nine months ended
September 30, 2007.
|
•
|
effective
consolidation of resources among relatively independent
affiliates;
|
|
•
|
maintaining
the balance between the collection of accounts receivable and the
extension of longer credit terms offered to our current and prospective
clients in an effort to boost sales; and
|
|
•
|
our
ability to effectively handle the increases in costs due to soaring fuel
prices and the weak U.S. dollar.
|
Balance Sheet
Data
December
31, 2008
|
As
filed
|
Adjustment
to Restate
|
Restated
|
|||||||||
Shareholders’
equity(deficit)
|
||||||||||||
Series
B Convertible Preferred Stock- 450,000 shares issued and
outstanding at December 31, 2008
|
$
|
450
|
-
|
$
|
450
|
|||||||
Common
Stock, $0.001 par value, 500,000,000 shares authorized,
34,508,203 shares issued and outstanding December 31,
2008
|
34,508
|
-
|
34,508
|
|||||||||
Additional
Paid-in-capital
|
3,572,042
|
15,657,471
|
19,229,513
|
|||||||||
Accumulated
Deficit
|
(2,472,020)
|
(15,657,471)
|
(18,129,491)
|
|||||||||
Accumulated
other comprehensive income loss
|
(187,495)
|
-
|
(187,495)
|
|||||||||
Total
shareholders’ equity(deficit)
|
947,485
|
-
|
947,485
|
|||||||||
Total
liabilities and shareholders’ equity
|
$
|
6,786,064
|
-
|
$
|
6,786,064
|
Consolidated Statements of
Cash Flows Data
December
31, 2008
|
As
filed
|
Adjustment
to Restate
|
Restated
|
|||||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
from 2008 Unit Offering
|
3,778,250
|
-
|
3.778.250
|
|||||||||
2008
Unit Offering expenses
|
(420,863
|
)
|
-
|
(420,863
|
)
|
|||||||
Proceeds
from convertible note payable-related party
|
-
|
148,200
|
148,200
|
|||||||||
Repayment
of short-term financing
|
(12,633
|
)
|
-
|
(12,633
|
)
|
|||||||
Advances
from related parties
|
299,285
|
(42,406
|
)
|
256,879
|
||||||||
Repayments
of advances from related parties
|
-
|
(105,794
|
)
|
(105,795
|
)
|
|||||||
Net
cash provided by financing activities
|
3,644,039
|
-
|
3,644,039
|
·
|
the
recognition of the Company’s capital transaction with Shandong Jiajia
resulting in a 51% interest in Shandong Jiajia implemented through a
reverse recapitalization;
|
|
·
|
the
recognition of an agreement to issue 450,000 shares of Series B preferred
stock with a fair value of $3,780,000;
|
|
·
|
the
correction of the accounting treatment accorded a convertible note payable
to a related party and principal shareholder, Mr. David
Aubel;
|
|
·
|
the
restatement of historical balance sheets and related disclosures to give
retraction effort to a 1 for 40 reverse stock split completed on March 11,
2008;
|
|
·
|
the
recognition of an accrued for certain professional fees, totaling $141,800
in expense, which were erroneously omitted; and
|
|
·
|
the
adjustment of the initially reported carrying values of assets and
liabilities of MediaReady, Inc. as of December 31, 2007, the effective
date of the reverse recapitalization transaction with Shandong
Jiajia.
