UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K /A
(Amendment
No. 1)
| [X] |
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the fiscal year ended December 31,
2014 |
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OR |
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TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from ______________
to ______________ |
Commission file number 000-54731
CHINA GREENSTAR CORPORATION
(Exact name of registrant as specified in its
charter)
| Delaware |
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27-5213322 |
(State or other jurisdiction
of
incorporation or organization) |
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(IRS. Employer
Identification No.) |
Suite B, 16/F., Ritz Plaza,
122 Austin Road
Tsim Sha Tsui, Kowloon, Hong Kong
(Address of principal executive offices, including
zip code)
+852.9787.3883
(Registrant’s telephone number, including
area code)
Securities registered pursuant to Section
12(b) of the Act: None
Securities registered pursuant to Section
12(g) of the Act: Common Stock, $.001 par value
Indicate by check mark if the registrant is
a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained,
to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions
of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2
of the Exchange Act.
| Large accelerated filer |
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Accelerated filer |
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| Non-accelerated filer |
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Smaller reporting company |
[X] |
| (Do not check if a smaller
reporting company) |
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Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes [X] No [ ]
State the aggregate market value of the voting
and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold,
or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently
completed second fiscal quarter. $2,617.93 (2,379,935 shares at $0.0011)
As of September 18 , 2015, there are
102,379,935 shares of common stock outstanding.
EXPLANATORY NOTE
This Amendment No. 1 to the Annual Report
on Form 10-K of China Greenstar Corporation for the fiscal year ended December 31, 2014 as filed with the Securities and Exchange
Commission (the “SEC”) on April 15, 2015 is being filed to respond to certain comments of the staff of the SEC.
TABLE OF CONTENTS
SPECIAL NOTE REGARDING
FORWARD LOOKING STATEMENTS
This Annual Report on
Form 10-K contains forward-looking statements that involve assumptions, and describe our future plans, strategies, and expectations.
Such statements are generally identifiable by use of the words “may,” “will,” “should,” “expect,”
“anticipate,” “estimate,” “believe,” “intend,” or “project” or the
negative of these words of other variations on these words or comparable terminology. These statements are expressed in good faith
and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished.
Such forward-looking statements
include statements regarding, among other things, (a) the potential markets for our products, our potential profitability, and
cash flows (b) our growth strategies, (c) anticipated trends in our industry, (d) our future financing plans and (e) our anticipated
needs for working capital. This information may involve known and unknown risks, uncertainties, and other factors that may cause
our actual results, performance, or achievements to be materially different from the future results, performance, or achievements
expressed or implied by any forward-looking statements. These statements may be found under “Item 1. Business” and
“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as
in this Annual Report on Form 10-K generally. Actual events or results may differ materially from those discussed in forward-looking
statements as a result of various factors as described in this Annual Report on Form 10-K generally. In light of these risks and
uncertainties, there can be no assurance that the forward-looking statements contained in this Annual Report on Form 10-K will
in fact occur. In addition to the information expressly required to be included in this filing, we will provide such further material
information, if any, as may be necessary to ensure that the required statements, in light of the circumstances under which they
are made, are not misleading.
Although forward-looking
statements in this Annual Report on Form 10-K reflect the good faith judgment of our management, forward-looking statements are
inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results
to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance
on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. We assume no obligation
to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report,
other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various
disclosures made by us in our reports filed with the SEC which attempt to advise interested parties of the risks and factors
that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties
materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.
In this Form 10-K, references
to “we,” “our,” “us,” or the “Company” refer to China Greenstar Corporation (formerly
Stark Beneficial, Inc.), a Delaware company and its consolidated subsidiaries.
ITEM 1. BUSINESS
Share Exchange
On
December 15, 2014 (the “Closing Date”), Stark Beneficial, Inc. (“Stark”) entered into a Share Exchange
Agreement (the “Exchange Agreement”), with (i) China Greenstar Holdings Limited (“Greenstar Holdings”),
a company organized under the laws of British Virgin Islands, (ii) Greenstar Holdings shareholders, Forever Prosperous Holdings
(China) Limited, a British Virgin Islands company (“Forever Prosperous”), Pride Sun Limited, a British Virgin Islands
company (“Pride Sun”) and New Empire Ventures Limited, a British Virgin Islands company, (collectively, “Greenstar
Holdings’ Shareholders”), who together owned shares constituting 100% of the issued and outstanding ordinary shares
of Greenstar Holdings ( “Greenstar Holdings’ Shares”) and (iii) Michael Anthony, the principal stockholder of
Stark (the “Stark Shareholder”). Pursuant to the terms of the Exchange Agreement, Greenstar Holdings Shareholders
transferred all of the Greenstar Holdings Shares in exchange for the issuance of 102,100,000 shares of Stark’s common stock
(the “Share Exchange”). As a result of the Share Exchange, Stark became a public company in development stage in the
People’s Republic of China (the “PRC”) engaged in distributing and reselling a fuel additive and cleaner called
“Greencare Product” in PRC.
Immediately prior to the
Share Exchange, Stark cancelled and retired 2,100,000 shares of its issued and outstanding common stock and 5,000,000 shares of
its preferred stock (the “Cancelled Shares”), reducing its issued and outstanding shares to 279,935 shares of common
stock. A cash amount of $134,645.61 was paid to Michael Anthony, Stark’s former majority shareholder and owner of the Cancelled
Shares, as consideration for cancelling the Cancelled Shares in connection with the Share Exchange. In addition, a cash amount
of $215,354.39 was paid to Stark’s existing creditors reducing its liabilities at closing of the Share Exchange to $0. The
total consideration was $350,000. As a result of the cancellation of the Cancelled Shares and the Share Exchange, Stark had
102,379,935 shares of common stock issued and outstanding following the Share Exchange. The Share Exchange was an arms-length
transaction between the parties. There were no third parties involved that received any compensation for arranging or facilitating
the transaction. On January 6, 2015, the Company filed a Certificate of Ownership and Merger with the Secretary of State of
the State of Delaware, whereby the Company changed its name from Stark Beneficial, Inc. to China Greenstar Corporation.
Business Overview
We purchase a fuel
additive from a third party in the PRC and resell it to customers under our brand name called “Greencare Product.”
The Greencare Product is added to gasoline in order to improve fuel quality by suppressing and cleaning sediments in fuel. The
Greencare Product improves overall engine performance, maximizes fuel-burning efficiency, enhances the power of an engine and
provides for cleaner emissions. We authorize our supplier to use our brand name and charge a distribution fee for it. We are not
directly involved in the production or manufacturing of fuel additives or cleaners. All of our operations are conducted in the
PRC through our operating subsidiary, Shenzhen Greenstar Technology Co., Ltd. (“Greenstar Technology”), a wholly foreign-owned
enterprise (“WFOE”).
Corporate Structure
Our current corporate structure is set forth below:
The laws of the PRC
do not impose any foreign ownership restrictions on the industry in which we operate.
Company Background
We are incorporated
in the State of Delaware. On December 15, 2014 , we consummated a Share Exchange. Our wholly owned subsidiary,
Greenstar Holdings was incorporated in the British Virgin Islands on July 29, 2014. Greenstar Holdings is the parent holding
company of Greenstar Group (HK) Limited (“Greenstar HK”), a Hong Kong company, which was established on October
25, 2013 and Greenstar HK is the parent company of Greenstar Technology established in the PRC . We operate our
business in China through Greenstar Technology.
Mr. Sui On Shum beneficially
owned 20,420,000 shares of the Company indirectly through Pride Sun Limited. In a private transfer on January 2, 2015, Mr. Sui
On Shum transferred 100% of his equity ownership interests in Pride Sun Limited to Fullwing Ventures Limited and resigned as the
sole director of Pride Sun Limited. Mr. Huangchen Chen is the sole director of Pride Sun and the sole member and director of Fullwing
Ventures.
Our former President
and Chief Executive Officer, Mr. Yu Ansheng, beneficially owned 61,260,000 shares of the Company indirectly through Forever Prosperous,
a company in which he was the sole member and a director. On February 3, 2015, in a private transfer, Mr. Yu transferred 100%
of his ownership in Forever Prosperous to Mr. Huangchen Chen, our current Chairman, Chief Executive Officer and President. As
a result of transaction, Mr. Yu no longer beneficially owns the shares. He resigned as an officer and director of the Company
on February 3, 2015.
Market Overview
The gasoline industry
in China is predominately controlled by two large state owned enterprises: Sinopec and China National Petroleum Corporation. Most
crude oil in the PRC is poor quality and oil refineries leave much to be desired. The crude oil used in refineries in Europe and
in the United States is generally low in sulfur content since the majority of it comes from the North Sea and Texas where it is
easy to process. Crude oil used in PRC refineries is generally high in sulfur content since it comes from the Middle East and
domestic oilfields. In addition, the production techniques used in China is behind that used in Europe and the United States.
China uses a technique called catalytic cracking which produces an end product that is low in octane and high in sulfur content.
In the Unites States, there are three octane grades of gasoline — 87, 89 and 93. In China, there are two octane grades of
gasoline — 93 and 97. However, because the grades in the two countries are based on different environmental standards and
are defined according to different performance levels, the highest grade of gasoline in China is equivalent to the lowest grade
of gasoline in the United States (i.e., China’s 97 is equal to the United States’ 87).
Gasoline produced in China
is lower in quality than gasoline produced in Europe and the United States and is prone to the formation of sediment, leading
to the deterioration of engine performance and reduced fuel efficiency. Low quality gasoline is also an important contributor
to ambient air pollution in Asia resulting in emissions of hazardous materials such as carbon monoxide, hydrocarbons and nitrogen
oxide. A report issued in January, 2014 showed that all 74 of China’s major cities failed to meet the nation’s air
quality standards. On March 25, 2014, the World Health Organization increased its estimate for the number of premature deaths
related to air pollution in China every year from the previous 3.2 million to 7 million. On the same day, the Ministry of Environmental
Protection released an annual report on air quality. The document was the first national air quality report since China began
monitoring PM 2.5 – inhalable matter less than 2.5 microns in diameter that can damage the lungs – in 74 major cities
on January 1, 2013. The average reading of PM 2.5 concentrations in the cities was 72 micrograms per cubic meter, almost twice
as high as the country’s standard of 35. The report confirmed at least 300 million Chinese people are breathing polluted
air.
Over the past two decades
China has experienced enormous economic development. China’s cities were filled with bicycles as recently as the 1990s,
but thanks to the explosive growth of the middle class, the Chinese now own more than 120 million cars and another 120 million
motor vehicles of other kinds. Fuel standards have not kept pace. In order to reduce vehicle emissions, an integrated approach
is required, in which fuel additives and cleaners play a significant part.
At an annual legislative
meeting in March, 2014, Premier Li Keqiang said the government will make cleaning up the air a top priority. The Chinese government
has pledged to reduce significantly and even eliminate heavily polluted days by 2017. Most recently, in a historic climate change
deal entered into in November, 2014, President Barack Obama and President Xi Jinping announced that the United States and China
will curb their greenhouse gas emissions over the next two decades. Under the agreement, the United States would cut its 2005
level of carbon emissions by 26-28% before the year 2025. China would peak its carbon emissions by 2030 and will also aim to get
20% of its energy from zero-carbon emission sources by the same year. To positively affect world climate change, the Chinese government
is trying to launch effective measures to move to cleaner sources of energy in order to mitigate the release of harmful emissions.
The issues mentioned above imply that China’s green energy industry should experience significant growth in the foreseeable
future.
Global demand is increasing
for innovative environmental protection and energy solutions for sustainable economic growth. Today, China is faced with the growing
challenge of reducing and controlling air pollution emissions that present serious health risks to its population and damage the
environment. We believe that our Greencare Product represents a large-scale, environmentally friendly and economically feasible
form for improving energy efficiency. In our opinion, our product is cost competitive, reduces pollution and greenhouse gas emissions
and will help make for a greener China and better world in the years to come.
Products
We distribute one fuel
additive and cleaner called Greencare Product. Our fuel additive is used for high end automobiles. We believe that our Greencare
Product provides the following benefits:
Versatility: Our Greencare
Product can be used directly by an automobile without any alteration to its engine. It can be used individually and also with
a mixture of any ratio of standard gasoline or ethanol gasoline.
Environmental Friendliness:
The automobile discharge of hazardous materials such as carbon monoxide, hydrocarbons and nitrogen oxide can be more than 40%
lower when our Greencare Product is added to standard gasoline or ethanol gasoline. Our product provides one of the most effective
ways for cutting down automobile discharge pollution, which in turn reduces smog and improves the overall quality of the environment.
High Octane Levels: The
octane levels of our product are three to five units higher than standard gasoline. Our product is suitable for medium to high
compression ratio engines and is designed to improve an engine’s explosion resistance.
Strong Propulsion: The
content of our product provides for higher propulsion force when compared to similar fuel additives.
Low Energy Consumption:
Our product can reduce the energy consumption of vehicles by more than 5% when calculated on the basis of equivalent fuel consumption
ratios.
Long Preservation Cycles:
Our product can be preserved for more than a year if the mixture with water does not exceed certain specifications and they are
kept within normal temperature ranges. As a result, our product is excellent for transporting and selling over a long period of
time.
Customers
We target customers
in a variety of markets, such as individual automobile owners, government fleets and gas stations. Many different types of automobiles
operators in China have begun to adopt fuel additives in order to improve overall engine performance and maximize fuel efficiency.
In addition, an increasing amount of state owned enterprises in China are faced with environmental challenges and are under regulatory
directives and political pressure to reduce pollution, particularly as part of the country’s overall expansion plans.
Suppliers
We purchase our fuel additive
from a third party in the PRC and resell it to customers. We are not directly involved in the production or manufacturing of fuel
additives and cleaners. The supply agreement does not contain any exclusivity, minimum volume or other commitments that restrict
us from pursuing relationships with other suppliers. There are other qualified parties who manufacturer the fuel additive. We
are able to enter into supply agreements with such parties, if needed.
Competition
The market for fuel additives
and cleaners is highly competitive. Many of the producers and sellers of gasoline and diesel fuel additives are large entities
that have significantly greater resources than we have. We also compete with suppliers of other alternative vehicle fuels, including
ethanol, biodiesel and hydrogen fuels, as well as providers of hybrid and electric vehicles.
Government Regulation
Our business depends in
part on environmental regulations and programs in China that promote the use of cleaner burning fuels for vehicles. Our supplier,
as the producer and manufacturer of the Greencare Product, is extensively regulated by policies and regulations enacted by the
PRC government relating to the production and sale of fuel additives and cleaners. The production of these materials requires approvals,
licenses or permits from relevant central and local government authorities. In addition, from time to time, relevant government
authorities may impose new regulations on these activities. As a reseller and distributor of fuel additives, we believe that we
have obtained all necessary licenses, registrations and permits and have complied with all requirements necessary to allow us to
conduct our business in the PRC.
Effect of SEC Reporting Obligations on our Business
We are subject to the following regulations
of the SEC and applicable securities laws, rules and regulations:
Sarbanes/Oxley Act
We are subject to the
Sarbanes/Oxley Act of 2002. The Sarbanes/Oxley Act created a strong and independent accounting oversight board to oversee the
conduct of auditors of public companies and strengthen auditor independence. It also requires steps to enhance the direct
responsibility of senior members of management for financial reporting and for the quality of financial disclosures made by public
companies; establishes clear statutory rules to limit, and to expose to public view, possible conflicts of interest affecting
securities analysts; creates guidelines for audit committee members’ appointment, compensation and oversight of the work
of public companies’ auditors; management assessment of our internal controls; auditor attestation to management’s
conclusions about internal controls; prohibits certain insider trading during pension fund blackout periods; requires companies
and auditors to evaluate internal controls and procedures; and establishes a federal crime of securities fraud, among other provisions.
Compliance with the requirements of the Sarbanes/Oxley Act will substantially increase our legal and accounting costs.
Exchange Act Reporting Requirements
Section 14(a) of the
Securities Exchange Act of 1934 (the “Exchange Act”) requires all companies with securities registered pursuant to
Section 12(g) of the Exchange Act to comply with the rules and regulations of the SEC regarding proxy solicitations, as outlined
in Regulation 14A. Matters submitted to stockholders at special or annual meetings thereof or pursuant to a written consent will
require us to provide our stockholders with the information outlined in Schedules 14A or 14C of Regulation 14; preliminary copies
of this information must be submitted to the SEC at least 10 days prior to the date that definitive copies of this information
are forwarded to our stockholders.
We are also required
to file Annual Reports on SEC Form 10-K and Quarterly Reports on SEC Form 10-Q with the SEC on a regular basis, and will be required
to timely disclose certain material events (e.g., changes in corporate control; acquisitions or dispositions of a significant
amount of assets other than in the ordinary course of business; and bankruptcy) in a Current Report on SEC Form 8-K.
Legal Proceedings
We are currently not a
party to any legal or administrative proceedings and are not aware of any pending or threatened legal or administrative proceedings
against us in all material aspects. We may from time to time become a party to various legal or administrative proceedings arising
in the ordinary course of our business.
Property
The following table summarizes the location
of real property we own and lease.
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Address |
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Leased/Owned |
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B121, B Zone, 4th Floor, Jinhui
Building, Nanhai Road, Nanshan District, Shenzhen, PRC |
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Leased |
Employees
As of April 15, 2015, we have 9 full-time employees.
We are compliant with
local prevailing wage, contractor licensing and insurance regulations, and have good relations with our employees.
As required by PRC regulations,
we participate in various employee benefit plans that are organized by municipal and provincial governments, including pension,
work-related injury benefits, maternity insurance, medical and unemployment benefit plans. We are required under PRC laws to make
contributions to the employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees,
up to a maximum amount specified by the local government from time to time. Members of the retirement plan are entitled to a pension
equal to a fixed proportion of the salary prevailing at the member’s retirement date.
Generally we enter into
a standard employment contract with our officers and managers for a set period of years and a standard employment contract with
other employees for a set period of years. According to these contracts, all of our employees are prohibited from engaging in
any activities that compete with our business during the period of their employment with us.
Corporation Information
Our principal executive offices are located
at Suite B, 16/F., Ritz Plaza, 122 Austin Road, Tsim Sha Tsui, Kowloon, Hong Kong. Our telephone number at this address is + 852.9787.3883.
ITEM 1A. RISK FACTORS
Risks Related to Our Business
Our operating history makes it difficult
to evaluate our future business prospects and to make decisions based on our historical performance.
We have very little
operating history, which makes it difficult to evaluate our business on the basis of historical operations. As a consequence,
it is difficult to forecast our future results based upon our limited historical data. Because of the uncertainties related to
our lack of historical operations, we may be hindered in our ability to anticipate and timely adapt to increases or decreases
in sales, product costs or expenses. If we make poor budgetary decisions as a result of unreliable historical data, we could incur
greater losses, which may result in a decline in our stock price.
Our operating results may fluctuate, which
makes our results difficult to predict and could cause our results to fall short of expectations.
Our operating results
may fluctuate as a result of a number of factors, many outside of our control. As a result, comparing our operating results on
a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance.
Our quarterly, year-to-date and annual expenses as a percentage of our revenues may differ significantly from our historical or
projected rates. Our operating results in future quarters may fall below expectations. Any of these events could cause our stock
price to fall. Each of the risk factors listed in this section and the following factors may affect our operating results:
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Our ability to continue
to attract customers; |
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Our ability to generate
revenue from the product we offer; |
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The amount and timing
of operating costs and capital expenditures related to the maintenance and expansion of our businesses; and |
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Our focus on long-term
goals over short-term results. |
Because our business is
changing and evolving, our historical operating results may not be useful to you in predicting our future operating results.
We may not be successful in implementing
important strategic initiatives, which may have a material adverse impact on our business and financial results.
There is no assurance
that we will be able to implement important strategic initiatives in accordance with our expectations, which may result in a material
adverse impact on our business and financial results. These strategic initiatives are designed to drive long-term shareholder
value and improve our company’s results of operations.
Our success depends substantially on the value of our brand.
Brand value is based in
part on consumer perceptions as to a variety of subjective qualities. Even isolated business incidents that erode consumer trust,
particularly if the incidents receive considerable publicity or result in litigation, can significantly reduce brand value. Consumer
demand for our product could diminish significantly if we fail to preserve quality or fail to deliver a consistently positive
consumer experience.
