(a)
Business Development
The
Company was organized under the laws of the State of Nevada on September 19, 2009, under its current name. The Company was a development
stage company with the goal of becoming a design, engineer, construct, market and sell high-quality PV SEFs for commercial and utility
applications to local markets.
Prior
to June 1, 2012, we were engaged in exploration for commercially recoverable metal-bearing mineral deposits. On June 1, 2012, we
entered into an agreement with Xunyang Yongjin Mining Co., Ltd. to transfer our mining exploration rights for a cash payment. Further,
on December 30, 2013, our subsidiary, Shaanxi Changjiang Mining & New Energy Co., Ltd ("Shaanxi Changjiang"), entered into
Equity Transfer Agreements with officers of the Company, whereby the Company’s subsidiaries were sold off.
Business
operations for China Chingjiang Mining & New Energy Energy Co., Ltd. and its subsidiaries were abandoned by former management and
a custodianship action, as described in the subsequent paragraph, was commenced in 2020. The Company filed its last 10-Q in 2017, this
financial report included liabilities and debts. As of the date of this filing, these liabilities and debts have not been addressed and
remain on the Company’s books.
On
February 3, 2020, the Eighth District Court of Clark County, Nevada granted the Application for Appointment of Custodian as a result
of the absence of a functioning board of directors and the revocation of the Company’s charter. The order appointed Small Cap Compliance,
LLC (“SCC”) custodian with the right to appoint officers and directors, negotiate and compromise debt, execute contracts,
issue stock, and authorize new classes of stock.
The
court awarded custodianship to Small Cap Compliance, LLC (sole member is Rhonda Keaveney) based on the absence of a functioning board
of directors, revocation of the company’s charter, and abandonment of the business. At this time, Ms. Keaveney was appointed sole
officer and director.
The
Company was severely delinquent in filing annual reports for the Company’s charter. The last annual report was filed on 12/31/2015
in on Form 10-K. In addition, the company was subject to Exchange Act reporting requirements including filing 10Q’s and 10Ks. The
Company filed its last 10Q for quarter ending 6/30/2017 and was out of compliance with Exchange Act reporting. SCC attempted to contact
the Company’s officers and directors through letters, emails and phone calls, with no success.
SCC
was a shareholder in the Company and applied to the Court for an Order appointing SCC as the Custodian. This application was for the
purpose of reinstating CHYL’s corporate charter to do business and restoring value to the Company for the benefit of the stockholders.
SCC
performed the following actions in its capacity as custodian:
| |
· |
Funded any expenses of the company including paying
off outstanding liabilities |
| |
· |
Brought the Company back into compliance with the Nevada
Secretary of State, resident agent, transfer agent |
| |
· |
Appointed officers and directors and held a shareholders
meeting |
SCC
paid the following expenses on behalf of the company:
Nevada
Secretary of State for reinstatement of the Company, $5,675
Transfer
agent, Island Stock Transfer, $6,500
Amended
and Restated Articles of Incorporation for the Company, $175.00.
Upon
appointment as custodian of CHJI and under its duties stipulated by the Nevada court, SCC took initiative to organize the business of
the issuer. As custodian, the duties were to conduct daily business, hold shareholder meetings, appoint officers and directors, reinstate
the company with the Nevada Secretary of State. SCC also had authority to enter into contracts and find a suitable merger candidate.
SCC was compensated for its role as custodian in the amount of 1,000,000 shares of Convertible Series C Preferred Stock. SCC did not
receive any additional compensation, in the form of cash or stock, for custodian services. The custodianship was discharged on May 18,
2020.
On
August 23, 2020, SCC entered into a Stock Purchase Agreement with Bridgeview Capital Partners, LLC whereby Bridgeview Capital Partners,
LLC purchased 1,000,000 shares of Convertible Series C Preferred Stock. These shares represent the controlling block of stock. Ms. Keaveney
resigned his position of sole officer and director and appointed Dr. Chongyi Yang as CEO, Treasurer, Secretary, and Director of the Company.
Bridgeview
Capital Partners, LLC is controlled by Michael Dobbs and Sean Lanci.
On
August 23, 2020, Bridgeview Capital Partners, LLC entered into a Stock Purchase with Cathay Capital Management Inc. (“Cathay”)
whereby Cathay purchased 1,000,000 shares of Convertible Series C Preferred Stock. Chongyi Yang is the control person for Cathay.
We
are currently a shell company, as defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”),
and Rule 12b-2.
(b)
Business of Issuer
China
Changjiang Mining & New Energy Co., Ltd. is a developmental stage company, incorporated under the laws of the State of Nevada on
September 19, 2009. Our plan of business has not been implemented but will incorporate exploration, development, and sales of crude oil,
as well as conducting industry analysis related to the petroleum industry.
At
present, we have not implemented our business plan and financial revenue has not yet been realized. The Company hopes to raise capital
in order to fund the project.
All
statements involving our business plan are forward looking statements and have not been implemented as of this filing.
The
Company is moving in a new direction, statements made relating to our business plan are forward looking statements and we have no history
of performance. Current management does not have any
experience in these industries but is actively looking for a suitable person to incorporate into the management team.
We
feel that our business plan addresses the need for additional development in the mining industry of oil and gas.
China’s
oil industry is regulated by the People’s Republic of China under the Mineral Resources Law. The Company will follow all prescribed
regulation.
