[√]
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the Fiscal year ended December 31,
2009
|
[
]
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period from __________________ to
__________________________
|
Commission
file number: 0-31497
|
CHINA LOGISTICS GROUP,
INC.
|
(Exact
name of registrant as specified in its
charter)
|
Florida
|
65-1001686
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
23F. Gutai Beach Building No.
969, Zhongshan Road (South), Shanghai,
China
|
200011
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant's
telephone number, including area code:
|
86-21-63355100
|
Title
of each class
|
Name
of each exchange on which registered
|
None
|
Not
applicable
|
Common
Stock
|
(Title
of class)
|
Large
accelerated filer
|
[
]
|
Accelerated
filer
|
[
]
|
Non-accelerated
filer
(Do
not check if smaller reporting company)
|
[
]
|
Smaller
reporting company
|
[X]
|
Page
No.
|
||
Part
I
|
||
Item
1.
|
Business.
|
1 |
Item
1A.
|
Risk
Factors
|
7 |
Item
1B.
|
Unresolved
Staff Comments.
|
13 |
Item
2.
|
Properties.
|
14 |
Item
3.
|
Legal
Proceedings.
|
15 |
Item
4.
|
(Removed
and Reserved)
|
16 |
Part
II
|
||
Item
5.
|
Stockholder
Market for Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities.
|
16 |
Item
6.
|
Selected
Financial Data.
|
17 |
Item
7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operation.
|
17 |
Item
7A.
|
Quantative
and Qualitative Disclosures About Market Risk.
|
23 |
Item
8.
|
Financial
Statements and Supplementary Data.
|
23 |
Item
9.
|
Changes
In and Disagreements With Accountants on Accounting and Financial
Disclosure.
|
23 |
Item
9A.(T)
|
Controls
and Procedures.
|
23 |
Item
9B.
|
Other
Information.
|
25 |
Part
III
|
||
Item
10.
|
Directors,
Executive Officers and Corporate Governance.
|
25 |
Item
11.
|
Executive
Compensation.
|
27 |
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
|
28 |
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence.
|
29 |
Item
14.
|
Principal
Accountant Fees and Services.
|
30 |
Part
IV
|
||
Item
15.
|
Exhibits,
Financial Statement Schedules.
|
30 |
• |
our ability to continue as a going concern; | ||
•
|
risks
from Securities and Exchange Commission litigation;
|
||
•
|
risks
from liquidated damages related to warrants sold in our 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;
|
||
•
|
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;
|
||
•
|
our
ability to maintain an effective system of internal control over financial
reporting.
|
||
•
|
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
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.
|
•
|
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
|
||
•
|
33,563,500
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.
|
Location
|
Approximate
Square Feet
|
Annual
Rent
|
Additional
Charges
|
Expiration
of Lease
|
|||
Shanghai
Branch (1)
|
7,008
|
$43,700
(RMB
300,000)
|
$20,590
(RMB
140,628)
|
May
31, 2010
|
|||
Xiamen
Branch, Xiamen City, Fujian Province (2)
|
1,026
|
$1,459
(RMB
10,800)
|
$0
|
December
31, 2010
|
|||
Lianyuangang
Branch, Lianyuangang City, Jiangsu Province (3)
|
1,184
|
$4,054
(RMB
30,000)
|
$0
|
March
15, 2011
|
|||
Tianjin
Branch, Tianjin City (4)
|
3,014
|
$21,962
(RMB
150,000)
|
$0
|
May
31, 2013
|
|||
Qingdao
Branch, Qingdao City (5)
|
2,368
|
$29,393
(RMB
200,752)
|
$0
|
January
31, 2011
|
(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. We anticipate that we will renew
this lease prior to its expiration. upon substantially the same terms and
conditions.
|
||
(2)
|
We
lease the offices for our Xiamen Branch from Mr. Xiangfen Chen, its
General Manager. We anticipate that we will renew this lease prior to its
expiration. upon substantially the same terms and
conditions.
|
||
(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.
|
||
(5)
|
We
lease the offices for our Qingdao Branch from an unrelated third
party.
|
ITEM
5.
|
STOCKHOLDER
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
|
High
|
Low
|
|||||||
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
|
||||
Fourth
quarter ended December 31, 2009
|
$
|
0.12
|
$
|
0.08
|
ITEM 6.
|
SELECTED FINANCIAL
DATA.
|
ITEM
7.