|
Balance
Sheet Data
December
31, 2007
|
As
Filed
|
Adjustment
to Restate
|
Restated
|
|||||||||
Accounts
receivable – related party
|
$ | 160,350 | $ | (153,350 | ) | $ | 7,000 | |||||
Deferred
Costs
|
5,450 | (5,450 | ) | - | ||||||||
Prepayment
and other current assets
|
338,895 | (10,830 | ) | 328,065 | ||||||||
Total
current assets
|
5,269,566 | (169,630 | ) | 5,099,936 | ||||||||
Property
and equipment, net
|
46,622 | (4,286 | ) | 42,336 | ||||||||
Other
assets:
|
||||||||||||
Intangible
assets
|
3,912,301 | (3,912,301 | ) | - | ||||||||
Deposits
|
12,00 | (12,000 | ) | - | ||||||||
Total
other assets
|
3,924,301 | (3,924,301 | ) | - | ||||||||
Total
assets
|
9,240,489 | (4,098,217 | ) | 5,142,272 | ||||||||
Accounts
payable – trade
|
4,444,825 | (835,940 | ) | 3,608,885 | ||||||||
Accrued
consulting fees
|
3,780,000 | (3,780,000 | ) | - | ||||||||
Other
accruals and current liabilities
|
343,301 | 141,800 | 485,101 | |||||||||
Derivative
liabilities
|
3,856,416 | (3,856,416 | ) | - | ||||||||
Total
current liabilities
|
16,206,143 | (8,327,555 | ) | 7,878,588 | ||||||||
Minority
interest
|
781,441 | (180,413 | ) | 601,028 | ||||||||
Stockholders’
deficit
|
||||||||||||
Series
B Convertible Preferred Stock
|
845 | 450 | 1,295 | |||||||||
Common
Stock, $.001 par value
|
199,962 | (194,963 | ) | 4,999 | ||||||||
Additional
paid-in capital
|
20,813,099 | 12,927,625 | ||||||||||
Accumulated
deficit
|
(28,535,611 | ) | (16,042,873 | ) | ||||||||
Total
stockholders’ equity (deficit)
|
(7,747,095 | ) | 4,412,751 | (3,334,344 | ) | |||||||
Total
liabilities and stockholders’ deficit
|
9,240,489 | (4,098,217 | ) | 5,142,272 |
Statement
of Operations Data
Year
ended December 31, 2007
|
As
Filed
|
Adjustment
to Restate
|
Restated
|
|||||||||
Sales
|
$ | - | $ | 35,298,453 | $ | 35,298,453 | ||||||
Cost
of sales
|
- | 34,036,196 | 34,036,196 | |||||||||
Gross
profit
|
- | 1,262,257 | 1,262,257 | |||||||||
Selling,
general and administrative
|
1,317,258 | (639,081 | ) | 678,177 | ||||||||
Provision
for obsolete inventory
|
4,138 | (4,138 | ) | - | ||||||||
Depreciation
|
8,028 | (8,028 | ) | - | ||||||||
Fair
value of equity instruments
|
10,424,900 | (10,424,900 | ) | - | ||||||||
Bad
debt expense
|
5,917 | (5,917 | ) | - | ||||||||
Total
operating expenses
|
11,760,241 | (11,082,064 | ) | 678,177 | ||||||||
Operating
income (loss)
|
(11,760,241 | ) | 12,344,321 | 584,080 | ||||||||
Other
income (expenses):
|
||||||||||||
Change
in fair value of derivative liability
|
662,899 | (662,899 | ) | - | ||||||||
Other
income
|
_-
|
13,515 | 13,575 | |||||||||
Interest
expense-related party
|
(201,583 | ) | 201,583 | - | ||||||||
Total
other income (expense)
|
461,316 | (447,741 | ) | 13,575 | ||||||||
Income
(loss) before income taxes and minority interest
|
(11,298,925 | ) | 11,896,580 | 597,655 | ||||||||
Foreign
taxes
|
- | 57,205 | 57,205 | |||||||||
Income
(loss) before minority interest
|
(11,298,925 | ) | 11,839,375 | 540,450 | ||||||||
Minority
interest in income of subsidiary
|
- | 264,820 | 264,820 | |||||||||
Net
income (Loss)
|
(11,298,925 | ) | 11,574,555 | 275,630 | ||||||||
Foreign
currency translation adjustment
|
- | (228,976 | ) | (228,976 | ) | |||||||
Comprehensive
income (loss)
|
(11,298,925 | ) | 11,345,579 | 46,654 | ||||||||
Basic
and Dilued income (loss) per common share:
|
||||||||||||
Basic
|
(0.08 | ) | 0.16 | 0.08 | ||||||||
Diluted
|
(0.08 | ) | 0.16 | 0.08 | ||||||||
Weighted