The
Company intends to implement its business plan upon raising capital. Subject to available capital, the oil and gas extraction industry
can be classified into four major categories:
Exploration
| |
· |
search for rock formations
associated with oil or natural gas deposits |
| |
· |
geophysical prospecting and/or
exploratory drilling |
Well
Development
| |
· |
construction of one or more
wells from the beginning |
Production
| |
· |
process
of extracting the hydrocarbons and separating the mixture of liquid hydrocarbons, gas, water, and solids, removing the constituents
that are non-saleable, and selling the liquid hydrocarbons and gas
|
Site
Abandonment
| |
· |
plugging the well(s) and restoring
the site when a recently-drilled well lacks the potential to produce economic quantities of oil or gas, or when a production well
is no longer economically viable |
In
applying the foregoing criteria, management will attempt to analyze all factors and circumstances and make a determination based upon
reasonable investigative measures and available data. Due to our limited capital available for investigation, we may not discover or
adequately evaluate adverse facts about the opportunity to be acquired. Additionally, we will be competing against other entities that
may have greater financial, technical, and managerial capabilities for identifying and completing our business plan.
We
are unable to predict when we will, if ever, identify and enter into any definitive agreement with buyers of our product. We anticipate
that proposed business plan would be made available to us through personal contacts of our directors, officers and principal stockholders,
professional advisors, broker-dealers, venture capitalists, members of the financial community and others who may present unsolicited
proposals. In certain cases, we may agree to pay a finder’s fee or to otherwise compensate the persons who introduce the Company
to business opportunities in which we participate.
As
of the time of this filing, the Company has not implemented its business plan.
We
expect that our due diligence will encompass, among other things, meetings with incumbent management of the target business and inspection
of its facilities, as necessary, as well as a review of financial and other information, which is made available to the Company. This
due diligence review will be conducted either by our management or by third parties we may engage. We anticipate that we may rely on
the issuance of our common stock in lieu of cash payments for services or expenses related to any analysis.
We
may incur time and costs required to select and evaluate our business structure and complete our business plan, which cannot presently
be determined with any degree of certainty. Any costs incurred with respect to the indemnification and evaluation of a prospective mining
venture that is not ultimately completed may result in a loss to the Company. These fees may include legal costs, accounting costs, finder’s
fees, consultant’s fees and other related expenses. We have no present arrangements for any of these types of fees.
We
anticipate that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial cost for accountants,
attorneys, consultants, and others. Costs may be incurred in the investigation process, which may not be recoverable. Furthermore, even
if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result
in a loss to the Company of the related costs incurred.
Competition
Our
company expects to compete in in the oil and gas industry. We will compete in global markets where countries such the USA, Saudi Arabia,
and Canada out produce China in oil production. In addition, there are several competitors in China that are larger and more profitable
than CHJI. We expect that the quantity and composition of our competitive environment will continue to evolve as the industry matures.
Additionally, increased competition is possible to the extent that new geographies enter the marketplace as a result of continued enactment
of regulatory and legislative changes. We believe that diligently establishing and expanding our funding sources will establish us in
an already established industry. Additionally, we expect that establishing our product offerings on new platforms are factors that mitigate
the risk associated with operating in a developing competitive environment. Additionally, the contemporaneous growth of the industry
as a whole will result in new customers entering the marketplace, thereby further mitigating the impact of competition on our future
operations and results.
Compliance
with oil and gas standards will increase development costs and the cost of products sold in the retail market. In turn, we may not be
able to meet the competitive price point dictated by the market and our competitors.
Again,
these are forward looking statements and not an indication of past performance. There is no guarantee that we will be able to implement
our business plan, however, we have a merger candidate, Inner
Mongolia Hongyuan Fengtai Resources Development Co., Ltd. (“IMHF”).
Founded
on July 19, 2006 and located in New Baolage Town, Xianghuang Banner, Inner Mongolia Hongyuan Fengtai Resources Development Co., Ltd.
(Hongfeng) is a limited liability company focusing on energy investment. The company is currently engaged in the exploration, development,
and sales of crude oil, as well as conducting industry analysis related to the petroleum industry. The company’s business can be
defined as conducting the midstream exploration and development (exploitation) in the petroleum industry. Government protection set up
has high barriers for potential competitors to entry. Hongfeng has an operating team of the top crude oil extraction experts with overseas
management experience. With fully automated mining equipment and regular maintenance, the company keeps safe (no operating accident in
14 years) and high efficiency at the same time.
Effect
of Existing or Probable Governmental Regulations on the Business
Upon
effectiveness of this Form 10, we will be subject to the Exchange Act and the Sarbanes-Oxley Act of 2002. Under the Exchange Act, we
will be required to file with the SEC annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The
Sarbanes-Oxley Act creates a strong and independent accounting oversight board to oversee the conduct of auditors of public companies
and to strengthen auditor independence. It also (1) requires steps be taken to enhance the direct responsibility of senior members of
management for financial reporting and for the quality of financial disclosures made by public companies; (2) establishes clear statutory
rules to limit, and to expose to public view, possible conflicts of interest affecting securities analysts; (3) creates guidelines for
audit committee members’ appointment, and compensation and oversight of the work of public companies’ auditors; (4) prohibits
certain insider trading during pension fund blackout periods; and (5) establishes a federal crime of securities fraud, among other provisions.
We
will also be subject to Section 14(a) of the Exchange Act, which 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 our stockholders at a special or annual meeting 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 14A. 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 provided to our stockholders.
We
are also subject to subpart 1300 of Regulation S-K, based on the Committee for Mineral Reserves International Reporting Standards (CRIRSCO).
All SEC reporting companies, other than those who file under the Canada-U.S. Multijurisdictional Disclosure System (MJDS), will be required
to comply with the new rules for their first fiscal year beginning on or after January 1, 2021.
Lastly,
we are also subject to the People’s Republic of China under the Mineral Resources Law many other China regulatory agencies. The
Mineral Resources Law oversees the area of developing the oil industry, promoting the exploration,
development, utilization and protection of mineral resources and ensuring the present and long-term needs of the socialist modernization
program.
