Document and Entity Information
Document and Entity Information - USD ($) | 3 Months Ended | ||
Dec. 31, 2015 | Feb. 19, 2016 | Mar. 31, 2015 | |
Document and Entity Information: | |||
Entity Registrant Name | CD INTERNATIONAL ENTERPRISES, INC. | ||
Document Type | 10-Q | ||
Document Period End Date | Dec. 31, 2015 | ||
Trading Symbol | cdii | ||
Amendment Flag | false | ||
Entity Central Index Key | 1,088,787 | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Common Stock, Shares Outstanding | 637,620,128 | ||
Entity Public Float | $ 893,492 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Current Reporting Status | No | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | Q1 |
CD INTERNATIONAL ENTERPRISES, I
CD INTERNATIONAL ENTERPRISES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 150,163 | $ 22,634 |
Marketable securities availible-for-sale | 2,450 | 2,800 |
Marketable securities availible-for-sale - related party | 5,000 | 20,000 |
Accounts receivable | 6,300 | 16,643 |
Accounts receivable - related party | 1,374 | |
Subscription receivable | 50,100 | |
Prepaid expenses and other current assets, net | 18,910 | 16,813 |
Total current assets | 184,197 | 128,990 |
Property, plant and equipment, net | 56,159 | 63,088 |
Total assets | 240,356 | 192,078 |
Current liabilities | ||
Loans and convertible notes payable - short term, net | 2,228,481 | 2,215,470 |
Accounts payable and accrued expenses | 704,437 | 1,191,643 |
Loans and other payables - related parties | 769,983 | 769,436 |
Advances from customers | 422,898 | 422,898 |
Derivative liabilities | 11,974,601 | 3,210,271 |
Other liabilities | 1,336,325 | 1,199,856 |
Total current liabilities | 17,436,725 | 9,009,574 |
Loans and convertible notes payable - long term, net | 3,002 | |
Total liabilities | 17,439,727 | 9,009,574 |
Equity (deficit): | ||
Series A convertible preferred stock: $.0001 par value, stated value $1,000 per share; 10,000,000 authorized, 1,006 shares issued and outstanding at December 31, 2015 and September 30, 2015, respectively | 1,006,250 | 1,006,250 |
Common stock: $.0001 par value; 1,000,000,000 authorized; 100,213,074 and 508,044,370 issued and outstanding at December 31, 2015 and September 30, 2015, respectively | 50,804 | 10,021 |
Additional paid-in capital | 83,323,535 | 79,278,110 |
Accumulated other comprehensive income (loss) | (689,938) | (719,106) |
Accumulated deficits | (100,890,022) | (88,392,771) |
Total CD International Enterprises, Inc.'s stockholders' deficit | (17,199,371) | (8,817,496) |
Total equity (deficit) | (17,199,371) | (8,817,496) |
Total liabilities and equity (deficit) | $ 240,356 | $ 192,078 |
CD INTERNATIONAL ENTERPRISES, 3
CD INTERNATIONAL ENTERPRISES, INC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues: | ||
Revenues | $ 34,125 | $ 114,941 |
Including: revenues from related party | 23,874 | 3,750 |
Cost of revenues | 8,628 | 35 |
Gross profit | 25,587 | 114,906 |
Operating expense: | ||
Selling, general, and administrative | 397,130 | 638,057 |
Total operating expenses | 397,130 | 638,057 |
Operating loss | (371,543) | (523,151) |
Other income (expenses): | ||
Other income | 101,911 | 98,276 |
Interest expenses | (925,529) | (410,285) |
Interest expenses- related parties | (8,100) | (45,049) |
Realized loss on marketable securities available for sale | (52,679) | |
Gain (loss) on revaluation for receivable and payable of marketable securities available for sale | 19,100 | (40,566) |
Change in fair value of derivative liability | (11,240,281) | 475,344 |
Total other income (expenses) | (12,105,578) | 77,360 |
Loss from continuing operations before income taxes | (12,477,121) | (445,791) |
Net loss from continuing operations | (12,477,121) | (445,791) |
Discontinued operations: | ||
Loss from discontinued operations, net of taxes | (19,033) | |
Total loss from discontinued operations, net of taxes | (19,033) | |
Net loss | (12,477,121) | (464,824) |
Net loss attributable to CD International Enterprises, Inc. | (12,477,121) | (464,824) |
Dividends on series A preferred stock | (20,130) | (20,130) |
Net loss allocable to common stockholders | (12,497,251) | (484,954) |
COMPREHENSIVE INCOME (LOSS): | ||
Net loss | (12,477,121) | (464,824) |
Foreign currency translation adjustments | (482) | 128,929 |
Unrealized gain (loss) on marketable securities available for sale | 29,650 | (27,800) |
Comprehensive loss | (12,447,953) | (363,695) |
Foreign currency translation adjustments - non-controlling interests | (62) | |
Comprehensive loss attributable to CD International Enterprises, Inc. | (12,447,953) | (363,633) |
Preferred stock dividend | (20,130) | (20,130) |
Comprehensive loss attributable to common stockholders | $ (12,468,083) | $ (383,763) |
Basic and diluted net loss per common share | ||
Net loss from continuing operations | $ (0.05) | $ (0.01) |
Net loss per common share | (0.05) | (0.01) |
Basic and diluted net income (loss) per common share - diluted: | ||
Net loss from continuing operations | (0.05) | (0.01) |
Net loss per common share | $ (0.05) | $ (0.01) |
Basic weighted average common shares outstanding | 229,781,930 | 62,309,431 |
Diluted weighted average common shares outstanding | 229,781,930 | 62,309,431 |
CD INTERNATIONAL ENTERPRISES, 4
CD INTERNATIONAL ENTERPRISES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (12,477,121) | $ (464,824) |
Loss from discontinued operations | 19,033 | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | $ 5,755 | 5,009 |
Allowance for doubtful accounts | $ 29,463 | |
Share issued to third parties for services provided | 50,100 | 265,000 |
Stock option expenses | $ 10,043 | $ 24,267 |
Realized loss on marketable securities availible-for-sale | 52,679 | |
Amortization of debt discount | $ 824,076 | 361,452 |
Change in fair value of derivative liabilities | 11,240,281 | (475,344) |
Other (income) loss due to revaluation of accounts receivable and accounts payable | (19,100) | 40,566 |
Changes in operating assets and liabilities: | ||
Accounts receivable (including accounts receivalbe from related party) | 8,024 | |
Prepaid expenses and other current assets, net | (2,175) | (17,093) |
Accounts payable and accrued expenses | (53,483) | 67,872 |
Other payable - related parties | 25,001 | 557,636 |
Other liabilities | 97,586 | (402,378) |
Net cash used in operating activities - continuing operations | (238,334) | 10,569 |
Net cash used in operating activities - discontinued operations | (28,695) | |
NET CASH USED IN OPERATING ACTIVITIES | (238,334) | (18,036) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from sales of marketable securities availible-for-sale | 32,322 | |
Net cash provided by (used in) investing activities - continuing operations | 32,322 | |
NET CASH PROVIDED BY INVESTING ACTIVITIES | 32,322 | |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from loans | 255,000 | |
Borrowings from related parties | 18,797 | |
Proceeds from exercise of options and warrants | 166,100 | |
Repayments to related parties | (50,000) | |
Repayments of loan payable | (54,572) | |
Net cash provided by (used in) financing activities - continuing operations | 335,325 | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 335,325 | |
EFFECT OF EXCHANGE RATE ON CASH | (1,784) | 52,524 |
NET CHANGE IN CASH | 127,529 | 34,488 |
CASH | 22,634 | 82,675 |
CASH | 150,163 | 117,163 |
Less: Cash and Cash Equivalents of Discontinued Operations at the End of Year | 2,816 | |
CASH AND CASH EQUIVALENTS OF CONTINUING OPERATIONS AT THE END OF YEAR | 150,163 | 114,347 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 21,405 | |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Deferred revenue received in the form of marketable securities | 40,000 | |
Unrealized gain (loss) on marketable securities available for sale | 29,650 | (27,800) |
Common stock issued for loan conversions and accrued interest | 449,336 | |
Debt discount recorded on convertible debt due to conversion feature | 984,778 | 361,452 |
Derivative liabilities related to warrant conversion feature | $ 46,667 | |
Accrued interest, default charges and legal expenses added to loan payable due to litigation settlement | 393,032 | |
Derivative liabilities written off into additional paid-in capital due to debt conversions | $ 3,460,729 |
Note 1 - Basis of Presentation
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2015 | |
Notes | |
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies | NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business and Organization CD International Enterprises, Inc. (CDII), a Florida corporation and its subsidiaries are referred to in this report as "we", "us", "our", "Company" or "CD International". We are a U.S. based company that sources and distributes industrial products in China and the Americas. We also provide business and management consulting services to public and private American and Chinese businesses. We operate in two identifiable segments, as defined by the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 280, Segment Reporting: Mineral Trading and Consulting. Beginning in 2006, we established our Consulting and Mineral Trading segments which grew through acquisitions of controlling interests in Chinese private companies. We consolidate these acquisitions as either wholly or majority owned subsidiaries. In our Mineral Trading segment, we source and distribute industrial commodities from North and South America for ultimate distribution in China. In our Consulting segment, we provide business and management consulting services to U.S. public companies that operate primarily in China. The consulting fees we charge vary based upon the scope of the services. In April 2015, the Company sold its entire 95% equity interest in CDI Jingkun Zinc Industry Co., Ltd. ("CDI Jingkun Zinc") and 100% equity interest in Shanghai CDI Metal Material Co., Ltd. ("CDI Metal") to Xiaowen Zhuang, the management member of CDI Shanghai Management Co., Ltd. ("CDI Shanghai Management") and the brother of James (Yuejian) Wang, the CEO of the Company, for zero consideration. The Company also sold its 100% equity interest in CDI Jixiang Metal Co., Ltd. ("CDI Jixiang Metal") to Dragon Capital Group Corp ("Dragon Capital"), a related party company for zero consideration. During the fourth quarter of fiscal year 2015, the Company also ceased the operation of CDII Chile, Ltda. ("CDII Chile") in Chile. As a result, results of operations of CDI Jingkun Zinc, CDI Metal, CDI Jixiang Metal and CDII Chile were separately reported as discontinued operations for all periods presented. CDI Jingkun Zinc, CDI Metal, CDI Jixiang Metal and CDI Chile were entities in the Mineral Trading segment. For additional information, see Note 10 - Discontinued Operations. For the three months ended December 31, 2015 and 2014, subsidiaries included in continuing operations consisted of the following: - CDI China, Inc. (CDI China), a wholly owned subsidiary of CDII; - International Magnesium Group, Inc. (IMG), a wholly owned subsidiary of CDII; - CDII Minerals, Inc. (CDII Minerals), a wholly owned subsidiary of CDII; - CDII Minerals de Peru SAC (CDII Peru), a Peruvian company and a 50% owned subsidiary of CDII Minerals; - Empresa Minera CDII de Bolivia S.A. (CDII Bolivia), a wholly owned subsidiary of CDII Minerals; - China Direct Investments, Inc. (China Direct Investments), a wholly owned subsidiary of CDII; - CDI Shanghai Management Co., Ltd. (CDI Shanghai Management), a wholly owned subsidiary of CDI China; and - Capital Resource Management Co., Ltd. (Capital Resource Management), a wholly owned subsidiary of CDI Shanghai Management, formerly known as Capital One Resource Co., Ltd. Basis of Presentation We have defined various periods that are covered in this report as follows: - fiscal year 2016 October 1, 2015 through September 30, 2016 - fiscal year 2015 October 1, 2014 through September 30, 2015 - fiscal year 2014 October 1, 2013 through September 30, 2014 The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidation. Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted as permitted by the rules and regulations of the United States Securities and Exchange Commission (SEC), although the Company believes that the disclosures contained in this report are adequate to make the information presented not misleading. The consolidated balance sheet information as of September 30, 2015 was derived from the consolidated audited financial statements included in the Companys Annual Report on Form 10-K for the year ended September 30, 2015. These consolidated financial statements should be read in conjunction with the annual consolidated audited financial statements and the notes thereto included in the Companys Annual Report on Form 10-K for the year ended September 30, 2015, and other reports filed with the SEC. The accompanying unaudited interim consolidated financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole. Going Concern For the three months ended December 31, 2015, the Company incurred a net loss from continuing operations of approximately $12.5 million and the Company also has a working capital deficit of $17.3 million. In addition, the Company has a significant amount of short term loans and convertible notes payable, totaling $2.2 million from unrelated parties, which requires the Company to secure additional funds given the Company's current cash position. The Company's cash and cash equivalent and revenues are not currently sufficient and cannot be projected to cover operating expenses in the coming year. These factors raise substantial doubt as to the ability of the Company to continue as a going concern. Managements plans include attempting to raise funds through debt and equity financings and restructuring on-going operations to eliminate inefficiencies to meet operating needs. There is no assurance that managements plans will be successful. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with U.S. 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 consolidated financial statements and the reported amounts of consolidated revenue and expenses during the reporting period. Significant estimates include the valuation of investments available-for-sale, the allowance for doubtful accounts, the fair value of stock based compensation, the useful life and impairment of property, plant and equipment, and the valuation of derivative liability. We rely on assumptions such as volatility, forfeiture rate, and expected dividend yield when deriving the grant date fair value of share based compensation as well as the valuation of derivative liability. If an equity award is modified, and we expect the service conditions of the original award will be met, we will adjust our assumptions and estimates as of the modification date and compare the old equity award valued at the modification date with the new equity award valued at the modification date to calculate any incremental cost. We then continue to recognize the original grant date fair value plus any incremental cost over the modified service period. Our estimate for allowance for uncollectible accounts is based on an evaluation of our outstanding accounts receivable, other receivables, and loans receivable including the aging of amounts due, the financial condition of our specific customers and clients, knowledge of our industry segment in Asia, and historical bad debt experience. This evaluation methodology has proven to provide a reasonable estimate of bad debt expense in the past and we intend to continue to employ this approach in our analysis of collectability. However, we are aware that given the current global economic situation, including that of China, meaningful time horizons may change. We intend to enhance our focus on the evaluation of our customers' sustainability and adjust our estimates as may be required. Assumptions and estimates employed in these areas are material to our reported financial condition and results of operations. Actual results could differ from these estimates. Concentration of Credit Risks Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and trade accounts receivable. We deposit our cash with high credit quality financial institutions in the United States and China. As of December 31, 2015, we had no bank deposits in the United States that exceeded federally insured limits. At December 31, 2015, we had deposits of $103,947 in banks in China. In China, there is no equivalent federal deposit insurance as in the United States, so the amounts held in banks in China are not insured. We have not experienced any losses in such bank accounts through December 31, 2015. At December 31, 2015 and September 30, 2015, bank deposits by geographic area were as follows: Country December 31, 2015 September 30, 2015 United States $ 46,216 31% $ 12,463 55% China 103,947 69% 10,171 45% Total cash and cash equivalents $ 150,163 100% $ 22,634 100% In an effort to mitigate any potential risk, we periodically evaluate the credit quality of the financial institutions at which we hold deposits, both in the United States and China. Fair Value of Financial Instruments We adopted the provisions of ASC Topic 820, Fair Value Measurements. These provisions relate to our consolidated financial assets and liabilities carried at fair value and our fair value disclosures related to financial assets and liabilities. ASC Topic 820 defines fair value, expands related disclosure requirements and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the 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. There are three levels of inputs to fair value measurements below: - Level 1, meaning the use of quoted prices for identical instruments in active markets; - Level 2, meaning the use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable; - Level 3, meaning the use of unobservable inputs. Observable market data should be used when available. The carrying amounts of the Companys financial instruments, such as cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses, advances from customers, and other current liabilities approximate their fair value due to the short term maturities of these instruments. The Companys loans payable approximate the fair value of such instruments based upon managements best estimate of interest rates that would be available to the Company for similar financial arrangements at December 31, 2015 and September 30, 2015. Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature. Recurring Fair Value Measurements The Company uses Level 1 of the fair value hierarchy to measure the fair value of marketable securities and marks the marketable securities available-for-sale at fair value in the statement of financial position at each balance sheet date and reports the unrealized holding gains and losses for marketable securities available-for-sale in other comprehensive income (loss) until realized provided the unrealized holding gains and losses is temporary. If the fair value of investment in marketable securities available-for-sale is less than its cost basis at the balance sheet date of the reporting period for which impairment is assessed, and it is determined that the impairment is other than temporary, then an impairment loss is recognized in earnings equal to the entire difference between the investments cost and its fair value at the balance sheet date of the reporting period. The Company uses Level 3 of the fair value hierarchy to measure the fair value of its derivative liabilities and revalues the derivative liabilities at every reporting period and recognizes gains or losses in the consolidated statements of operations and comprehensive loss that are attributable to the change in the fair value of derivative liabilities. The financial assets and liabilities carried at fair value on a recurring basis at December 31, 2015 are as follows: Financial assets and liabilities Fair Value Level 1 Level 2 Level 3 Marketable equity securities $ 7,450 $ 7,450 $ - $ - Receivable of marketable equity securities 7,674 7,674 - - Derivative liabilities (11,974,601) - - (11,974,601) $ (11,959,477) $ 15,124 $ - $ (11,974,601) The financial assets and liabilities carried at fair value on a recurring basis at September 30, 2015 are as follows: Financial assets and liabilities Fair Value Level 1 Level 2 Level 3 Marketable equity securities $ 22,800 $ 22,800 $ - $ - Receivable of marketable equity securities 7,200 7,200 - - Derivative liabilities (3,210,271) - - (3,210,271) $ (3,180,271) $ 30,000 $ - $ (3,210,271) Marketable Securities Marketable securities that we receive from our clients as compensation are generally restricted for sale under Federal securities laws. Our policy is to liquidate securities received as compensation when market conditions are favorable for sale. Since these securities are often restricted, we are unable to liquidate them until the restriction is removed. Pursuant to ASC Topic 320, Investments Debt and Equity Securities our marketable securities have a readily determinable quoted price, such as from NASDAQ, NYSE Euronext, the Over the Counter Bulletin Board, and the OTC Markets Group (formerly known as the Pink Sheets) and any unrealized gain or loss is recognized as an element of comprehensive income or loss based on changes in the fair value of the security as quoted on an exchange or an inter-dealer quotation. Once liquidated, any realized gain or loss on the sale of marketable securities is reflected in our statement of operations for the period in which the securities are liquidated. We perform an analysis of our marketable securities at least on an annual basis to determine if any of these securities have become other than temporarily impaired. If we determine that the decline in fair value is other than temporary we recognize the amount of the impairment as a realized loss into our current period net income (loss). This determination is based on a number of factors, including but not limited to (i) the percentage of the decline, (ii) the severity of the decline in relation to the enterprise/market conditions, and (iii) the duration of the decline. Foreign Currency Translation The accompanying consolidated financial statements are presented in United States dollars (U.S. dollar). The functional currency of our Chinese subsidiaries is the Renminbi (RMB), the official currency of the Peoples Republic of China (PRC). Capital accounts of the consolidated financial statements are translated into U.S. dollars from RMB at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of the balance sheet date. Income and expenditures are translated at the average exchange rates for the three month periods ended December 31, 2015 and 2014, respectively. A summary of the conversion rates for the periods presented is as follows: December 31, 2015 September 30, 2015 December 31, 2014 Period end RMB: U.S. dollar exchange rate 6.4907 6.3538 6.1385 Average fiscal-year-to-date RMB: U.S. dollar exchange rate 6.3841 6.1543 6.1356 The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through PRC authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into United States dollars at the rates applied in the translation. Derivative Liabilities The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations, in accordance with ASC 815-15, Derivative and Hedging. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. ASC Subtopic 815-40, Contracts in Entitys Own Equity, requires that entities recognize as derivative liabilities the derivative instruments, including certain derivative instruments embedded in other contracts that are not indexed to an entitys own stock. Pursuant to the provisions of ASC Section 815-40-15, ( formerly FASB Emerging Issues Task Force (EITF) Issue No. 07-5: Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own Stock (EITF 07-5) Reclassifications Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position. Recent Accounting Pronouncements In November 2015, the FASB issued ASU 2015-17, " Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes In January 2016, the FASB issued ASU 2016-01, " Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities |
Note 2 - Earnings (loss) Per Sh
Note 2 - Earnings (loss) Per Share | 3 Months Ended |
Dec. 31, 2015 | |
Notes | |
Note 2 - Earnings (loss) Per Share | NOTE 2 - LOSS PER SHARE Under the provisions of ASC 260, Earnings Per Share - basic loss per common share is computed by dividing net loss attributable to common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of the company, subject to anti-dilution limitations. The following table presents the computation of basic and diluted loss per share for the three months ended December 31, 2015 and 2014: For the Three Months Ended December 31, 2015 For the Three Months Ended December 31, 2014 Net loss allocable to common stockholders: Net loss from continuing operations $ (12,477,121) $ (445,791) Net loss from discontinued operations 0 (19,033) Net loss allocable to common stockholders (12,477,121) (464,824) Less: preferred stock dividends 20,130 20,130 Net loss allocable to common stockholders less preferred stock dividends $ (12,497,251) $ (484,954) Basic weighted average common shares outstanding 229,781,930 62,309,431 Dilutive weighted-average common shares outstanding 229,781,930 62,309,431 Net loss per common share - basic: Net loss from continuing operations $ (0.05) $ (0.01) Net loss from discontinued operations 0 (0.00) Net loss per common share - basic $ (0.05) $ (0.01) Net loss per common share - diluted: Net loss from continuing operations $ (0.05) $ (0.01) Net loss from discontinued operations 0 (0.00) Net loss per common share - diluted $ (0.05) $ (0.01) Common stock equivalents are not included in the denominator in periods when anti-dilutive. We excluded 9,000,000 shares of our common stock issuable upon exercise of options, 777,778 shares of our common stock issuable upon exercise of warrants, 2,486,060,274 shares issuable upon conversion of series A preferred stock and accrued but unpaid dividend, and 302,965,082 shares of common stock issuable upon conversion of convertible debt for the three months ended December 31, 2015 as their effect was anti-dilutive.The Company currently does not have sufficient number of common stock authorized to satisfy the full conversions of existing stock options, warrants, series A preferred stock and convertible debt. We excluded 9,000,400 shares of our common stock issuable upon exercise of options, 777,778 shares of our common stock issuable upon exercise of warrants and 44,580,565 shares issuable upon conversion of series A preferred stock and 24,588,614 shares of common stock issuable upon conversion of convertible debt for the three months ended December 31, 2014 as their effect was anti-dilutive. |
Note 3 - Marketable Securities
Note 3 - Marketable Securities Available-for-sale | 3 Months Ended |
Dec. 31, 2015 | |
Notes | |
Note 3 - Marketable Securities Available-for-sale | NOTE 3 MARKETABLE SECURITIES AVAILABLE-FOR-SALE Marketable securities available-for-sale and marketable securities available-for-sale-related party as of December 31, 2015 and September 30, 2015 consisted of the following financial instruments: Company December 31, 2015 % of Total September 30, 2015 % of Total China Logistics Group, Inc. $ 2,450 33% $ 2,800 12% Dragon Capital Group, Corp. 5,000 67% 20,000 88% Marketable securities available-for-sale $ 7,450 100% $ 47,352 100% All the securities were received from our clients as consulting fees. During the three months ended December 31, 2015 and 2014, we collected marketable securities originated from deferred revenues in the amount of $40,000 and $0, respectively. We categorize the securities as investments in marketable securities available-for-sale or investments in marketable securities available-for-sale-related party. These securities are quoted either on an exchange or on the over the counter market system. Some of the securities are restricted and cannot be readily sold by us absent a registration of those securities under the Securities Act of 1933 (the Securities Act" or the availability of an exemption from the registration requirements under the Securities Act. Our policy is to liquidate the securities on a regular basis. As these securities are often restricted, we are unable to liquidate them until the restriction is removed. Unrealized gains or losses on marketable securities available-for-sale and on marketable securities available-for-sale-related party are recognized on a periodic basis as an element of comprehensive income based on changes in the fair value of the security. Once liquidated, realized gains or losses on the sale of marketable securities available-for-sale and marketable securities available-for-sale-related party are reflected in our net income for the period in which the security was liquidated. The marketable securities available-for-sale-related party totaled $5,000 and $20,000 at December 31, 2015 and September 30, 2015, respectively, and are comprised solely of the securities of Dragon Capital Group, Corp. (Dragon Capital). Mr. Lisheng (Lawrence) Wang, the CEO and Chairman of the Board of Dragon Capital, is the brother of James (Yuejian) Wang, the CEO of the Company. These securities were issued by Dragon Capital as compensation for consulting services. Dragon Capital is a non-reporting company whose securities are quoted on the OTC Pink Tier of the OTC Markets Group. As such, under Federal securities laws, securities of Dragon Capital generally cannot be resold by us in absence of a registration of those securities under the Securities Act or unless there exists an available exemption from such registration. Our marketable securities available-for-sale are carried at fair value. Under the guidance of ASC320, Investments, we periodically evaluate our marketable securities to determine whether a decline in their value is other than temporary. Management utilizes criteria such as the magnitude and duration of the decline, in addition to the reasons underlying the decline, to determine whether the loss in value is other than temporary. The term other-than-temporary is not intended to indicate that the decline is permanent. It indicates that the prospects for a near term recovery of value are not necessarily favorable, or that there is a lack of evidence to support fair values equal to, or greater than, the carrying value of the investment. Once a decline in value is determined to be other than temporary, the value of the security is reduced and a corresponding impairment charge to earnings is recognized. In this assessment for various securities at December 31, 2015 and September 30, 2015, the guidance in ASC 320, the Investment-Debt and Equity Securities, is carefully followed. In accordance with ASC 320-10-35-33, when an entity has decided to sell an impaired available-for-sale security and the entity does not expect the fair value of the security to fully recover before the expected time of sale, the security shall be deemed other-than-temporarily impaired in the period in which the decision to sell is made. However, an entity shall recognize an impairment loss when the impairment is deemed other than temporary impairment even if a decision to sell has not been made. For the three months ended December 31, 2015 and 2014, we had no loss related to other than temporary impairment. Marketable securities available-for-sale and marketable securities available-for-sale-related party are either valued at the date received or at the date when services are rendered. The table below provides a summary of the changes in the fair of marketable securities for three months ended December 31, 2015 and 2014: For the Three Months Ended December 31, 2015 September 30, 2015 Fair value received/sold Cost basis adjustment for other than temporary impairment Unrealized gain (loss) December 31, 2015 Investment in marketable securities available-for-sale $ 2,800 $ 0 $ 0 $ (350) $ 2,450 Investment in marketable securities available-for-sale-related party 20,000 (45,000) 0 30,000 5,000 Total investment in securities available-for-sale $ 22,800 $ (45,000) $ 0 $ 29,650 $ 7,450 For the Three Months Ended December 31, 2014 September 30, 2014 Fair value received/sold Cost basis adjustment for other than temporary impairment Unrealized loss December 31, 2014 Investment in marketable securities available-for-sale $ 7,352 $ 0 $ 0 $ 2,800 $ 4,552 Investment in marketable securities available-for-sale-related party 40,000 0 0 25,000 15,000 Total investment in securities available-for-sale $ 47,352 $ 0 $ 0 $ 27,800 $ 19,552 |
Note 4 - Accounts Receivable an
Note 4 - Accounts Receivable and Accounts Receivable - Related Party | 3 Months Ended |
Dec. 31, 2015 | |
Notes | |
Note 4 - Accounts Receivable and Accounts Receivable - Related Party | NOTE 4 ACCOUNTS RECEIVABLE AND ACCOUNTS RECEIVABLE - RELATED PARTY Accounts receivables generally include trade receivables and receivables of marketable securities available-for-sale. These receivables are carried at fair market value. The changes in the fair market value of the marketable securities underlying the receivables are reflected in earnings for each period. We have receivable of 9,000,000 shares of common stock due from China Logistic, Inc (OTC: CHLO) on December 31, 2015 and September 30, 2015, respectively, the fair value of available-for-sale securities receivable was $6,300 and $7,200. We have $1,374 related party receivable of 13,744,625 shares of common stock due from Dragon Capital (Pink Sheet: DRGV) as of December 31, 2015. We have no related party receivable as of September 30, 2015. On December 31, 2015 and September 30, 2015, we also had $0 and $9,443 of trade receivables related to the consulting service provided which were not in the form of marketable securities available-for-sale. |