Effectively managing our growth into new
geographic areas will be challenging.
Effectively managing growth
can be challenging, particularly as we expand into new markets geographically where we must balance the need for flexibility and
a degree of autonomy for local management against the need for consistency with the our goals, philosophy and standards. Growth
can make it increasingly difficult to locate and hire sufficient numbers of key employees to meet our financial targets, to maintain
an effective system of internal controls, and to train employees nationally to deliver a consistently high quality service and
customer experience.
We face significant competition, and if
we do not compete successfully against new and existing competitors, we may lose our market share, and our profitability may be
adversely affected.
Increased competition
could reduce our profitability and result in a loss of market share. Some of our existing and potential competitors may have competitive
advantages, such as significantly greater financial, marketing or other resources, and may successfully mimic and adopt our business
models. We cannot assure you that we will be able to successfully compete against new or existing competitors.
Failure to manage our growth could strain
our management, operational and other resources, which could materially and adversely affect our business and prospects.
We intend to expand our
operations and plan to expand rapidly in China. The continued growth of our business will result in, substantial demand on our
management, operational and other resources. In particular, the management of our growth will require, among other things:
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increased sales and sales support activities; |
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improved administrative and operational
systems; |
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enhancements to our information technology
system; |
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stringent cost controls and sufficient
working capital; |
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strengthening of financial and management
controls; and |
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hiring and training of new personnel. |
As we continue this effort,
we may incur substantial costs and expend substantial resources. We may not be able to manage our current or future operations
effectively and efficiently or compete effectively in new markets we enter. If we are not able to manage our growth successfully,
our business and prospects would be materially and adversely affected.
Key employees are essential to growing our business.
Mr. Huangchen Chen and
Mr. Yang Rong are essential to our ability to continue to grow our business. They have established relationships within the industries
in which we will operate. If they were to leave us, our growth strategy might be hindered, which could limit our ability to increase
revenue.
In addition, we face competition
for attracting skilled personnel. If we fail to attract and retain qualified personnel to meet current and future needs, this
could slow our ability to grow our business, which could result in a decrease in market share.
We may need additional capital and we may
not be able to obtain it at acceptable terms, or at all, which could adversely affect our liquidity and financial position.
We may need additional
cash resources due to changed business conditions or other future developments. If these sources are insufficient to satisfy our
cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The incurrence of indebtedness
would result in increased debt service obligations and could result in operating and financing covenants that would restrict our
operations and liquidity.
Our ability to obtain
additional capital on acceptable terms is subject to a variety of uncertainties, including:
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investors’ perception of, and demand
for, our securities; |
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conditions of the U.S. and other capital
markets in which we may seek to raise funds; |
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our future results of operations, financial
condition and cash flow; |
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PRC governmental regulation of foreign
investment in China; |
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economic, political and other conditions
in China; and |
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PRC governmental policies relating to foreign
currency borrowings. |
We rely on computer software and hardware
systems in managing our operations, the failure of which could adversely affect our business, financial condition and results
of operations.
We are dependent upon
our computer software and hardware systems in supporting our network and managing and monitoring programs on the network. In addition,
we rely on our computer hardware for the storage, delivery and transmission of the data on our network. Any system failure which
interrupts the input, retrieval and transmission of data or increases the service time could disrupt our normal operation. Any
failure in our computer software or hardware systems could decrease our revenues and harm our relationships with consumers, which
in turn could have a material adverse effect on our business, financial condition and results of operations.
We do not have a majority of independent
directors serving on our board of directors, which could present the potential for conflicts of interest.
We do not have a majority
of independent directors serving on our board of directors. In the absence of a majority of independent directors, our executive
officers could establish policies and enter into transactions without independent review and approval thereof. This could present
the potential for a conflict of interest between us and our stockholders, generally, and the controlling officers, stockholders
or directors.
We have limited insurance coverage.
The insurance industry
in China is still at an early stage of development. Insurance companies in China offer limited insurance products. We have determined
that the risks of disruption or liability from our business, the loss or damage to our property, including our facilities, equipment
and office furniture, the cost of insuring for these risks, and the difficulties associated with acquiring such insurance on commercially
reasonable terms make it impractical for us to have such insurance. As a result, we do not have any business liability, disruption,
litigation or property insurance coverage for our operations in China except for insurance on some company owned vehicles. Any
uninsured occurrence of loss or damage to property, or litigation or business disruption may result in the incurrence of substantial
costs and the diversion of resources, which could have an adverse effect on our operating results.
If we are unable to establish appropriate
internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the
restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors
to lose confidence in our reported financial information and have a negative effect on the market price for shares of our common
stock.
Effective internal controls
are necessary for us to provide reliable financial reports and effectively prevent fraud. We maintain a system of internal control
over financial reporting, which is defined as a process designed by, or under the supervision of, our principal executive officer
and principal financial officer, or persons performing similar functions, and effected by our board of directors, management and
other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. Since we recently completed the
reverse acquisition of Greenstar Holdings on December 15, 2014, we have not evaluated Greenstar Holdings and its consolidated
subsidiaries’ internal control systems in order to allow our management to report on our internal controls on a consolidated
basis as required by the requirements of SOX 404. We will be required to complete such evaluation and include a report of management
in our annual report for the fiscal year ended December 31, 2015.
As a public company, we
will have significant additional requirements for enhanced financial reporting and internal controls. We will be required to document
and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002,
which requires annual management assessments of the effectiveness of our internal controls over financial reporting and a report
by our independent registered public accounting firm addressing these assessments. The process of designing and implementing effective
internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic
and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to
satisfy our reporting obligations as a public company.
We cannot assure you that
we will not, in the future, identify areas requiring improvement in our internal control over financial reporting. We cannot assure
you that the measures we will take to remediate any areas in need of improvement will be successful or that we will implement
and maintain adequate controls over our financial processes and reporting in the future as we continue our growth. If we are unable
to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting
obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny
and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market
price for shares of our common stock.
Lack of experienced officers of publicly-traded
companies may hinder our ability to comply with Sarbanes-Oxley Act.
It may be time consuming,
difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley
Act. We may need to hire additional financial reporting, internal controls and other finance staff or consultants in order to
develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with the Sarbanes-Oxley
Act’s internal controls requirements, we may not be able to obtain the independent auditor certifications that Sarbanes-Oxley
Act requires publicly-traded companies to obtain.
We will incur increased costs as a result of being a public
company.
As a public company, we
will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley
Act, as well as new rules subsequently implemented by the Securities and Exchange Commission (the “SEC”), has required
changes in corporate governance practices of public companies. We expect these new rules and regulations to increase our legal,
accounting and financial compliance costs and to make certain corporate activities more time-consuming and costly. In addition,
we will incur additional costs associated with our public company reporting requirements. We are currently evaluating and monitoring
developments with respect to these new rules, and we cannot predict or estimate the amount of additional costs we may incur or
the timing of such costs.
Risks Associated With Doing Business in China
Our operations and assets in China are subject to significant
political and economic uncertainties.
Changes in PRC laws and
regulations, or their interpretation, or the imposition of confiscatory taxation, restrictions on currency conversion, imports
and sources of supply, devaluations of currency or the nationalization or other expropriation of private enterprises could have
a material adverse effect on our business, results of operations and financial condition. Under its current leadership, the Chinese
government has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization.
There is no assurance, however, that the Chinese government will continue to pursue these policies, or that it will not significantly
alter these policies from time to time without notice.
A substantial portion of ours sales will be derived from China.
We anticipate that sales
of our product in China will represent our total sales in the near future. Any significant decline in the condition of the PRC
economy could adversely affect consumer demand of our product, among other things, which in turn would have a material adverse
effect on our business and financial condition.
Currency fluctuations and restrictions
on currency exchange may adversely affect our business, including limiting our ability to convert Chinese Renminbi into foreign
currencies and, if Chinese Renminbi were to decline in value, reducing our revenue in U.S. dollar terms.
Our reporting currency
is the U.S. dollar and our operations in China use their local currency as their functional currencies. Substantially all of our
revenue and expenses are in Chinese Renminbi. We are subject to the effects of exchange rate fluctuations with respect to any
of these currencies. For example, the value of the Renminbi depends to a large extent on Chinese government policies and China’s
domestic and international economic and political developments, as well as supply and demand in the local market. Since 1994,
the official exchange rate for the conversion of Renminbi to the U.S. dollar had generally been stable and the Renminbi had appreciated
slightly against the U.S. dollar. However, on July 21, 2005, the Chinese government changed its policy of pegging the value of
Chinese Renminbi to the U.S. dollar. Under the new policy, Chinese Renminbi may fluctuate within a narrow and managed band against
a basket of certain foreign currencies. It is possible that the Chinese government could adopt a more flexible currency policy,
which could result in more significant fluctuation of Chinese Renminbi against the U.S. dollar. We can offer no assurance that
Chinese Renminbi will be stable against the U.S. dollar or any other foreign currency.
The income statements
of our operations are translated into U.S. dollars at the average exchange rates in each applicable period. To the extent the
U.S. dollar strengthens against foreign currencies, the translation of these foreign currencies denominated transactions results
in reduced revenue, operating expenses and net income for our international operations. Similarly, to the extent the U.S. dollar
weakens against foreign currencies, the translation of these foreign currency denominated transactions results in increased revenue,
operating expenses and net income for our international operations. We are also exposed to foreign exchange rate fluctuations
as we convert the financial statements of our foreign subsidiaries into U.S. dollars in consolidation. If there is a change in
foreign currency exchange rates, the conversion of the foreign subsidiaries’ financial statements into U.S. dollars will
lead to a translation gain or loss which is recorded as a component of other comprehensive income. In addition, we have certain
assets and liabilities that are denominated in currencies other than the relevant entity’s functional currency. Changes
in the functional currency value of these assets and liabilities create fluctuations that will lead to a transaction gain or loss.
We have not entered into agreements or purchased instruments to hedge our exchange rate risks, although we may do so in the future.
The availability and effectiveness of any hedging transaction may be limited and we may not be able to successfully hedge our
exchange rate risks.
Although Chinese governmental
policies were introduced in 1996 to allow the convertibility of Chinese Renminbi into foreign currency for current account items,
conversion of Chinese Renminbi into foreign exchange for capital items, such as foreign direct investment, loans or securities,
requires the approval of the State Administration of Foreign Exchange, or the SAFE. These approvals, however, do not guarantee
the availability of foreign currency conversion. We cannot be sure that we will be able to obtain all required conversion approvals
for our operations or that Chinese regulatory authorities will not impose greater restrictions on the convertibility of Chinese
Renminbi in the future. Because a significant amount of our future revenue may be in the form of Chinese Renminbi, our inability
to obtain the requisite approvals or any future restrictions on currency exchanges could limit our ability to utilize revenue
generated in Chinese Renminbi to fund our business activities outside of China, or to repay foreign currency obligations, including
our debt obligations, which would have a material adverse effect on our financial condition and results of operations.
We may rely on dividends and other distributions
from our PRC subsidiary to fund our cash and financing requirements, and any limitation on the ability of our subsidiary to make
payments to us could materially and adversely affect our ability to conduct our business.
As an offshore holding
company, we will rely principally on dividends from Greenstar Technology, our PRC subsidiary, for our cash requirements, dividends
payments and other distributions to our shareholders, and to service any debt that we may incur and pay our operating expenses.
The payment of dividends by entities organized in China is subject to limitations. In particular, PRC regulations permit Greenstar
Technology to pay dividends only out of its accumulated profits, if any, as determined in accordance with Chinese accounting standards
and regulations. In addition, Greenstar Technology is required each year to set aside at least 10% of its annual after-tax profits
(as determined under PRC accounting standards) into its statutory reserve fund until the aggregate amount of that reserve reaches
50% of such entity’s registered capital. These reserves are not distributable as cash dividends.
If Greenstar Technology
incurs debt on its own behalf, the instruments governing the debt may restrict its ability to pay dividends or make other distributions
to us. Any limitation on the ability of Greenstar Technology to distribute dividends or other payments to us could materially
and adversely limit our ability to grow, make investments or acquisitions, pay dividends and otherwise fund and conduct our business.
We may be subject to product liability claims if people or properties
are harmed by the product sold by us.
The product sold by us
is manufactured by a third party. The product may be defectively designed or manufactured. As a result, sales of the product could
expose us to product liability claims relating to personal injury or property damage and may require product recalls or other
actions. Third parties subject to such injury or damage may bring claims or legal proceedings against us as the reseller of the
product. We do not currently maintain any third-party liability insurance or product liability insurance in relation to product
we sell. As a result, any material product liability claim or litigation could have a material and adverse effect on our business,
financial condition and results of operations. Even unsuccessful claims could result in the expenditure of funds and managerial
efforts in defending them and could have a negative impact on our reputation.
We may have limited legal recourse under PRC laws if disputes
arise under our contracts with third parties.
The Chinese government
has enacted laws and regulations dealing with matters such as corporate organization and governance, foreign investment, commerce,
taxation and trade. However, their experience in implementing, interpreting and enforcing these laws and regulations is limited,
and our ability to enforce commercial claims or to resolve commercial disputes is unpredictable. If our new business ventures
are unsuccessful, or other adverse circumstances arise from these transactions, we face the risk that the parties to these ventures
may seek ways to terminate the transactions, or, may hinder or prevent us from accessing important information regarding the financial
and business operations of these acquired companies. The resolution of these matters may be subject to the exercise of considerable
discretion by agencies of the Chinese government, and forces unrelated to the legal merits of a particular matter or dispute may
influence their determination. Any rights we may have to specific performance, or to seek an injunction under PRC law, in either
of these cases, are severely limited, and without a means of recourse by virtue of the Chinese legal system, we may be unable
to prevent these situations from occurring. The occurrence of any such events could have a material adverse effect on our business,
financial condition and results of operations.
We must comply with the Foreign Corrupt Practices Act.
We are required to comply
with the United States Foreign Corrupt Practices Act, which prohibits U.S. companies from engaging in bribery or other prohibited
payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some of our competitors,
are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from
time-to-time in mainland China. If our competitors engage in these practices, they may receive preferential treatment from personnel
of some companies, giving our competitors an advantage in securing business or from government officials who might give them priority
in obtaining new licenses, which would put us at a disadvantage. Although we inform our personnel that such practices are illegal,
we cannot assure you that our employees or other agents will not engage in such conduct for which we might be held responsible.
If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties.
Changes in foreign exchange regulations
in the PRC may affect our ability to pay dividends in foreign currency or conduct other foreign exchange business.
The Renminbi is not a
freely convertible currency currently, and the restrictions on currency exchanges may limit our ability to use revenues generated
in Renminbi to fund our business activities outside the PRC or to make dividends or other payments in United States dollars. The
PRC government strictly regulates conversion of Renminbi into foreign currencies. Over the years, foreign exchange regulations
in the PRC have significantly reduced the government’s control over routine foreign exchange transactions under current
accounts. In the PRC, the SAFE, regulates the conversion of the Renminbi into foreign currencies. Pursuant to applicable PRC laws
and regulations, foreign invested enterprises incorporated in the PRC are required to apply for foreign exchange registration.
Currently, conversion within the scope of the “current account” (e.g. remittance of foreign currencies for payment
of dividends, etc.) can be effected without requiring the approval of SAFE. However, conversion of currency in the “capital
account” (e.g. for capital items such as direct investments, loans, securities, etc.) still requires the approval of SAFE.
PRC regulation of loans to and direct investments
in PRC entities by offshore holding companies may delay or prevent us from using the proceeds of any offering to make loans or
capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and ability to fund and
expand our business.
We may transfer funds
to or finance Greenstar Technology, our PRC subsidiary, by means of shareholder’s loans or capital contributions. Any loans
to Greenstar Technology, which is a foreign-invested enterprise, cannot exceed statutory limits based on the amount of our investments
in Greenstar Technology, and shall be registered with the SAFE or its local counterparts. Furthermore, any capital contributions
we make to Greenstar Technology shall be approved by the Ministry of Commerce, or the MOFCOM, or its local counterparts. We may
not be able to obtain these government registrations or approvals on a timely basis, if at all. If we fail to receive such registrations
or approvals, our ability to provide loans or capital contributions to Greenstar Technology may be negatively affected, which
could adversely affect our liquidity and our ability to fund and expand our business.
In addition, the SAFE
promulgated the Circular on the Relevant Operating Issues concerning Administration Improvement of Payment and Settlement of Foreign
Currency Capital of Foreign-invested Enterprises, or SAFE Circular No. 142, on August 29, 2008. Under SAFE Circular No. 142, registered
capital of a foreign invested company settled in Renminbi converted from foreign currencies may only be used within the business
scope approved by the applicable governmental authority and may not be used for equity investments in the PRC, unless otherwise
provided by other PRC laws or regulations. In addition, foreign-invested enterprises may not change how they use such capital
without SAFE’s approval, and may not in any case use such capital to repay Renminbi loans if they have not used the proceeds
of such loans. SAFE further promulgated the Circular on Further Clarification and Regulation of the Issues Concerning the Administration
of Certain Capital Account Foreign Exchange Businesses, or SAFE Circular No. 45, on November 16, 2011, which expressly prohibits
foreign-invested enterprises from using the registered capital settled in Renminbi converted from foreign currencies to grant
loans through entrustment arrangements with a bank, repay inter-company loans or repay bank loans that have been transferred to
a third party. SAFE Circular No. 142 and SAFE Circular No. 45 may significantly limit our ability to transfer the net proceeds
from an offshore offering to Greenstar Technology and convert the net proceeds into Renminbi to invest in or acquire any other
PRC companies, which may adversely affect our liquidity and our ability to fund and expand our business in the PRC.
A failure by the beneficial owners of our
shares who are PRC residents to comply with certain PRC foreign exchange regulations could restrict our ability to distribute
profits, restrict our overseas and cross-border investment activities and subject us to liability under PRC law.
The SAFE has promulgated
regulations, including the Notice on Relevant Issues Relating to Domestic Residents’ Investment and Financing and Round-Trip
Investment through Special Purpose Vehicles, or SAFE Circular No. 37, effective on July 14, 2014, and its appendixes, that require
PRC residents, including PRC institutions and individuals, to register with local branches of the SAFE in connection with their
direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such
PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred
to in SAFE Circular No. 37 as a “special purpose vehicle.” SAFE Circular No. 37 further requires amendment to the
registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decrease
of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. In the event
that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC
subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from
carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in their ability
to contribute additional capital into its PRC subsidiary. Further, failure to comply with the various SAFE registration requirements
described above could result in liability under PRC law for foreign exchange evasion.
These regulations apply
to our direct and indirect shareholders who are PRC residents and may apply to any offshore acquisitions or share transfers that
we make in the future if our shares are issued to PRC residents. To the best of our knowledge, none of our direct and indirect
shareholders are PRC residents. However, if there exists any PRC residents beneficially holding interests in us without making
appropriate registration pursuant to SAFE Circular No. 37, Greenstar Technology, as our PRC subsidiary, could be subject to fines
and legal penalties, and the SAFE could restrict our cross-border investment activities and our foreign exchange activities, including
restricting Greenstar Technology’s ability to distribute dividends to or obtain loans denominated in foreign currencies
from us, or prevent us from paying dividends. As a result, our business operations and our ability to make distributions to you
could be materially and adversely affected.
PRC regulations relating to mergers and
acquisitions and overseas listings of domestic enterprises by foreign investors may increase the administrative burden we face
and create regulatory uncertainties.
The Regulations on Mergers
and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rule, which became effective in September 2006 and
were further amended in June 2009, requires that if an overseas company is established or controlled by PRC domestic companies
or citizens intends to acquire equity interests or assets of any other PRC domestic company affiliated with the PRC domestic companies
or citizens, such acquisition must be submitted to the MOFCOM, rather than local regulators, for approval. In addition, the M&A
Rule requires that an overseas company controlled directly or indirectly by PRC companies or citizens and holding equity interests
of PRC domestic companies needs to obtain the approval of the China Securities Regulatory Commission, or CSRC, prior to listing
its securities on an overseas stock exchange. On September 21, 2006, the CSRC published a notice on its official website specifying
the documents and materials required to be submitted by overseas special purpose companies seeking CSRC’s approval of their
overseas listings.