Employees
As
of March 31, 2021, we had one officer and no employees. We anticipate that we will begin to fill out our management team as and when
we raise capital to begin implementing our business plan. In the interim, we will utilize independent consultants to assist with accounting
and administrative matters. We currently have no employment agreements and believe our consulting relationships are satisfactory. We
plan to continue to hire independent consultants from time to time on an as-needed basis.
Risks
Relating to Our Business
Our
business plan involves a number of very significant risks. Our future business, operating results and financial condition could be seriously
harmed as a result of the occurrence of any of the following risks. You could lose all or part of your investment due to any of these
risks. You should invest in our common stock only if you can afford to lose your entire investment.
Our
officers and directors reside outside the United States,
investors may have limited legal recourse against them including difficulties in enforcing judgments made against them by U.S. courts.
There is neither treaty nor any reciprocal arrangement between China and the United States regarding recognition or enforcement of civil
judgments.
Risks
Related to the Company’s Organizational Structure
The
Company is currently organized under the operating structure of the public entity, China
Changjiang Mining & New Energy Co., Ltd., incorporated in the state of Nevada. CHJI plans to
conduct operations in China and may acquire Chinese companies as subsidiaries to carry out its plan of operation. The VIE structure provides
contractual exposure to foreign investment in such companies. The Company is not currently organized under a Variable Interest Entity
(VIE) however, we may decide to implement a VIE structure in the future. The disclosed risks or events are only applicable if we decide
to implement a VIE structure.
China’s
Foreign Investment Law (FIL) may prohibit direct foreign investment in Chinese operating companies moving forward.
Foreign
investors are permitted to own equity in companies incorporated in Nevada but not permitted to own equity in our contemplated Chinese
entities.
We
will continue to monitor the changes in FIL, and CHJI may consider migrating to a VIE structure to continue receiving participation from
foreign investors.
CHJI
does not use a VIE structure at this time and the following implications of operating under a VIE structure do not apply to us. However,
if we decide to implement a VIE structure moving forward, as
discussed in detail below, the value of our common stock may decline or become worthless, and the shareholder could lose their entire
investment.
Our
contemplated VIE structure would consist of at least three core entities: a Chinese company with legitimate operations (referred to as
contemplated the VIE); a wholly foreign-owned enterprise established as an intermediary in China; and an offshore shell company that
lists on a U.S. or other foreign exchange.[2]
Courts
are unlikely to enforce the contracts and VIE contracts have not been tested in a court of law. Because the value of the offshore shell
company derives from its ability to consolidate the Chinese VIE on its financial statements, losing the VIE as a result of breached contracts
(or government enforcement) would significantly devalue shareholders’ investments. CHJI
does not currently use a VIE structure, but that if you do implement one, there would be substantial legal uncertainties surrounding
the related contractual arrangements.
The
Chinese government could rule that the VIE structure is against public policy, Chinese laws, and regulations. This ruling would likely
result in a material change in our contemplated operations. Furthermore, the disruption or termination of our operations could result
in the decline in the value of our stock may become worthless, and the shareholder could lose their entire investment. See Item 1.A Risk
Factors: Risks Related to Access to Information and
Regulatory Oversight.
Any
failure by our contemplated VIE or their shareholders to perform their obligations under our contractual arrangements with them would
have a material and adverse effect on our business. If our contemplated VIE or their shareholders fail to perform their respective obligations
under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce
such arrangements. We may also have to rely on legal remedies under PRC law, including seeking specific performance or injunctive relief,
and contractual remedies, which we cannot assure you will be sufficient or effective under PRC law.
In
addition, if any third parties claim any interest in such shareholders' equity interests in our contemplated VIE, our ability to exercise
shareholders' rights or foreclose the share pledge according to the contractual arrangements may be impaired. If these or other disputes
between the shareholders of our contemplated VIE and third parties were to impair our control over our contemplated VIE, our ability
to consolidate the financial results of our contemplated VIE would be affected, which would in turn result in a material adverse effect
on our business, operations and financial condition.
CHJI
does not currently use a VIE structure, but that if you do implement one, there would be substantial legal uncertainties surrounding
the related contractual arrangements. However, these risks or events are only applicable if we decide to implement a VIE structure.
There
are greater legal and operational risks associated having the majority of our contemplated operations in China.
We
don’t currently utilize a VIE structure or have Chinese subsidiaries. However, if we decide the VIE structure is there will be
additional risks associated with our business. If the PRC government determines that the contractual
arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted
differently in the future, our securities may decline in value or become worthless if the determinations, changes, or interpretations
result in your inability to assert contractual control over the assets of our PRC subsidiaries or the VIEs that conduct all or substantially
all of your operations.
Our
Auditor is U.S based, registered with the PCAOB, and is Subject to PCAOB Inspections
The
HFCAA requires the SEC to identify registrants that have retained a registered public
accounting firm to issue an audit report where that registered public
accounting firm has a branch or office that:
| · | Is located in a foreign jurisdiction; and |
| · | The PCAOB has determined that it is unable to
inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction |
| · | As reflected on the PCAOB's website, the PCAOB is currently unable to inspect
or investigate accounting firms due to a position of the local authority in two jurisdictions: China and Hong Kong |
If
a PCAOB auditor is unable to inspect the issuer's public accounting firm for three consecutive years,
the issuer's securities are banned from trade on a national exchange or through other methods. The United States Senate passed the Accelerating
Holding Foreign Companies Accountable Act, which, if enacted, would decrease the number of non-inspection years from three years to two
years. As a result, our securities could be delisted rendering our stock worthless as a result of "non-inspection" by the PCAOB.