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION.
|
Year
ended December 31,
|
|||||||||||||
2009
|
2008
|
$
Change
|
%
Change
|
||||||||||
(restated) | |||||||||||||
Sales
|
$
|
19,824,390
|
$
|
35,561,833
|
$
|
(15,737,443)
|
-44%
|
||||||
Cost
of Sales
|
19,699,736
|
34,552,938
|
(14,853,202)
|
-43%
|
|||||||||
Gross
Profit
|
124,654
|
1,008,895
|
(884,241)
|
-88%
|
|||||||||
Total
Operating Expenses
|
1,684,660
|
1,003,330
|
681,330
|
68%
|
|||||||||
Income
(Loss) from Operations
|
(1,560,006)
|
5,565
|
(1,565,571)
|
N/M
|
|||||||||
Total
Other Income
|
3,351,881
|
(1,666,094)
|
5,017,975
|
301%
|
|||||||||
Net
Income (loss)
|
1,763,797
|
(1,930,129)
|
3,693,926
|
191%
|
|||||||||
Net
Income (Loss) attributable to China Logistics Group, Inc.
|
$
|
2,271,209
|
$
|
(2,086,618)
|
$
|
4,357,827
|
209%
|
Year
ended December 31,
|
||||||||
2009
|
2008
|
|||||||
(restated)
|
||||||||
Cost
of sales as a percentage of sales
|
99
|
%
|
97
|
%
|
||||
Gross
profit margin
|
1
|
%
|
3
|
%
|
||||
Total
operating expenses as a percentage of sales
|
8
|
%
|
3
|
%
|
December
31, 2009
|
December
31, 2008
|
|||||||||||||||
United
States
|
$
|
10,755
|
1%
|
$
|
201,605
|
6%
|
||||||||||
China
|
1,710,083
|
99%
|
2,954,757
|
94%
|
||||||||||||
$
|
1,720,838
|
100%
|
$
|
3,156,362
|
100%
|
December
31, 2009
|
December
31, 2008
|
Increase/Decrease
|
%
Change
|
|||||||||||||
(restated)
|
||||||||||||||||
Cash
|
$
|
1,720,838
|
$
|
3,156,362
|
$
|
(1,435,524)
|
-45
|
%
|
||||||||
Accounts
receivable, net
|
2,923,990
|
2,739,173
|
184,817
|
7
|
%
|
|||||||||||
Advance
to vendors and other prepaid expenses
|
146,058
|
29,510
|
116,548
|
395
|
%
|
|||||||||||
Other
Receivables
|
1,100,662
|
298,442
|
802,220
|
269
|
%
|
|||||||||||
Due
from related parties
|
447,033
|
518,433
|
(71,400)
|
-14
|
%
|
|||||||||||
Total
current assets
|
$
|
6,338,581
|
$
|
6,741,920
|
$
|
(403,339)
|
-6
|
%
|
December 31, 2009 | December 31, 2008 | Increase/Decrease | % Change | |||||||||||||
(restated) | ||||||||||||||||
Accounts
payable - trade
|
$
|
2,733,820
|
1,752,862
|
980,958
|
56
|
%
|
||||||||||
Other
accruals and current liabilities
|
535,576
|
146,953
|
388,623
|
264
|
%
|
|||||||||||
Advances
from customers
|
475,358
|
1,133,283
|
(657,925)
|
-58
|
%
|
|||||||||||
Accrued
registration rights penalty
|
1,597,000
|
1,597,000
|
-
|
0
|
%
|
|||||||||||
Due
to related parties
|
814,226
|
378,697
|
435,529
|
115
|
%
|
|||||||||||
Foreign
tax payable
|
18,784
|
34,898
|
(16,114)
|
-46
|
%
|
|||||||||||
Total
current liabilities
|
$
|
6,174,764
|
$
|
5,043,693
|
$
|
1,131,071
|
22
|
%
|
•
|
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.
|
•
|
$110,000
owed to Xiangfen Chen, general manager of our Xiamen branch, a decrease of
$13,000 from December 31, 2008,
|
||
•
|
$99,000
owed to Mr. Bin Liu, the manager of our Tianjin branch, an increase of
$36,000 from December 31, 2008,
|
||
•
|
$560,000
owed to Tianjin Sincere, a company of which Mr. Bin Liu is a 90% owner, an
increase of $377,000 from December 31, 2008.
|
||
•
|
$45,000
owed to China Direct Industries, Inc., a principal shareholder, an
increase of $45,000 from December 31,
2008.
|
Period
|
Total
|
|||
Period
Ended December 31, 2010
|
$
|
95,000
|
||
Period
Ended December 31, 2011
|
26,000
|
|||
Period
Ended December 31, 2012
|
22,000
|
|||
Period
Ended December 31, 2013
|
22,000
|
|||
Period
Ended December 31, 2014
|
22,000
|
|||
Thereafter
|
--
|
|||
$
|
187,000
|
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
|
•
|
The
lack of controls over the accounting for the classification of 2,000,000
warrants issued to Mr. Chen as additional consideration in connection with
the reverse recapitalization transaction with Shandong Jiajia completed on
December 31, 2007 which required us to record the issuance as a derivative
liability in the amount of $480,000 and to restate our financial
statements included in our Annual Report on Form 10-K/A for the year ended
December 31, 2007 (Amendment No. 4) as a result of accounting errors
related to the incorrect accounting treatment.