While the application
of the M&A Rule remains unclear, based on our understanding of current PRC laws, regulations, and the notice published on
September 21, 2006, since Greenstar Technology, our operating entity, was established by means of direct investment, rather than
by merger or acquisition of the equity interest or assets of any “domestic company” as defined under the M&A Rules,
we believe we are not required to submit an application to the MOFCOM or the CSRC for its approval for any of our transactions.
However, we cannot assure
you that PRC governmental authorities, including the MOFCOM and the CSRC, will reach the same conclusion as us. If the MOFCOM,
the CSRC and/or other PRC regulatory agencies subsequently determine that the approvals from the MOFCOM and/or CSRC and/or other
PRC regulatory agencies were required, our PRC business could be challenged and we may need to apply for a remedial approval and
may be subject to certain administrative punishments or other sanctions from PRC regulatory agencies. The regulatory agencies
may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, delay or restrict the
repatriation of our foreign currency in our offshore bank accounts into the PRC, or take other actions that could materially and
adversely affect our business, financial condition, results of operations, reputation and prospects, as well as the trading price
of our ordinary shares.
The Chinese government exerts substantial
influence over the manner in which we must conduct our business activities.
China only recently has
permitted provincial and local economic autonomy and private economic activities, and, as a result, we are dependent on our relationship
with the local government in the province in which we operate our business. Chinese government has exercised and continues to
exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability
to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, product liabilities,
environmental regulations, property and other matters. We believe that our operations in China are in material compliance with
all applicable legal and regulatory requirements. However, the central or local governments of these jurisdictions may impose
new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on
our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including
any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional
or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China
or particular regions thereof, and could require us to divest ourselves of any interest we then hold in PRC subsidiaries.
Future inflation in China may inhibit our activity to conduct
business in China.
In recent years, the Chinese
economy has experienced periods of rapid expansion and high rates of inflation. These factors have led to the adoption by Chinese
government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth
and contain inflation. High inflation may in the future cause Chinese government to impose controls on credit and/or prices, or
to take other action, which could inhibit economic activity in China, and thereby harm the market for our product.
We may have difficulty establishing adequate management, legal
and financial controls in the PRC.
We may have difficulty
in hiring and retaining a sufficient number of qualified employees to work in the PRC. As a result of these factors, we may experience
difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements,
books of account and corporate records and instituting business practices that meet Western standards. We may have difficulty
establishing adequate management, legal and financial controls in the PRC.
You may experience difficulties in effecting
service of legal process, enforcing foreign judgments or bringing original actions in China based on United States or other foreign
laws against us and our management.
We conduct substantially
all of our operations in China and substantially all of our assets are located in China. In addition, all of our directors
and executive officers are Chinese residents. As a result, it may not be possible to affect service of process within the
United States or elsewhere outside China upon our directors and senior executive officers, including with respect to matters arising
under U.S. federal securities laws or applicable state securities laws. It would also be difficult for investors to bring an original
lawsuit against us or our directors or executive officers based on U.S. federal securities laws in a Chinese. Moreover, China
does not have treaties with the United States or many other countries providing for the reciprocal recognition and enforcement
of judgment of courts.
Under the EIT Law, we may be classified
as a “resident enterprise” of China. Such classification will likely result in unfavorable tax consequences to us
and holders of our securities.
Under the EIT Law, an
enterprise established outside of China with its “de facto management body” in China is considered a “resident
enterprise,” meaning that it can be treated the same as a Chinese enterprise for enterprise income tax purposes. The implementing
rules of the EIT Law defines “de facto management body” as an organization that exercises “substantial and overall
management and control over the production and operations, personnel, accounting, and properties” of an enterprise. On April
22, 2009, the SAT, issued a circular, or SAT Circular No. 82, providing certain specific criteria for determining whether the
“de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China, which
include all of the following conditions: (a) the location where senior management members responsible for an enterprise’s
daily operations discharge their duties; (b) the location where financial and human resource decisions are made or approved by
organizations or persons; (c) the location where the major assets and corporate documents are kept; and (d) the location where
more than half (inclusive) of all directors with voting rights or senior management have their habitual residence.
If the PRC tax authorities
determine that we are a “resident enterprise” for PRC enterprise income tax purposes, a number of unfavorable PRC
tax consequences could follow. First, we will be subject to enterprise income tax at a rate of 25% on our worldwide income as
well as PRC enterprise income tax reporting obligations. This would mean that income such as interest on offering proceeds and
other non-China source income would be subject to PRC enterprise income tax at a rate of 25%. Second, although under the EIT Law
and its implementing rules dividends paid to us by our PRC subsidiaries would qualify as “tax-exempt income,” we cannot
guarantee that such dividends will not be subject to a 10% withholding tax, as the PRC foreign exchange control authorities, which
enforce the withholding tax, have not yet issued guidance with respect to the processing of outbound remittances to entities that
are treated as resident enterprises for PRC enterprise income tax purposes. Finally, it is possible that a 10% withholding tax
is imposed on dividends we pay to our non-PRC enterprise shareholders and with respect to gains derived by our non-PRC enterprise
shareholders from transferring our shares, and a 20% withholding tax is imposed on dividends we pay to our non-PRC individual
shareholders and with respect to gains derived by our non-PRC individual shareholders from transferring our shares.
We face uncertainties with respect to the
application of the Circular on Strengthening the Administration of Enterprise Income Tax for Share Transfer by Non-PRC Resident
Enterprises.
Pursuant to the Circular
on Strengthening the Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular
No. 698, issued by the SAT in December 2009 with retroactive effect from January 1, 2008, if a non-resident enterprise indirectly
transfers the equity interests of a PRC resident enterprise by transferring equity interests of an overseas holding company, or
an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (i) has an effective tax rate of
less than 12.5% or (ii) does not impose income tax on foreign income of its residents, the transferring nonresident enterprise
must report this Indirect Transfer to the competent PRC tax authority of the PRC resident enterprise. The PRC tax authority will
apply the “substance over form” principle, and as a result may disregard the existence of the overseas holding company
if such overseas holding company lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding
or deferring PRC tax. As a result, gains derived from such an Indirect Transfer may be subject to PRC withholding tax at a rate
of up to 10%. SAT Circular No. 698 also provides that where a non-PRC resident enterprise transfers its equity interests in a
PRC resident enterprise to its related parties at a price lower than the fair market value, the relevant tax authority has the
power to make a reasonable adjustment to the taxable income of the transaction.
There is uncertainty as
to the application of SAT Circular No. 698. While the term “Indirect Transfer” is not clearly defined, it is understood
that the relevant PRC tax authorities have broad jurisdiction over requests for information regarding foreign companies having
remote contact with the PRC. Moreover, the relevant authority has not yet promulgated any formal provisions or made any formal
interpretation as to the procedures or format for reporting an Indirect Transfer. In addition, there have not been any formal
declarations concerning how to determine whether a foreign investor has adopted an arrangement for the purpose of reducing, avoiding
or deferring PRC tax. As a result, we and our non-resident investors or non-resident enterprise shareholders may be at risk of
being taxed under SAT Circular No. 698 and may be required to expend valuable resources to comply with SAT Circular No. 698 or
to establish that we and our non-resident enterprise investors or non-resident enterprise shareholders should not be taxed under
SAT Circular No. 698, which may have a material adverse effect on our financial condition and results of operations or such non-resident
investors’ or such non-resident enterprise shareholders’ investments in us.
Our Chinese operating companies are obligated
to withhold and pay PRC individual income tax in respect of the salaries and other income received by their employees who are
subject to PRC individual income tax. If they fail to withhold or pay such individual income tax in accordance with applicable
PRC regulations, they may be subject to certain sanctions and other penalties, which could have a material adverse impact on our
business.
Under PRC laws, Greenstar
Technology will be obligated to withhold and pay individual income tax in respect of the salaries and other income received by
their employees who are subject to PRC individual income tax. Greenstar Technology may be subject to certain sanctions and other
liabilities under PRC laws in case of failure to withhold and pay individual income taxes for its employees in accordance with
the applicable laws.
In addition, the SAT has
issued several circulars concerning employee stock options. Under these circulars, employees working in the PRC (which could include
both PRC employees and expatriate employees subject to PRC individual income tax) are required to pay PRC individual income tax
in respect of their income derived from exercising or otherwise disposing of their stock options. If we implement employee stock
options plan, Greenstar Technology will be obligated to file documents related to employee stock options with relevant tax authorities
and withhold and pay individual income taxes for those employees who exercise their stock options. While tax authorities may advise
us that our policy is compliant, they may change their policy, and we could be subject to sanctions.
The enforcement of labor contract law and
increase in labor costs in the PRC may adversely affect our business and our profitability.
China adopted a labor
contract law and its implementation rules effective on January 1, 2008 and September 18, 2008, respectively. The labor contract
law was further amended on December 28, 2012. The labor contract law and its implementation rules impose more stringent requirements
on employers with regard to, among others, severance payment upon permitted termination of the employment by an employer and non-fixed
term employment contracts, time limits for probation period as well as the duration and the times that an employee can be placed
on a fixed term employment contract. Due to the limited period of effectiveness of the labor contract law and its implementation
rules, and the lack of clarity with respect to their implementation, potential penalties and fines, it is uncertain how they will
impact our current employment policies and practices. Our employment policies and practices may violate the labor contract law
or its implementation rules and we may be subject to related penalties, fines or legal fees. Compliance with the labor contract
law and its implementation rules may increase our operating expenses, in particular our personnel expenses, as the continued success
of our business depends significantly on our ability to attract and retain qualified personnel. In the event that we decide to
terminate some of our employees or otherwise change our employment or labor practices, the labor contract law and its implementation
rules may also limit our ability to effect those changes in a manner that we believe to be cost-effective or desirable, which
could adversely affect our business and results of operations.
Additionally, PRC companies
are subject to various laws and regulations regarding social insurance and housing funds, under which Greenstar Technology is
required to pay employees’ pension contributions, work-related injury benefits, maternity insurances, medical and unemployment
benefit plans, housing funds and other welfare-oriented payments. Greenstar Technology has not contributed social insurance premiums
and housing funds for its employees in full compliance with applicable PRC laws. As such, Greenstar Technology may be ordered
to compensate the cumulative amount of the under-contributed social insurance premiums and housing fund contributions and be subject
to administrative penalties, including fines, and as such our business and reputation may be adversely affected.
Because Chinese laws will govern almost
all of our business’ material agreements, we may not be able to enforce our rights within the PRC or elsewhere, which could
result in a significant loss of business, business opportunities or capital.
The Chinese legal system
is similar to a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases
have little precedential value. Although legislation in the PRC over the past 25 years has significantly improved the protection
afforded to various forms of foreign investment and contractual arrangements in the PRC, these laws, regulations and legal requirements
are relatively new. Due to the limited volume of published judicial decisions, their non-binding nature, the short history since
their enactments, the discrete understanding of the judges or government agencies of the same legal provision, inconsistent professional
abilities of the judicators, and the inclination to protect local interest in the court rooms, interpretation and enforcement
of PRC laws and regulations involve uncertainties, which could limit the legal protection available to us, and foreign investors,
including you. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss
of business, business opportunities or capital and could have a material adverse impact on our business, prospects, financial
condition, and results of operations. In addition, the PRC legal system is based in part on government policies and internal rules
(some of which are not published on a timely basis or at all) that may have a retroactive effect. As a result, we may not be aware
of our violation of these policies and rules until sometime after the violation. In addition, any litigation in the PRC, regardless
of outcome, may be protracted and result in substantial costs and diversion of resources and management attention.
Risks Relating to Our Securities
Insiders have substantial control over
us, and they could delay or prevent a change in our corporate control even if our other stockholders wanted it to occur.
Our executive officers,
directors, and principal stockholders hold approximately 99% of our outstanding common stock. Accordingly, these stockholders
are able to control all matters requiring stockholder approval, including the election of directors and approval of significant
corporate transactions. This could delay or prevent an outside party from acquiring or merging with us even if our other stockholders
wanted it to occur.
There may not be sufficient liquidity in
the market for our securities in order for investors to sell their securities.
There is currently only
a limited public market for our common stock, which is listed on the Over-the-Counter Bulletin Board, and there can be no assurance
that a trading market will develop further or be maintained in the future. During the month of November 2014, there was no trading
activity in our common stock. As of November 30, 2014, the closing bid price of our common stock was $0.0011 per share. As of
November 30, 2014, we had approximately 310 shareholders of record of our common stock, not including shares held in street name.
The market price of our common stock may be volatile.
The market price of our
common stock has been and will likely continue to be highly volatile, as is the stock market in general, and the market for OTC
Bulletin Board quoted stocks in particular. Some of the factors that may materially affect the market price of our common stock
are beyond our control, such as changes in financial estimates by industry and securities analysts, conditions or trends in the
industry in which we operate or sales of our common stock. These factors may materially adversely affect the market price of our
common stock, regardless of our performance. In addition, the public stock markets have experienced extreme price and trading
volume volatility. This volatility has significantly affected the market prices of securities of many companies for reasons frequently
unrelated to the operating performance of the specific companies. These broad market fluctuations may adversely affect the market
price of our common stock.
Our common stock may be considered a “penny
stock” and may be difficult to sell.
The SEC has adopted regulations
which generally define a “penny stock” to be an equity security that has a market price of less than $5.00 per share
or an exercise price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock is less
than $5.00 per share and, therefore, it may be designated as a “penny stock” according to SEC rules. This designation
requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written
agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may
restrict the ability of brokers or dealers to sell our common stock and may affect the ability of investors to sell their shares.
The market for penny stocks has experienced
numerous frauds and abuses, which could adversely impact investors in our stock.
OTCBB securities are frequent
targets of fraud or market manipulation, both because of their generally low prices and because OTCBB reporting requirements are
less stringent than those of the stock exchanges or NASDAQ.
Patterns of fraud and abuse include:
| |
●
|
Control of the market
for the security by one or a few broker-dealers that are often related to the promoter or issuer; |
| |
|
|
| |
● |
Manipulation of prices
through prearranged matching of purchases and sales and false and misleading press releases; |
| |
|
|
| |
● |
“Boiler room”
practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons; |
| |
|
|
| |
● |
Excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and |
| |
|
|
| |
● |
Wholesale dumping
of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the
inevitable collapse of those prices with consequent investor losses. |
Our management is aware of the abuses that have occurred historically
in the penny stock market.
We have not paid dividends in the past
and do not expect to pay dividends in the foreseeable future and any return on investment may be limited to the value of our stock.
We have never paid any
cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future
and any return on investment may be limited to the value of our stock. We plan to retain any future earnings to finance growth.
ITEM 1B. UNRESOLVED
STAFF COMMENTS
There are no unresolved
comments from the Securities and Exchange Commission.
ITEM 2. PROPERTIES
The following table summarizes the location
of real property we own and lease.
| Item |
|
Address |
|
Leased/Owned |
| |
|
|
|
|
| 1 |
|
B121, B Zone, 4th Floor, Jinhui
Building, Nanhai Road, Nanshan District, Shenzhen, PRC |
|
Leased |
ITEM 3. LEGAL PROCEEDINGS
We are not engaged in
any material litigation, arbitration or claim, and no material litigation, arbitration or claim is known to be pending or threatened
by or against us that would have a material adverse effect on our operation results or financial condition.
ITEM 4. MINE SAFETY
DISCLOSURES
Not applicable.
ITEM 5. MARKET FOR
REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
There is no change in
the market for our securities as a result of the Share Exchange. Our common stock, par value $0.001, is listed for quotation in
the OTCBB under the symbol “FAFA.” There is no active trading market in our securities. No assurance can be given
that any market for our common stock will develop or be maintained. If a public market ever develops in the future, the sale of
shares of our common stock that are deemed to be “restricted securities” pursuant to Rule 144 of the SEC by members
of management or others may have a substantial adverse impact on any such market. See the heading “Rule 144” below
for requirements of resales of shares of our common stock under Rule 144.
Holders
As of April 15, 2015,
the Company had approximately 312 shareholders of record of our common stock. This number does not include an indeterminate number
of shareholders whose shares are held by brokers in street name.
Dividends
We have not declared any
cash dividends. We do not intend to pay dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business
operations.
Rule
144
The
following is a summary of the current requirements of Rule 144:
| |
|
Affiliate or Person
Selling on Behalf of an Affiliate |
|
Non-Affiliate (and has
not been an Affiliate During the Prior Three Months) |
| |
|
|
|
|
Restricted
Securities of Reporting Issuers |
|
During six-month holding period
– no resales under Rule 144 Permitted. |
|
During six- month holding period
– no resales under Rule 144 permitted. |
| |
|
|
|
| |
After Six-month holding period –
may resell in accordance with all Rule 144 requirements including: |
|
After six-month holding
period but before one year – unlimited public resales under Rule 144 except that the current public information requirement
still applies.
After one-year holding period – unlimited public resales under Rule 144; need not comply with any other Rule 144 requirements. |
| |
|
|
|
| |
|
● Current public information, |
|
| |
|
|
|
| |
|
● Volume limitations, |
|
| |
|
|
|
|
| |
|
● Manner of sale requirements
for equity securities, and |
|
|
| |
|
|
|
| |
|
● Filing of Form 144. |
|
| |
|
|
|
|
Restricted
Securities of Non-Reporting Issuers |
|
During one-year holding period –
no resales under Rule 144 permitted. |
|
During one-year holding period –
no resales under Rule 144 permitted. |
| |
|
|
|
| |
After one-year holding period –
may resell in accordance with all Rule 144 requirements including: |
|
After one-year holding period –
unlimited public resales under Rule 144; need not comply with any other Rule 144 requirements. |
| |
|
|
|
|
| |
|
● Current public information, |
|
|
| |
|
|
|
|
| |
|
● Volume limitations, |
|
|
| |
|
|
|
|
| |
|
● Manner
of sale requirements for equity securities, and |
|
|
| |
|
|
|
|
| |
|
● Filing of Form 144 |
|
|
Shell
Companies
The
following is an excerpt from Rule 144(i) regarding resales of securities of shell companies:
(i)
Unavailability to securities of issuers with no or nominal operations and no or nominal non-cash assets.
(1)
This section is not available for the resale of securities initially issued by an issuer defined below:
(i)
An issuer, other than a business combination related shell company, as defined in §230.405, or an asset-backed issuer, as
defined in Item 1101(b) of Regulation AB (§229.1101(b) of this chapter), that has:
(A)
No or nominal operations; and
(B)
Either:
(1)
No or nominal assets;
(2)
Assets consisting solely of cash and cash equivalents; or
(3)
Assets consisting of any amount of cash and cash equivalents and nominal other assets; or
(ii)
An issuer that has been at any time previously an issuer described in paragraph (i)(1)(i).
(2)
Notwithstanding paragraph (i)(1), if the issuer of the securities previously had been an issuer described in paragraph (i)(1)(i)
but has ceased to be an issuer described in paragraph (i)(1)(i); is subject to the reporting requirements of section 13 or 15(d)
of the Exchange Act; has filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act,
as applicable, during the preceding 12 months (or for such shorter period that the issuer was required to file such reports and
materials), other than Form 8-K reports (§249.308 of this chapter); and has filed current “Form 10 information”
with the SEC reflecting its status as an entity that is no longer an issuer described in paragraph (i)(1)(i), then those securities
may be sold subject to the requirements of this section after 12 months have elapsed from the date that the issuer filed “Form
10 information” with the SEC.
(3)
The term “Form 10 information” means the information that is required by Form 10 or Form 20-F (§249.220f of this
chapter), as applicable to the issuer of the securities, to register under the Exchange Act each class of securities being sold
under this rule. The issuer may provide the “Form 10 information” in any filing of the issuer with the SEC.
The “Form 10 information” is deemed filed when the initial filing is made with the SEC.”
Securities
of a shell company cannot be publicly sold under Rule 144 in the absence of compliance with this subparagraph.