On
December 16, 2021, the PCAOB issued a report on its determinations that if the Board is unable to inspect or investigate completely
PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, a Special Administrative Region of the People’s
Republic of China (PRC), because of positions taken by PRC authorities in those jurisdictions, it will suspend trading of the issuer.
The Board made these determinations pursuant to PCAOB Rule 6100 which provides a framework for how the PCAOB fulfills its responsibilities
under the Holding Foreign Companies Accountable Act (HFCAA).
On
December 16, 2021, the following amendments to the HCFAA were adopted by the Securities and Exchange Commission:
Consistent
with the HFCAA, the final amendments require Commission-Identified Issuers to submit documentation to the SEC through the EDGAR system
on or before its annual report due date that establishes that it is not owned or controlled by a governmental entity in its public accounting
firm’s foreign jurisdiction. The final amendments also require a Commission-Identified Issuer that is also a “foreign issuer,”
as defined in Exchange Act Rule 3b-4, to provide certain additional specified disclosures in their annual report for itself and its consolidated
foreign operating entity or entities, including any variable-interest entity or similar structure that results in additional foreign
entities being consolidated in the registrant’s financial statements.
The
required disclosures include:
| |
· |
During
the period covered by the form, the registered public accounting firm has prepared an audit report for the issuer;
|
| |
· |
The
percentage of the shares of the issuer owned by governmental entities in the foreign jurisdiction in which the issuer is incorporated
or otherwise organized;
|
| |
· |
Whether
governmental entities in the applicable foreign jurisdiction with respect to that registered public accounting firm have a controlling
financial interest with respect to the issuer;
|
| |
· |
The name of each official of the Chinese Communist
Party who is a member of the board of directors of the issuer or the operating entity with respect to the issuer; and |
| |
· |
Whether the articles of incorporation of the issuer
(or equivalent organizing document) contains any charter of the Chinese Communist Party, including the text of any such charter. |
The
SEC will identify a registrant as a Commission-Identified Issuer as early as possible after the registrant files its annual report and
on a rolling basis. The SEC will “provisionally identify” a registrant as a Commission-Identified Issuer on the SEC’s
website at www.sec.gov/HFCAA. For 15 business days after this provisional identification, a registrant may email the SEC if it believes
it has been incorrectly identified, providing evidence supporting its claim. After reviewing the information, the registrant will be
notified whether the SEC will “conclusively identify” the registrant as a Commission-Identified Issuer.
A
Commission-Identified Issuer is a registrant identified by the SEC as having filed an annual report with an audit report issued by a
registered public accounting firm that is located in a foreign jurisdiction and that the Public Company Accounting Oversight Board (PCAOB)
is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction (PCAOB-Identified Firm).
The SEC will identify such issuers promptly after the filing of their annual reports by evaluating whether the annual report contains
an audit report signed by a PCAOB-Identified Firm. We may be subject to the HFCAA if we
are identified as a "Commission-Identified Issuer" in accordance with such HFCAA amendments
If
the registrant does not contact the SEC to dispute the provisional identification within 15 business days, the SEC will conclusively
identify the registrant as a Commission-Identified Issuer. The SEC will publish a list on its website identifying Commission-Identified
Issuers, indicating the number of years a Commission-Identified Issuer has been published on the list, and noting whether the Commission-Identified
Issuer has been subject to any prior trading prohibitions.
The
HFCAA requires the SEC to prohibit the trading of the securities of certain Commission Identified Issuers on a national securities exchange
or through any other method that is within the jurisdiction of the SEC to regulate, including through over-the-counter trading. As a
result, the SEC will impose an initial trading prohibition on a registrant as soon as practicable after it is conclusively identified
as a Commission-Identified Issuer for three consecutive years.
If
the SEC ends the initial trading prohibition and, thereafter, the registrant is again determined to be a Commission-Identified Issuer,
the SEC will impose a subsequent trading prohibition on the registrant for a minimum of five years. To end an initial or subsequent trading
prohibition, a Commission-Identified Issuer must certify that it has retained or will retain a registered public accounting firm that
the PCAOB has determined it is able to inspect or investigate. To make that certification, the Commission-Identified Issuer must file
financial statements that include an audit report signed by such a registered public accounting firm.
Our
auditor is located in the United States and subject PCAOB audits and not subject to the HFCAA ruling announced by the PCAOB on December
16, 2021.
Our
Business is Subject to Numerous Legal and Regulatory Risks that Could Have an Adverse Impact on our Contemplated Business.
We
are subject to differing and sometimes conflicting laws and regulations in the various China jurisdictions where we provide our services.
Our contemplated business model is a highly regulated industry, new laws and regulations may be adopted from time to time to address
new issues that come to the authorities' attention. In addition, considerable uncertainties still exist with respect to the interpretation
and implementation of existing laws and regulations governing our contemplated business activities. A large number of proposals are before
various national, regional, and local legislative bodies and regulatory entities regarding issues related to our industry or our business
model. As we implement our business plan and expand into countries, we may become subject to additional laws and regulations that we
are not subject to now. Existing or new laws and regulations could expose us to substantial liability, including significant expenses
necessary to comply with such laws and regulations, and could dampen our growth, which could adversely affect our business and results
of operations.
Risks
Related to Access to Information and Regulatory Oversight
PRC
Securities Law state that no overseas securities regulator can directly conduct investigations or evidence collection activities within
the PRC and no entity or individual in China may provide documents and information relating to securities business activities to overseas
regulators without Chinese government approval. The SEC, U.S. Department of Justice, and other U.S. authorities face substantial challenges
in bringing and enforcing actions against China-based Issuers and their officers and directors. As a result, investors in China-based
Issuers may not benefit from a regulatory environment that fosters effective enforcement of U.S. federal securities laws.