|
|
•
|
The
lack of controls over the accounting for the reverse recapitalization
transaction with Shandong Jiajia which required us to properly record the
changes in the components of equity as a result of this transaction and to
restate our financial statements included in our Annual Report on Form
10-K/A for the year ended December 31, 2008.
|
|
•
|
The
lack of controls over the disclosure of advances from, and repayments of
advances from related parties disclosed in our consolidated statements of
cash flows for the year ended December 31, 2008 which required us to
expand our disclosure of these items and to restate our financial
statements included in our Annual Report on Form 10-K/A for the year ended
December 31, 2008.
|
|
•
|
The
lack of controls over the accounting for common stock purchase warrants
which required us to record the fair value of the warrants as a derivative
liability because the warrants were not indexed to our common stock and
restate our financial statements included in our Quarterly Reports on Form
10-Q for the periods ended March 31, 2009, June 30, 2009, and September
30, 2009 to reflect this accounting treatment.
|
|
•
|
The
lack of controls over the presentation of cash flows from operating
activities using the indirect method which required us to restate our
financial statements included in our Quarterly Reports on Form 10-Q for
the periods ended March 31, 2009, June 30, 2009 to reflect this accounting
presentation.
|
|
•
|
We
historically have had an inadequate number of personnel with the requisite
expertise in generally accepted accounting principles to ensure the proper
application thereof. Our Chief Executive Officer who served as our
principal financial and accounting officer until October 12, 2009 is not
an accountant and we have historically relied upon the services of outside
accountants. On October 12, 2009 our Board of Directors
appointed Ms. Yuan Huang as our Chief Financial Officer. Ms.
Huang is an accountant and while she lacks expertise in U.S. GAAP, she has
significant experience in PRC accounting. The balance of our
internal accounting staff is primarily engaged in ensuring compliance with
PRC accounting and reporting requirements and their U.S. GAAP knowledge is
also limited. As a result, a majority of our internal accounting staff is
relatively inexperienced with U.S. GAAP and the related internal control
procedures required of U.S. public companies. Although our accounting
staff is professional and experienced in accounting requirements and
procedures generally accepted in the PRC, management has determined that
they require additional training and assistance in U.S. GAAP matters.
Management has determined that our internal audit function is also
significantly deficient due to insufficient qualified resources to perform
internal audit functions. Finally, management determined that the lack of
an Audit Committee of our Board of Directors also contributed to
insufficient oversight of our accounting and audit functions.
|
•
|
We
plan to implement changes in our disclosure controls and procedures to
correct these material weaknesses. Specifically, for accounting of
derivative liabilities, capital transactions, and presentation of equity,
management plans to implement improved policies and procedures that will
include a review of financial instruments to determine appropriate
accounting treatment and presentation.
|
|
•
|
Also
we have improved procedures related to the preparation of the statement of
cash flows to correct weaknesses related to presentation and
disclosure
|
|
•
|
We
will make sure that we have an adequate number of personnel involved in
the preparation of the financial statements and disclosures with the
requisite expertise in generally accepted accounting principles to ensure
the proper application thereof.
|
|
•
|
We
plan to provide training to our accounting staff in various areas of US
generally accepted accounting
principles.
|
Name
|
Age
|
Positions
|
|||
Wei
Chen
|
40 |
Chairman
of the Board, Chief Executive Officer, President, Secretary and
Treasurer
|
|||
Yuan
Huang
|
38 |
Chief
Financial Officer
|
|||
Hui
Liu
|
48 |
Director,
Chief Executive Officer of Shandong
Jiajia
|
•
|
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,
2009 as that term is defined under Rule 3b-7 of the Securities Exchange
Act of 1934, and
|
|
•
|
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 31,2009.