average number of shares outstanding:
|
||||||||||||
Basic
|
137,686,070 | (134,243,918 | ) | 3,442,152 | ||||||||
Diluted
|
137,686,070 | (134,196,462 | ) | 3,489,608 |
Consolidated
Statement of Cash Flows Data
Year
ended December 31, 2007
|
As
Filed
|
Adjustment
to Restate
|
Restated
|
|||||||||
Net
Income (loss)
|
$ | (11,298,925 | ) | $ | 11,574,555 | $ | 275,630 | |||||
Depreciation
|
8,028 | 10,378 | 18,406 | |||||||||
Minority
Interest
|
- | 264,820 | 264,820 | |||||||||
Allowance
for doubtful accounts
|
5,917 | 62,232 | 68,149 | |||||||||
Provision
for obsolete inventory
|
4,138 | (4,138 | ) | - | ||||||||
Stock
issued for services and compensation
|
10,633,000 | (10,633,000 | ) | - | ||||||||
Stock
issued under employment agreement
|
13,000 | (13,000 | ) | - | ||||||||
Stock
issued under employment agreement-cancelled
|
(221,100 | ) | 221,100 | - | ||||||||
Change
in fair value of derivative liability
|
(662,899 | ) | 662,899 | - | ||||||||
Interest
in convertible note payable-related party
|
201,583 | (201,583 | ) | - | ||||||||
(Increase)
decrease in accounts receivable
|
16,282 | (1,244,229 | ) | (1,227,947 | ) | |||||||
(Increase)
decrease in accounts receivable-related party
|
600,000 | (600,000 | ) | - | ||||||||
(Increase)
decrease in other receivables
|
- | 114,158 | 114,158 | |||||||||
Decrease
in other assets
|
- | (419 | ) | (419 | ) | |||||||
Decrease
(increase) in prepaid expenses and other current
assets
|
18,569 | (331,806 | ) | (313,237 | ) | |||||||
(Decrease)
increase in accounts payable
|
(200,434 | ) | 1,254,761 | 1,054,327 | ||||||||
(Decrease)
increase in other accruals
|
18,622 | (181,062 | ) | (162,440 | ) | |||||||
Increase
in accrued compensation
|
17,487 | (17,487 | ) | - | ||||||||
(Decrease)
increase in taxes payable
|
- | 27,245 | 27,245 | |||||||||
Increase
in advances from customers
|
- | 572,877 | 572,877 | |||||||||
Net
cash (used in) provided by operating activities
|
(846,732 | ) | 1,538,301 | 691,569 | ||||||||
Cash
flows from investing activities:
|
||||||||||||
Cash acquired purchase of subsidiary | 1,121,390 | (1,121,390 | ) | - | ||||||||
Capital
explanations
|
- | (13,504 | ) | (13,504 | ) | |||||||
Advances
to related parties
|
- | (419,940 | ) | (419,940 | ) | |||||||
Net
cash provided by (used in ) investing activities
|
1,121,390 | (1,554,834 | ) | (433,444 | ) | |||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
from convertible notes payable-related party
|
841,157 | (841,157 | ) | |||||||||
Repayment
of short-term debt
|
(43,793 | ) | 43,793 | - | ||||||||
Proceeds
from stockholders loans
|
52,157 | (52,157 | ) | -- | ||||||||
Repayment
of shareholder loans
|
(4,000 | ) | 4,000 | - | ||||||||
Net
cash provided by financing
|
845,521 | (845,521 | ) | - | ||||||||
Effect
of exchange rate on cash
|
- | 40,572 | 40,572 | |||||||||
Net
increase in cash
|
1,120,179 | (821,482 | ) | 298,697 | ||||||||
Cash
at beginning of year
|
1,426 | 821,482 | 822,908 | |||||||||
Cash
at end of year
|
1,121,605 | - | 1,121,605 | |||||||||
Cash
paid during the period for foreign taxes
|
-_
|
31,361 | 31,361 |
|
•
|
When
merchandise departs the shipper’s location when the trade pricing terms
are CIF (cost, insurance and freight),
|
|
•
|
When
merchandise departs the shipper’s location when the trade pricing terms
are CFR (cost and freight cost), or
|
|
•
|
When
the merchandise arrives at the destination port if the trade pricing terms
are FOB (free on board)
destination.