Risks
Related to the Chinese Government’s Significant Oversight
The
Chinese government may intervene or influence our operations at any time, which could result in a material change in our operations and/or
the value of our securities.
China’s
legal system is substantially different from the legal system in the United States and may raise risks and uncertainties concerning the
intent, effect, and enforcement of its laws, rules, and regulations, including those that restrict the inflow and outflow of foreign
capital or provide the Chinese government with significant authority to exert influence on a China-based Issuer’s ability to conduct
business or raise capital. This lack of certainty may result in the inconsistent and unpredictable interpretation and enforcement of
laws, rules, and regulations, which may change quickly. China-based Issuers face risks related to evolving laws and regulations, which
could impede their ability to obtain or maintain permits or licenses required to conduct business in China. In the absence of required
permits or licenses, governmental authorities may impose material sanctions or penalties on the company. Such actions could significantly
limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to
significantly decline or be worthless.
Recent
Statements by the Chinese Government
Given recent
statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted overseas
and/or foreign investment in China-based issuers, there are additional risks that could affect our contemplated business plan. Such action
by Chinese government could significantly limit or completely hinder our ability to offer or continue to offer securities to investors
and cause the value of such securities to significantly decline or be worthless.
Limitations
on Shareholder Rights and Recourse
Legal
claims, including federal securities law claims, against China-based Issuers, or their officers, directors, and gatekeepers, may be difficult
or impossible for investors to pursue in U.S. courts. Even if an investor obtains a judgment in a U.S. court, the investor may be unable
to enforce such judgment, particularly in the case of a China-based Issuer, where the related assets or persons are typically located
outside of the United States and in jurisdictions that may not recognize or enforce U.S. judgments. If an investor is unable to bring
a U.S. claim or collect on a U.S. judgment, the investor may have to rely on legal claims and remedies available in China or other overseas
jurisdictions where the China-based Issuer may maintain assets. The claims and remedies available in these jurisdictions are often significantly
different from those available in the United States and difficult to pursue.
Greater
Chinese Regulatory Oversight May Impact our Contemplated Business
We
are not currently required to comply with regulations and policies of the Cyberspace Administration of China (CAC) because we have not
commenced our business in China.
CAC
regulates the collection of personal information, which is recorded electronically, or in any other form, to recognize the identity of
a natural person. In light of greater oversight regarding the collection of personal information we may be subject to cybersecurity review
upon execution of our contemplated business plan.
If
CAC determines that we have violated any portion of PRC laws and regulation, our ability to obtain or maintain permits or licenses required
to conduct business in China may be affected. In the absence of required permits or licenses, governmental authorities may impose material
sanctions or penalties on the company. Such actions could significantly limit or completely hinder our ability to offer or continue to
offer securities to investors and cause the value of such securities to significantly decline or be worthless.
At
this time, we are not required to comply with CAC regulation and have not submitted information to the CAC for approval.
Merger
& Acquisition Approval is Required
Under
the PRC Anti-monopoly Law, merger & acquisitions that meet certain turnover thresholds must notify the State Administration for Market
Regulation (SAMR) for merger control clearance and may not be implemented without SAMR’s approval.
CHJI
may merge with, or acquire, a target company to commence its contemplated business operations. If our target business meets the threshold
for review by SAMR, we will be required to submit an application for approval.
The
SAMR utilizes a substantive test for merger review. The substantive test takes into consideration the:
| |
· |
Market shares and market control power of the business
operators concerned |
| |
· |
Concentration levels of relevant markets |
| |
· |
Impact of the concentration on market entry, technological
development, consumers and other relevant operators |
| |
· |
Impact of the concentration on national economic development |
As
of this time, CHJI is not required to submit an application to SAMR as we have not identified a merger or acquisition candidate. However,
if we locate a suitable merger or acquisition candidate, we may be required to submit an approval request to SAMR. We don’t anticipate
merging with a company that is large enough to trigger anti-monopoly threshold for review. However, if SAMR denies our application, such
actions could significantly limit or completely hinder our ability to offer, or continue to offer, securities to investors and cause
the value of such securities to significantly decline or be worthless.
Resale
limitations of Rule 144(i) on your shares
According
to the Rule 144(i), Rule 144 is not available for the resale of securities initially issued by either a reporting or non-reporting shell
company. Moreover, Rule 144(i)(1)(ii) states that Rule 144 is not available to securities initially issued by an issuer that has been
“at any time previously” a reporting or non-reporting shell company. Rule 144(i)(1)(ii) prohibits shareholders from utilizing
Rule 144 to sell their shares in a company that at any time in its existence was a shell company. However, according to Rule 144(i)(2),
an issuer can “cure” its shell status.
To
“cure” a company’s current or former shell company status, the conditions of Rule 144(i)(2) must be satisfied regardless
of the time that has elapsed since the public company ceased to be a shell company and regardless of when the shares were issued. The
availability of Rule 144 for resales of shares issued while the company is a shell company or thereafter may be restricted even after
the expiration of the one-year period since it filed its Form 10 information if the company is not current on all of its periodic reports
required to be filed within the SEC during the 12 months before the date of the shareholder’s sale. Thus, the company must file
all 10-Qs and 10-K for the preceding 12 months and since the filing of the Form 10, or Rule 144 is not available for the resale of securities
We
have extremely limited assets, have incurred operating losses, and have no current source of revenue
We
have had minimal assets. We do not expect to generate revenues until we begin to implement our business plan. However, we can provide
no assurance that we will produce any material revenues for our stockholders, or that our business will operate on a profitable basis.