|
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
($)
(J)
|
||||||||||||||||||||||||
Wei
Chen
|
2009
|
26,316
|
-—
|
—
|
—
|
—
|
—
|
—
|
26,316
|
||||||||||||||||||||||||
2008
|
25,854
|
—
|
—
|
—
|
—
|
—
|
—
|
25,854
|
|||||||||||||||||||||||||
Yuan
Huang
|
2009
|
2,640
|
2,928
|
--
|
--
|
--
|
--
|
--
|
5,568
|
||||||||||||||||||||||||
2008
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
OPTION
AWARDS
|
STOCK
AWARDS
|
||||||||||||||||||||||||||||||||
Name
(a)
|
Number
of securities underlying unexercised options
(#)
exercisable
(b)
|
Number
of
Securities
Underlying
Unexercised
options
(#)
unexercisable
(c)
|
Equity
Incentive
plan
awards:
Number
of
Securities
Underlying
Unexercised
Unearned
options
(#)
(d)
|
Option
Exercise
price
($)
(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)
|
||||||||||||||||||||||||
Wei
Chen
|
—
|
—
|
—
|
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||
Yuan
Huang
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
• |
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)
|
6,762,500
|
17.1
|
%
|
|||||
Hui
Liu
|
1,312,500
|
3.3
|
||||||
Yuan
Huang
|
--
|
--
|
||||||
All
named executive officers and directors as a group (three persons)
(2)
|
8,075,000
|
20.4
|
%
|
|||||
China
Direct Industries, Inc. (3)
|
11,512,500
|
29.1
|
%
|
(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 warrants 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.,
|
||
• |
2,062,500
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.
|
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
|
•
|
$110,000
owed to Xiangfen Chen, general manager of our Xiamen branch, a decrease of
$13,000 from December 31, 2008,
|
||
•
|
$99,000
owed to Mr. Bin Liu, the manager of our Tianjin branch, an increase of
$36,000 from December 31, 2008,
|
||
•
|
$560,000
owed to Tianjin Sincere, a company of which Mr. Bin Liu is a 90% owner, an
increase of $377,000 from December 31, 2008.
|
||
•
|
$45,000
owed to China Direct Industries, Inc., a significant shareholder, an
increase of $45,000 from December 31,
2008.
|
2009
|
2008
|
|||||||
Audit
Fees
|
$
|
75,000
|
$
|
72,000
|
||||
Audit-Related
Fees
|
-
|
-
|
||||||
Tax
Fees
|
-
|
-
|
||||||
All
Other Fees
|
-
|
-
|
||||||
Total
|
$
|
75,000
|
$
|
72,000
|
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)
|
||
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, 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.
(17)
|
||
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, 2009 between Shandong Jiajia International
& Freight Forwarding Co., Ltd. and Shandong Import & Export Co.,
Ltd. (17)
|
||
10.15
|
Assumption
Agreement dated December 31, 2007 between David Aubel and MediaReady, Inc.
(17)
|
||
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.(17)
|
||
10.23
|
Employment
Agreement effective as of October 12, 2009 between China Logistics Group,
Inc. and Yuan Huang (18)
|
||
14.1
|
Code
of Business Conduct and Ethics (12)
|
||
21.1
|
Subsidiaries
of the Registrant (12)
|
||
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 *
|
||
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 *
|
||
32.1
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
*
|
(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 June 2,
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-Q/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 registration statement on Form S-1, SEC File No.
333-151783, as amended.
|
China
Logistics Group, Inc.
|
||
Date:
April 15, 2010
|
By:
/s/ Wei Chen
|
|
Wei
Chen, Chairman, Chief Executive Officer and President (Principal Executive
Officer)
|
Signature
|
Title
|
Date
|
/s/
Wei Chen
|
Chairman
of the Board, Chief Executive Officer and President
|
April
15, 2010
|
Wei Chen
|
(principal
executive officer)
|
|
/s/
Yuan Huang
|
Chief
Financial Officer
|
April
15, 2010
|
Yuan Huang
|
(principal
financial and accounting officer)
|
|
/s/
Hui Liu
|
Director
|
April
15, 2010
|
Hui
Liu
|
December
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
(Restated)
|
||||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
|
$ | 1,720,838 | $ | 3,156,362 | ||||
Accounts
receivable, net
|
2,923,990 | 2,739,173 | ||||||
Other
Receivables
|
1,100,662 | 298,442 | ||||||
Advance
to vendors and other prepaid expenses
|