Section
4(a)(1) of the Securities Act
Since
we are a shell company as defined in subparagraph (i) of Rule 144, our shares of common stock that were issued while or after
we became a shell company cannot be publicly resold under Rule 144 until we comply with the requirements outlined above under
the heading “Shell Companies.” Until those requirements have been satisfied, any resales of our shares of common
stock must be made in compliance with the provisions of the exemption from registration under the Securities Act provided in Section
4(a)(1) thereof, applicable to persons other than “an issuer, underwriter or a dealer.” That will require that
such shares of common stock be sold in “routine trading transactions,” which would include compliance with substantially
all of the requirements of Rule 144, including the availability of “current public information” about us as required
by subparagraph (c)(1) or (c)(2) of Rule 144, regardless of the Rule’s availability; and such resales may be limited to
our non-affiliates. It has been the position of the SEC that the Section 4(a)(1) exemption (and its prior exemption, 4(1))
is not available for the resale of any securities of an issuer that is or was a shell company, by directors, executive officers,
promoters or founders or their transferees. See NASD Regulation, Inc., CCH Federal Securities Law Reporter, 1990-2000
Decisions, Paragraph No. 77,681, the so-called “Worm-Wulff Letter.” The current position of the SEC that is
contained in Securities Act Release No. 33-8899, effective February 15, 2008, and that codified the position of the SEC set forth
in the Worm-Wulff Letter and revised Rule 144 as outlined above, is that Rule 144 now defines what resales can be made under Section
4(a)(1) of the Securities Act, and with limited exceptions, which are set forth in footnote 172 of that Release, shares of shell
companies must be sold in compliance with Rule 144(i) that is quoted above.
Securities Authorized for Issuance under Equity Compensation
Plans
The Company has not declared
any dividends since inception and does not anticipate paying any dividends in the foreseeable future. The payment of dividends
is within the discretion of the Board of Directors and will depend on the Company’s earnings, capital requirements, financial
condition, and other relevant factors. There are no restrictions that currently limit the Company’s ability to pay dividends
on its common stock other than those generally imposed by applicable state law.
ITEM 6. SELECTED FINANCIAL
DATA
We are a smaller reporting
company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 7. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion
and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial
statements and the related notes included elsewhere in this Form 10-K. Our consolidated financial statements have been prepared
in accordance with U.S. GAAP. In addition, our consolidated financial statements and the financial data included in this Form
10-K reflect our reorganization and have been prepared as if our current corporate structure had been in place throughout the
relevant periods. Actual results could differ materially from those projected in the forward-looking statements. For additional
information regarding these and other risks and uncertainties, please see the items listed above under the section captioned “Risk
Factors”, as well as any other cautionary language contained in this Form 10-K. Except as may be required by law, we undertake
no obligation to update any forward-looking statement to reflect events after the date of this Form 10-K.
Operations
We purchase a fuel
additive from a third party in the PRC and resell it to customers under our brand name called “Greencare Product.”
The Greencare Product is added to gasoline in order to improve fuel quality by suppressing and cleaning sediments in fuel. The
Greencare Product improves overall engine performance, maximizes fuel-burning efficiency, enhances the power of an engine and
provides for cleaner emissions. We authorize our supplier to use our brand name and charge a distribution fee for it. We are not
directly involved in the production or manufacturing of fuel additives or cleaners.
We are in the process
of developing a better sales network and more customers. We believe that we need to raise approximately $0.8 million through the
sale of additional debt or equity securities or additional contribution from current stockholders in order to continue to fund
our existing business.
In the next 12 months we plan to expand our business into the automotive consumption space, such as, car
washing services. In order to do so, we intend to acquire a company with adequate capabilities. If we can raise an additional
$0.5 million through the sale of additional debt or equity securities or contribution from current stockholders, we will be able
to expand our business into the automotive consumption space.
Critical Accounting Policies
We prepare our financial
statements in conformity with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported
amounts of revenues and expenses during the financial reporting period. We continually evaluate these estimates and assumptions
based on the most recently available information, our own historical experience and on various other assumptions that we believe
to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process,
actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others
in their application. We consider the policies discussed below to be critical to an understanding of our financial statements.
Principles
of Consolidation
The
consolidated financial statements include the financial statements of the Company and all our subsidiaries. All transactions and
balances between the Company and our subsidiaries have been eliminated upon consolidation. Pursuant to the share transfer agreement
of Greenstar HK in August 2014 described above, we reorganized our structure. Before and after the reorganization, Greenstar HK
continued to be owned and managed by the same ultimate controlling shareholder, Forever Prosperous, substantively. Therefore,
the acquisition of Greenstar HK was accounted for as a merger under common control, using merger accounting in a manner similar
to pooling-of-interest, as if the merger had been consummated at the beginning of the earliest period presented, and no gain or
loss is recognized. All the assets and liabilities of Greenstar HK are recorded at carrying value.
As
a result of the Share Exchange on December 15, 2014, Greenstar Holdings became a subsidiary of us. The former Greenstar Holdings’s
stockholders owned a majority of common stock of us. The transaction was regarded as a reverse recapitalization whereby Greenstar
Holdings was considered to be the accounting acquirer as its stockholders retained control of us after the share exchange, although
the Company is the legal parent company. The share exchange was treated as a recapitalization. As such, Greenstar Holdings is
the continuing entity for financial reporting purpose. In a reverse recapitalization, the historical shareholder’s equity
of the accounting acquirer prior to the merger is retroactively reclassified (a recapitalization) for the equivalent number of
shares received in the merger after giving effect to any difference in par value of the registrant’s and the accounting
acquirer’s stock by an offset in paid-in-capital. Therefore, the financial statements have been prepared as if Greenstar
Holdings had always been the reporting company and then on the share exchange date, had reorganized its capital stock.
Foreign
currency translation
The
functional currency of the Company is United States dollars (“US$”), and the functional currency of our Hong Kong
subsidiary is Hong Kong dollars (“HK$”). The functional currency of Greenstar Technology is the Renminbi. The PRC
is the primary economic environment in which we operate.
For
financial reporting purposes, the financial statements of Greenstar Technology, which are prepared using the Renminbi, are translated
into our reporting currency, the US$. Assets and liabilities are translated using the exchange rate at each balance sheet date.
Revenue and expenses are translated using average rates prevailing during each reporting period, and shareholders’ equity
is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of
accumulated other comprehensive income/loss in shareholders’ equity.
Transactions
denominated in currencies other than the reporting currency are translated into the reporting currency at the exchange rates prevailing
at the dates of the transactions. The resulting exchange differences are included in the determination of net loss of the consolidated
financial statements for the respective periods.
The
exchange rates applied are as follows:
| | |
Year
ended
December 31, 2014 | | |
October
25, 2013
(inception) through
December 31, 2013 | |
| | |
| | |
| |
| Period end RMB exchange rate | |
| 6.1829 | | |
| 6.1934 | |
| Average RMB exchange rate | |
| 6.1390 | | |
| 6.2715 | |
| | |
| | | |
| | |
| Period end HK$ exchange rate | |
| 7.7676 | | |
| 7.7610 | |
| Average HK$ exchange rate | |
| 7.7666 | | |
| 7.7672 | |
No
representation is made that the HK$ and RMB amounts could have been, or could be, converted into U.S. dollars at the rates used
in translation.
Use
of estimates
The
preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these estimates using
the best information available at the time the estimates are made; however actual results could differ from those estimates.
Cash
and cash equivalents
Cash
and cash equivalents represent cash on hand and deposits held in banks. All highly liquid investments with original maturities
of three months or less at the time of purchase are considered to be cash equivalents. As of December 31, 2014 and 2013, the Company’s
cash and cash equivalents comprised of $108,692 and $258, respectively. Cash deposits are held in financial institutions located
in PRC and Hong Kong where there is currently regulation mandated on obligatory insurance of bank accounts. The Company believes
this financial institution is of high credit quality.
Acquisition-related
Costs
Acquisition-related
costs are costs the Company incurs to effect a reverse merger of public shell company. Those costs include finder’s fee;
advisory, legal, accounting and other professional or consulting fees; general administrative costs, including the costs of maintaining
an internal acquisitions department; and costs of registering and issuing debt and equity securities. The Company account for
acquisition-related costs as expenses in the periods in which the costs are incurred and the services are received.
Fair
value of financial instruments
The
Company applies the provisions of ASC Subtopic 820-10, “Fair Value Measurements”, for fair value measurements of financial
assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair
value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about
fair value measurements.
Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required
or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact
and it considers assumptions that market participants would use when pricing the asset or liability.
ASC
820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level
1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The
three levels of the fair value hierarchy are as follows:
| ● |
Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| |
|
| ● |
Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs
that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial
instruments. |
| |
|
| ● |
Level
3 inputs to the valuation methodology are unobservable and significant to the fair value. |
There
were no assets or liabilities measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as
of December 31, 2014 and 2013, respectively.
The
carrying values of cash, other current assets and accrued expenses approximate estimated fair values due to their short maturities.
Revenue
recognition
Revenues
from sales of various goods are recognized when all of the following criteria exist: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred; (3) price to the buyer is fixed or determinable; and (4) collectability is reasonably assured.
Delivery
does not occur until goods have been shipped to the customers, risk of loss has been transferred to the customers and customers’
acceptance has been obtained, or the Company has objective evidence that the criteria specified in customers’ acceptance
provisions have been satisfied. The sales price is not considered to be fixed or determinable until all contingencies related
to the sale have been resolved. Certain credit terms and limits were granted to customers with low risk of collectability based
on the Company’s credit assessment. No material collectability problem has occurred. Revenue is recognized when delivery
occurs and collectability is reasonably assured.
In
the PRC, value added tax (the “VAT”) of generally 17% on invoice amount is collected in respect of the sales of goods
against the customers on behalf of tax authorities. The VAT collected is not revenue of the Company; instead, the amount is recorded
as a liability on the balance sheet until such VAT is paid to the authorities.
Income
taxes
Income
taxes are accounted for using an asset and liability method. Under this method, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and deferred
tax liabilities are measured using enacted tax rates in the applicable tax jurisdiction expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the period that includes the enactment date. Deferred income tax expense
represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred
tax assets and liabilities are individually classified as current and non-current based on their characteristics. Realization
of the deferred tax asset is dependent on generating sufficient taxable income in future years.
The
Company recognizes interest on non-payment of income taxes under requirement by tax law and penalties associated with tax positions
when a tax position does not meet the minimum statutory threshold to avoid payment of penalties. According to the PRC Tax Administration
and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made
by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where
the underpayment of taxes is more than RMB 100,000. The tax return of the Company’s PRC subsidiary is subject to examination
by the relevant tax authorities. The Group did not have any material interest or penalties associated with tax positions and did
not have any significant unrecognized uncertain tax positions as of December 31, 2014 and 2013, respectively.
Loss
per share
Basic
loss per share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period
from October 25, 2013 (inception) to December 31, 2013 and to the year ended December 31, 2014. Diluted loss per share was the
same as basic loss per share due to the lack of dilutive items and the fact that Company is in net loss position.
Comprehensive
loss
Comprehensive
loss is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding
transactions resulting from investments from owners and distributions to owners. Accumulated other comprehensive loss, as presented
on the accompanying consolidated balance sheets are the cumulative foreign currency translation adjustments.
Recently Issued Accounting Standards
In
August 2014, the FASB issued ASU No.2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going
Concern. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating
and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide
a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide
principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial
doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures
when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial
statements are issued (or available to be issued). The amendments in this update are effective for the annual period ending after
December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted and the Group has early
adopted it in 2014.
We
do not believe other recently issued, but not yet effective accounting standards, if currently adopted, would have a material
effect on the consolidated financial position, statements of operations and cash flows.
Results of Operation
We are in a preliminary
startup stage and generated little income. We have incurred recurring losses to date. Our general and administrative expense was
primarily related to legal and professional fees in connection with the incorporation of the Company and its subsidiaries, as
well as filings made with the SEC. Our financial statements have been prepared assuming that we will continue as a going concern
and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities
that might be necessary should we be unable to continue in operation.
We expect we will require
additional capital to meet our long term operating requirements. We expect to obtain financing from shareholders or raise additional
capital through, among other things, the sale of equity or debt securities.
General and Administrative Expenses
The following table sets
forth the main components of the Company’s general and administrative expenses for the period from January 1 to December
31, 2014.
| | |
Year
ended
December 31, 2014 | | |
%
of Total | | |
October
25, 2013
(inception) through
December 31, 2013 | | |
%
of Total | |
| Legal and professional fees | |
$ | 322,366 | | |
| 97.6 | % | |
$ | 444 | | |
| 100 | % |
| Salary | |
| 5,392 | | |
| 1.6 | % | |
| - | | |
| - | |
| Office expense | |
| 1,412 | | |
| 0.4 | % | |
| - | | |
| - | |
| Others | |
| 979 | | |
| 0.3 | % | |
| - | | |
| - | |
| Total G&A | |
$ | 330,149 | | |
| 100.0 | % | |
$ | 444 | | |
| 100 | % |
Liquidity and Capital Resources
The
consolidated financial statements are prepared on a going concern basis, which contemplates the realization of assets and the
satisfaction of obligations in the normal course of business. The Company had recurring consolidated losses of $328,933 for the
year ended December 31, 2014 and $444 for the period from October 25, 2013 (inception) through December 31, 2013, working capital
of $53,512 as of December 31, 2014 and $258 as of December 31, 2013, and has a total deficit of $329,377 as of December 31, 2014
and $444 as of December 31, 2013. These conditions raise substantial doubt about the ability of the Company to continue as a going
concern. The financial statements do not include any adjustments to the amount and classification of assets and liabilities that
may be necessary should the Company not continue as a going concern.
In
view of these matters, continuation as a going concern is dependent upon continued operations of the Company, which in turn is
dependent upon the Company’s ability to meet its financial requirements, raise additional capital, and the success of its
future operations. The Company intends to raise additional capital through controlling shareholder, however, no assurance can
be provided that the Company will able to do so. In addition, there is no assurance that any capital it raises will be sufficient
to enable the Company to attain profitable operations or continue as a going concern.
The
Company distributes and resells a fuel additive and cleaner whose aim is to reduce emissions of carbon dioxide and save energy
in relation to vehicle output. The Group is in the process of developing a better sales network and more customers. Management
anticipates the revenue from the resale of the fuel additive will comprise a major component of the Group’s business going
forward. The Group also plans to expand business into the automotive consumption space, such as car washing services. In order
to do so, management plans to acquire a company with adequate capabilities.
The following table provides detailed information
about our net cash flows for the periods indicated:
| | |
Year
ended
December 31, 2014 | | |
October
25, 2013
(inception) through
December 31, 2013 | |
| | |
| | |
| |
| Net cash used in operating activities | |
$ | (273,359 | ) | |
$ | (444 | ) |
| Net cash used in investing activities | |
| - | | |
| - | |
| Net cash provided by financing activities | |
| 382,145 | | |
| 703 | |
| Effect of foreign currency exchange
rate changes on cash | |
| 352 | | |
| (1 | ) |
| Net increase in cash and cash
equivalents | |
$ | 108,434 | | |
$ | 258 | |
We
have financed our operations primarily from capital contributions of our controlling stockholder Forever Prosperous. For the period
from January 1, 2014 to December 31, 2014, additional capital contributed from Forever Prosperous was $382,145. Mr. Chen Huangchen,
our Chairman, President and CEO, is the sole director of Forever Prosperous and has sole voting and dispositive power over the
shares.
Restricted
Net Assets
Since
our operations are conducted through our PRC subsidiary, Greenstar Technology, our ability to pay dividends is dependent on receiving
distributions of funds from Greenstar Technology. Relevant PRC statutory laws and regulations permit payments of dividends by
our PRC subsidiary only out of retained earnings, if any, as determined in accordance with PRC accounting standards and regulations
and after it has met the PRC requirements for appropriation to statutory reserves. Paid in capital of our PRC subsidiary are also
not distributable for dividend purposes.
In
accordance with the PRC regulations on Enterprises with Foreign Investment, a WFOE established in the PRC is required to provide
certain statutory reserves, namely general reserve fund, the enterprise expansion fund and staff welfare and bonus fund which
are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A WFOE is required to allocate
at least 10% of its annual after-tax profit to the general reserve until such reserve has reached 50% of its registered capital
based on the enterprise’s PRC statutory accounts. Appropriations to the enterprise expansion fund and staff welfare and
bonus fund are at the discretion of the board of directors. The aforementioned reserves can only be used for specific purposes
and are not distributable as cash dividends. Additionally, in accordance with the Company Law of the PRC, a domestic enterprise
is required to provide a statutory common reserve of at least 10% of its annual after-tax profit until such reserve has reached
50% of its registered capital based on the enterprise’s PRC statutory accounts. A domestic enterprise is also required to
provide for a discretionary surplus reserve, at the discretion of the board of directors. The aforementioned reserves can only
be used for specific purposes and are not distributable as cash dividends. Our PRC subsidiary is subject to the above mandated
restrictions on distributable profits. As a result of these PRC laws and regulations, our PRC subsidiary is restricted in its
ability to transfer a portion of its net assets to us.
The
EIT Law, which was effected on January 1, 2008, also imposed a 10% withholding income tax for dividends distributed by a foreign
invested enterprise to its immediate holding company outside China, which were exempted under the previous EIT law. A lower withholding
tax rate will be applied if there is a tax treaty arrangement between mainland China and the jurisdiction of the foreign holding
company. Holding companies in Hong Kong, for example, will be subject to a 5% rate. Our WFOE is invested by its immediate holding
company in Hong Kong and will be entitled to the 5% preferential withholding tax rate upon distribution of the dividends to its
immediate holding company.
The
ability of our PRC subsidiary to make dividends and other payments to us may also be restricted by changes in applicable foreign
exchange and other laws and regulations.
Foreign
currency exchange regulation in China is primarily governed by the following rules:
| |
● |
Foreign Exchange
Administration Rules (1996), as amended in August 2008, or the Exchange Rules; |
| |
|
|
| |
● |
Administration Rules of the Settlement, Sale and Payment of
Foreign Exchange (1996), or the Administration Rules. |
Currently,
under the Administration Rules, Renminbi is freely convertible for current account items, including the distribution of dividends,
interest payments, trade and service related foreign exchange transactions, but not for capital account items, such as direct
investments, loans, repatriation of investments and investments in securities outside of China, unless the prior approval of the
SAFE is obtained and prior registration with the SAFE is made. Foreign-invested enterprises like our PRC operating subsidiary
that need foreign exchange for the distribution of profits to its shareholders may effect payment from their foreign exchange
accounts or purchase and pay foreign exchange rates at the designated foreign exchange banks to their foreign shareholders by
producing board resolutions for such profit distribution. Based on their needs, foreign-invested enterprises are permitted to
open foreign exchange settlement accounts for current account receipts and payments of foreign exchange along with specialized
accounts for capital account receipts and payments of foreign exchange at certain designated foreign exchange banks.
Although
the current Exchange Rules allow the convertibility of Chinese Renminbi into foreign currency for current account items, conversion
of Chinese Renminbi into foreign exchange for capital items, such as foreign direct investment, loans or securities, requires
the approval of SAFE, which is under the authority of the People’s Bank of China. These approvals, however, do not guarantee
the availability of foreign currency conversion. We cannot be sure that it will be able to obtain all required conversion approvals
for our operations or the Chinese regulatory authorities will not impose greater restrictions on the convertibility of Chinese
Renminbi in the future. Currently, all our retained earnings are generated in Renminbi. Any future restrictions on currency exchanges
may limit our ability to use retained earnings generated in Renminbi to make dividends or other payments in U.S. dollars or fund
possible business activities outside China.
ITEM 7A. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting
company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
The full text of our audited
consolidated financial statements as of December 31, 2014 and 2013 begins on page F-1 of this annual report.
ITEM 9. CHANGES IN
AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period
covered by this Report, our Chief Executive Officer and Chief Financial Officer performed an evaluation of the effectiveness of
our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act. Based on
the evaluation and the identification of the material weaknesses in internal control over financial reporting described below,
our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2014, the Company’s disclosure
controls and procedures were not effective.