We
will, likely, sustain operating expenses without corresponding revenues, at least until the consummation of our business plan. This may
result in our incurring a net operating loss that will increase unless we consummate a business plan with a profitable business or internally
develop our business. We cannot assure you that we can identify a suitable business combination or successfully internally develop our
business, or that any such business will be profitable at the time of its acquisition by the Company or ever.
Our
capital resources may not be sufficient to meet our capital requirements, and in the absence of additional resources we may have to curtail
or cease business operations
We
have historically generated negative cash flow and losses from operations and could experience negative cash flow and losses from operations
in the future. Our independent auditors have included an explanatory paragraph in their report on our financial statements for the fiscal
years ended December 31, 2019 and 2020 expressing doubt regarding our ability to continue as a going concern. We currently only have
a minimal amount of cash available, which will not be sufficient to fund our anticipated future operating needs. The Company will need
to raise substantial sums to implement its business plan. There can be no assurance that the Company will be successful in raising funds.
To the extent that the Company is unable to raise funds, we will be required to reduce our planned operations or cease any operations.
We
may encounter substantial competition in our business and our failure to compete effectively may adversely affect our ability to generate
revenue
We
believe that existing and new competitors will continue to improve in cost control and performance of their mining. We have global competitors
and China’s ore oil sector has been affected by Covid-19 that are larger and we will be required to continue to invest in product
development and productivity improvements to compete effectively in our markets. Our competitors could develop a more efficient product
or undertake more aggressive and costly marketing campaigns than ours, which may adversely affect our marketing strategies and could
have a material adverse effect on our business, results of operations and financial condition.
Our
major competitors may be better able than we to successfully endure downturns in our industrial sector. In periods of reduced demand
for our products, we can either choose to maintain market share by reducing our selling prices to meet competition or maintain selling
prices, which would likely sacrifice market share. Sales and overall profitability would be reduced in either case. In addition, we cannot
assure you that additional competitors will not enter our existing markets, or that we will be able to compete successfully against existing
or new competition.
Effect
of Environmental Laws
We
believe that we are in compliance with all applicable environmental laws, in all material respects. We do not expect future compliance
with environmental laws to have a material adverse effect on our business.
We
may not be able to obtain regulatory or governmental approvals for our products
Our
business is subject to extensive laws and regulations governing development, production, environmental regulations, and other matters.
The Company is subject to potential risks and liabilities occurring as a result of oil exploration and production.
All
operating and exploration plans have been made in consideration of existing governmental regulations. Regulations that most affect operations
are related to safety, hazard material cleanup, and environmental concerns.
Potential
environmental liability could have a material adverse effect on our operations and financial condition
To
the knowledge of our management team, we anticipate that production and sale of our future products will constitute activities and generate
materials that create environmental hazards. Our future business and operating results may be materially and adversely affected if we
were to be held liable for violating existing environmental regulations or if we were to increase expenditures to comply with environmental
regulations affecting our operations.
We
face a number of risks associated with our business plan, including the possibility that we may incur substantial debt or convertible
debt, which could adversely affect our financial condition
We
intend to use reasonable efforts to complete our business plan. The risks commonly encountered in implementing our business plan is insufficient
revenues to offset increased expenses associated with mining ore. Failure to raise sufficient capital to carry out our business plan.
Additionally, we have no operations at this time so our expenses are likely to increase and it is possible that we may incur substantial
debt or convertible debt in order to complete our business plan, which can adversely affect our financial condition. Incurring a substantial
amount of debt or convertible debt may require us to use a significant portion of our cash flow to pay principal and interest on the
debt, which will reduce the amount available to fund working capital, capital expenditures, and other general purposes. Our indebtedness
may negatively impact our ability to operate our business and limit our ability to borrow additional funds by increasing our borrowing
costs, and impact the terms, conditions, and restrictions contained in possible future debt agreements, including the addition of more
restrictive covenants; impact our flexibility in planning for and reacting to changes in our business as covenants and restrictions contained
in possible future debt arrangements may require that we meet certain financial tests and place restrictions on the incurrence of additional
indebtedness and place us at a disadvantage compared to similar companies in our industry that have less debt.
Our
future success is highly dependent on the ability of management to locate and attract suitable business opportunities and our stockholders
will not know what business we will enter into until we consummate a transaction with the approval of our then existing directors and
officers
At
this time, we have no operations and future implementation of our business plan is highly speculative, there is a consequent risk of
loss of an investment in the Company. The success of our plan of operations will depend to a great extent on the operations, financial
condition and management of future business and internal development. While management intends to seek businesses opportunities with
entities having established operating histories, we cannot provide any assurance that we will be successful in locating opportunities
meeting that criterion. In the event we complete a business plan, the success of our operations will be dependent upon management, its
financial position and numerous other factors beyond our control.
There
can be no assurance that we will successfully consummate a business plan or internally develop a successful business
We
are a blank check company and can give no assurance that we will successfully identify and evaluate suitable business opportunities or
that we will successfully implement our business plan. We cannot guarantee that we will be able to negotiate ore mining contracts on
favorable terms. No assurances can be given that we will successfully identify and evaluate suitable business opportunities, that we
will conclude a business plan or that we will be able to develop a successful business. Our management and affiliates will play an integral
role in establishing the terms for any future business.
We
will incur increased costs as a result of becoming a reporting company, and given our limited capital resources, such additional costs
may have an adverse impact on our profitability.