|
Year
ended
|
||||||||
December
31,
|
||||||||
2008
|
2007
|
|||||||
Numerator:
|
Restated |
Restated
|
||||||
Net
income (loss) applicable to common stockholders (A)
|
$
|
(2,086,618
|
)
|
$
|
275,630
|
|||
Denominator:
|
||||||||
Denominator
for basic earnings per share
|
||||||||
Weighted
average shares outstanding (B)
|
26,823,216
|
13,697
|
||||||
Denominator
for diluted earnings per share
|
||||||||
Treasury
Stock method
|
||||||||
Stock purchase warrants
|
-
|
1,871,245
|
||||||
Series
A and B Convertible Preferred Stock
|
-
|
3,732,192
|
||||||
Adjusted
weighted average shares outstanding (C)
|
26,823,216
|
5,617,134
|
||||||
Basic
and Diluted (Loss) Earnings Per Common Share:
|
||||||||
Earnings
per share- basic (A)/(B)
|
$
|
(0.08
|
)
|
$
|
20.12
|
|||
Earnings
per share- diluted (A)/(C)
|
$
|
(0.08
|
)
|
$
|
0.05
|
Year
ended
|
|||||
December
31,
|
|||||
2008
|
2007
|
||||
Restated
|
Restated
|
||||
Stock
purchase warrants issued to Mr. Chen
|
2,000,000
|
-
|
|||
Warrants
|
117,500
|
117,500
|
|||
Class
A and B Warrants
|
31,558,500
|
-
|
|||
Series
B Convertible Preferred Stock
|
4,500,000
|
-
|
|||
38,176,000
|
117,500
|
2008
|
2007
|
|||||||
Restated |
Restated
|
|||||||
Trade
receivables
|
$
|
3,203,448
|
$
|
3,926,546
|
||||
Less:
allowance for doubtful accounts
|
(464,275
|
)
|
(794,715
|
)
|
||||
$
|
2,739,173
|
$
|
3,131,831
|
•
|
For
the first and second quarters of 2005 at $0.01 per
share;
|
|
•
|
For
the third quarter 2005 at 20% of the closing price on the date of
conversion; and
|
|
•
|
For
the fourth quarter 2005 and beyond at 40% of the closing price on the date
of conversion
|
Year
|
Interest
Expense
|
|||
2005
|
$ | 209,105 | ||
2006
|
246,367 | |||
2007
|
201,583 | |||
2008
|
-- | |||
$ | 657,055 |
Year
|
Funds
Advanced
|
Intrinsic
Value
|
||||||
2005
|
$ | 160,000 | $ | 240,000 | ||||
2006
|
1,730,168 | 2,595,251 | ||||||
2007
|
874,164 | 1,311,246 | ||||||
2008
|
148,200 | 222,300 | ||||||
$ | 2,912,532 | $ | 4,368,797 |
Year
|
Number
of Shares Converted
|
Amount
of Note Reduction
|
Intrinsic
Value
|
|||||||||
2005
|
802,500
|
$
|
698,000
|
$
|
14,829,000
|
|||||||
2006
|
592,500
|
1,445,000
|
2,319,000
|
|||||||||
2007
|
1,795,000
|
1,751,720
|
2,821,280
|
|||||||||
2008
|
2,864,606
|
2,521,380
|
659,432
|
|||||||||
Total
|
6,054,606
|
$
|
6,416,100
|
$
|
20,628,712
|
Useful
Lives
|
2008
|
2007
|
|||||||
Restated |
Restated
|
||||||||
Computer
equipment
|
4
years
|
$
|
37,246
|
$
|
228,707
|
||||
Software
|
3
years
|
-
|
361,861
|
||||||
Furniture
and equipment
|
4-5
years
|
89,745
|
112,297
|
||||||
Total:
|
126,991
|
702,865
|
|||||||
Less:
accumulated depreciation
|
(82,847)
|
(660,529)
|
|||||||
$
|
44,144
|
$
|
42,336
|
•
|
effected
a one for 40 reverse stock split of its issued and outstanding common
stock,
|
|
•
|
increased
the number of authorized preferred stock shares from 5,000,000 to
10,000,000 shares, and
|
|
•
|
increased
the number of common stock shares from 200,000,000 shares to 500,000,000
shares.
|
•
|
issue
additional shares to the purchasers to take into account the amount paid
by the purchaser as of the closing date for the shares included in the
units so that the per share price paid by the purchaser equals the lower
price in the subsequent issuance,
|
|
•
|
reduce
the warrant exercise price of any unexercised warrants then held by the
purchaser to such lower price, and
|
|
•
|
if
necessary, issue additional shares to purchaser to take into account the
amount paid, whether in cash or by cashless exercise, by the purchaser if
the purchaser has exercised any warrants so that the per share exercise
price and to the exercise price for the exercised warrants equals the
lower price of the subsequent
issuance.
|
•
|
strategic
license agreements or similar partnering arrangements provided that the
issuances are not for the purpose of raising capital and there are no
registration rights granted,
|
|
•
|
strategic
mergers, acquisitions or consolidation or purchase of substantially all of
the securities or assets of a corporation or other entity provided that we
do not grant the holders of such securities registration rights,
and
|
|
•
|
the
issuance of common stock or options pursuant to stock option plans and
employee purchase plans at exercise prices equal to or higher than the
closing price of our common stock on the issue/grant date or as a result
of the exercise of warrants issued either in the 2008 Unit Offering or
which were outstanding prior to the 2008 Unit
Offering.