Management’s Annual Report on Internal
Control over Financial Reporting
Our
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally
accepted accounting principles and includes those policies and procedures that:
| |
● |
Pertain
to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of
our assets; |
| |
|
|
| |
● |
Provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with
authorizations of our management and directors; and |
| |
|
|
| |
● |
Provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use of disposition of our assets
that could have a material effect on the financial statements. |
Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also, projection of any evaluation of effectiveness
to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
A material weakness is
a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or
detected on a timely basis. Our management assessed the effectiveness of
our internal control over financial reporting as of December 31, 2014. In making this assessment, our management used the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 Internal Control-Integrated Framework.
In connection with management’s assessment of our internal control over financial reporting as required under Section
404 of the Sarbanes-Oxley Act of 2002, we identified the following material weaknesses in our internal control over financial
reporting as of December 31, 2014:
1. The Company has not
established adequate financial reporting monitoring procedures to mitigate the risk of management override.
2. There is a strong reliance
on the external consultants and legal counsel to review and edit the annual and quarterly filings and to ensure compliance with
Securities and Exchange Commission disclosure requirements.
Remediation of Material Weaknesses in Internal
Control over Financial
As a small business, the
Company does not have the resources to install a dedicated staff with deep expertise in all facets of Securities and Exchange
Commission disclosure and GAAP compliance. As is the case with many small businesses, the Company will continue to work with its
external consultants as it relates to new accounting principles and changes to Securities and Exchange Commission disclosure requirements.
The Company has found this approach worked well in the past and believes it to be the most cost effective solution available for
the foreseeable future.
ITEM 9B. OTHER INFORMATION
None.
ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Officers
The following table sets
forth the names and ages of our directors and executive officers, as of the date of this Form 10-K:
| Name |
|
Age |
|
Position |
| Chen Huangchen |
|
34 |
|
Chairman of the Board, Chief Executive
Officer and President |
| Yang Rong |
|
36 |
|
Chief Financial Officer and Treasurer |
Chen Huangchen serves as the
Company’s Chairman of the Board, Chief Executive Officer and President. Prior to that role, from June 2010 to present, Mr.
Chen Huangchen acted as Chairman of the Board of Beijing Greenstar Holdings Company Limited. Mr. Chen Huangchen holds a Bachelor
of Arts degree in Business Administration from University of Science and Technology Beijing.
Yang Rong serves as the Company’s
Chief Financial Officer and Treasurer effective March 16, 2015. Prior to serving in this role, from January 2014 to present, Mr.
Yang acted as Procurement Director of Beijing Greenstar Holdings Company Limited. From January 2008 to December 2013, Mr. Yang
was the Regional Sales Director of Zhengjiang Sanfang Control Valve Co., Ltd. Mr. Yang holds a Bachelor of Arts degree in Business
Administration from Hangzhou Dianzi University.
To the best of our knowledge,
no family relationships exist among our directors or executive officers. To the best of our knowledge, none of our directors or
executive officers has been involved in any of the following events during the past five years:
| |
● |
any
bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time; |
| |
● |
any
conviction in a criminal proceeding or being subject to a pending criminal proceeding, excluding traffic violations and other
minor offences; |
| |
● |
being
subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities
or banking activities; or |
| |
● |
being
found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
Involvement in Other Public Companies Registered Under the
Exchange Act
Neither Mr. Chen Huangchen nor Mr. Yan Rong
are officers or directors of other public companies that file reports with the SEC under Section 13 of the Exchange Act.
Board of Directors
Our Board of Directors
is currently composed of one member, Chen Huangchen. He is responsible for exercising and performing such powers and duties as
prescribed by our Bylaws.
Board Committees
As of this date, our Board
of Directors has not appointed an audit committee, compensation committee or nominating committee, however, we are not currently
required to have such committees. Accordingly, we do not have an “audit committee financial expert” as such term is
defined in the rules promulgated under the Securities Act of 1933, as amended and the Exchange Act. The functions ordinarily handled
by these committees are currently handled by our entire Board of Directors. Our Board of Directors intends, however, to review
our governance structure and institute board committees as necessary and advisable in the future, to facilitate the management
of our business.
Code of Ethics
A code of ethics relates
to written standards that are reasonably designed to deter wrongdoing and to promote:
| |
● |
honest
and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional
relationships; |
| |
● |
full,
fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the SEC
and in other public communications made by an issuer; |
| |
● |
compliance
with applicable governmental laws, rules and regulations; |
| |
● |
the
prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and |
| |
● |
accountability
for adherence to the code. |
We have not adopted a
code of ethics because, to date, we have had no meaningful operations. However, we plan to adopt a code of ethics in the future.
Compliance with Section 16(a) of the Exchange Act
Based solely on review
of the copies of such forms furnished to the Company, or written representations that no reports were required, the Company believes
that for the year ended December 31, 2014, our directors and executive officers complied with Section 16(a) filing requirements
applicable to them.
ITEM 11. EXECUTIVE
COMPENSATION
Summary Compensation
The following table sets
forth all cash compensation paid by us, as well as certain other compensation paid or accrued, in 2013 and 2014 to each of the
following named executive officers.
Summary Compensation of Named Executive
Officers
| Name and Principal Position | |
Fiscal
Year | | |
Salary
($) | | |
Total
($) | |
| | |
| | |
| | |
| |
| Michael Anthony | |
| 2014 | | |
$ | 0 | | |
$ | 0 | |
| Former President (1) | |
| 2013 | | |
$ | 0 | | |
$ | 0 | |
| | |
| | | |
| | | |
| | |
| Yu Ben Ansheng, | |
| 2014 | | |
$ | 5,392 | | |
$ | 5,426 | |
Former President and Chief Executive
Officer (2)
| |
| 2013 | | |
$ | 0 | | |
$ | 0 | |
| | |
| | | |
| | | |
| | |
| Chen Huangchen, | |
| 2014 | | |
$ | 0 | | |
$ | 0 | |
| President and Chief Executive Officer | |
| 2013 | | |
$ | 0 | | |
$ | 0 | |
| | |
| | | |
| | | |
| | |
| Chen Jie, | |
| 2014 | | |
$ | 0 | | |
$ | 0 | |
Former Chief Financial Officer
and Treasurer (3)
| |
| 2013 | | |
$ | 0 | | |
$ | 0 | |
| | |
| | | |
| | | |
| | |
| Yang Rong, | |
| 2014 | | |
$ | 0 | | |
$ | 0 | |
| Chief Financial Officer and Treasurer | |
| 2013 | | |
$ | 0 | | |
$ | 0 | |
(1) Term – November 14, 2007 to December
15, 2014.
(2) Term – December 15, 2014 to February
3, 2015.
(3) Term – December 15 2014 to March
16, 2015.
Outstanding Equity Awards
We have not adopted retirement,
pension, profit sharing, stock option or insurance programs or other similar programs for the benefit of our employees..
Director Compensation
Our directors do not receive
any compensation and are not reimbursed for any expenses for serving on the Board of Directors.
Employment Agreements
We have not entered into
employment agreements with any of our officers, directors or employees.
Indemnification
We are a Delaware corporation.
Section 252 of the Delaware General Corporation Law (DGCL) provides that the articles of incorporation of a Delaware corporation
may contain a provision eliminating or limiting the personal liability of a director to the corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director, except that any such provision may not eliminate or limit the liability
of a director (i) for any breach of the director’s duty of loyalty to the corporation or its shareholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) acts specified in Section
7-108-403 (concerning unlawful distributions), or (iv) any transaction from which a director directly or indirectly derived an
improper personal benefit. The Company’s articles of incorporation contain a provision eliminating the personal liability
of directors to Standard Commerce or Standard Commerce shareholders for monetary damages to the fullest extent provided by the
DGCL.
Section 242 of the DGCL
provides that a Delaware corporation must indemnify a person who was wholly successful, on the merits or otherwise, in defense
of any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative
and whether formal or informal (a “Proceeding”), in which he or she was a party because the person is or was a director,
against reasonable expenses incurred by him or her in connection with the Proceeding, unless such indemnity is limited by the
corporation’s articles of incorporation. The Company’s articles of incorporation do not contain any such limitation.
Section 242 of the DGCL
provides that a Delaware corporation may indemnify a person made a party to a Proceeding because the person is or was a director
against any obligation incurred with respect to a Proceeding to pay a judgment, settlement, penalty, fine (including an excise
tax assessed with respect to an employee benefit plan) or reasonable expenses incurred in the Proceeding if the person conducted
himself or herself in good faith and the person reasonably believed, in the case of conduct in an official capacity with the corporation,
that the person’s conduct was in the corporation’s best interests and, in all other cases, his or her conduct was
at least not opposed to the corporation’s best interests and, with respect to any criminal proceedings, the person had no
reasonable cause to believe that his or her conduct was unlawful. The Company’s articles of incorporation and bylaws allow
for such indemnification. A corporation may not indemnify a director in connection with any Proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation or, in connection with any other Proceeding charging
that the director derived an improper personal benefit, whether or not involving actions in an official capacity, in which Proceeding
the director was judged liable on the basis that he or she derived an improper personal benefit. Any indemnification permitted
in connection with a Proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection
with such Proceeding.
Under 242 of the DGCL,
unless otherwise provided in the articles of incorporation, a Delaware corporation may indemnify an officer, employee, fiduciary,
or agent of the corporation to the same extent as a director and may indemnify such a person who is not a director to a greater
extent, if not inconsistent with public policy and if provided for by its bylaws, general or specific action of its board of directors
or shareholders, or contract. The Company’s articles of incorporation provide for indemnification of directors, officers,
employees, fiduciaries and agents of the Company to the full extent permitted by Delaware law.
ITEM 12. SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets
forth certain information regarding beneficial ownership of our common stock as of April 15, 2015 by (i) each person (or group
of affiliated persons) who is known by us to own more than five percent of the outstanding shares of our common stock, (ii) each
director and executive officer, and (iii) all of our directors, executive officers and director nominees as a group. As of April
15, 2015, we had 102,379,935 shares of common stock issued and outstanding.
Beneficial ownership is
determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. Unless otherwise
noted, the principal address of each of the stockholders, directors and officers listed below is at Suite B, 16/F., Ritz Plaza,
122 Austin Road, Tsim Sha Tsui, Kowloon, Hong Kong.
All share ownership figures
include shares of our common stock issuable upon securities convertible or exchangeable into shares of our common stock within
sixty (60) days of April 15, 2015, which are deemed outstanding and beneficially owned by such person for purposes of computing
his or her percentage ownership, but not for purposes of computing the percentage ownership of any other person.
| Name and Address of Beneficial Owner | |
Amount
and
Nature of
Beneficial
Ownership | | |
Percentage
of
Outstanding
Shares of
Common Stock | |
| Forever Prosperous Holdings (China) Limited(1) | |
| 61,260,000 | | |
| 59.8 | % |
| New Empire Ventures Limited(2) | |
| 20,420,000 | | |
| 19.9 | % |
| Pride Sun Limited(3) | |
| 20,420,000 | | |
| 19.9 | % |
| Chen Huangchen(4) | |
| 81,680,000 | | |
| 79.7 | % |
| Yang Rong | |
| 0 | | |
| 0 | % |
| All Directors and Executive
Officers, as a group | |
| 81,680,000 | | |
| 79.7 | % |
(1) The business address of Forever Prosperous
Holdings (China) Limited is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgins Islands. Mr. Chen,
Huangchen, our Chairman, Chief Executive Officer and President, has sole voting and investment power over the shares.
(2) The business address of New Empire Ventures
Limited is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgins Islands. Mr. Ricardo Lee, the sole
director and sole shareholder of New Empire Ventures Limited, has sole voting and investment power over the shares.
(3) The business address of Pride Sun Limited
is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgins Islands. Mr. Chen, Huangchen, our Chairman,
Chief Executive Officer and President, has sole voting and investment power over the shares.
(4) Chen Huangchen is the sole director of
Forever Prosperous Holdings (China) Limited and is the sole director of Fullwing Ventures Limited which owns one hundred percent
of Pride Sun Limited. He has sole voting and dispositive power over the shares. As such, he is deemed to have beneficial ownership
of the shares.
ITEM 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
We have financed our
operations primarily from capital contributions of our controlling stockholder Forever Prosperous. For the period from January
1, 2014 to December 31, 2014, additional capital contributed from Forever Prosperous was $382,145. All funds from Forever Prosperous
were treated as “additional paid-in capital” in the Balance Sheet. Such amount will not be repaid to Forever Prosperous.
Mr. Chen Huangchen, our Chairman, President and CEO, is the sole director of Forever Prosperous and has sole voting and dispositive
power over the shares.
ITEM 14. PRINCIPAL
ACCOUNTING FEES AND SERVICES
During the fiscal year
ended December 31, 2014, the total fees billed to MBP for audit-related services was $56,525, for tax services was $0 and for
all other services was $0.
During the fiscal years
ended May 31, 2013 and 2014, the total fees billed to Salberg for audit-related services was $8,100 and $8,600, respectively,
for tax services was $0 and for all other services was $0.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
| Exhibit
No. |
|
Description |
| |
|
|
| 2.1 |
|
Share Exchange Agreement,
dated as of December 15, 2014, by and among Stark Beneficial, Inc., Michael Anthony, China Greenstar Holdings Limited and
the shareholders of China Greenstar Holdings Limited.* |
| |
|
|
| 3.1 |
|
Certificate of Incorporation
of Stark Beneficial, Inc., as amended.** |
| |
|
|
| 3.2 |
|
Amended and Restated
Bylaws of China Greenstar Corporation
|
| |
|
|
| 10.1 |
|
Realty Lease Contract* |
| |
|
|
| 10.2 |
|
Supply Agreement |
| |
|
|
| 21 |
|
Subsidiaries *** |
| |
|
|
| 31.1 |
|
Certification of Principal
Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| |
|
|
| 31.2 |
|
Certification of Principal
Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| |
|
|
| 32.1 |
|
Certification of Principal
Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| |
|
|
| 101 |
|
Interactive data files
pursuant to Rule 405 of Regulation S-T |
* Previously filed with the Company’s Form 8-K on December
19, 2014.
** Previously filed with the Company’s Form 10 Registration
Statement on June 20, 2012.
*** Previously filed with the Company’s Form 10-K on April
15, 2015.
SIGNATURES
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereto duly authorized.
| |
China
Greenstar Corporation |
| |
|
|
Date:
September 18, 2015
|
By: |
/s/
Chen Huangchen |
| |
|
Chen Huangchen |
| |
|
Chairman, President and Chief Executive
Officer, |
| |
|
(Principal Executive
Officer) |
| |
|
|
Date:
September 18, 2015
|
By: |
/s/
Yang Rong |
| |
|
Yang Rong |
| |
|
(Principal Financial Officer and Principal
Accounting Officer) |
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf
of the Registrant in the indicated capacities and on the dates indicated.
| /s/
Chen Huangchen |
Date:
September 18, 2015
|
| Chen Huangchen, Director |
|
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
of China Greenstar Corporation (formerly known as Stark Beneficial, Inc.)
We have audited the accompanying consolidated
balance sheets of China Greenstar Corporation (the “Company”) (formerly known as Stark Beneficial, Inc.) as of December
31, 2014 and 2013, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’
equity and cash flows for the year ended December 31, 2014 and for the period from October 25, 2013 (inception) through December
31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred
to above present fairly, in all material respects, the financial position of China Greenstar Corporation, as of December 31, 2014
and 2013, and the results of its operations and its cash flows for the year ended December 31, 2014 and for the period from October
25, 2013 (inception) through December 31, 2013 in conformity with accounting principles generally accepted in the United States
of America.
The accompanying of consolidated financial
statements has been prepared assuming that the Company will continue as a going concern. As described in Note 2 to the consolidated
financial statements, the Company has suffered recurring losses from operations that raise substantial doubts about their ability
to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
| /s/ Marcum Bernstein & Pinchuk llp |
|
| |
|
| Marcum Bernstein & Pinchuk llp |
|
| New York, New York |
|
| April 15, 2015 |
|
CHINA
GREENSTAR CORPORATION
(Formerly
STARK BENEFICIAL, INC.)
CONSOLIDATED
BALANCE SHEETS
(Amounts
in US$, except shares)
| | |
As
of December 31, | |
| | |
2014 | | |
2013 | |
| | |
| | |
| |
| Assets | |
| | | |
| | |
| Current assets: | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 108,692 | | |
$ | 258 | |
| Prepaid and other current assets | |
| 685 | | |
| - | |
| Total
current assets | |
$ | 109,377 | | |
$ | 258 | |
| Liabilities
and Stockholders’ Equity | |
| | | |
| | |
| Liabilities | |
| | | |
| | |
| Accounts Payable | |
$ | 1,921 | | |
$ | - | |
| Accrued expenses | |
| 53,944 | | |
| - | |
| Total
current liabilities | |
| 55,865 | | |
| - | |
| Stockholders’
equity: | |
| | | |
| | |
| Common stock ($0.001 par value, issued and outstanding
shares of 102,379,935 and 102,100,000 at December 31, 2014 and 2013, respectively.) | |
| 102,380 | | |
| 102,100 | |
| Additional paid-in capital | |
| 280,468 | | |
| (101,397 | ) |
| Accumulated deficit | |
| (329,377 | ) | |
| (444 | ) |
| Accumulated other comprehensive
income (loss) | |
| 41 | | |
| (1 | ) |
| Total
stockholders’ equity | |
| 53,512 | | |
| 258 | |
| Total
liabilities and stockholders’ equity | |
$ | 109,377 | | |
$ | 258 | |
See
notes to the consolidated financial statements.
CHINA
GREENSTAR CORPORATION
(Formerly
STARK BENEFICIAL, INC.)
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Amounts
in US$, except shares)
| |
|
Year
ended
December
31, 2014 |
|
|
October
25, 2013
(inception)
through
December
31, 2013 |
|
| |
|
|
|
|
|
|
| Revenues |
|
$ |
3,151 |
|
|
$ |
- |
|
| Cost
of sales |
|
|
(1,935 |
)
|
|
|
- |
|
| Gross
profit |
|
$ |
1,216 |
|
|
$ |
- |
|
| Operating expenses |
|
|
|
|
|
|
|
|
| General
and administrative expenses |
|
|
(330,149 |
) |
|
|
(444 |
) |
| Income
tax expense |
|
|
- |
|
|
|
- |
|
| Net
loss |
|
|
(328,933 |
) |
|
|
(444 |
) |
| Other comprehensive
loss |
|
|
|
|
|
|
|
|
| Foreign
currency translation gain (loss) |
|
|
41 |
|
|
|
(1 |
) |
| Comprehensive
loss |
|
$ |
(328,892 |
) |
|
$ |
(445 |
) |
| Loss per share |
|
|
|
|
|
|
|
|
| Basic
and diluted |
|
$ |
(0.003 |
) |
|
$ |
- |
|
| Weighted average
number of common shares outstanding |
|
|
|
|
|
|
|
|
| Basic
and diluted |
|
|
102,113,038 |
|
|
|
102,100,000 |
|
See
notes to the consolidated financial statements.
CHINA
GREENSTAR CORPORATION
(Formerly
STARK BENEFICIAL, INC.)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Amounts
in US$)
| | |
Year
ended
December 31, 2014 | | |
October
25, 2013
(inception) through
December
31, 2013 | |
| | |
| | |
| |
| Cash
flows from operating activities | |
| | | |
| | |
| Net loss | |
$ | (328,933 | ) | |
$ | (444 | ) |
| Changes
in operating assets and liabilities | |
| | | |
| | |
| Prepaid and other current assets | |
| (690 | ) | |
| - | |
| Accounts payable | |
| 1,935 | | |
| - | |
| Accrued expenses and other payables | |
| 54,329 | | |
| - | |
| Net cash used in operating
activities | |
| (273,359 | ) | |
| (444 | ) |
| Cash
flows from financing activities | |
| | | |
| | |
| Additional capital contribution | |
| 382,145 | | |
| 703 | |
| Net cash provided by financing
activities | |
| 382,145 | | |
| 703 | |
| Effect of exchange rate fluctuation
on cash and cash equivalents | |
| (352 | ) | |
| (1 | ) |
| Net increase in cash and
cash equivalents | |
| 108,434 | | |
| 258 | |
| Cash and cash equivalents at
beginning of the year | |
| 258 | | |
| - | |
| Cash and cash equivalents at
end of the year | |
$ | 108,692 | | |
$ | 258 | |
| Supplement
disclosure of cash flow information: | |
| | | |
| | |
| Interest expense paid | |
$ | - | | |
$ | - | |
| Income taxes paid | |
$ | - | | |
$ | - | |
See
notes to the consolidated financial statements.