Note 5 - Loans Payable
Note 5 - Loans Payable | 3 Months Ended |
Dec. 31, 2015 | |
Notes | |
Note 5 - Loans Payable | NOTE 5 - LOANS AND CONVERTIBLE NOTES PAYABLE, NET Loans and convertible notes payable, net at December 31, 2015 and September 30, 2015 consisted of the following: Description December 31, 2015 September 30, 2015 Current portion China Direct Investments loan from Draco Resources, Inc. Due on March 18, 2015 with 2% annual interest rate. The loan is unsecured and currently in default. $ 200,000 $ 200,000 CDII loan from TCA Global Credit Master Fund, LP. Due on October 15, 2016 with 18% annual effective interest rate including 10% annual interest rate per the loan agreement and 8% other fees and charges. The loan is secured by pledge of assets of CDII. (1) 910,787 643,000 China Direct Investments loan from Kong Tung, a Chinese citizen. Originally due on January 7, 2015 and extended to December 31, 2015. 2% interest rate per month. Currently in default. Secured by pledge of assets of CDII. (2) Also see Note 6 for derivative liabilities. 308,500 600,000 China Direct Investments loan from Yewen Xi, a Chinese citizen. $500,000 was due on December 31, 2015 and extended to September 30, 2016, and $200,000 is due on May 31, 2016. 12% annual interest rate. For the $500,000 and $200,000, Yewen Xi has the right to convert the outstanding principal amount and interest into common stock of CDII on and after January 1, 2016 and June 1, 2016, respectively. Conversion Price is equal to 75% of the average closing price of CDII common stock for five consecutive days prior to the conversion. Secured by pledge of assets of CDII. See Note 12 for more discussion of conversion. 700,000 700,000 CDII loan from Money Works Direct in the principal amounts of $100,000 and $50,000, monthly interest rates at 3.99% and 4.44%, due on April 30, 2016 and June 30, 2016, respectively. Secured by pledge of assets of CDII. China Direct Investments make cash repayment of $740 and $259, respectively, for the two loans per business day. 67,898 72,470 CDII loan from an institutional investor with a term of one year, due on October 22, 2016, convertible after 180 days and issued with $2,000 original issue discount (OID). Net of debt discount of $1,611 as of December 31, 2015. 8% annual interest rate and Conversion Price is equal to 60% of lowest trading price of CDII common stock in the 20 consecutive days prior to the conversion. Secured by pledge of assets of CDII. (3) 23,389 0 CDII loan from multiple institutional investors with a term of one year, convertible immediately and issued with OID of $28,000. Net of debt discount of $167,093 as of December 31, 2015, including debt discount related to OID of $27,582 and debt discount due to conversion feature of $139,511. 8% - 12% annual interest rate and Conversion Price is equal to 55% - 60% of lowest trading price of CDII common stock for certain consecutive days prior to the conversion. Secured by pledge of assets of CDII. (3) Also see Note 6 for derivative liabilities. 17,907 0 Loans and convertible notes payable, short-term, net 2,228,481 2,215,470 Non-current portion CDII loan from an institutional investor with a term of two years, due on October 12, 2017, net of debt discount of $24,776, convertible immediately. 12% annual interest rate and Conversion Price is equal to 60% of lowest trading price of CDII common stock in the 25 consecutive days prior to the conversion. Secured by pledge of assets of CDII. (3) Also see Note 6 for derivative liabilities. 3,002 0 Loans and convertible notes payable, long-term, net $ 3,002 $ 0 (1) On July 30, 2014, the Company closed a senior secured revolving credit facility agreement (the "Credit Agreement") with TCA Global Credit Master Fund, LP ("TCA"), a Cayman Islands limited partnership. Pursuant to the Credit Agreement, TCA agreed to loan the Company up to a maximum of $5 million for working capital purposes. The initial credit line is $2,000,000 subject to funding in the discretion of TCA. In connection with the closing, an initial take down of $650,000 was funded by TCA. Any increase in the amount of the credit line from the initial amount up to the maximum amount is at the discretion of TCA. On July 31, 2014, the Company issued 3,154,115 restricted shares of our common stock valued at about $0.06 per share to TCA for a total of $175,000 for advisory services provided. Based on the Credit Agreement, upon an event of default, the lender may convert all or any portion of the outstanding principal and accrued interest payables into shares of the Company's common stock equal to the 85% of the average of the lowest daily volume weighted average price ("VWAP") of the five business days prior to the conversion day. On December 12, 2014, TCA claimed this loan was in default due to the Company's failure to provide timely monthly reporting. The Company recorded derivative liabilities and debt discount of $361,452 on December 12, 2014. Since the loan was in default, the full amount of $361,452 debt discount was charged to interest expense on the same day. On April 28, 2015, TCA filed a complaint/petition against the Company and James (Yuejian) Wang for the breach of the Credit Agreement. On October 15, 2015, the Company and TCA entered into a settlement agreement pursuant to which both parties agreed that the outstanding obligations the Company owed to TCA should be $1,036,032 as of October 8, 2015, including $765,133 for the principal, accrued and unpaid interest and other fees and charges and $270,899 for the advisory fees. The total obligation of $1,036,032 was split into two separate and distinct replacement notes for the balance of $50,000 and $986,032. According to the terms agreed upon in the settlement agreement, the Company should make monthly payments to TCA in the amount of $40,000 commencing on November 30, 2015 by means of ACH transfer or by payment made to TCA through a third party until the complete repayment of all payables due to TCA. The Company is making the timely payments through the assignments of notes to other two institutional investors in the totaling of $150,000 as of December 31, 2015, which included the following two notes: (A) On October 26, 2015, the Company entered into a master exchange agreement with an institutional investor. Pursuant to the exchange agreement, the institutional investor shall exchange, at its option, $50,000 principal amount of convertible notes of the Company plus any accrued interest for shares of the Company's common stock at $0.0001 par value per share at an exchange price of 57% of the lowest trading price of the Company's common stock during the five consecutive trading day period preceding the exchange date. From November 4, 2015 to December 4, 2015, the institutional investor converted $51,846, including $50,000 of principal and $1,846 of interest, into a total of 55,989,891 shares of the Company's common stock at the average conversion price of $0.0009. (B) On December 9, 2015, the Company entered into a note purchase agreement with an institutional investor to sell $100,000 of TCA's note. The note is convertible at a price of 55% of the lowest trading price of the Company's common stock during ten consecutive business days prior to the conversion date. From December 10, 2015 to December 22, 2015, the institutional investor converted $99,990 of the note into a total of 82,688,447 shares of the Company's common stock at the average conversion price of $0.0012. The balance of total obligation to TCA was $910,787, including the principal of $886,032 and accrued interest added to principal of $24,755, as of December 31, 2015. The Company has accrued principal, unpaid interest and other fees and charges of $763,257, advisory fees of $270,900, and other legal expenses of $40,342 as of September 30, 2015. TCA upon execution of the settlement agreement, agreed to have its counsel file a Conditional Joint Stipulation of Dismissal Without Prejudice with respect to the Pending Litigation the parties involved. Consequently, the case was settled and dismissed pursuant to the Stipulation of Settlement entered into between the parties. The Court reserved jurisdiction for enforcement of the settlement terms. Also see Note 6 for derivative liabilities and Note 12 for discussion related to subsequent TCA replacement note issuance and assignment. (2) On April 7, 2014, China Direct Investments borrowed $600,000 from Kong Tung, who was the former Director of the Company and resigned his position as a Director of the Company on March 26, 2015. On January 7, 2015, the Company and Kong Tung entered into an amendment to promissory note, where the maturity date of the note is extended to December 31, 2015 and a conversion option is added. Pursuant to the amendment to promissory note, after the maturity date of the note, the note holder shall have the right, at any time and from time to time, to convert the outstanding principal amount and accrued interest into CDII's common stocks. The conversion price shall be equal to 85% of the closing price CDII common stock on the date of conversion. On October 14, 2015, the Company entered into a note purchase agreement with an institutional investor to sell $600,000 of Kong Tung's note together with accrued interest of $214,000 depending on the funding of the investor. Pursuant to the purchase agreement, the Company shall repay the institutional investor the principal of $600,000 with interest at the rate of 8% per year starting from October 14, 2015, and the institutional investor has the option to convert all or portion of the unpaid principal balance, together with any accrued interest and any fees or charges, into the Company's common stocks at a 40% discount to the lowest closing price of the common stock during the 10 trading day period preceding the conversion date. From October 20, 2015 to December 11, 2015, the institutional investor purchased $241,500 of the note and converted a total of 220,000,000 shares of the Company's common stock at the average conversion price of $0.0011. On October 15, 2015, Kong Tung and an institutional investor entered into a note purchase agreement. Pursuant to the agreement, $50,000 out of the $600,000 Kong Tung's convertible note was sold to the institutional investor. The note bears an interest rate of 12% with a maturity date of October 15, 2016. The conversion price of the note is 55% of the lowest trading price of the Company's common stock during the 10 consecutive trading days prior to the conversion date. The institutional investor converted all the principal of $50,000 and accrued interest of $6,000 of the note into a total of 40,652,958 shares of the Company's common stock at the average conversion price of $0.0014. Also see Note 12 for more discussion. (3) On October 13, 2015, the Company issued a convertible promissory note to an institutional investor and the principal is up to $150,000 with a 10% original discount. The consideration to be received is up to $135,000 with $25,000 payable at closing of the note and up to $110,000 upon mutual agreement. The conversion price is 60% of the lowest trade price in the 25 trading days previous to the conversion date. The Company has the option to pre-pay the loan within 90 days with no interest. After 90 days, the note will bear a 12% one-time interest charge. This note becomes due and payable on October 12, 2017. On October 13, 2015, the Company received a part of this loan of $25,000 in cash after deducting $2,778 of original discount. On October 15, 2015, the Company issued a convertible promissory note for the amount of $25,000 to an institutional investor, at a 10% annual interest rate. This note provides conversion features equal to 55% of the lowest trading price of the Company's common stock during the 10 consecutive trading days prior to the date of conversion. This note becomes due and payable on October 15, 2016. The sum of $20,000 shall be remitted and delivered to the Company and the remaining $5,000 shall be retained by the purchaser through an original issue discount for due diligence and legal bills related to the transaction. Additional interest will accrue from the date of event of default at the rate equal to the lower of 18% per annum or the highest rate permitted by law. On October 20, 2015, the Company issued a convertible promissory note for the amount of $40,000 to an institutional investor, at a 10% annual interest rate. This note provides conversion features, and the conversion price is the lower of (1) the closing sale price of the common stock on the principal market on the trading day immediately preceding the closing date, and (2) 60% of the lowest trading price of the Company's common stock during the 20 consecutive trading days prior to the date of conversion. This note becomes due and payable on October 20, 2016 and is guaranteed by all the subsidiaries of the Company. On October 22, 2015, the Company issued a convertible note to an institutional investor for the principal amount of $25,000 with interest rate of 8% and maturity date of October 22, 2016. The holder of the note is entitled to convert the note into the Company's common stock, after 180 days and cash payment at a price equals to 60% of the lowest trading price for the last 20 trading days prior to conversion. On October 22, 2015, the Company received $23,000 in cash and $2,000 was retained by the institutional investor through an original issue discount for due diligence and legal bills related to this transaction. On December 9, 2015, the Company issued a convertible promissory note for the amount of $120,000 to an institutional investor, at a 12% annual interest rate. 20% of any consideration was retained by the debt holder as an original issue discount. This note provides conversion features equal to 55% of the lowest trading price of the Company's common stock during the 10 consecutive trading days prior to the date of conversion. 15% additional cumulative discount of the conversion price can be charged under certain circumstances. This note becomes due and payable on December 9, 2016. In any event of default, additional interest will accrue at the rate equal to the lower of 22% per annum or the highest rate permitted by the law. The interest expense and interest expense - related parties for the loans amounted to $933,629 and $455,694, including amortization of debt discount in the amount of $824,076 and $361,452, for the three months ended December 31, 2015 and September 30, 2014, respectively. |
Note 6 - Derivative Liabilities
Note 6 - Derivative Liabilities | 3 Months Ended |
Dec. 31, 2015 | |
Notes | |
Note 6 - Derivative Liabilities | NOTE 6 DERIVATIVE LIABILITIES Convertible Notes As described in Note 5, the Company defaulted on its loan with TCA which triggered the variable conversion option on the loan. In addition, during the three months ended December 31, 2015, the Company issued several convertible notes with variable conversion price. The conversion options embedded in the convertible notes contain no explicit limit to the number of shares to be issued upon agreements and as the result are classified as a liability under ASC 815. The Company accounted for the embedded conversion option in accordance with ASC 815-40, which requires the Company to bifurcate the embedded conversion options as liability at the date the notes become convertible and to record changes in fair value relating to the conversion option liabilities in the statement of operations and comprehensive income as of each subsequent balance sheet date. The debt discounts related to the convertible notes are amortized over the life of the note using the effective interest method. The Companys conversion option liabilities are valued using Black Scholes pricing models. Where possible, the Company verifies the values produced by its pricing models to market prices. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility and correlations of such inputs. These consolidated financial liabilities do not trade in liquid markets, and as such, model inputs cannot generally be verified and do involve significant management judgment. Such instruments are typically classified within Level 3 of the fair value hierarchy. On October 15, 2015, the Company and TCA entered into a settlement agreement pursuant to which the note was no longer in default. Therefore the note became not convertible as the note is convertible upon default pursuant to the settlement agreement. The fair value of derivative liabilities due to the embedded conversion option was re-measured to be $710,425 on October 15, 2015 and was written off to gain on settlement of convertible note which was included in change in fair value of derivative liabilities. The carrying amounts of the derivative liabilities for the embedded conversion option on the TCA note were $0 and $489,031, respectively, as of December 31, 2015 and September 30, 2015. On October 15, 2015, the total obligation of $1,036,032 was split into two separate and distinct replacement notes for the balance of $50,000 and $986,032. On October 26, 2015, the Company entered into a master exchange agreement with an institutional investor. Pursuant to the exchange agreement, the institutional investor shall exchange, at its option, $50,000 principal amount of convertible notes of the Company plus any accrued interest for shares of the Company's common stock at $0.0001 par value per share at an exchange price of 57% of the lowest trading price of the Company's common stock during the five consecutive trading day period preceding the exchange date. On December 9, 2015, the Company entered into a note purchase agreement with an institutional investor to sell $100,000 of this TCA loan. The note is convertible at a price of 55% of the lowest trading price of the Company's common stock during 10 consecutive business days prior to the conversion date. During three months ended on December 31, 2015, a total of $149,990 of loan from TCA, subsequently assigned to two institutional investors, together with accrued interest and other fees of $1,846, was converted into 138,678,338 shares of the Companys common stock. Derivative liability of $854,916 was initially created due to the loans assigned to two institutional investors containing variable conversion option and the amount of $1,369,488 was re-measured on the date of conversions and written off to additional paid-in capital as a result of the conversion. The remaining principal of TCA note assigned to institutional investors which is convertible amounted to $10 and the fair value of the derivative liabilities related to the embedded conversion option was $24 as of December 31, 2015. As described in Note 5, during three months ended on December 31, 2015, a total of $291,500 of $600,000 loan from Kong Tung, subsequently assigned to institutional investors, together with accrued interest and other fees of $6,000 was converted into 260,652,958 shares of the Companys common stock. Derivative liability of $867,191 was initially created due to the loans assigned to institutional investors containing variable conversion option and the amount of $2,091,241 was re-measured on the date of the conversions and written off to additional paid-in capital as a result of the conversion. The remaining principal of Kong Tung note amounted to $308,500 and the fair value of the derivative liabilities related to the embedded conversion option was $618,358 as of December 31, 2015. As described in Note 5, during three months ended on December 31, 2015, the Company issued multiple convertible promissory notes to the multiple institutional investors and the aggregate principal is $212,778. The fair value of derivative liabilities related to the embedded conversion option was initially determined to be $1,809,720 on the date of issuance and subsequently determined to be $662,816 as of December 31, 2015. The fair value of the instruments was determined by using Black-Scholes option-pricing model based on the following assumptions: dividend yield of 0%, volatility of 166%-1,499%, risk free rate of 0.00%-0.96%, and an expected term of 0.05-2.00 year. The fair value of the embedded conversion options determined using Black-Scholes option pricing model as of the dates the notes became convertible was $3,531,827 and $984,778 was recorded as debt discount. The day one loss on derivative liabilities of $2,547,049 was recorded in change in fair value of derivative liabilities. $820,491 of debt discount due to embedded conversion option was amortized into interest expense for the three months ended December 31, 2015. The total change in fair value of derivative liabilities related to convertible notes described above amounted to expense of $3,268,118 and income of $30,547 for the three months ended December 31, 2015 and 2014, respectively. Warrants and Convertible Preferred Stock On September 4, 2015, as compensation for services, the Company granted the consultant, Shaoying Wang, the warrant ("warrant A") to purchase 5,000,000 shares of the Company's common stock. The warrant became exercisable immediately and the exercise price is fixed at $0.023. The warrant was excised and the Company received proceeds of $116,000 on December 10, 2015. The Company considered derivative accounting under ASC 815-15 "Derivatives and Hedging" and determined that the warrant should be classified as liability as the warrant was tainted due to the indeterminate number of shares to be delivered upon settlement of the above convertible notes. The Companys derivative liabilities related to warrant A are valued using Black Scholes pricing models on the following assumptions: dividend yield