|
•
|
until
the earlier of the registration statement having been effective for 240
days or the date on which all the shares of common stock sold in the
offering, including the shares underlying the warrants, have been sold we
will not file any additional registration statements, other than a Form
S-8, and
|
|
•
|
until
the earlier of two years from the closing date or the date on which all
shares of common stock sold in the offering, including the shares
underlying the warrants, have been sold or transferred we agreed we would
not:
|
|
•
|
amend
our articles of incorporation or bylaws so as to adversely affect the
rights of the investors,
|
|
•
|
repurchase
or otherwise acquire any of our securities or make any dividends or
distributions of our securities, or
|
|
•
|
prepay
any financing related or other outstanding debt
obligations.
|
Shares
|
||||
Settlement
of obligation to former President and CEO
|
581,247
|
|||
Settlement
(conversion) of note payable to principal
shareholder
|
2,864,606
|
|||
Conversion
1,000,000 shares of Series A Convertible Preferred
Stock
|
2,500,000
|
|||
Conversion
of 845,000 shares of Series B Convertible Preferred
Stock
|
8,450,000
|
|||
2008
Unit offering
|
15,113,000
|
|||
29,508,853
|
•
|
in
connection with the acquisition of the 51% interest in Shandong Jiajia
effective December 31, 2007:
|
||
•
|
issued
250,000 share of common stock to Capital One Resources Co., Ltd. in
connection with consulting services rendered in the Shandong Jiajia
transaction. The shares had a fair value at issuance of
$380,000,
|
||
•
|
issued
1,000,000 of Series A preferred stock to finance, in part, the acquisition
of a 51% interest in a company incorporated in the People Republic of
China, Shandong Jiajia, at a fair value of $2.10 per preferred share, for
a total of $2,100,000,
|
||
•
|
issued
120,000 shares of Series B preferred stock as partial compensation in
connection with the acquisition of a 51% interest in Shandong Jiajia
valued at $8.00 per preferred share, for a total of $960,000,
|
||
•
|
issued
an additional 725,000 shares of Series B preferred stock to third parties
for services rendered in connection with the Shandong Jiajia transaction
at a fair value of $8.40 per share, for a total of
$6,090,000,
|
||
•
|
granted
stock purchase warrants to purchase 2,000,000
shares of common stock to finance, in part, the purchase of a 51% interest
in a company incorporated in the Peoples Republic of China, Shandong
Jiajia, at a fair value of $480,000,
|
||
•
|
issued
62,500 shares of common stock to China Direct Investments, Inc. under a
management consulting agreement. The shares had a fair value of
$168,000 at issuance,
|
||
•
|
issued
2,500 shares of common stock to an employee for services rendered at $2.60
per share, for a total of $6,500,
|
||
•
|
issued
16,250 shares of common stock to third parties for services rendered with
a fair value of $58,950,
|
||
•
|
cancelled
12,500 shares held in treasury at $15.00 per share, for a total of
$187,500,
|
||
•
|
a
related party, Mr. David Aubel, converted $1,751,720 in convertible notes
payable into 1,795,000 shares of common stock at prices ranging $0.28 to
$2.00 per share,
|
||
•
|
the
Company president, Mr. V Jeffrey Harrell, converted $193,500 in accrued
compensation into 135,000 shares of common stock at $1.44 per
share,
|
||
•
|
the
Company was released from an obligation to issue 18,000 shares of common
stock to an employee under an employment agreement. Accordingly, during
the year ended December 31, 2007 the Company reversed the amounts
expensed for the fair market value of the stock during the years ended
December 31, 2006, 2005 and 2004, respectively, for a total of
$221,100,
|
Risk-free
rate
|
2.5%
|
Expected
Volatility
|
175%
|
Life
|
3
years
|
Dividend
yield
|
0%
|
Shares
Underlying Warrants
|
Weighted
Average Exercise Price
|
Weighted
Average Contractual Term (years)
|
Aggregate
Intrinsic Value
|
|||||||||||||
Outstanding
at December 31, 2007
|
2,000,000
|
$
|
0.30
|
2.0
|
$
|
-
|
||||||||||
Granted
|
-
|
-
|
||||||||||||||
Exercised
|
-
|
-
|
||||||||||||||
Outstanding
at December 31, 2008
|
2,000,000
|
$
|
0.30
|
2.0
|
$
|
-
|
December
31, 2008
|
December
31, 2007
|
|||||||
Restated |
Restated
|
|||||||
Risk-free
rate
|
3.0
|
%
|
4.45
|
%
|
||||
Volatility
|
100
|
%
|
96
|
%
|
||||
Expected
Dividend Yield
|
0
|
%
|
0
|
%
|
Shares
Underlying
Warrants
|
Weighted Average
Exercise Price
|
|||||||
Outstanding
at December 31, 2007 (1)
|
117,500
|
$
|
9.69
|
|||||
Granted (2)
|
31,558,500
|
0.42
|
||||||
Exercised
|
—
|
—
|
||||||
Outstanding
at December 31, 2008
|
31,676,000
|
$
|
0.46
|
2008
|
2007
|
|||||||
Restated |
Restated
|
|||||||
Due
to Xiangfen Chen
|
$
|
123,458
|
$
|
229,252
|
||||
Due
to Bin Liu
|
62,652
|
-
|
||||||
Due
to Tianjin Sincere Logistics Co., Ltd.