CHINA
GREENSTAR CORPORATION
(Formerly
STARK BENEFICIAL, INC.)
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Amounts
in US$, except shares)
| | |
Number
of
common
stock | | |
Common
stock | | |
Additional
paid-in
capital | | |
Accumulated
deficit | | |
Accumulated
other
comprehensive
income | | |
Total
shareholders’
equity | |
| Balance
at October 25, 2013 (Inception) | |
| 102,100,000 | | |
$ | 102,100 | | |
$ | (102,100 | ) | |
$ | - | | |
$ | - | | |
$ | - | |
| Capital injection | |
| - | | |
| - | | |
| 703 | | |
| - | | |
| - | | |
| 703 | |
| Net loss for the period | |
| - | | |
| - | | |
| - | | |
| (444 | ) | |
| - | | |
| (444 | ) |
| Foreign currency translation
adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1 | ) | |
| (1 | ) |
| Balance
at December 31, 2013 | |
| 102,100,000 | | |
| 102,100 | | |
| (101,397 | ) | |
| (444 | ) | |
| (1 | ) | |
| 258 | |
| Shares issued in reverse acquisition | |
| 279,935 | | |
| 280 | | |
| (280 | ) | |
| - | | |
| - | | |
| - | |
| Capital injection | |
| - | | |
| - | | |
| 382,145 | | |
| - | | |
| - | | |
| 382,145 | |
| Net loss for the period | |
| - | | |
| - | | |
| - | | |
| (328,933 | ) | |
| - | | |
| (328,933 | ) |
| Foreign currency translation
adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| 42 | | |
| 42 | |
| Balance
at December 31, 2014 | |
| 102,379,935 | | |
$ | 102,380 | | |
$ | 280,468 | | |
$ | (329,377 | ) | |
$ | 41 | | |
$ | 53,512 | |
See
notes to the consolidated financial statements
CHINA
GREENSTAR CORPORATION
(Formerly
STARK BENEFICIAL, INC.)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the period October 25, 2013 (inception) through December 31, 2013 and the year ended December 31, 2014
(Amounts
in US$)
| 1. |
Organization
and principal activities |
China Greenstar Corporation (the “Company”),
formerly known as Stark Beneficial, Inc. (“Stark”), was incorporated in the State of Delaware. On December 15,
2014, the Company consummated a Share Exchange.
China
Greenstar Holdings Limited (“Greenstar Holdings”) was established in the British Virgin Islands (“BVI”)
on July 29, 2014. Greenstar Holdings itself has no significant business operations and assets other than holds equity interests
in its subsidiaries.
Greenstar
Group (HK) Limited (“Greenstar HK”) was established as an Investment Holding Company by Forever Prosperous Holdings
(China) Limited (“Forever Prosperous”) (the controlling shareholder of the Company) in Hong Kong Special Administrative
Region of the People’s Republic of China (the “PRC”) on October 25, 2013. The ownership interests of Greenstar
HK were transferred to Greenstar Holdings in August 2014, after Greenstar Holdings was set up.
Shenzhen Greenstar Technology Co., Ltd. (“Greenstar
Technology”) was established as a wholly foreign owned enterprise on September 29, 2014 in Shenzhen, the PRC by Greenstar
HK. The registered capital of Greenstar Technology is HK$ 1,000,000 (equal to USD128,622). Greenstar Technology was principally
engaged in selling fuel additive product and business consulting services.
On December 15, 2014 (the “Closing Date”),
Stark, entered into a Share Exchange Agreement (the “Exchange Agreement”), with (i) Greenstar Holdings, (ii) Greenstar
Holdings’ shareholders, Forever Prosperous Holdings (China) Limited, a British Virgin Islands company (“Forever Prosperous”),
Pride Sun Limited, a British Virgin Islands company (“Pride Sun “) and New Empire Ventures Limited, a British Virgin
Islands company, (collectively, “Greenstar Holdings Shareholders”) who together own shares constituting 100% of the
issued and outstanding ordinary shares of Greenstar Holdings (“Greenstar Holdings Shares”) and (iii) Michael Anthony,
the principal stockholder of Stark (the “Stark Shareholder”). Pursuant to the terms of the Exchange Agreement, Greenstar
Holdings Shareholders transferred all of the shares of Greenstar Holdings in exchange for the issuance of 102,100,000 shares of
Stark’s common stock (the “Share Exchange’). Immediately prior to the Share Exchange, the original shares (2,100,000
of common stock and 5,000,000 preferred stock) were repurchased and cancelled (the “Cancelled Shares”), reducing Stark’s
issued and outstanding shares to 279,935 shares of common stock. The total consideration was $350,000 . As a result of the
cancellation of the Cancelled Shares and the Share Exchange, Stark had 102,379,935 shares of common stock issued and outstanding
following the Share Exchange. The Share Exchange was an arms-length transaction between the parties. There were no third parties
involved that received any compensation for arranging or facilitating the transaction. Stark changed its name to China Greenstar
Corporation on January 6, 2015. The Company, Greenstar Holdings, Greenstar HK and its subsidiary are collectively referred to
as the “Group.”
The Group purchases a fuel additive from
a third party in the PRC and resells it to customers under its brand name called
“Greencare Product.” The Greencare Product is added to gasoline in order to improve fuel quality by suppressing and
cleaning sediments in fuel. The Greencare Product improves overall engine performance, maximizes fuel-burning efficiency, enhances
the power of an engine and provides for cleaner emissions. The Group authorizes its supplier to use its brand name and charges
a distribution fee for it. The Group is not directly involved in the production or manufacturing of fuel additives or cleaners.
The
consolidated financial statements are prepared on a going concern basis, which contemplates the realization of assets and the
satisfaction of obligations in the normal course of business. The Company had recurring consolidated losses of $328,933 for the
year ended December 31, 2014 and $444 for the period from October 25, 2013 (inception) through December 31, 2013, working capital
of $53,512 as of December 31, 2014 and $258 as of December 31, 2013, and has a total deficit of $329,377 as of December 31, 2014
and $444 as of December 31, 2013. These conditions raise substantial doubt about the ability of the Company to continue as a going
concern. The financial statements do not include any adjustments to the amount and classification of assets and liabilities that
may be necessary should the Company not continue as a going concern.
In
view of these matters, continuation as a going concern is dependent upon continued operations of the Company, which in turn is
dependent upon the Company’s ability to meet its financial requirements, raise additional capital, and the success of its
future operations. The Company intends to raise additional capital through controlling shareholder, however, no assurance can
be provided that the Company will able to do so. In addition, there is no assurance that any capital it raises will be sufficient
to enable the Company to attain profitable operations or continue as a going concern.
The Group distributes and resells a fuel
additive and cleaner whose aim is to reduce emissions of carbon dioxide and save energy in relation to vehicle output. The Group
is in the process of developing a better sales network and more customers. Management anticipates the revenue from the resale
of the fuel additive will comprise a major component of the Group’s business going forward. The Group also plans to expand business
into the automotive consumption space, such as, car washing services. In order to do so, management plans to acquire a company
with adequate capabilities.
| 3. |
Summary
of significant accounting policies
|
| |
|
| (a) |
Basis of
presentation |
The
accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles
in the United States of America (“U.S. GAAP”).
| (b) |
Principles
of Consolidation |
The
consolidated financial statements include the financial statements of the Company and all its subsidiaries. All transactions and
balances between the Company and its subsidiaries have been eliminated upon consolidation. Pursuant to the share transfer agreement
of Greenstar HK in August 2014 described above, the Group reorganized its structure. Before and after the reorganization, Greenstar
HK continued to be owned and managed by the same ultimate controlling shareholder, Forever Prosperous, substantively. Therefore,
the acquisition of Greenstar HK was accounted for as a merger under common control, using merger accounting in a manner similar
to pooling-of-interest, as if the merger had been consummated at the beginning of the earliest period presented, and no gain or
loss is recognized. All the assets and liabilities of Greenstar HK are recorded at carrying value.
As
a result of the Share Exchange on December 15, 2014, Greenstar Holdings became a subsidiary of Stark. The former Greenstar Holdings’
stockholders owned a majority of common stock of Stark. The transaction was regarded as a reverse recapitalization whereby Greenstar
Holdings was considered to be the accounting acquirer as its stockholders retained control of Stark after the share exchange,
although Stark is the legal parent company. The share exchange was treated as a recapitalization. As such, Greenstar Holdings
is the continuing entity for financial reporting purpose. In a recapitalization, the historical shareholder’s equity of
the accounting acquirer prior to the merger is retroactively reclassified (a recapitalization) for the equivalent number of shares
received in the merger after giving effect to any difference in par value of the registrant’s and the accounting acquirer’s
stock by an offset in paid-in-capital. Therefore, the financial statements have been prepared as if Greenstar Holdings had always
been the reporting company and then on the share exchange date, had reorganized its capital stock.
| (c) |
Foreign
currency translation and transactions |
The
functional currency of the Company and Greenstar Holdings is United States dollars (“US$”), and the functional currency
of Greenstar HK is Hong Kong dollars (“HK$”). The functional currency of Greenstar Technology is the Renminbi (“RMB”),
and PRC is the primary economic environment in which the Group operates.
For
financial reporting purposes, the financial statements of Greenstar HK, which are prepared using the HK$, and the financial statements
of Greenstar Technology, which are prepared using the RMB, are translated into the Company’s reporting currency, the US$.
Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenue and expenses are translated
using average rates prevailing during each reporting period, and shareholders’ equity is translated at historical exchange
rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income
in shareholders’ equity.
Transactions
denominated in currencies other than the Company’s reporting currency are translated into the Company’s reporting
currency at the exchange rates prevailing at the dates of the transactions. The resulting exchange differences are included in
the determination of net income of the consolidated financial statements for the respective periods.
The exchange
rates applied are as follows:
| | |
Year
ended
December 31, 2014 | | |
October
25, 2013
(inception) through
December 31, 2013 | |
| | |
| | |
| |
| Period end RMB exchange rate | |
| 6.1829 | | |
| 6.1934 | |
| Average RMB exchange rate | |
| 6.1390 | | |
| 6.2715 | |
| Period end HK$
exchange rate | |
| 7.7676 | | |
| 7.7610 | |
Average
HK$ exchange rate
| |
| 7.7666 | | |
| 7.7672 | |
No
representation is made that the HK$ and RMB amounts could have been, or could be, converted into U.S. dollars at the rates used
in translation.
The
preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these estimates using
the best information available at the time the estimates are made; however actual results could differ from those estimates.
| (e) |
Cash and
cash equivalents |
Cash
and cash equivalents represent cash on hand and deposits held in banks. The Group considers all highly liquid investments with
original maturities of three months or less at the time of purchase to be cash equivalents. As of December 31, 2014 and 2013,
the Company’s cash and cash equivalents comprised of $108,692 and $258, respectively. The Group’s cash deposits are
held in financial institutions located in PRC or Hong Kong where there is currently regulation mandated on obligatory insurance
of bank accounts. The Company believes this financial institution is of high credit quality.
| (f) |
Acquisition-related
Costs |
Acquisition-related
costs are costs the Company incurs to effect a reverse merger of public shell company (see Note 1). Those costs include finder’s
fee; advisory, legal, accounting and other professional or consulting fees; general administrative costs, including the costs
of maintaining an internal acquisitions department; and costs of registering and issuing debt and equity securities. The Group
account for acquisition-related costs as expenses in the periods in which the costs are incurred and the services are received.
| (g) |
Fair value
of financial instruments |
The
Group applies the provisions of ASC Subtopic 820-10, “Fair Value Measurements”, for fair value measurements of financial
assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair
value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about
fair value measurements.
Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required
or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact
and it considers assumptions that market participants would use when pricing the asset or liability.
ASC
820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level
1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The
three levels of the fair value hierarchy are as follows:
| ● |
Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| |
|
| ● |
Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs
that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial
instruments. |
| |
|
| ● |
Level
3 inputs to the valuation methodology are unobservable and significant to the fair value. |
There
were no assets or liabilities measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as
of December 31, 2014 and 2013, respectively.
The
carrying values of cash, other current assets and accrued expenses approximate estimated fair values due to their short maturities.
The
Group recognizes revenue from sales of various goods when all of the following criteria exist: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred; (3) price to the buyer is fixed or determinable; and (4) collectability is reasonably assured.
Delivery
does not occur until goods have been shipped to the customers, risk of loss has been transferred to the customers and customers’
acceptance has been obtained, or the Group has objective evidence that the criteria specified in customers’ acceptance provisions
have been satisfied. The sales price is not considered to be fixed or determinable until all contingencies related to the sale
have been resolved. Certain credit terms and limits were granted to customers with low risk of collectability based on the Group’s
credit assessment. No material collectability problem has occurred. Revenue is recognized when delivery occurs and collectability
is reasonably assured.
In
the PRC, value added tax (the “VAT”) of generally 17% on invoice amount is collected in respect of the sales of goods
against the customers on behalf of tax authorities. The VAT collected is not revenue of the Group; instead, the amount is recorded
as a liability on the balance sheet until such VAT is paid to the authorities.
Income
taxes are accounted for using an asset and liability method. Under this method, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and deferred
tax liabilities are measured using enacted tax rates in the applicable tax jurisdiction expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the period that includes the enactment date. Deferred income tax expense
represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred
tax assets and liabilities are individually classified as current and non-current based on their characteristics. Realization
of the deferred tax asset is dependent on generating sufficient taxable income in future years.
The
Group recognizes interest on non-payment of income taxes under requirement by tax law and penalties associated with tax positions
when a tax position does not meet the minimum statutory threshold to avoid payment of penalties. According to the PRC Tax Administration
and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made
by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where
the underpayment of taxes is more than RMB 100,000. The tax return of the Company’s PRC subsidiary is subject to examination
by the relevant tax authorities. The Group did not have any material interest or penalties associated with tax positions and did
not have any significant unrecognized uncertain tax positions as of December 31, 2014 and 2013, respectively.
Basic loss per share is computed by dividing
net loss by the weighted average number of ordinary shares outstanding
during the period from October 25, 2013 (inception) to December 31, 2013 and to the year ended December 31, 2014. Diluted loss
per share was the same as basic loss per share due to the lack of dilutive items and the fact that Company is in net loss position.
Comprehensive
loss is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding
transactions resulting from investments from owners and distributions to owners. Accumulated other comprehensive loss, as presented
on the accompanying consolidated balance sheets are the cumulative foreign currency translation adjustments.
| (l) |
Recently
issued accounting pronouncements |
From
time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other
standard setting bodies that are adopted by the Group as of the specified effective date.
In
August 2014, the FASB issued ASU No.2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going
Concern. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating
and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide
a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide
principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial
doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures
when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial
statements are issued (or available to be issued). The amendments in this update are effective for the annual period ending after
December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted and the Group has early
adopted it in 2014.
The
Group does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material
effect would have a material effect on the consolidated financial position, statements of operations and cash flows.
Income
Tax
(i)
United States: The Company is incorporated in the State of Delaware and does not conduct any substantial operations of
its own. No provision for profits tax have been made in the financial statements as the Company has no assessable profits for
the year ended December 31, 2014 and the period ended December 31, 2013, respectively.
(ii)
British Virgin Islands: Greenstar Holdings is incorporated in the BVI. Under the current law of the BVI, Greenstar Holdings
is not subject to tax on income or capital gains. Additionally, upon payments of dividends by Greenstar Holdings to its shareholders,
no BVI withholding tax will be imposed.
(iii)
Hong Kong: Greenstar HK was incorporated in Hong Kong and does not conduct any substantial operations of its own. No provision
for Hong Kong profits tax have been made in the financial statements as Greenstar HK has no assessable profits for the year ended
December 31, 2014 and the period from October 25, 2013 (inception) to December 31, 2013, respectively.
(iv)
PRC: The foreign invested enterprises and domestic companies are generally subject to enterprise income tax at a uniform
rate of 25%.
PRC
Withholding Tax on Dividends
The
current PRC Enterprise Income Tax Law imposes a 10% withholding income tax for dividends distributed by foreign invested enterprises
to their immediate holding companies outside the PRC. A lower withholding tax rate will be applied if there is a tax treaty arrangement
between the PRC and the jurisdiction of the foreign holding company. Distributions to holding companies in Hong Kong that satisfy
certain requirements specified by PRC tax authorities will be subject to a 5% withholding tax rate.
As
of December 31, 2014, the Group had not recorded any withholding tax as since the PRC subsidiary is in net loss position.
The
following table reconciles the Group’s effective tax for the periods presented:
| | |
Year
ended
December 31, 2014 | | |
October
25, 2013
(inception) through
December 31, 2013 | |
| | |
| | |
| |
| Expected enterprise income tax at statutory
tax rate | |
$ | (82,372 | ) | |
$ | - | |
| Expenses non-deductible for
tax purpose | |
| 82,372 | | |
| - | |
| Effective enterprise income
tax | |
$ | - | | |
$ | - | |
Non-deductible
expenses in the year ended December 31, 2014 were mainly the legal and professional fees in connection with the incorporation
of the Company and its subsidiaries, as well as filings made with the SEC. The expenses were paid by the controlling shareholder
with no appropriate document for tax deduction.
Common Stock
The Company is authorized to issue a maximum
of 300,000,000 shares of a single class each with a par value of $0.001.
As of December 31, 2014 and 2013, there were
102,379,935 and 102,100,000 shares issued and outstanding respectively.
Additional
paid-in capital
Additional
paid-in capital represents the fund injected by the controlling shareholder to the Group for daily operations.
Statutory
Reserve
The
Company’s China-based subsidiary to be set up is required to make appropriations to certain non-distributable reserve funds.
Pursuant
to the China Foreign Investment Enterprises laws, the Company’s China-based subsidiary to be set up, which are called wholly
foreign-owned enterprise (“WFOE”), have to make appropriations from their after-tax profit as determined under generally
accepted accounting principles in the PRC (the “after-tax-profit under PRC GAAP”) to non-distributable reserve funds,
including (i) general reserve fund and (ii) staff bonus and welfare fund. Each year, at least 10% of the after-tax-profit under
PRC GAAP is required to be set aside as general reserve fund until such appropriations for the fund equal 50% of the paid-in capital
of the applicable entity. The appropriation for the other two reserve funds named enterprise development reserve and employee
welfare fund is at the Group’s discretion as determined by the Board of Directors of each entity.
General
reserve and statutory surplus funds are restricted to set-off against losses, expansion of production and operation and increasing
registered capital of the respective company. Staff welfare and bonus fund are restricted to capital expenditures for the collective
welfare of employees. The reserves are not allowed to be transferred to the Company in terms of cash dividends, loans or advances,
nor are they allowed for distribution except under liquidation.
As
of December 31, 2014 and 2013, respectively, there was no profit appropriation to the statutory surplus fund or general reserve
fund.
A
significant part of the Group’s businesses is transacted in RMB, which is not freely convertible into foreign currencies.
All foreign exchange transactions take place either though the People’s Bank of China or other banks authorized to buy and
sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments
by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with
suppliers’ invoices and signed contracts. These exchange control measures imposed by the PRC government authorities may
restrict the ability of the Company’s PRC subsidiary to transfer its net assets, which to the Company though loans, advances
or cash dividends.
1)
On January 6, 2015, the Company changed its name from Stark Beneficial, Inc. to China Greenstar Corporation.
2)
Mr. Yu Ansheng beneficially owned 61,260,000 shares of the Company indirectly through Forever Prosperous., a company in which
he was the sole member and a director. On February 3, 2015, in a private transfer, Mr. Yu transferred 100% of his ownership in
Forever Prosperous to Mr. Huangchen Chen, the Chairman, Chief Executive Officer and President of the Company. As a result, Mr.
Yu no longer beneficially owns the shares, and has resigned as an officer and director of the Company.
Mr.
Sui On Shum beneficially owned 20,420,000 shares of the Company indirectly through Pride Sun Limited. In a private transfer on
January 2, 2015, Mr. Sui On Shum transferred 100% of his equity ownership interests in Pride Sun Limited to Fullwing Ventures
Limited and resigned as sole director of Pride Sun. Mr. Huangchen Chen is the sole director of Pride Sun and the sole member and
director of Fullwing Ventures.