of 0%, volatility of 167%-234%, risk free rate of 0.49%-0.88%, and an expected term of 2.06-2.33 year. As of December 31, 2015 and September 30, 2015, the carrying amounts of the derivative liabilities for warrant A were $0 and $98,870, respectively. The net changes in fair value of derivative liabilities of warrant A were income of $98,870 and $0 during the three months ended December 31, 2015 and 2014, respectively. The Company also issued warrants with exercise price subject to adjustment("warrant B") if the Company, at any time while the warrant is outstanding, shall issue rights, options or warrants to all holders of common stock (and not to the holders) entitling them to subscribe for or purchase shares of common stock at a price per share less than the VWAP on the record date, then, the exercise price shall be multiplied by a fraction, of which the denominator shall be the number of shares of the common stock outstanding on the date of issuance of such rights, options or warrants plus the number of additional shares of common stock offered for subscription or purchase, add of which the numerator shall be the number of shares of the common stock outstanding on the date of issuance of such rights, options or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at such VWAP. The price reset provision makes the warrant not indexed to the Companys own stock, and therefore requires the warrant to be treated as derivative liabilities as provided un EITF 07-05. In addition, the Company issued convertible preferred stock and the conversion price of the preferred stock is subject to adjustment if the Company issues or sells shares of common stock for a consideration per share less than the conversion or exercise price then in effect, or issue options, warrants or other securities convertible or exchangeable for shares of common stock at a conversion or exercise price less than the conversion price of the preferred stock then in effect. If either of these events should occur, the conversion price is reduced to the lowest price at which these securities were issued or are exercisable. These clauses were referred to as the Anti-Dilution Rights. The Anti-Dilution Rights of the beneficial conversion feature make the conversion option not indexed to the companys own stock, and therefore requires the conversion feature to be treated as derivative liabilities as provided under EITF 07-05. The Company used maximum value method to determine the fair value of derivative liabilities related to warrants B and preferred stock conversion option. As of December 31, 2015 and September 30, 2015, the carrying amounts of the derivative liabilities for warrant B were $3,344 and $18,744, respectively. As of December 31, 2015 and September 30, 2015, the carrying amounts of the derivative liabilities for preferred stock conversion option were $10,690,059 and $2,603,626, respectively. The net changes in fair value of derivative liabilities of warrant B and preferred stock during the periods were expense of $8,071,033 during the three months ended December 31, 2015 and income of $444,797 during the three months ended December 31, 2014. Below is the reconciliation of the fair value of the Companys derivative liabilities during the three months ended December 31, 2015: Beginning balance as of September 30, 2015 $3,210,271 Additions due to debt discount on convertible notes 984,778 Write-off of derivative liabilities due to conversion of convertible notes (3,460,729) Change in the fair value of derivative liabilities (Gain) or loss related to derivative liabilities being marked to market 9,403,657 Write-off of derivative liabilities due to settlement of TCA note (710,425) Day one loss related to embedded conversion option 2,547,049 Ending balance as of December 31, 2015 $11,974,601 |
Note 7 - Related Party Transact
Note 7 - Related Party Transactions | 3 Months Ended |
Dec. 31, 2015 | |
Notes | |
Note 7 - Related Party Transactions | NOTE 7 - RELATED PARTY TRANSACTIONS List of Related Parties We have specified the following persons and entities as related parties with ending balances as of December 31, 2015 and September 30, 2015: - Xiaowen Zhuang, a management member of CDI Shanghai Management and brother of James (Yuejian) Wang; - James (Yuejian) Wang, the CEO, CFO and sole member of the Board of Directors of the Company; - Lawrence Wang, the brother of James (Yuejian) Wang; and - Dragon Capital Group, Corp. ("Dragon Capital"), a company organized under the laws of Nevada, USA, the principal owner of Dragon Capital is Lawrence Wang; As of December 31, 2015, accounts receivables - related party was $1,374, as set forth below: Accounts Receivables - Related Party As of December 31, 2015 and September 30, 2015, accounts receivables - related party were $1,374 and $0, respectively, as follows: CD International Subsidiary - Related Party December 31, 2015 September 30, 2015 China Direct Investments - Dragon Capital $ 1,374 $ 0 Total Accounts Receivables - Related Parties $ 1,374 $ 0 As of December 31, 2015, loan payables and other payables related parties were $769,983 consisting of loan payables related parties of $396,182 and other payables related parties of $373,801 as set forth below: Loan Payables Related Parties At December 31, 2015 and September 30, 2015, loan payables related party was for working capital purposes, which were $396,182 and $388,082, respectively, as follows: CD International Subsidiary - Related Party December 31, 2015 September 30, 2015 China Direct Investments - James (Yuejian) Wang $ 396,182 $ 388,082 Total Loan Payables-Related Parties $ 396,182 $ 388,082 From time to time, China Direct Investments borrowed funds from James (Yuejian) Wang. At December 31, 2015 and September 30, 2015, CDII owed James Wang a total of $396,182 and $388,082, including aggregate principal loan amount of $300,000 and accrued interest of $96,182 and $88,082, respectively. The loans bear interest at 12% per annum with principal of $300,000 originally due on September 30, 2014. On September 12, 2014, James (Yuejian) Wang entered into Addendum I to the note agreement and agreed that the Company shall have the option to pay back to the lender the principal amount and all accrued interest upon maturity date in form of the Company's common stock valued at $0.05 per share. The Company did not elect to pay off the loan in common stock. On December 22, 2015, both parties entered into Addendum II to the note agreement and the maturity date was extended to September 30, 2016 with the same terms and conditions of the original note. Other Payables Related Parties At December 31, 2015 and September 30, 2015, other payables related party for working capital purposes were $373,801 and $381,354, respectively, as follows: CD International Subsidiary - Related Party December 31, 2015 September 30, 2015 China Direct Investments - James (Yuejian) Wang $ 306,936 $ 331,935 CDI Shanghai Management - Xiaowen Zhuang 60,702 43,124 CDI Shanghai Management - Dragon Capital 6,163 6,295 Total Other Payable-Related Parties $ 373,801 $ 381,354 Revenue - Related Party The Company provided consulting service to one of its related companies, Dragon Capital. The consulting revenues of $23,874 and $3,750 were recognized for the three month ended December 31, 2015 and 2014, respectively. |
Note 8 - Capital Stock
Note 8 - Capital Stock | 3 Months Ended |
Dec. 31, 2015 | |
Notes | |
Note 8 - Capital Stock | NOTE 8 CAPITAL STOCK Preferred Stock and Related Dividends We have 10,000,000 shares of preferred stock, par value $.0001, authorized. As of December 31, 2015 and September 30, 2015, there were 1,006 shares of series A convertible preferred stock outstanding. The series A preferred stock has a stated value per share of $1,000, carries an 8% per annum dividend rate payable quarterly in arrears on January 1, April 1, July 1 and October 1 (each, an dividend date). The dividends can be paid in cash or shares of our common stock, at our option, subject to certain provisions, on each dividend date. The holders are entitled to convert any whole number of preferred shares, plus the amount of any accrued but unpaid dividends per preferred share then remaining into the Company's common stock at the conversion rate which equals to the quotient of (i) the sum of the stated value and additional amount divided by (ii) the conversion price which was initially $7.00. The additional amount is calculated using a formula to represent the accrued but unpaid dividend. The terms of the Series A preferred stock provide that if we sell common stock at a price per share less than the then conversion price of the preferred stock, then we are required to reduce the conversion price of the series A convertible preferred stock to the lower price of the subsequent sale. Since we have issued securities at prices lower than the exercise price of the $7.00 per share conversion price of the series A preferred stock, we reduced the exercise price of those outstanding securities. At December 31, 2015, the conversion price of the series A preferred is adjusted to $0.00066. The conversion price of the preferred stock is subject to adjustment, and therefore requires the conversion feature to be treated as derivative liabilities as provided under EITF 07-05. See Note 6 for discussion on derivative liabilities. The dividends calculated at $20,130 per quarter are payable in cash or shares of our common stock at our option subject to certain provisions. If paid in shares of common stock, the stock shall be valued at the lower of the conversion price or the average of the weighted average price of the 10 consecutive trading days immediately preceding the dividend date. During the three months ended December 31, 2015 and 2014, we did not pay off dividends in cash or our common stock on our series A convertible preferred stock. As of December 31, 2015 and September 30, 2015, accrued dividend payable is $168,879 and $148,749, respectively. Common Stock We have 1,000,000,000 shares of common stock, par value $.0001, authorized. At December 31, 2015, there were 508,044,370 shares of common stock issued and outstanding and there were 100,213,074 shares of common stock issued and outstanding at September 30, 2015. During the three months ended December 31, 2015, the Company issued a total of 407,831,296 share of our common stock comprised of: 3,500,000 shares of our common stock to consultants for services, valued at $50,100; 399,332,296 shares of common stocks for the convertible notes on Note 5, valued at $449,336 and derivative liabilities written off into additional paid-in capital due to debt conversions of $3,460,729. The Company also issued 5,000,000 shares in connection with the exercise of 5,000,000 stock options for consideration in the total of $116,000 of common stock, and the Company received the proceeds of the exercise of options in the amount of $116,000 on December 11, 2015. During the three months ended December 31, 2014, we issued a total of 6,500,000 shares of our common stock to consultants for services, valued at $265,000. Option and Warrants On