|
183,448
|
-
|
||||||
Other
|
9,139
|
|||||||
$
|
378,697
|
$
|
229,252
|
Location
|
Approximate
Square Feet
|
Annual
Rent
|
Additional
Charges
|
Expiration
of Lease
|
|||||
Shanghai
Branch (1)
|
7,008
|
$43,700
(RMB
300,000)
|
$20,440
(RMB
140,622)
|
May
31, 2009
|
|||||
Xiamen
Branch, Xiamen City, Fujian Province (2)
|
1,026
|
$1,459
(RMB
10,800)
|
- |
December
31, 2009
|
|||||
Tianjin
Branch, Tianjin City (3)
|
3,014
|
$21,962
(RMB
150,000)
|
- |
May
31, 2013
|
Year
Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Restated
|
Restated
|
|||||||
US
Operations
|
$
|
(2,249,
494
|
)
|
$
|
-
|
|||
Chinese
Operations
|
588,965
|
597,655
|
||||||
$
|
(1,660,529
|
)
|
$
|
597,655
|
Year
Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Restated
|
Restated
|
|||||||
US
Operations
|
$
|
-
|
$
|
-
|
||||
Chinese
Operations
|
269,600
|
57,205
|
||||||
$
|
269,600
|
$
|
57,205
|
Year
Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Restated
|
Restated
|
|||||||
Income
tax provision (benefit) at Federal statutory rate
|
$
|
(581,000
|
)
|
$
|
209.000
|
|||
State
income taxes, net of Federal Benefit
|
(76,000
|
)
|
27,000
|
|||||
Permanent
differences
|
632,000
|
-
|
||||||
Temporary
differences
|
123,000
|
-
|
||||||
U.S.
tax rate in excess of foreign tax rate
|
(86,000
|
)
|
(39,000
|
)
|
||||
Increase
in valuation allowance
|
258,000
|
-
|
||||||
Abatement
of foreign income taxes
|
-
|
(140,000
|
)
|
|||||
Tax
provision (benefit)
|
$
|
270,000
|
$
|
57,000
|
December
31,
|
||||||||
2008
|
2007
|
|||||||
Restated
|
||||||||
Federal
net operating loss carryforward
|
$
|
3,928,000
|
$
|
3,700,000
|
||||
State
net operating loss carryforward
|
633,000
|
600,000
|
||||||
Provisions
|
-
|
-
|
||||||
Timing
differences
|
639,000
|
167,000
|
||||||
5,200,000
|
4,467,000
|
|||||||
Valuation
allowance
|
(5,200,000
|
)
|
(4,467,000
|
)
|
||||
$
|
-
|
$
|
-
|
Period
|
Total
|
|||
Period
Ended December 31, 2009
|
$
|
121,000
|
||
Period
Ended December 31, 2010
|
48,000
|
|||
Period
Ended December 31, 2011
|
23,000
|
|||
Period
Ended December 31, 2012
|
23,000
|
|||
Period
Ended December 31, 2013
|
23,000
|
|||
Thereafter
|
--
|
|||
$
|
238,000
|
Sales
|
Assets
|
|||||||
United
States
|
$
|
—
|
$
|
201,605
|
||||
Peoples Republic
of China
|
35,561,833
|
6,584,459
|
||||||
$
|
35,561,833
|
$
|
6,786,064
|
SEC
Registration and Filing Fee
|
$ | 523 | ||
Legal
Fees and Expenses*
|
50,000 | |||
Accounting
Fees and Expenses*
|
7,500 | |||
Financial
Printing*
|
2,500 | |||
Transfer
Agent Fees*
|
500 | |||
Blue
Sky Fees and Expenses*
|
150 | |||
Miscellaneous*
|
827 | |||
TOTAL
|
$ | 62,000 |
|
* Estimated
|
• |
three
individuals, who included Messrs. Wei Chen and Hui Liu, minority
shareholders, officers and directors of Shandong Jiajia, who owned
1,000,000 shares of our Series A Convertible Preferred Stock
converted those shares into an aggregate of 2,500,000 shares of our common
stock; and
|
||
• |
three
individuals and two entities, which included Mr. Chen, who owned
725,000 shares of Series B Convertible Preferred Stock converted
those shares into an aggregate of 8,450,000 shares of our common
stock.