The
above two transactions resulted in change of ultimate control of the Group.
Exhibit 3.2
AMENDED AND RESTATED
BYLAWS
OF
CHINA GREENSTAR CORPORATION
TABLE OF CONTENTS
| |
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|
Page |
| |
|
|
|
| ARTICLE I |
CORPORATE OFFICES |
|
1 |
| |
|
|
|
| 1.1 |
Registered Office |
|
1 |
| 1.2 |
Other Offices |
|
1 |
| |
|
|
|
| ARTICLE II |
MEETINGS OF STOCKHOLDERS |
|
1 |
| |
|
|
|
| 2.1 |
Annual Meetings |
|
1 |
| 2.2 |
Special Meetings |
|
1 |
| 2.3 |
Notice Of Stockholders’ Meetings |
|
2 |
| 2.4 |
Quorum |
|
3 |
| 2.5 |
Organization; Conduct of Business |
|
3 |
| 2.6 |
Proxies and Voting |
|
3 |
| 2.7 |
Waiver Of Notice |
|
4 |
| 2.8 |
Stockholder Action By Written Consent Without A Meeting |
|
4 |
| 2.9 |
Record Date For Stockholder Notice; Voting; Giving Consents |
|
5 |
| |
|
|
|
| ARTICLE III |
DIRECTORS |
|
6 |
| |
|
|
|
| 3.1 |
Number Of Directors |
|
6 |
| 3.2 |
Election And Term Of Office Of Directors |
|
6 |
| 3.3 |
Director Resignations; Newly Created Directors And Vacancies |
|
6 |
| 3.4 |
Participation In Meetings By Conference Telephone |
|
7 |
| 3.5 |
Regular Meetings |
|
7 |
| 3.6 |
Special Meetings |
|
8 |
| 3.7 |
Quorum |
|
8 |
| 3.8 |
Waiver Of Notice |
|
8 |
| 3.9 |
Conduct of Business; Board Action By Written Consent Without A Meeting |
|
9 |
| 3.10 |
Compensation Of Directors |
|
9 |
| 3.11 |
Approval Of Loans To Officers |
|
9 |
| 3.12 |
Removal Of Directors |
|
9 |
| 3.13 |
Chairman Of The Board Of Directors |
|
9 |
| |
|
|
|
| ARTICLE IV |
COMMITTEES |
|
10 |
| |
|
|
|
| 4.1 |
Committees Of Directors |
|
10 |
| 4.2 |
Committee Minutes |
|
10 |
| 4.3 |
Conduct of Business |
|
10 |
| |
|
|
|
| ARTICLE V |
OFFICERS |
|
11 |
| |
|
|
|
| 5.1 |
Officers |
|
11 |
| 5.2 |
Appointment Of Officers |
|
11 |
| 5.3 |
Subordinate Officers |
|
11 |
| 5.4 |
Removal And Resignation Of Officers |
|
11 |
| 5.5 |
Vacancies In Offices |
|
11 |
| 5.6 |
Chief Executive Officer |
|
12 |
TABLE OF CONTENTS
(continued)
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Page |
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| 5.7 |
President |
|
12 |
| 5.8 |
Vice Presidents |
|
12 |
| 5.9 |
Secretary |
|
12 |
| 5.10 |
Chief Financial Officer/ Treasurer |
|
13 |
| 5.11 |
Action With Respect to Securities Of Other Corporations |
|
13 |
| 5.12 |
Delegation of Authority |
|
13 |
| |
|
|
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| ARTICLE VI |
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS |
|
13 |
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| 6.1 |
Indemnification Of Directors And Officers |
|
13 |
| 6.2 |
Indemnification Of Others |
|
14 |
| 6.3 |
Payment Of Expenses In Advance |
|
14 |
| 6.4 |
Indemnity Not Exclusive |
|
14 |
| |
|
|
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| ARTICLE VII |
RECORDS AND REPORTS |
|
15 |
| |
|
|
|
| 7.1 |
Maintenance And Inspection Of Records |
|
15 |
| 7.2 |
Inspection By Directors |
|
15 |
| 7.3 |
Annual Report To Stockholders; Waiver |
|
15 |
| |
|
|
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| ARTICLE VIII |
GENERAL MATTERS |
|
16 |
| |
|
|
|
| 8.1 |
Checks |
|
16 |
| 8.2 |
Execution Of Corporate Contracts And Instruments |
|
16 |
| 8.3 |
Stock Certificates |
|
16 |
| 8.4 |
Special Designation On Certificates |
|
17 |
| 8.5 |
Lost Certificates |
|
17 |
| 8.6 |
Construction; Definitions |
|
17 |
| 8.7 |
Fiscal Year |
|
17 |
| 8.8 |
Seal |
|
17 |
| 8.9 |
Transfers of Stock |
|
18 |
| 8.10 |
Registered Stockholders |
|
18 |
| 8.11 |
Facsimile Signature |
|
18 |
| |
|
|
|
| ARTICLE IX |
AMENDMENTS |
|
18 |
AMENDED
AND RESTATED
BYLAWS
OF
CHINA
GREENSTAR CORPORATION
ARTICLE
I
CORPORATE OFFICES
1.1
Registered Office.
The
board of directors (the “Board of Directors”) of China Greenstar Corporation (the “Corporation”)
shall establish a registered office in the State of Delaware.
1.2
Other Offices.
The
Board of Directors may at any time establish other offices at any place or places where the Corporation is qualified to do business.
ARTICLE
II
MEETINGS
OF STOCKHOLDERS
2.1
Annual Meetings.
(a)
The annual meeting of stockholders shall be held on such date, time and place as may be designated by resolution of the Board
of Directors. The Board of Directors may, in its sole discretion, determine that the meeting may be held solely by means of remote
communication, as permitted by Section 211 of the Delaware General Corporation Law (“DGCL”). At such meetings, directors
shall be elected and any other proper business may be transacted.
2.2
Special Meetings.
Special
meetings of the stockholders, other than those required by statute, may be called at any time by the Board of Directors acting
pursuant to a resolution adopted by a majority of the Whole Board of Directors or by one or more stockholders holding an aggregate
of not less than 25% of the outstanding capital stock of the Corporation entitled to vote at the meeting. For purposes of these
Bylaws, the term “Whole Board” shall mean the total number of authorized directors whether or not there exist any
vacancies in previously authorized directorships. The Board of Directors may postpone or reschedule any previously-scheduled special
meeting.
If
a special meeting is called by any stockholder or group of stockholders, the request shall be in writing, specifying the time
of such meeting and the general nature of the business proposed to be transacted, and shall be delivered to the Secretary of the
Corporation. No business shall be transacted at such special meeting other than as specified in such notice. Upon receiving such
notice, the Secretary shall cause notice to be given to the stockholders, in accordance with Sections 2.3 and 2.4 of these Bylaws,
that a meeting will be held at the time requested by the stockholder or stockholders calling the special meeting. Nothing contained
in this paragraph of this Section 2.2 shall be construed as limiting, fixing or affecting the time when a meeting of stockholders
called by action of the Board of Directors may be held.
Nominations
of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be
elected pursuant to the Corporation’s notice of meeting (i) by or at the direction of the Board of Directors or (ii) by
any stockholder of record at the time of giving of notice provided for in this paragraph, who shall be entitled to vote at the
meeting and who complies with the notice procedures set forth in this Section 2.2. Nominations by stockholders of persons for
election to the Board of Directors may be made at such a special meeting of stockholders if the stockholder’s notice has
been delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on
the later of the 30th day before such special meeting or the 10th day following the day on which public announcement is first
made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.
2.3
Notice Of Stockholders’ Meetings.
(a)
Notice of the place, if any, date and time of all meetings of stockholders, and the means of remote communication, if any, by
which stockholders and proxyholders may be deemed to be present and person and vote at such meeting, shall be given not less than
10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting, except as otherwise
provided herein or required by law or the Certificate of Incorporation. Written notice of any meeting of stockholders, if mailed,
is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on
the records of the Corporation. Without limiting the manner by which notice otherwise may be given effectively to stockholders,
any notice to stockholders may be given by electronic mail or other electronic transmission, in the manner provided in Section
232 of the DGCL. An affidavit of the secretary or an assistant secretary or of the transfer agent of the Corporation that the
notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
(b)
When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place,
if any, thereof, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present
in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; provided, however,
that if the date of any adjourned meeting is more than 30 days after the date for which the meeting was originally noticed, or
if a new record date is fixed for the adjourned meeting, notice of the place, if any, date, and time of the adjourned meeting
and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and
vote at such adjourned meeting, shall be given in conformity herewith. At any adjourned meeting, any business may be transacted
which might have been transacted at the original meeting.
2.4
Quorum.
At
any meeting of the stockholders, the holders of a majority of the shares of stock entitled to vote at the meeting, present in
person or by proxy, shall constitute a quorum for all purposes, except as otherwise provided by the DGCL or by the Certificate
of Incorporation. Where a separate vote by a class or classes or series is required, a majority of the shares of such class or
classes or series present in person or by proxy shall constitute a quorum entitled to take action with respect to that vote on
that matter.
If
a quorum shall fail to attend any meeting, the chairman of the meeting may adjourn the meeting to another place, if any, date
or time.
2.5
Organization; Conduct of Business.
(a)
The chief executive officer of the Corporation or, if no such officer has been appointed or in his or her absence, the president
of the Corporation or, in his or her absence, the chairman of the Board of Directors, shall call to order any meeting of the stockholders
and act as chairman of the meeting. In the absence of the secretary of the Corporation, the secretary of the meeting shall be
such person as the chairman of the meeting appoints.
(b)
The chairman of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including
the manner of voting and the conduct of business. The chairman shall have the power to adjourn the meeting to another place, if
any, date and time. The date and time of opening and closing of the polls for each matter upon which the stockholders will vote
at the meeting shall be announced at the meeting.
2.6
Proxies and Voting.
(a)
At any meeting of the stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument
in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting. Any copy,
facsimile communication or other reliable reproduction of the writing or transmission created pursuant to this paragraph may be
substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction
of the entire original writing or transmission.
(b)
The Corporation may, and to the extent required by law, shall, in advance of any meeting of stockholders, appoint one or more
inspectors to act at the meeting and make a written report thereof. The Corporation may designate one or more alternate inspectors
to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the chairman
of the meeting may, and to the extent required by law, shall, appoint one or more inspectors to act at the meeting. Each inspector,
before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector
with strict impartiality and according to the best of his or her ability. Every vote taken by ballots shall be counted by a duly
appointed inspector or inspectors.
(c)
All elections of directors shall be determined by a plurality of the votes cast, and except as otherwise required by law, all
other matters shall be determined by a majority of the votes cast affirmatively or negatively.
Unless
otherwise provided in the Certificate of Incorporation, all voting on the election of directors shall be by written ballot. Voting
on other matters may be by voice vote, except if otherwise required by law or by the Certificate of Incorporation; provided, however,
that a vote by written ballot shall be taken if the chairman of the meeting so elects or if so demanded by a stockholder.
The
requirement, if any, of a written ballot may be satisfied by a ballot submitted by electronic transmission, provided that any
such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic
transmission was authorized by the stockholder or proxyholder.
2.7
Waiver Of Notice.
Whenever
notice is required to be given under any provision of the DGCL or of the Certificate of Incorporation or these Bylaws, a written
waiver thereof, signed by the person entitled to notice, or waiver by electronic mail or other electronic transmission by such
person, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting
shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in
any written waiver of notice, or any waiver of notice by electronic transmission, unless so required by the Certificate of Incorporation
or these Bylaws.
2.8
Stockholder Action By Written Consent Without A Meeting.
Any
action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action that may be taken
at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote
if a consent in writing, setting forth the action so taken, is (i) signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled
to vote thereon were present and voted, and (ii) delivered to the Corporation in accordance with Section 228(a) of the DGCL.
Every
written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective
to take the corporate action referred to therein unless, within 60 days after the date the earliest dated consent is delivered
to the Corporation, a written consent or consents signed by a sufficient number of holders to take action are delivered to the
Corporation in the manner prescribed in this Section 2.8. An electronic mail or other electronic transmission consenting to an
action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder
or proxyholder, shall be deemed to be written, signed and dated for purposes of this Section to the extent permitted by law. Any
such consent shall be delivered in accordance with Section 228(d)(1) of the DGCL.
Any
copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing
for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction
shall be a complete reproduction of the entire original writing.
Prompt
notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing (including by electronic mail or other electronic transmission as permitted by
law). If the action which is consented to is such as would have required the filing of a certificate under any section of the
DGCL if such action had been voted on by stockholders at a meeting thereof, then the certificate filed under such section shall
state, in lieu of any statement required by such section concerning any vote of stockholders, that written notice and written
consent have been given as provided in Section 228 of the DGCL.
2.9
Record Date For Stockholder Notice; Voting; Giving Consents.
In
order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which
record date may not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and
which (i) with respect to a stockholder meeting, shall not be not less than 10 nor more than 60 days before the date of such meeting,
(ii) with respect to a consent to corporate action without a meeting, shall not be more than 10 days after the date upon which
the resolution fixing the record date is adopted by the Board of Directors or (iii) with respect to any other action, shall not
be more than 60 days before such other action.
If
the Board of Directors does not so fix a record date:
(a)
The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close
of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held.
(b)
The record date for determining stockholders entitled to consent to corporate action in writing without a meeting (i) when no
prior action by the Board of Directors is necessary, shall be the day on which the first written consent (including consent by
electronic mail or other electronic transmission as permitted by law) is delivered to the Corporation by a stockholder of record
as of the close of business on the prior business day and (ii) when prior action by the Board of Directors is required, shall
be the close of business on the day the Board of Directors adopts the resolution taking such prior action.
(c)
The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board
of Directors adopts the resolution relating thereto.
A
determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting, if such adjournment is for 30 days or less; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
ARTICLE
III
DIRECTORS
3.1
Number Of Directors.
The
number of directors constituting the Whole Board shall not be less than one (1) nor more than five (5). The initial number of
Directors shall be established by resolution.
Subject
to the rights of the holders of any series of preferred stock to elect directors under specified circumstances and except as otherwise
provided for in the Certificate of Incorporation, this number may be changed from time to time by a resolution adopted by a majority
of the Whole Board. No decrease in the number of authorized directors shall shorten the term of any incumbent director.
3.2
Election And Term Of Office Of Directors.
Except
as provided in Section 3.3 of these Bylaws, and unless otherwise provided in the Certificate of Incorporation, directors shall
be elected at each annual meeting of stockholders to hold office until the next annual meeting. Directors need not be stockholders.
Each director, including a director elected to fill a vacancy, shall hold office until his or her successor is elected or until
his or her earlier resignation or removal.
3.3
Director Resignations; Newly Created Directors And Vacancies.
(a)
Any director may resign at any time upon written notice to the attention of the secretary of the Corporation or, if there is no
secretary in office, then to the attention of any other corporate officer or to the Board of Directors as a whole. Subject to
the rights of stockholders then outstanding and except as otherwise provided for in the Certificate of Incorporation, when one
or more directors so resigns and the resignation is effective at a future date, a majority of the directors then in office, including
those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling
of other vacancies.
(b)
Subject to the rights of the stockholders then outstanding and except as otherwise provided for in the Certificate of Incorporation,
newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of
Directors resulting from death, resignation, retirement, removal from office or other cause shall, unless otherwise required by
law or by resolution of the Board of Directors, be filled only by a majority vote of the directors then in office, though less
than a quorum, and directors so chosen shall serve for a term expiring at the next annual meeting of stockholders or until such
director’s successor shall have been duly elected.
(c)
Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions
of the Certificate of Incorporation, vacancies and newly created directorships of such class or classes or series may be filled
by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director
so elected.
(d)
Subject to the rights of the stockholders then outstanding, and except as otherwise provided for in the Certificate of Incorporation,
if any vacancy or newly created directorship has not been filled by director action as provided above, it may be filled by vote
of the stockholders entitled to vote on such director, at an annual or special meeting of stockholders or by written consent of
a majority of the stockholders so entitled to vote, subject to the other requirements set forth for stockholder voting at a meeting
or by written consent set forth elsewhere in these Bylaws.
(e)
If at any time, by reason of death or resignation or other cause, the Corporation should have no directors in office, then any
officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with
like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the
provisions of the Certificate of Incorporation or these Bylaws, or may apply to the Court of Chancery for a decree summarily ordering
an election as provided in Section 211 of the DGCL.
(f)
If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a
majority of the Whole Board (as constituted immediately before any such increase), then the Court of Chancery may, upon application
of any stockholder or stockholders holding at least 10% of the total number of the shares at the time outstanding having the right
to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions
of Section 211 of the DGCL as far as applicable.
3.4
Participation In Meetings By Conference Telephone.
Members
of the Board of Directors, or of any committee thereof, may participate in a meeting of the Board of Directors, or any committee,
by means of conference telephone or other communications equipment by means of which all persons participating in the meeting
can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
3.5
Regular Meetings.
Regular
meetings of the Board of Directors may be held at such date, time and place as shall from time to time be determined by the Board.
A regular meeting of the Board of Directors shall be held immediately after the conclusion of each annual meeting of stockholders.
3.6
Special Meetings.
Special
meetings of the Board of Directors may be called by the Chairman of the Board, the president, the chief executive officer or by
a majority of the Whole Board, and shall be held at such place, date and time as he, she or they shall fix.
Notice
of the place, date and time of special meetings shall be delivered personally or by telephone to each director or sent by first-class
mail, charges prepaid, facsimile or electronic mail, addressed to each director at that director’s address as it is shown
on the records of the Corporation. If the notice is mailed, it shall be deposited in the United States mail at least four days
before the time of the holding of the meeting. If the notice is delivered personally, or by facsimile, electronic mail or telephone,
it shall be delivered at least 24 hours before the time of the holding of the meeting. The notice need not specify the place of
the meeting, if the meeting is to be held at the principal executive office of the Corporation. Any and all business may be transacted
at a special meeting, unless otherwise indicated in the notice thereof.
3.7
Quorum.
At
any meeting of the Board of Directors, a majority of the Whole Board shall constitute a quorum for all purposes, except as may
be otherwise specifically provided by statute or by the Certificate of Incorporation. If a quorum shall fail to attend any meeting,
then a majority of the directors present may adjourn the meeting to another place, date or time, without further notice or waiver
thereof.
A
meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors,
if any action taken is approved by at least a majority of the required quorum for that meeting.
3.8
Waiver Of Notice.
Whenever
notice of a Board of Directors meeting is required to be given under any provision of the DGCL or of the Certificate of Incorporation
or these Bylaws, a written waiver thereof, signed by the person entitled to notice, or waiver by electronic mail or other electronic
transmission by such person, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance
of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors,
or members of a committee of directors, need be specified in any written waiver of notice or any waiver by electronic transmission,
unless so required by the Certificate of Incorporation or these Bylaws.
3.9
Conduct of Business; Board Action By Written Consent Without A Meeting.
At
any meeting of the Board of Directors, business shall be transacted in such order and manner as the Board of Directors may from
time to time determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise
provided in these Bylaws or by law.
Any
action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without
a meeting if all members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic
transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings
of the Board of Directors or committee. Such filings shall be in paper form if the minutes are maintained in paper form and shall
be in electronic form if the minutes are maintained in electronic form.
3.10
Compensation Of Directors.
The
Board of Directors shall have the authority to fix the compensation of the directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors, and may be paid a fixed sum for attendance at each meeting of
the Board of Directors, or paid a stated salary or paid other compensation as director. No such compensation shall preclude any
director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing
committees may be allowed compensation for attending committee meetings.
3.11
Approval Of Loans To Officers.
Subject
to applicable law, including Section 13(k) of the Securities Exchange Act of 1934, as amended, the Corporation may lend money
to, or guarantee any obligation of, or otherwise assist any officer or other employee of the Corporation or of its subsidiary,
including any officer or employee who is a director of the Corporation or its subsidiary, whenever, in the judgment of the directors,
such loan, guaranty or assistance may reasonably be expected to benefit the Corporation. The loan, guaranty or other assistance
may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including,
without limitation, a pledge of shares of stock of the Corporation. Nothing in this section shall be deemed to deny, limit or
restrict the powers of guaranty or warranty of the Corporation at common law or under any statute.