Following
the effectiveness of this Form 10, we will be an SEC reporting company. The Company currently has no business and no revenue. However,
the rules and regulations under the Exchange Act require a public company to provide periodic reports with interactive data files which
will require the Company to engage legal, accounting and auditing services, and XBRL and EDGAR service providers. The engagement of such
services can be costly, and the Company is likely to incur losses, which may adversely affect the Company’s ability to continue
as a going concern. In addition, the Sarbanes-Oxley Act of 2002, as well as a variety of related rules implemented by the SEC, have required
changes in corporate governance practices and generally increased the disclosure requirements of public companies. For example, as a
result of becoming a reporting company, we will be required to file periodic and current reports and other information with the SEC and
we must adopt policies regarding disclosure controls and procedures and regularly evaluate those controls and process.
The
additional costs we will incur in connection with becoming a reporting company will serve to further stretch our limited capital resources.
The expenses incurred for filing periodic reports and implementing disclosure controls and procedures may be as high as $70,000 USD annually.
In other words, due to our limited resources, we may have to allocate resources away from other productive uses in order to pay any expenses
we incur in order to comply with our obligations as an SEC reporting company. Further, there is no guarantee that we will have sufficient
resources to meet our reporting and filing obligations with the SEC as they come due.
The
time and cost of preparing a private company to become a public reporting company may preclude us from entering into an acquisition or
merger with the most attractive private companies and others
From
time to time the Company may come across target merger companies. These companies may fail to comply with SEC reporting requirements
may delay or preclude acquisitions. Sections 13 and 15(d) of the Exchange Act require reporting companies to provide certain information
about significant acquisitions, including certified financial statements for the company acquired, covering one or two years, depending
on the relative size of the acquisition. The time and additional costs that may be incurred by some target entities to prepare these
statements may significantly delay or essentially preclude consummation of an acquisition. Otherwise, suitable acquisition prospects
that do not have or are unable to obtain the required audited statements may be inappropriate for acquisition so long as the reporting
requirements of the Exchange Act are applicable.
A
Business may result in a change of control and a change of management.
In
conjunction with completion of a business acquisition, it is anticipated that we may issue an amount of our authorized but unissued common
or preferred stock which represents the majority of the voting power and equity of our capital stock, which would result in stockholders
of a target company obtaining a controlling interest in us. As a condition of the business combination agreement, our current stockholders
may agree to sell or transfer all or a portion of our common stock as to provide the target company with all or majority control. The
resulting change in control may result in removal of our present officers and directors and a corresponding reduction in or elimination
of their participation in any future affairs.
We
depend on our officers and the loss of their services would have an adverse effect on our business
We
have officers and directors of the Company that are critical to our chances for business success. We are dependent on their services
to operate our business and the loss of these persons, or any of them would have an adverse impact on our future operations until such
time as he or she could be replaced, if he could be replaced. We do not have employment contracts or employment agreements with our officers,
and we do not carry key man life insurance on their lives.
Because
we are significantly smaller than the some of our competitors, we may lack the resources needed to capture market share
The
oil industry is highly competitive, and our operation will be smaller in size than some of our competitors. We are at a disadvantage
as a blank check company, we do not have an established business. Many of our competitors have an already established their business,
more established market presence, and substantially greater financial, marketing, and other resources than do we. New competitors may
emerge and may develop new or innovative products that compete with our anticipated future production. No assurance can be given that
we will be able to compete successfully within the oil industry.
Our
ability to use our net operating loss carry-forwards and certain other tax attributes may be limited
We
have incurred losses during our history. To the extent that we continue to generate taxable losses, unused losses will carry forward
to offset future taxable income, if any, until such unused losses expire. Under Sections 382 and 383 of the Internal Revenue Code of
1986, as amended, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value)
in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carry-forwards,
or NOLs, and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. We may experience
ownership changes in the future because of subsequent shifts in our stock ownership. As a result, if we earn net taxable income, our
ability to use our pre-change net operating loss carryforwards to offset U.S. federal taxable income may be subject to limitations, which
could potentially result in increased future tax liability to us. In addition, at the state level, there may be periods during which
the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
Our
ability to hire and retain key personnel will be an important factor in the success of our business and a failure to hire and retain
key personnel may result in our inability to manage and implement our business plan
Our
management has limited mining experience and we may not be able to attract and retain the necessary qualified personnel. If we are unable
to retain or to hire qualified personnel as required, we may not be able to adequately manage and implement our business plan.
Legal
disputes could have an impact on our Company
We
plan to engage in business matters that are common to the business world that can result in disputations of a legal nature. In
the event the Company is ever sued or finds it necessary to bring suit against others, there is the potential that the results of any
such litigation could have an adverse impact on the Company.
Our
common stock is quoted on the OTC MARKETS. An investment in our common stock is risky and there can be no assurance that the price for
our stock will not decrease substantially in the future
Our
common stock is quoted on the OTC Markets. The market for our stock has been volatile and has been characterized by large swings in the
trading price that do not appear to be directly related to our business or financial condition. As a result, an investment in our common
stock is risky and there can be no assurance that the price for our stock will not decrease substantially in the future.
Our
stock trades below $5.00 per share and is subject to special sales practice requirements that could have an adverse impact on any trading
market that may develop for our stock
If
our stock trades below $5.00 per share and is subject to special sales practice requirements applicable to "penny stocks" which
are imposed on broker-dealers who sell low-priced securities of this type. These rules may be anticipated to affect the ability of broker-dealers
to sell our stock, which may in turn be anticipated to have an adverse impact on the market price for our stock if and when an active
trading market should develop.
Our
officers, directors and principal stockholders own a large percentage of our issued and outstanding shares and other stockholders have
little or no ability to elect directors or influence corporate matters
As
of September 30 2021, our officers, directors, and principal stockholders were deemed to be the beneficial owners of approximately 99%
of our issued and outstanding shares of common stock. As a result, such persons can determine the outcome of any actions taken by us
that require stockholder approval. For example, they will be able to elect all of our directors and control the policies and practices
of the Company.