|
Exhibit No.
|
Description
|
||
3.1 |
Articles
of Incorporation (1)
|
||
3.2 |
Articles
of Amendment (1)
|
||
3.3 |
Articles
of Amendment (5)
|
||
3.4 |
Articles
of Amendment (2)
|
||
3.5 |
Form of
Articles of Amendment (10)
|
||
3.6 |
Bylaws
(1)
|
||
4.1 |
Trilogy
Capital Partners, Inc. Warrant Agreement dated June 1,
2006(3)
|
||
4.2 |
Form of
common stock purchase warrant issued to Mr. Chen
(12)
|
||
4.3 |
Form
of common stock purchase warrant issued in the 2008 Unit Offering
(13)
|
||
5.1 |
Opinion
of Schneider Weinberger & Beilly LLP **
|
||
10.1 |
Debt
Conversion Agreement with David Aubel dated December 3, 2005
(4)
|
||
10.2 |
Amendment
to Debt Conversion Agreement with David Aubel dated May 15, 2006
(6)
|
||
10.3 |
Consulting
and Management Agreement dated May 22, 2007 with China Direct
Investments, Inc. (7)
|
||
10.4 |
Consulting
and Management Agreement dated September 5, 2007 with Capital One
Resource Co., Ltd (8)
|
||
10.5 |
Acquisition
Agreement dated as of December 31, 2007 between MediaREADY, Inc.,
Shandong Jiajia International Freight & Forwarding (Logistics Co.)
Ltd., and Messrs. Hui Liu and Wei Chen (2)
|
||
10.6 |
Finder’s
Agreement dated as of December 31, 2007 between MediaREADY, Inc. and
Dragon Venture (Shanghai) Capital Management Co., Ltd.
(2)
|
||
10.7 |
Consulting
Agreement dated as of December 31, 2007 between MediaREADY, Inc. and
China Direct Industries, Inc. (2)
|
||
10.8 |
Form of
Amendment to Acquisition Agreement dated as of January 28, 2008
between MediaREADY, Inc., Shandong Jiajia International Freight &
Forwarding Co., Ltd., and Messrs. Hui Liu and Wei Chen
(9)
|
||
10.9 |
Form of
Amendment to Finder’s Agreement dated as of January 28, 2008 between
MediaREADY, Inc. and Dragon Venture (Shanghai) Capital Management Co.,
Ltd. (9)
|
||
10.10 |
Form of
Amendment to Acquisition Agreement dated as of March 13, 2008 between
MediaREADY, Inc., Shandong Jiajia International Freight & Forwarding
Co., Ltd., and Messrs. Hui Liu and Wei Chen (11)
|
||
10.11 |
Lease
Agreement between China Logistics Group, Inc. and ETI International,
Inc.**
|
||
10.12 |
Form
of Subscription Agreement for 2008 Unit Offering (13)
|
||
10.13 |
Lease
Agreement between Wei Chen and Shandong Jiajia International Freight &
Forwarding Co., Ltd.(14)
|
||
10.14 |
Lease
Agreement dated December 31, 2008 between Shandong Jiajia International
& Freight Forwarding Co., Ltd. and Shandong Import & Export Co.,
Ltd.**
|
||
10.15 |
Assumption
Agreement dated December 31, 2007 between David Aubel and MediaReady, Inc.