3.12
Removal Of Directors.
Unless
otherwise restricted by statute, by the Certificate of Incorporation or by these Bylaws, any director or the entire Board of Directors
may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors.
3.13
Chairman Of The Board Of Directors.
The
Corporation may have, at the discretion of the Board of Directors, a chairman of the Board of Directors who shall not be considered
by virtue of holding such position to be an officer of the Corporation.
ARTICLE
IV
COMMITTEES
4.1
Committees Of Directors.
The
Board of Directors, with the consent of the directors selected by the holders of Series A Preferred Stock of the Corporation,
may from time to time designate committees of the Board of Directors, with such lawfully delegable powers and duties as it thereby
confers, to serve at the pleasure of the Board of Directors and shall, for those committees and any others provided for herein,
elect a director or directors to serve as the member or members, designating, if it desires, other directors as alternate members
who may replace any absent members at any meeting of the committee. In the absence of any member of any committee and any alternate
member in his or her place, the member or members of the committee present at the meeting, whether or not he or she or they constitute
a quorum, may by unanimous vote appoint another member of the Board of Directors to act at the meeting in the place of the absent
member. Any Board committee, with the consent of the directors selected by the holders of Series A Preferred Stock of the Corporation,
may create one or more subcommittees, each subcommittee to consist of one or more members of such committee, and delegate to the
subcommittee any or all of the powers and authority of the committee.
4.2
Committee Minutes.
Each
committee shall keep regular minutes of its meetings and maintain them in the Corporation’s official minute book.
4.3
Conduct of Business.
Each
committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except
as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings; one-half
of the members shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Action
may be taken by any committee without a meeting if all members thereof consent thereto in writing or by electronic transmission,
and the writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of such
committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the
minutes are maintained in electronic form.
The
Board of Directors may adopt rules for the governance of any committee not inconsistent with these Bylaws.
ARTICLE
V
OFFICERS
5.1
Officers.
The
officers of the Corporation shall be a chief executive officer, a president, a secretary, and a chief financial officer/treasurer.
The Corporation may also have, at the discretion of the Board of Directors, a chief executive officer, one or more vice presidents,
one or more assistant secretaries, and one or more assistant treasurers, and any such other officers as may be appointed in accordance
with these Bylaws. Any number of offices may be held by the same person.
5.2
Appointment Of Officers.
The
officers of the Corporation shall be appointed by the Board of Directors.
5.3
Subordinate Officers.
The
Board of Directors may appoint such other officers and agents as the business of the Corporation may require, each of whom shall
hold office for such period, have such authority, and perform such duties as are provided in these Bylaws or as the Board of Directors
or such other officer may from time to time determine. The Board of Directors may empower the chief executive officer or the president
to define the authority and duties of such subordinate officers.
5.4
Removal And Resignation Of Officers.
Subject
to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause,
by an affirmative vote of the majority of the Board of Directors at any regular or special meeting of the board or, except in
the case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the
Board of Directors.
Any
officer may resign at any time by giving written notice to the secretary of the Corporation. Any resignation shall take effect
at the date of the receipt of that notice or at any later time specified in that notice (unless the officer is removed before
such later time); and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to
make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which
the officer is a party.
5.5
Vacancies In Offices.
Any
vacancy occurring in any office of the Corporation shall be filled in the manner prescribed in these Bylaws for regular appointments
to that office.
5.6
Chief Executive Officer.
Subject
to such supervisory powers, if any, as may be given by the Board of Directors to the chairman of the board, if any, the chief
executive officer of the Corporation shall, subject to the control of the Board of Directors, have general supervision, direction,
and control of the business and the officers of the Corporation. He or she shall preside at all meetings of the stockholders and,
in the absence or nonexistence of a chairman of the board, at all meetings of the Board of Directors, shall have the general powers
and duties of management usually vested in the office of chief executive officer of a Corporation and shall have such other powers
and duties as may be prescribed by the Board of Directors or these Bylaws.
5.7
President.
Subject
to such supervisory powers, if any, as may be given by the Board of Directors to the chairman of the board, if there is one, or
to the chief executive officer, the president shall be the principal executive officer of the Corporation and shall, subject to
the control of the Board of Directors, have general supervision, direction, and control of the business and other officers of
the Corporation. He or she shall have the general powers and duties of management usually vested in the office of president of
a Corporation and such other powers and duties as may be prescribed by the Board of Directors or these Bylaws.
5.8
Vice Presidents.
In
the absence or disability of the chief executive officer and president, the vice presidents, if any, in order of their rank as
fixed by the Board of Directors or, if not ranked, a vice president designated by the Board of Directors, shall perform all the
duties of the president and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president.
The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them
respectively (in order of priority) by the Board of Directors, the chief executive officer or the president.
5.9
Secretary.
The
secretary shall keep or cause to be kept, at the principal executive office of the Corporation or such other place as the Board
of Directors may direct, a book of minutes of all meetings and actions of directors, committees of directors, and stockholders.
The minutes shall show the time and place of each meeting, the names of those present at directors’ meetings or committee
meetings, the number of shares present or represented at stockholders’ meetings and the proceedings thereof.
The
secretary shall keep, or cause to be kept, at the principal executive office of the Corporation or at such other place as may
be designated by the Board of Directors, a share register, or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares,
and the number and date of cancellation of every certificate surrendered for cancellation.
The
secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors required
to be given by law or by these Bylaws. He or she shall keep the seal of the Corporation, if one be adopted, in safe custody and
shall have such other powers and perform such other duties as may be prescribed by the Board of Directors, by custom or by these
Bylaws.
5.10
Chief Financial Officer/ Treasurer.
The
chief financial officer/treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and
records of accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital retained earnings, and shares.
The
chief financial officer/treasurer shall deposit all moneys and other valuables in the name and to the credit of the Corporation
with such depositories as may be designated by the Board of Directors. He or she shall disburse the funds of the Corporation as
may be ordered by the Board of Directors, shall render to the president, the chief executive officer, or the directors, upon request,
an account of all his or her transactions as chief financial officer/treasurer and of the financial condition of the Corporation,
and shall have other powers and perform such other duties as may be prescribed by the Board of Directors, by custom or by these
Bylaws.
5.11
Action With Respect to Securities Of Other Corporations.
Unless
otherwise directed by the Board of Directors, the chief executive officer, the president or any officer of the Corporation authorized
by the chief executive officer or the president is authorized to vote and otherwise act on behalf of the Corporation, in person
or by proxy, at any meeting of stockholders of or with respect to any action of stockholders of any other corporation in which
the Corporation may hold securities and otherwise to exercise any and all rights and powers which the Corporation may possess
by reason of its ownership of securities in such other corporation.
5.12
Delegation of Authority.
Notwithstanding
any other provision in these Bylaws, the Board of Directors may from time to time delegate the powers or duties of any officer
to any other officers or agents.
ARTICLE
VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS
6.1
Indemnification Of Directors And Officers.
The
Corporation shall, to the maximum extent and in the manner permitted by applicable law (including as applicable law may change
in a way that expands the Corporation’s power to do so) indemnify each of its directors and officers, either incumbent or
former, against all expenses, liability and loss (including attorneys fees, judgments, fines, ERISA excise taxes and amounts paid
in settlement) actually and reasonably incurred by them in connection with any action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the Corporation), in which such person was or is a
party, is threatened to be made a party, or is otherwise involved by reason of the fact that such person is or was a director
or officer of the Corporation or a predecessor corporation. For purposes of this Article VI, that agency shall include the acts
and omissions of the Corporation’s directors and officers in those capacities, as well as their capacity as a director,
officer, manager, trustee, administrator, employee, partner, or other agent of or at other entities or enterprises (whether they
be corporations, partnerships, limited liability companies, joint ventures, employee benefit plans or other trusts, or otherwise)
if the director or officer of the Corporation is or was serving in the additional capacity or capacities at the request of the
Corporation.
6.2
Indemnification Of Others.
The
Corporation shall have the power, to the extent and in the manner permitted by applicable law (including as applicable law may
change in a way that expands the Corporation’s power to do so) and to the extent authorized by the Board of Directors, to
indemnify each of its employees and agents (other than directors and officers) against all expenses, liability and loss (including
attorneys fees, judgments, fines, ERISA excise taxes and amounts paid in settlement) actually and reasonably incurred by them
in connection with any action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation), in which such person is a party, is threatened to be made a party, or is otherwise involved
by reason of the fact that such person is or was an employee or agent of the Corporation or a predecessor corporation. For purposes
of this Article VI, that agency shall include the acts and omissions of the Corporation’s employees and agents in those
capacities, as well as their capacity as a director, officer, manager, trustee, administrator, employee, partner, or other agent
of or at other entities or enterprises (whether they be corporations, partnerships, limited liability companies, joint ventures,
employee benefit plans or other trusts, or otherwise) if the employee or agent of the Corporation is or was serving in the additional
capacity or capacities at the request of the Corporation.
6.3
Payment Of Expenses In Advance.
Expenses
incurred in defending any civil or criminal action or proceeding for which indemnification is required pursuant to Section 6.1,
or for which indemnification is permitted pursuant to Section 6.2, following authorization thereof by the Board of Directors,
shall be paid by the Corporation in advance of the final disposition of such action or proceeding if the Corporation receives
an undertaking by or on behalf of the indemnified party to repay any portion of the amount so advanced for which it is ultimately
determined that the indemnified party is not entitled to be indemnified by the Corporation.
6.4
Indemnity Not Exclusive.
The
indemnification provided by this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification
may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in
an official capacity and as to action in another capacity while holding such office, to the extent that such additional rights
to indemnification are authorized in the Certificate of Incorporation.
ARTICLE
VII
RECORDS AND REPORTS
7.1
Maintenance And Inspection Of Records.
The
Corporation shall, either at its principal executive offices or at such place or places as designated by the Board of Directors,
keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder,
a copy of these Bylaws as amended to date, accounting books and other records.
Any
stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof,
have the right during the usual hours for business to inspect for any proper purpose the Corporation’s stock ledger, a list
of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose
reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent is the
person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing
that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to
the Corporation at its registered office in Delaware or at its principal place of business.
A
complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of
stock and showing the address of each such stockholder and the number of shares registered in each such stockholder’s name,
shall be open to the examination of any such stockholder for a period of at least 10 days before the meeting to the extent and
in the manner provided by law. The stock list shall also be open to the examination of any stockholder during the whole time of
the meeting as provided by law. This list shall presumptively determine the identity of the stockholders entitled to vote at the
meeting and the number of shares held by each of them.
7.2
Inspection By Directors.
Any
director shall have the right to examine the Corporation’s stock ledger, a list of its stockholders, and its other books
and records for a purpose reasonably related to his or her position as a director.
7.3
Annual Report To Stockholders; Waiver.
As
long as the Corporation is subject to Section 2115 of the California Corporations Code, or the Corporation has its principal executive
offices or customarily holds meetings of the Board of Directors in California, the Board of Directors shall cause an annual report
to be sent to the stockholders not later than 120 days after the close of the fiscal year adopted by the Corporation. Such report
shall be sent at least 15 days (or, if sent by third-class mail 35 days) before the annual meeting of stockholders to be held
during the next fiscal year and in the manner specified in Section 2.5 of these bylaws for giving notice to stockholders of the
Corporation.
The
annual report shall contain (a) a balance sheet as of the end of the fiscal year, (b) an income statement, (c) a statement of
changes in financial position for the fiscal year, and (d) any report of independent accountants or, if there is no such report,
the certificate of an authorized officer of the Corporation that the statements were prepared without audit from the books and
records of the Corporation.
The
foregoing requirement of an annual report is waived so long as the shares of the Corporation are held by fewer than 100 holders
of record.
ARTICLE
VIII
GENERAL MATTERS
8.1
Checks.
From
time to time, the Board of Directors shall determine by resolution which person or persons may sign or endorse all checks, drafts,
other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the Corporation,
and only the persons so authorized shall sign or endorse those instruments.
8.2
Execution Of Corporate Contracts And Instruments.
The
Board of Directors may, except as otherwise provided in these Bylaws or the Certificate of Incorporation, authorize any officer
or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation;
such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board of Directors or
within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation
by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.
8.3
Stock Certificates.
The
shares of the Corporation shall be represented by certificates. Every stockholder shall be entitled to have a certificate signed
by, or in the name of the Corporation by the chairman or vice-chairman of the Board of Directors, or the president or vice-president,
and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the Corporation. Any or all of the
signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar
at the date of issue.
No
stock certificates will be issued in bearer form.
8.4
Special Designation On Certificates.
If
the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the
designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized
on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock; provided,
however, that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may be set
forth on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock a statement
that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences,
and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.5
Lost Certificates.
Except
as provided in this Section 8.5, no new certificates for shares shall be issued to replace a previously issued certificate unless
the latter is surrendered to the Corporation and cancelled at the same time. The Corporation may issue a new certificate of stock
in the place of any certificate previously issued by it, alleged to have been lost, stolen, mutilated or destroyed, provided,
however, that the Corporation may require the owner of the lost, stolen, mutilated or destroyed certificate, or the owner’s
legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it
on account of the alleged loss, theft, mutilation or destruction of any such certificate or the issuance of such new certificate.
8.6
Construction; Definitions.
Unless
the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction
of these Bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number
includes the singular, and the term “person” includes both a corporation (or other entity) and a natural person.
8.7
Fiscal Year.
The
fiscal year of the Corporation shall be December 31st. It may be changed by the Board of Directors.
8.8
Seal.
The
Corporation may adopt a corporate seal, which may be altered at pleasure, and may use the same by causing it or a facsimile thereof,
to be impressed or affixed or in any other manner reproduced.
8.9
Transfers of Stock.
Transfers
of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation.
8.10
Registered Stockholders.
The
Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive
dividends and to vote as such owner and shall not be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
8.11
Facsimile Signature.
In
addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures
of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee
thereof.
ARTICLE
IX
AMENDMENTS
The
Bylaws of the Corporation may be adopted, amended or repealed by the stockholders entitled to vote. The Corporation may, in its
Certificate of Incorporation, confer the power to adopt, amend or repeal Bylaws upon the Board of Directors. The fact that such
power has been so conferred upon the Board of Directors shall not divest the stockholders of the power, nor limit their power,
to adopt, amend or repeal Bylaws as set forth in this Article IX.
Supply
Agreement
Party
A (Supplier): Shanghai Tian Jin Petrochemical Co., Ltd.
Address:
Suite 345, Tower 5, No. 2278 Zhao Zhong Road, Zhongfu Town, Qing Pu District, Shanghai
Party
B (Seller): Shenzhen Greenstar Technology Co., Ltd.
Address:
B121, Section B Tower 4, Jinhuidadao, Nanhaidadao, Nanshan District, Shenzhen
To
protect the legitimate rights and interests of both parties, in accordance with the People’s Republic of China Contract
Law, Party A and Party B agree to enter into this contract through friendly consultation, in the common commitment to perform.
Article
1: The object of the contract (excluding tax)
| Item |
|
Specifications |
|
Measuring Unit |
|
Unit |
|
Total |
| |
|
|
|
|
|
|
|
|
| Fuel Oil |
|
80ml*6bottles*9cases |
|
Box |
|
Yuan |
|
2,500.00 |
Total
in RMB: (Capital) Two Thousand and Five Hundred Yuan, (Digital) ¥2,500.00
Article
2: The orders
| |
1. |
Party B shall
order product from Party A. |
| |
|
|
| |
2. |
The orders shall
specify the name of the goods, manufacturer producer name and address, specifications, units, brand, quality, origin, quantity,
unit price, delivery time and delivery place and other specific content. |
| |
|
|
| |
3. |
Party A shall
reply within two (2) working days after its receive the order whether to accept the order. If Party A fails to respond, it
shall be deemed not to accept the order. |
Article
3: Delivery/Pick up and place: Party A shall deliver to Party B’s address
Article
4: Delivery time: From May 1, 2015.
Article
5: Settlement and duration: Sixty (60) days payment.
Article
6: Commodity promotion
| |
1. |
Party B may manage
sales to accelerate commodity turnover and sales. |
| |
|
|
| |
2. |
Party A shall
pay a distribution/branding fee to Party B for promoting the product. The parties shall mutually agree to the amount of the
fee to be paid by Party A to Party B and the payment terms. |
Article
7: Liability for breach contract:
| |
1. |
Liability for
breach of the supplier: |
| |
i). |
When Party A
sells product that is not in accordance with the original sample quality standards or delivery product quality standards,
Party B shall have the right to refuse and return. |
| |
|
|
| |
ii). |
Party A’s
failure to make delivery completely in conformity with the contract, according to the contract price, the compensation shall
be 0.5% of the payment per day. |
| |
2. |
Liability for
breach of the seller: |
| |
i). |
Party A’s
shall have all rights under PRC law to bring a claim for breach under the terms of the contract. |
The
party suffering from force majeure is exempt from performing under the terms of the contract.
Article
8: Confidentiality
The
parties shall keep the terms of this contract strictly confidential.
Article
9: Other terms:
| |
1. |
This agreement
is in duplicate, each of the parties has one copy. |
| |
|
|
| |
2. |
The contract
is signed by both parties after the effective date. Any outstanding issues can be further signed by a supplementary contract. |
| |
|
|
| |
3. |
This contract
is valid: from May 1, 2015 to April 30, 2016. |
/s/
Shanghai Tian Jin Petrochemical Co., Ltd.
|
|
| Shanghai Tian Jin Petrochemical Co., Ltd. |
|
| |
|
/s/
Shenzhen Greenstar Technology Co., Ltd.
|
|
| Shenzhen Greenstar Technology Co., Ltd. |
|
Certification of Principal Executive Officer
Pursuant to Rule 13A-14(A)/15D-14(A)
of the Securities Exchange Act of 1934
I, Chen Huangchen, Chief Executive Officer (Principal
Executive Officer), certify that:
1. I have reviewed this
Annual Report on Form 10-K for the period ended December 31, 2014 of China Greenstar Corporation;
2. Based on my knowledge,
this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge,
the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s
other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a. designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b. designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c. evaluated the effectiveness
of registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. disclosed in this report
any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s
other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing
the equivalent functions):
a. all significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. any fraud, whether or
not material, that involves management or other employees who have a significant role in the registrant’s internal controls
over financial reporting.
Dated:
September 18 , 2015
|
By: |
/s/ Chen Huangchen |
| |
|
Chen Huangchen |
| |
|
Chairman, President and Chief Executive Officer |
Certification of Principal Financial Officer
Pursuant to Rule 13A-14(A)/15D-14(A)
of the Securities Exchange Act of 1934
I, Yang Rong, Chief Financial
Officer (Principal Financial and Accounting Officer), certify that:
1. I have reviewed this
Annual Report on Form 10-K for the period ended December 31, 2014 of China Greenstar Corporation;
2. Based on my knowledge,
this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge,
the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s
other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a. designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b. designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c. evaluated the effectiveness
of registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. disclosed in this report
any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s
other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing
the equivalent functions):
a. all significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. any fraud, whether or
not material, that involves management or other employees who have a significant role in the registrant’s internal controls
over financial reporting.
Dated: September 18 , 2015
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By: |
/s/ Yang Rong |
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Yang Rong |
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Chief Financial Officer |
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350 AND EXCHANGE ACT RULES 13a-14(b) AND 15d-14(b)
(Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the Annual Report of
China Greenstar Corporation on Form 10-K for the period ended December 31, 2014, as filed with the Securities and Exchange Commission
on the date hereof (the “Report”), each of the undersigned do hereby certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in
all material respects, the financial condition and results of the operations of the Company.
Dated: September 18 , 2015
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CHINA GREENSTAR CORPORATION |
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By: |
/s/ Chen Huangchen |
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Chen Huangchen |
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Chairman, President and Chief Executive Officer |
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By: |
/s/ Yang Rong |
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Yang Rong |
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Chief Financial Officer |