146,062 | 29,510 | ||||||
Due
from related parties
|
447,032 | 518,433 | ||||||
Total
current assets
|
6,338,584 | 6,741,920 | ||||||
Property
and equipment, net
|
39,748 | 44,144 | ||||||
Total
assets
|
$ | 6,378,332 | $ | 6,786,064 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT)
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable - trade
|
$ | 2,733,820 | $ | 1,752,862 | ||||
Accrued
registration rights penalty
|
1,597,000 | 1,597,000 | ||||||
Other
accruals and current liabilities
|
535,576 | 146,953 | ||||||
Advances
from customers
|
475,358 | 1,133,283 | ||||||
Due
to related parties
|
814,226 | 378,697 | ||||||
Foreign
tax payable
|
18,784 | 34,898 | ||||||
Total
current liabilities
|
6,174,764 | 5,043,693 | ||||||
Derivative
Liability
|
2,535,505 | - | ||||||
Total
liabilities
|
8,710,269 | 5,043,693 | ||||||
Equity
(deficit):
|
||||||||
China
Logistics Group, Inc. shareholders' equity (deficit):
|
||||||||
Preferred
stock - $0.001 par value, 10,000,000 shares authorized;
|
||||||||
Series
B convertible preferred stock - 450,000 issued and oustanding at December
31, 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 December 31, 2009 and December 31,
2008
|
34,508 | 34,508 | ||||||
Additional
paid-in capital
|
17,057,203 | 19,229,513 | ||||||
Accumulated
deficit
|
(19,541,703 | ) | (18,129,491 | ) | ||||
Accumulated
other comprehensive loss
|
(178,505 | ) | (187,495 | ) | ||||
Total
China Logistics Group, Inc. shareholders' equity (deficit)
|
(2,628,047 | ) | 947,485 | |||||
Noncontrolling
interest
|
296,110 | 794,886 | ||||||
Total
equity
|
(2,331,937 | ) | 1,742,371 | |||||
Total
liabilities and equity
|
$ | 6,378,332 | $ | 6,786,064 |
For
the Year Ended
|
||||||||
December
31, 2009
|
December
31, 2008
|
|||||||
(Restated)
|
||||||||
Sales
|
$ | 19,824,390 | $ | 35,561,833 | ||||
Cost
of sales
|
19,699,736 | 34,552,938 | ||||||
Gross
profit
|
124,654 | 1,008,895 | ||||||
Operating
expenses:
|
||||||||
Selling,
general and administrative
|
826,530 | 1,298,331 | ||||||
Depreciation
and amortization
|
16,002 | 35,438 | ||||||
Bad
debt expense (recovery of bad debt)
|
842,128 | (330,439 | ) | |||||
Total
operating expenses
|
1,684,660 | 1,003,330 | ||||||
Income
(loss) from operations
|
(1,560,006 | ) | 5,565 | |||||
Other
income (expenses):
|
||||||||
Other
income (expense)
|
32,228 | 15,218 | ||||||
Non-operating
bad debt expense
|
- | (85,844 | ) | |||||
Registration
agreement penalty
|
- | (1,597,000 | ) | |||||
Change
in fair value of derivative liability
|
3,320,227 | - | ||||||
Interest
income (expense)
|
(574 | ) | 1,532 | |||||
Total
other income (expenses)
|
3,351,881 | (1,666,094 | ) | |||||
Income
(loss) before income taxes
|
1,791,875 | (1,660,529 | ) | |||||
Foreign
taxes
|
28,078 | 269,600 | ||||||
Net
Income (loss)
|
1,763,797 | (1,930,129 | ) | |||||
Less:
Net income (loss) attributable to the noncontrolling
interest
|
(507,412 | ) | 156,489 | |||||
Net
income (loss) attributable to China Logistics Group, Inc.
|
$ | 2,271,209 | $ | (2,086,618 | ) | |||
Earnings
(loss) per common share:
|
||||||||
Basic
|
$ | 0.07 | $ | (0.08 | ) | |||
Diluted
|
$ | 0.06 | $ | (0.08 | ) | |||
Weighted
average number of shares outstanding:
|
||||||||
Basic
|
34,508,203 | 26,823,216 | ||||||
Diluted
|
39,008,203 | 26,823,216 | ||||||
China
Logistics Group, Inc. Shareholders' Equity
|
||||||||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||||||||
Additional
|
Other
|
|||||||||||||||||||||||||||||||||
Preferred
A Stock
|
Preferred
B Stock
|
Common
Stock
|
Paid-In
|
Accumulated
|
Comprehensive
|
Noncontrolling
|
Comprehensive
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Loss
|
Interest
|
Income
(loss)
|
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 Seiries A Preferred to common stock
|
(1,000,000 | ) | (1,000 | ) | - | - | 2,500,000 | 2,500 | (1,500 | ) | - | - | - | - | ||||||||||||||||||||
Conversion
of Seiries 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
|
- | - | - | - | - | - | - | (2,086,618 | ) | - | 156,489 | (1,930,129 | ) | (1,930,129 | ) | |||||||||||||||||||
Other
comprehensive income, net of tax:
|
||||||||||||||||||||||||||||||||||
Unrealized
gain on foreign currency translation adjustment
|
- | - | - | - | - | - | - | - | 38,895 | 37,369 | 76,264 | 76,264 | ||||||||||||||||||||||