Risks
Related to Our Shareholders and Shares of Common Stock
There
is presently no public market for our securities
Our
common stock is not currently trading on any market, and a robust and active trading market may never develop. Because of our current
status as a “shell company,” Rule 144 is not currently available. Future sales of our common stock by existing stockholders
pursuant to an effective registration statement or upon the availability of Rule 144 could adversely affect the market price of our common
stock. A shareholder who decides to sell some, or all, of their shares in a private transaction may be unable to locate persons who are
willing to purchase the shares, given the restrictions. Also, because of the various risk factors described above, the price of the publicly
traded common stock may be highly volatile and not provide the true market price of our common stock.
Our
stock is not traded, so you may be unable to sell your shares at or near the quoted bid prices if you need to sell a significant number
of your shares
Even
if our stock becomes trading, it is likely that our common stock will be thinly traded, meaning that the number of persons interested
in purchasing our common shares at or near bid prices at any given time may be relatively small or non-existent. This situation is attributable
to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers,
institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the
attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase
or recommend the purchase of our shares until such time as we became more seasoned and viable. Consequently, there may be periods of
several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large
and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot
give you any assurance that a broader or more active public trading market for our common shares will develop or be sustained, or that
current trading levels will be sustained. Due to these conditions, we can give you no assurance that you will be able to sell your shares
at or near bid prices or at all if you need money or otherwise desire to liquidate your shares.
Our
common stock is be considered a “penny stock,” and thereby be subject to additional sale and trading regulations that may
make it more difficult to sell
A
common stock is a “penny stock” if it meets one or more of the following conditions (i) the stock trades at a price less
than $5.00 per share; (ii) it is not traded on a “recognized” national exchange; (iii) it is not quoted on the Nasdaq Capital
Market, or even if so, has a price less than $5.00 per share; or (iv) is issued by a company that has been in business less than three
years with net tangible assets less than $5 million.
The
principal result or effect of being designated a “penny stock” is that securities broker-dealers participating in sales of
our common stock will be subject to the “penny stock” regulations set forth in Rules 15g-2 through 15g-9 promulgated under
the Exchange Act. For example, Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential investors with a document
disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document at least two business
days before effecting any transaction in a penny stock for the investor’s account. Moreover, Rule 15g-9 requires broker-dealers
in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment
experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable
for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made
the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately
reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements
may make it more difficult and time consuming for holders of our common stock to resell their shares to third parties or to otherwise
dispose of them in the market or otherwise.
We
may issue more shares in an acquisition or merger, which will result in substantial dilution
Our
Articles of Incorporation, as amended, authorize the Company to issue an aggregate of 500,000,000 shares of common stock of which 64,629,559
shares are currently outstanding and 10,000,000 shares of Preferred Stock of which 10,000,000 shares of Preferred C Stock are
authorized and 1,000,000 shares are outstanding. Any acquisition or merger effected by the Company may result in the issuance of additional
securities without stockholder approval and may result in substantial dilution in the percentage of our common stock held by our then
existing stockholders. Moreover, shares of our common stock issued in any such merger or acquisition transaction may be valued on an
arbitrary or non-arm’s-length basis by our management, resulting in an additional reduction in the percentage of common stock held
by our then existing stockholders. In an acquisition type transaction, our Board of Directors has the power to issue any, or all, of
such authorized but unissued shares without stockholder approval. To the extent that additional shares of common stock are issued in
connection with a business combination or otherwise, dilution to the interests of our stockholders will occur and the rights of the holders
of common stock might be materially adversely affected.
Obtaining
additional capital though the sale of common stock will result in dilution of stockholder interests
We
may raise additional funds in the future by issuing additional shares of common stock or other securities, which may include securities
such as convertible debentures, warrants or preferred stock that are convertible into common stock. Any such sale of common stock or
other securities will lead to further dilution of the equity ownership of existing holders of our common stock. Additionally, the existing
conversion rights may hinder future equity offerings, and the exercise of those conversion rights may have an adverse effect on the value
of our stock. If any such conversion rights are exercised at a price below the then current market price of our shares, then the market
price of our stock could decrease upon the sale of such additional securities. Further, if any such conversion rights are exercised at
a price below the price at which any stockholder purchased shares, then that particular stockholder will experience dilution in his or
her investment.
Our
directors have the authority to authorize the issuance of preferred stock
Our
Articles of Incorporation, as amended, authorize the Company to issue an aggregate of 10,000,000 shares of Preferred C Stock. Our directors,
without further action by our stockholders, have the authority to issue shares to be determined by our board of directors of Preferred
Stock with the relative rights, conversion rights, voting rights, preferences, special rights, and qualifications as determined by the
board without approval by the shareholders. Any issuance of Preferred Stock could adversely affect the rights of holders of common stock.
Additionally, any future issuance of preferred stock may have the effect of delaying, deferring, or preventing a change in control of
the Company without further action by the shareholders and may adversely affect the voting and other rights of the holders of common
stock. Our Board does not intend to seek shareholder approval prior to any issuance of currently authorized stock, unless otherwise required
by law or stock exchange rules.
We
have never paid dividends on our common stock, nor are we likely to pay dividends in the foreseeable future. Therefore, you may not derive
any income solely from ownership of our stock
We
have never declared or paid dividends on our common stock and do not presently intend to pay any dividends in the foreseeable future.
We anticipate that any funds available for payment of dividends will be re-invested into the Company to further our business strategy.
This means that your potential for economic gain from ownership of our stock depends on appreciation of our stock price and will only
be realized by a sale of the stock at a price higher than your purchase price.