August 28, 2015, China Direct Investments entered into a consulting agreement with Mr. Xiaowen Zhuang, the management member of CDI Shanghai Management and brother of James (Yuejian) Wang, pursuant to which he received the options to purchase 3,000,000 shares of the Company's common stock at an exercise price of $0.0167 for providing services including but not limited to sales, translation and marketing for a period ended on December 31, 2016. Both parties also entered into option agreement on the same day and the options to purchase common stock were granted under the Company's S-8 registration. The options vested immediately and will expire on December 31, 2017. The Company issued 3,000,000 share of common stock, value at $50,100, to Xiaowen Zhuang on September 3, 2015 pursuant to the exercise of the options. The Company received the proceeds of the exercise of options in the amount of $50,100 on December 11, 2015. As a result, the Company recorded $0 and $50,100 subscription receivable as an asset on the consolidated balance sheets as of December 31, 2015 and September 30, 2015, respectively. On September 4, 2015, as compensation for services, the Company granted the consultant, Shaoying Wang, the warrant ("warrant A") to purchase 5,000,000 shares of the Company's common stock. The warrant became exercisable immediately and the exercise price is fixed at $0.023. The warrant was excised and the Company received proceeds of $116,000 on December 10, 2015. Also see Note 6. The Company recognized a total of $10,043 and $24,267 stock option expenses for three month ended December 31, 2015 and 2014, respectively. The value of option was calculated using Black Scholes Option Pricing Model based upon the following assumptions: dividend yield of 0%, volatility of 120% - 176%, risk free rate of 0.36% - 1.20%, and an expected term of 1.17 to 4.5 years. The following table sets forth our stock option activities during the three months ended December 31, 2015: Description Shares underlying options Weighted average exercise price Balance at September 30, 2015 9,000,000 $ 0.05 Outstanding and exercisable at September 30, 2015 6,000,000 $ 0.05 Balance at December 31, 2015 9,000,000 $ 0.05 Outstanding and Exercisable at December 31, 2015 6,000,000 $ 0.05 As of December 31, 2015 and September 30, 2015, we had 9,000,000 and 9,000,000 shares underlying options outstanding and exercisable, respectively. The remaining contractual life and exercise price of options outstanding and exercisable at December 31, 2015 are as follows: Number of options outstanding and exercisable Exercise price Remaining contractual life (Years) 3,000,000 $ 0.050 1.75 3,000,000 0.050 2.75 6,000,000 $ 0.050 2.25 Common Stock Purchase Warrants On September 4, 2015, 5,000,000 warrants with an exercise price of $0.023, expiring on December 31, 2017, were issued to a consultant for services provided. The Company received the proceeds in the amount of $116,000 on December 11, 2015. Also see Note 6. A summary of the status of our outstanding common stock purchase warrants granted as of December 31, 2015 and changes during the period is as follows: Shares underlying warrants Weighted average exercise price Outstanding and exercisable at September 30, 2015 5,777,778 $ 0.29 Excised (5,000,000) 0.023 Outstanding and exercisable at December 31, 2015 777,778 $ 2.00 The following information applies to all warrants outstanding and exercisable at December 31, 2015. Number of Warrants outstanding and exercisable Exercise Price Remaining contractual life (Years) 777,778 $ 2.00 1.58 777,778 $ 2.00 1.58 |
Note 9 - Segment Information
Note 9 - Segment Information | 3 Months Ended |
Dec. 31, 2015 | |
Notes | |
Note 9 - Segment Information | NOTE 9 - SEGMENT INFORMATION For the three months ended December 31, 2015 and 2014, the Company operated in two reportable business segments - (1) Mineral Trading segment, where we sell and distribute of a variety of products, including iron ore products, non-ferrous metals, recycled materials, and industrial commodities, and (2) Consulting segment where we provide business and financial consulting services to U.S. public companies that operate primarily in China. The Company's reportable segments are strategic business units that offer different products. They are managed separately based on the fundamental differences in their operations. Information with respect to these reportable business segments for the three months ended December 31, 2015 and 2014 are as follows: Revenues: For the Three Months Ended December 31, 2015 For the Three Months Ended December 31, 2014 Mineral Trading $ 0 $ 0 Consulting 34,215 114,941 Total revenue: $ 34,215 $ 114,941 Depreciation: Mineral Trading $ 0 $ 0 Consulting 5,755 5,009 Total depreciation: $ 5,755 $ 5,009 Interest expenses and interest expenses relate parties: Mineral Trading $ 0 $ 0 Consulting 933,629 455,694 Total interest expenses and interest expenses relate parties: $ 933,629 $ 455,694 Net loss from continuing operations: Mineral Trading $ 0 $ 13,268 Consulting 12,477,121 432,523 Total net loss from continuing operations: $ 12,477,121 $ 445,791 Total tangible assets by segment as of December 31, 2015 and September 30, 2015 are as follows: December 31, 2015 September 30, 2015 Mineral Trading $ 0 $ 0 Consulting 56,159 63,088 Total tangible assets $ 56,159 $ 63,088 |
Note 10 - Discontinued Operatio
Note 10 - Discontinued Operations | 3 Months Ended |
Dec. 31, 2015 | |
Notes | |
Note 10 - Discontinued Operations | NOTE 10 DISCONTINUED OPERATIONS Subsidiaries Disposed In April 2015, the Company sold its entire 95% equity interest in CDI Jingkun Zinc and 100% equity interest in CDI Metal to Xiaowen Zhuang, a management member and the brother of James (Yuejian) Wang, the CEO of the Company. The Company also sold its 100% equity interest in CDI Jixiang Metal to Dragon Capital, a related party company. As a result, results of operations, financial position and cash flows associated with CDI Jingkun Zinc, CDI Metal and CDI Jixiang Metal are reported as discontinued operations for all periods presented. During the fourth quarter of fiscal year 2015, the Company also disposed CDII Chile and the Chilean government has granted us approval to officially close down the business on July 31, 2015. As a result, results of operations, financial position and cash flows associated with CDI Chile are reported as discontinued operations for all periods presented. Summarized Financial Information for Discontinued Operations The following table presents the results of discontinued operations for the three months ended December 31, 2015 and 2014: For the Three Months Ended December 31, 2015 2014 Revenues $ 0 $ 0 Cost of revenues 0 0 Loss before income taxes 0 (19,033) Income tax expense 0 0 Loss from discontinued operations, net of taxes 0 (19,033) Gain from disposal, net of taxes 0 0 Total Loss from discontinued operations, net of taxes $ 0 $ (19,033) |
Note 11 - Commitments and Conti
Note 11 - Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2015 | |
Notes | |
Note 11 - Commitments and Contingencies | NOTE 11 - COMMITMENTS AND CONTINGENCIES Income Tax Matters The IRS is currently auditing our consolidated income tax return for 2008. The IRS has proposed an adjustment to our 2008 taxable income and penalties of approximately $4.6 million (approximately $3.1 million in income tax and $1.5 million in penalties) primarily related to transfer pricing issues pursuant to IRC section 482. In May 2013, the case was sent to the Appeals division of the Internal Revenue Service. At present we are in the process of waiting for the Service to assign an examiner to determine the validity of our position as it relates to the transfer pricing issue and revenue reorganization of restricted stock. We retained an independent accounting firm that has conducted an independent transfer pricing study, an evaluation of the tax basis value of marketable securities received for services, and an analysis of the allocation of the related costs and expenses associated with such revenues. As a result of such study and as a result of net operating tax loss carry forwards, we believe that no income tax or penalties will be accessed against us by the IRS and we intend to vigorously defend our position including an appeal in the U.S. Tax Court. If we are unable to defend our position, any such adjustment could have a material effect on the Companys results of operations and financial position and liquidity. Legal Contingencies Our wholly owned subsidiaries, China Direct Investments and Capital Resource Management, and our Company are involved in the following litigation with a shareholder of Linkwell Corporation, Ltd. ("Plaintiff"): On January 9, 2013, Plaintiff filed a petition in the United States District Court for the Southern District of Florida (Case No. 12-cv-62539-WJZ) to complain that Linkwell's directors (Director Defendants) breached their fiduciary duties to Linkwell and its shareholders by entering into a transaction intended to obscure their "secret transfer" of Linkwell's valuable subsidiaries to themselves or entities they control or Ecolab, Inc. without fair compensation being paid to Linkwell and by causing Linkwell to file and disseminate materially misleading information. In addition, Plaintiff contended that the Director Defendants" including the Company and its subsidiaries, China Direct Investments and Capital Resource Management aided and abetted those breaches and conspired with the Director Defendants to commit those breaches. The Plaintiff also contended that all defendants were unjustly enriched and were liable for attorneys fees. China Direct Investments and Capital Resource Management are alleged to have acted as consultants who were the principal moving force behind the challenged transaction, for which consulting services each is alleged to have received shares of Linkwell common stock. Subsequent to the filing of the initial complaint, Linkwells Board of Directors unwound the challenged transaction and the shares received by China Direct Investments and Capital Resource Management were returned to Linkwell. The Company, as well as China Direct Investments and Capital Resource Management, has denied all liabilities and intends to contest the matter vigorously. |
Note 12 - Subsequent Events
Note 12 - Subsequent Events | 3 Months Ended |
Dec. 31, 2015 | |
Notes | |