Other
comprehensive income
|
76,264 | 76,264 | ||||||||||||||||||||||||||||||||
Comprehensive
income
|
(1,853,865 | ) | (1,853,865 | ) | ||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||
Cumulative
effect of a change in accounting principle - adoption of FASB ASC 825
effective January 1, 2009
|
(2,172,310 | ) | (3,683,422 | ) | (5,855,732 | ) | ||||||||||||||||||||||||||||
Net
income
|
- | - | - | - | - | - | - | 2,271,210 | - | (507,412 | ) | 1,763,798 | 1,763,798 | |||||||||||||||||||||
Other
comprehensive income, net of tax:
|
||||||||||||||||||||||||||||||||||
Unrealized
gain on foreign currency translation adjustment
|
- | - | - | - | - | - | - | - | 8,990 | 8,636 | 17,626 | 17,626 | ||||||||||||||||||||||
Other
comprehensive income
|
17,626 | 17,626 | ||||||||||||||||||||||||||||||||
Comprehensive
income
|
1,781,424 | 1,781,424 | ||||||||||||||||||||||||||||||||
Balance
December 31, 2009
|
- | $ | - | 450,000 | $ | 450 | 34,508,203 | $ | 34,508 | $ | 17,057,203 | $ | (19,541,704 | ) | $ | (178,505 | ) | $ | 296,110 | $ | (2,331,937 | ) |
For
the Year Ended
|
||||||||
December
31,
|
||||||||
2009
|
2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
Restated
|
|||||||
Net
income (loss)
|
$ | 1,763,797 | $ | (1,930,129 | ) | |||
Adjustments
to reconcile net income (loss) to net cash used in operating
activities:
|
||||||||
Depreciation
expense
|
16,002 | 35,438 | ||||||
Allowance
for doubtful accounts
|
842,128 | (330,439 | ) | |||||
Change
in fair value of derivative liability
|
(3,320,227 | ) | - | |||||
Registration
rights penalty
|
- | 1,597,000 | ||||||
Changes
in assets and liabilities:
|
||||||||
(Increase)
decrease in accounts receivable
|
(1,026,946 | ) | 723,098 | |||||
Decrease
in accounts receivable - related party
|
- | 7,000 | ||||||
Increase
in prepaid expenses and other current assets
|
(802,220 | ) | 114 | |||||
(Decrease)
increase in accounts payable
|
980,958 | (1,856,023 | ) | |||||
Increase
(decrease) in other accruals and current liabilities
|
388,623 | (338,148 | ) | |||||
(Decrease)
increase in taxes payable
|
(16,114 | ) | (1,220 | ) | ||||
Increase
in advances to vendors
|
(116,552 | ) | - | |||||
(Decrease)
increase in advances from customers
|
(657,925 | ) | 449,848 | |||||
NET
CASH USED IN OPERATING ACTIVITIES
|
(1,948,476 | ) | (1,643,461 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Capital
expenditures
|
(11,606 | ) | (37,246 | ) | ||||
Advances
to related parties
|
- | (6,998 | ) | |||||
Collection
of repayments of advances to related parties
|
71,400 | - | ||||||
NET
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
59,794 | (44,244 | ) | |||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds
convertible note payable - related party
|
- | 148,200 | ||||||
Repayment
of short-term financing
|
- | (12,633 | ) | |||||
Proceeds
from 2008 unit offering private placement
|
- | 3,778,250 | ||||||
2008
unit offering private placement expenses
|
- | (420,863 | ) | |||||
Advances
from related parties
|
458,255 | 256,879 | ||||||
Repayment
of advances from related parties
|
(22,726 | ) | (105,794 | ) | ||||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
435,529 | 3,644,039 | ||||||
EFFECT
OF EXCHANGE RATE ON CASH
|
17,629 | 78,423 | ||||||
NET
INCREASE (DECREASE) IN CASH
|
(1,435,524 | ) | 2,034,757 | |||||
CASH -
beginning of year
|
3,156,362 | 1,121,605 | ||||||
CASH
- end of year
|
$ | 1,720,838 | $ | 3,156,362 | ||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash
paid during the period for foreign taxes
|
$ | 241,522 | $ | 34,524 | ||||
Convertible
note payable converted to common stock -related party
|
$ | - | $ | 2,521,380 | ||||
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.
|
December 31, 2008 | ||||||||||||
Balance Sheet
Data
|
As
filed
|
Adjustment
to Restate
|
Restated
|
|||||||||
Equity:
|
||||||||||||
China
Logistics Group, Inc. shareholders’ 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
|
December 31, 2008 | ||||||||||||
Consolidated Statements of
Cash Flows Data
|
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
|
)
|
(105,794
|
)
|
|||||||
Net
cash provided by financing activities
|
$
|
3,644,039
|
$
|
-
|
$
|
3,644,039
|
•
|
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.