**
|
||
10.16 |
Conversion
Agreement dated March 20, 2008 between V. Jeffrey Harrell and China
Logistics Group, Inc. (16)
|
||
10.17 |
Conversion
Agreement dated March 20, 2008 between David Aubel and China Logistics
Group, Inc. (16)
|
||
10.18 |
Form
of promissory note in the principal amount of $561,517.27 dated January 1,
2003 issued by Video Without Boundaries, Inc. to Mr. David Aubel
(15)
|
||
10.19 |
Form
of Security Agreement dated May 23, 2001 between Valusales.com, Inc. and
Mr. David Aubel (15)
|
||
10.20 |
Promissory
note from Shanghai Yudong Logistics Co., Ltd. to Shandong Jiajia
International Freight & Forwarding Co., Ltd., dated March 30, 2009
(17)
|
||
10.21 |
Lease
Agreement expiring May 2010 between Wei Chen and Shandong Jiajia
International Freight & Forwarding Co., Ltd.* *
|
||
14.1 |
Code
of Business Conduct and Ethics (12)
|
||
21.1 |
Subsidiaries
of the Registrant (12)
|
||
23.1 |
Consent
of Sherb & Co. LLP *
|
||
23.2 |
Consent
of Schneider Weinberger & Beilly LLP (included in Exhibit 5.1)
**
|
|
———————
|
* |
filed
herewith
|
||
** |
previously
filed
|
||
(1 | ) |
Incorporated
by reference to the registration statement on Form 10-SB, SEC File No.
0-31497 as filed with the Securities and Exchange Commission on September
11, 2000, as amended.
|
|
(2 | ) |
Incorporated
by reference to the Current Report on Form 8-K as filed on January 7,
2008.
|
|
(3 | ) |
Incorporated
by reference to the Current Report on Form 8-K as filed on June2,
2006.
|
(4 | ) |
Incorporated
by reference to the Annual Report on Form 10-KSB for the year ended
December 31, 2004.
|
|
(5 | ) |
Incorporated
by reference to the Current Report on Form 8-K as filed on September 27,
2006.
|
|
(6 | ) |
Incorporated
by reference to the Quarterly Report on Form 10-QSB for the period ended
September 30, 2006.
|
|
(7 | ) |
Incorporated
by reference to the Current Report on Form 8-K as filed on May 23,
2007.
|
|
(8 | ) |
Incorporated
by reference to the Current Report on Form 8-K as filed on September 10,
2007.
|
|
(9 | ) |
Incorporated
by reference to the Current Report on Form 8-K as filed on January 31,
2008.
|
|
(10 | ) |
Incorporated
by reference to the definitive information statement on Schedule 14C as
filed on February 14, 2008.
|
|
(11 | ) |
Incorporated
by reference to the Current Report on Form 8-K as filed on March 18,
2008.
|
|
(12 | ) |
Incorporated
by reference to the Annual Report on Form 10-K for the year ended December
31, 2007.
|
|
(13 | ) |
Incorporated
by reference to the Current Report on Form 8-K as filed on April 24,
2008.
|
|
(14 | ) |
Incorporated
by reference to the Quarterly Report on Form 10-0Q/A (Amendment No. 1) for
the period ended June 30, 2008.
|
|
(15 | ) |
Incorporated
by reference to the Quarterly Report on Form 10-Q for the period ended
September 30, 2008.
|
|
(16 | ) |
Incorporated
by reference to the Quarterly Report on Form 10-Q/A (Amendment No. 1) for
the period ended March 31, 2008.
|
|
(17 | ) |
Incorporated
by reference to the Quarterly Report on Form 10-Q for the period ended
March 31, 2009.
|
a. |
The
undersigned registrant hereby undertakes:
|
||||||
1. |
To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration
statement:
|
||||||
i. |
To
include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
|
||||||
ii.
|
To
reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
registration statement;
|
||||||
iii.
|
To
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration
statement.
|
||||||
2. |
That,
for the purpose of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
|
||||||
3. |
To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
|
||||||
4. |
That,
for the purpose of determining liability under the Securities Act of 1933
to any purchaser:
|
||||||
i. |
If
the registrant is subject to Rule 430C, each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to an offering,
other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of
and included in the registration statement as of the date it is first used
after effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by
reference into the registration statement or prospectus that is part of
the registration statement will, as to a purchaser with a time of contract
of sale prior to such first use, supersede or modify any statement that
was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to
such date of first use.
|
China
Logistics Group, Inc.
|
||
By:
|
/s/
Wei Chen
|
|
Wei
Chen, Chairman of the Board, Chief Executive Officer, President, Secretary
and Treasurer
|
Signature | Title | Date |
/s/ Wei Chen |
Chairman
of the Board, Chief Executive Officer, President, Secretary and Treasurer,
|
October 9, 2009 |
Wei
Chen
|
principal
executive officer and principal financial and accounting
officer
|
|
/s/ Hui Liu |
Director
|
October
9, 2009
|
Hui
Liu
|
|
|