|
December
31, 2009
|
December
31, 2008
|
|||||||
(Restated)
|
||||||||
Loans
receivable
|
$
|
960,215
|
$
|
229,742
|
||||
Legal
deposit
|
-
|
38,662
|
||||||
Deferred
expense
|
131,366
|
23,561
|
||||||
Other
|
9,081
|
6,477
|
||||||
$
|
1,100,662
|
$
|
298,442
|
December
31, 2009
|
December
31, 2008
|
|||||||
(Restated)
|
||||||||
Loans
payable
|
$
|
289,603
|
$
|
-
|
||||
Accruals
|
193,306
|
146,953
|
||||||
Accrued
salaries
|
52,667
|
-
|
||||||
$
|
535,576
|
$
|
146,953
|
Class
A Warrants
|
Class
B Warrants
|
|||||||||||||||
January
1, 2009
|
December
31, 2009
|
January
1, 2009
|
December
31, 2009
|
|||||||||||||
Dividend
Yield
|
0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Volatility
|
231 | % | 284 | % | 231 | % | 284 | % | ||||||||
Risk
Free Rate
|
1.00 | % | 1.43 | % | 1.00 | % | 1.43 | % | ||||||||
Expected
Term
|
4.33 | 3.33 | 4.33 | 3.33 | ||||||||||||
Asset
Price
|
$ | 0.19 | $ | 0.08 | $ | 0.19 | $ | 0.08 | ||||||||
Exercise
Price
|
$ | 0.35 | $ | 0.35 | $ | 0.50 | $ | 0.50 |
December
31, 2009
|
December
31, 2008
|
|||||||
Balance
sheet
|
6.8372
|
6.8542
|
||||||
Statement
of operations
|
6.8409
|
6.9623
|
1.
|
A
subsidiary or group of assets that is a business or nonprofit
activity
|
|
2.
|
A
subsidiary that is a business or nonprofit activity that is transferred to
an equity method investee or joint
venture
|
3.
|
An
exchange of a group of assets that constitutes a business or nonprofit
activity for a noncontrolling interest in an entity (including an equity
method investee or joint venture).
|
1.
|
Sales
of in substance real estate. Entities should apply the sale of
real estate guidance in Subtopics 360-20 (Property, Plant, and Equipment)
and 976-605 (Retail/Land) to such transactions.
|
|
2.
|
Conveyances
of oil and gas mineral rights. Entities should apply the
mineral property conveyance and related transactions guidance in Subtopic
932-360 (Oil and Gas-Property, Plant, and Equipment) to such
transactions.
|
Year
ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Numerator:
|
(Restated)
|
|||||||
Net
income (loss) applicable to common stockholders (A)
|
$
|
2,271,209
|
$
|
(2,086,618
|
)
|
|||
Denominator:
|
||||||||
Denominator
for basic earnings per share
|
||||||||
Weighted
average shares outstanding (B)
|
34,508,203
|
26,823,216
|
||||||
Denominator
for diluted earnings per share
|
||||||||
Treasury
Stock method
|
||||||||
Stock
purchase warrants
|
-
|
-
|
||||||
Series
A and B Convertible Preferred Stock
|
4,500,000
|
-
|
||||||
Adjusted
weighted average shares outstanding (C)
|
39,008,203
|
26,823,216
|
||||||
Basic
and Diluted (Loss) Earnings Per Common Share:
|
||||||||
Earnings
per share- basic (A)/(B)
|
$
|
0.07
|
$
|
(0.08
|
)
|
|||
Earnings
per share- diluted (A)/(C)
|
$
|
0.06
|
$
|
(0.08
|
)
|
Year
ended December 31,
|
|||||
2009
|
2008
|
||||
(Restated)
|
|||||
Stock
purchase warrants issued to Mr. Chen
|
2,000,000
|
2,000,000
|
|||
Warrants
|
117,500
|
117,500
|
|||
Class
A and B Warrants
|
31,558,500
|
31,558,500
|
|||
Series
B Convertible Preferred Stock
|
-
|
4,500,000
|
|||
33,676,000
|
38,176,000
|
Useful
Lives
|
2009
|
2008
|
|||||||
(Restated)
|
|||||||||
Computer
equipment
|
4
years
|
$
|
37,246
|
$
|
37,246
|
||||
Furniture
and equipment
|
4-5
years
|
101,351
|
89,745
|
||||||
|
138,597
|
126,991
|
|||||||
Less:
accumulated depreciation
|
(98,849)
|
(82,847)
|
|||||||
$
|
39,748
|
$
|
44,144
|
•
|
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
year ended December 31,
|
||||||||
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
of 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, 2007
|
117,500
|
$
|
9.69
|
1.75
|
$
|
-
|
||||||||||
Granted
|
33,558,500
|
0.42
|
5.00
|
-
|
||||||||||||
Exercised
|
-
|
-
|
-
|
-
|
||||||||||||
Expired
|
-
|
-
|
-
|
-
|
||||||||||||
Outstanding
at December 31, 2008
|
33,676,000
|
$
|
0.45
|
4.18
|
$
|
-
|
||||||||||
Granted
|
-
|
-
|
-
|
-
|
||||||||||||
Exercised
|
-
|
-
|
-
|
-
|
||||||||||||
Expired
|
(112,500
|
)
|
7.80
|
-
|
-
|
|||||||||||
Outstanding
at September 30, 2009
|
33,563,500
|
$
|
0.42
|
3.90
|
$
|
-
|
2009
|
2008
|
|||||||
(Restated)
|
||||||||
Due
to Xiangfen Chen
|
$
|
109,871
|
$
|
123,458
|
||||
Due
to Bin Liu
|
99,381
|
62,652
|
||||||
Due
to Tianjin Sincere Logistics Co., Ltd.
|
559,974
|
183,448
|
||||||
Due
to China Direct Industries, Inc.
|
45,000
|
-
|
||||||
Other
|
-
|
9,139
|
||||||
$
|
814,226
|
$
|
378,697
|
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)
|
-
|
December
31, 2010
|
|||
Tianjin
Branch, Tianjin City (3)
|
3,014
|
$21,962
(RMB
150,000)
|
-
|
May
31, 2013
|
Year
Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
(Restated)
|
||||||||
US
Operations
|
$
|
2,799,331
|
$
|
(2,249,494)
|
||||
Chinese
Operations
|
(1,007,456)
|
588,965
|
||||||
$
|
1,791,875
|
$
|
(1,660,529)
|
Year
Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
(Restated)
|
||||||||
US
Operations
|
$
|
-
|
$
|
-
|
||||
Chinese
Operations
|
28,078
|
269,600
|
||||||
$
|
28,078
|
$
|
269,600
|
Year
Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
(Restated)
|
||||||||
Income
tax provision (benefit) at Federal statutory rate
|
$
|
627,000
|
$
|
(581,000)
|
||||
State
income taxes, net of Federal Benefit
|
83,000
|
(76,000)
|
||||||
Permanent
differences
|
(1,315,000)
|
632,000
|
||||||
Temporary
differences
|
280,000
|
123,000
|
||||||
U.S.
tax rate in excess of foreign tax rate
|
147,000
|
(86,000
|
)
|
|||||
Increase
in valuation allowance
|
206,000
|
258,000
|
||||||
Abatement
of foreign income taxes
|
-
|
-
|
||||||
Tax
provision (benefit)
|
$
|
28,000
|
$
|
270,000
|
December
31,
|
||||||||
2009
|
2008
|
|||||||
(Restated)
|
||||||||
Federal
net operating loss carryforward
|
$
|
4,100,000
|
$
|
3,928,000
|
||||
State
net operating loss carryforward
|
660,000
|
633,000
|
||||||
Provisions
|
-
|
-
|
||||||
Timing
differences
|
640,000
|
639,000
|
||||||
5,400,000
|
5,200,000
|
|||||||
Valuation
allowance
|
(5,400,000
|
)
|
(5,200,000
|
)
|
||||
$
|
-
|
$
|
-
|
Period
|
Total
|
|||
Period
Ended December 31, 2010
|
$
|
95,000
|
||
Period
Ended December 31, 2011
|
26,000
|
|||
Period
Ended December 31, 2012
|
22,000
|
|||
Period
Ended December 31, 2013
|
22,000
|
|||
Period
Ended December 31, 2014
|
22,000
|
|||
Thereafter
|
--
|
|||
$
|
187,000
|
For
the Year Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
(Restated)
|
||||||||
Net
(loss) income
|
$
|
1,763,797
|
$
|
(1,930,129
|
)
|
|||
Other
comprehensive (loss) income, net of tax
|
||||||||
Foreign
currency translation gain, net of tax
|
17,626
|
76,264
|
||||||
Total
other comprehensive (loss) income, net of tax
|
17,626
|
76,264
|
||||||
Comprehensive
Income
|
1,781,423
|
(1,853,865
|
)
|
|||||
Less:
Comprehensive Income attributable to the noncontrolling
interests
|
(498,776
|
)
|
193,858
|
|||||
Comprehensive
(loss) Income attributable to China Logistics Group, Inc.
|
$
|
2,280,219
|
$
|
(2,047,723
|
)
|
December
31, 2009
|
Sales
|
Assets
|
||||||
United
States
|
$
|
—
|
$
|
10,755
|
||||
Peoples Republic
of China
|
19,824,390
|
6,367,577
|
||||||
$
|
19,824,390
|
$
|
6,378,332
|
|||||
December
31, 2008 (restated)
|
||||||||
United
States
|
$
|
—
|
$
|
201,605
|
||||
Peoples Republic
of China
|
35,561,833
|
6,584,459
|
||||||
$
|
35,561,833
|
$
|
6,786,064
|