Note 12 - Subsequent Events | NOTE 12 - SUBSEQUENT EVENTS On January 15, 2016, the Company issued 10,000,000 shares of common stock under the Company's S-8 registration to a consultant for the exercise of the warrants with an exercise price of $0.0035 granted to him pursuant to the January 14, 2016 amendment of the consulting agreement dated September 4, 2015. The Company has not received the proceeds of this warrant exercise as of the filing date. On January 22, 2016, the Company entered into a note purchase agreement with an institutional investor to sell $100,000 of TCA's note. This note provides conversion features equal to 55% of the lowest trading price of the Company's common stock during the 10 consecutive trading days prior to the date of conversion. On January 25, 2016, the institutional investor converted $30,000 into 21,818,182 shares of the Companys common stock at the conversion price of $0.001375 per share. On January 28, 2016, the institutional investor converted $44,000 into 32,000,000 shares of the Companys common stock at the conversion price of $0.001375 per share. On February 10, 2016, the institutional investor converted $26,000 into 15,757,576 shares of the Companys common stock at the conversion price of $0.00165 per share. On January 22, 2016, the Company borrowed a new loan from Money Works Direct in the amount of $120,000, bearing interest at the rate of approximately 4.7% per month, and repaid off the total balance of previous loan of $100,000 and its accrued interests due to Money Works Direct. Pursuant to the loan agreement, the Company is required to pay off a total of $168,000 with a daily amount of $891, due on October 13, 2016. The loan is secured by all the assets of CDII. On January 25, 2016, the Company issued a convertible promissory note for the amount of $35,000 to an institutional investor, at a 12% annual interest rate. This note becomes due and payable on January 25, 2017. This note provides conversion features equal to 55% of the lowest trading price of the Company's common stock during the 10 consecutive trading days prior to the date of conversion. On January 29, 2016, the Company received $27,000 in cash and $8,000 was retained by the institutional investor through OID. On January 29, 2016, a note holder converted $169,500 from the portion of the $500,000 note into 50,000,000 shares of the Companys common stock, at the conversion price of $0.00339 per share. |
Note 1 - Basis of Presentatio17
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies: Use of Estimates (Policies) | 3 Months Ended |
Dec. 31, 2015 | |
Policies | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. 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 consolidated financial statements and the reported amounts of consolidated revenue and expenses during the reporting period. Significant estimates include the valuation of investments available-for-sale, the allowance for doubtful accounts, the fair value of stock based compensation, the useful life and impairment of property, plant and equipment, and the valuation of derivative liability. We rely on assumptions such as volatility, forfeiture rate, and expected dividend yield when deriving the grant date fair value of share based compensation as well as the valuation of derivative liability. If an equity award is modified, and we expect the service conditions of the original award will be met, we will adjust our assumptions and estimates as of the modification date and compare the old equity award valued at the modification date with the new equity award valued at the modification date to calculate any incremental cost. We then continue to recognize the original grant date fair value plus any incremental cost over the modified service period. Our estimate for allowance for uncollectible accounts is based on an evaluation of our outstanding accounts receivable, other receivables, and loans receivable including the aging of amounts due, the financial condition of our specific customers and clients, knowledge of our industry segment in Asia, and historical bad debt experience. This evaluation methodology has proven to provide a reasonable estimate of bad debt expense in the past and we intend to continue to employ this approach in our analysis of collectability. However, we are aware that given the current global economic situation, including that of China, meaningful time horizons may change. We intend to enhance our focus on the evaluation of our customers' sustainability and adjust our estimates as may be required. Assumptions and estimates employed in these areas are material to our reported financial condition and results of operations. Actual results could differ from these estimates. |
Note 1 - Basis of Presentatio18
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies: Concentration of Credit Risks (Policies) | 3 Months Ended |
Dec. 31, 2015 | |
Policies | |
Concentration of Credit Risks | Concentration of Credit Risks Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and trade accounts receivable. We deposit our cash with high credit quality financial institutions in the United States and China. As of December 31, 2015, we had no bank deposits in the United States that exceeded federally insured limits. At December 31, 2015, we had deposits of $103,947 in banks in China. In China, there is no equivalent federal deposit insurance as in the United States, so the amounts held in banks in China are not insured. We have not experienced any losses in such bank accounts through December 31, 2015. At December 31, 2015 and September 30, 2015, bank deposits by geographic area were as follows: Country December 31, 2015 September 30, 2015 United States $ 46,216 31% $ 12,463 55% China 103,947 69% 10,171 45% Total cash and cash equivalents $ 150,163 100% $ 22,634 100% In an effort to mitigate any potential risk, we periodically evaluate the credit quality of the financial institutions at which we hold deposits, both in the United States and China. |
Note 1 - Basis of Presentatio19
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies: Fair Value of Financial Instruments (Policies) | 3 Months Ended |
Dec. 31, 2015 | |
Policies | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We adopted the provisions of ASC Topic 820, Fair Value Measurements. These provisions relate to our consolidated financial assets and liabilities carried at fair value and our fair value disclosures related to financial assets and liabilities. ASC Topic 820 defines fair value, expands related disclosure requirements and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the 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. There are three levels of inputs to fair value measurements below: - Level 1, meaning the use of quoted prices for identical instruments in active markets; - Level 2, meaning the use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable; - Level 3, meaning the use of unobservable inputs. Observable market data should be used when available. The carrying amounts of the Companys financial instruments, such as cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses, advances from customers, and other current liabilities approximate their fair value due to the short term maturities of these instruments. The Companys loans payable approximate the fair value of such instruments based upon managements best estimate of interest rates that would be available to the Company for similar financial arrangements at December 31, 2015 and September 30, 2015. Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature. |
Note 1 - Basis of Presentatio20
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies: Recurring Fair Value Measurements (Policies) | 3 Months Ended |
Dec. 31, 2015 | |
Policies | |
Recurring Fair Value Measurements | Recurring Fair Value Measurements The Company uses Level 1 of the fair value hierarchy to measure the fair value of marketable securities and marks the marketable securities available-for-sale at fair value in the statement of financial position at each balance sheet date and reports the unrealized holding gains and losses for marketable securities available-for-sale in other comprehensive income (loss) until realized provided the unrealized holding gains and losses is temporary. If the fair value of investment in marketable securities available-for-sale is less than its cost basis at the balance sheet date of the reporting period for which impairment is assessed, and it is determined that the impairment is other than temporary, then an impairment loss is recognized in earnings equal to the entire difference between the investments cost and its fair value at the balance sheet date of the reporting period. The Company uses Level 3 of the fair value hierarchy to measure the fair value of its derivative liabilities and revalues the derivative liabilities at every reporting period and recognizes gains or losses in the consolidated statements of operations and comprehensive loss that are attributable to the change in the fair value of derivative liabilities. The financial assets and liabilities carried at fair value on a recurring basis at December 31, 2015 are as follows: Financial assets and liabilities Fair Value Level 1 Level 2 Level 3 Marketable equity securities $ 7,450 $ 7,450 $ - $ - Receivable of marketable equity securities 7,674 7,674 - - Derivative liabilities (11,974,601) - - (11,974,601) $ (11,959,477) $ 15,124 $ - $ (11,974,601) The financial assets and liabilities carried at fair value on a recurring basis at September 30, 2015 are as follows: Financial assets and liabilities Fair Value Level 1 Level 2 Level 3 Marketable equity securities $ 22,800 $ 22,800 $ - $ - Receivable of marketable equity securities 7,200 7,200 - - Derivative liabilities (3,210,271) - - (3,210,271) $ (3,180,271) $ 30,000 $ - $ (3,210,271) |
Note 1 - Basis of Presentatio21
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies: Marketable Securities (Policies) | 3 Months Ended |
Dec. 31, 2015 | |
Policies | |
Marketable Securities | Marketable Securities Marketable securities that we receive from our clients as compensation are generally restricted for sale under Federal securities laws. Our policy is to liquidate securities received as compensation when market conditions are favorable for sale. Since these securities are often restricted, we are unable to liquidate them until the restriction is removed. Pursuant to ASC Topic 320, Investments Debt and Equity Securities our marketable securities have a readily determinable quoted price, such as from NASDAQ, NYSE Euronext, the Over the Counter Bulletin Board, and the OTC Markets Group (formerly known as the Pink Sheets) and any unrealized gain or loss is recognized as an element of comprehensive income or loss based on changes in the fair value of the security as quoted on an exchange or an inter-dealer quotation. Once liquidated, any realized gain or loss on the sale of marketable securities is reflected in our statement of operations for the period in which the securities are liquidated. We perform an analysis of our marketable securities at least on an annual basis to determine if any of these securities have become other than temporarily impaired. If we determine that the decline in fair value is other than temporary we recognize the amount of the impairment as a realized loss into our current period net income (loss). This determination is based on a number of factors, including but not limited to (i) the percentage of the decline, (ii) the severity of the decline in relation to the enterprise/market conditions, and (iii) the duration of the decline. |
Note 1 - Basis of Presentatio22
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies: Foreign Currency Translation (Policies) | 3 Months Ended |
Dec. 31, 2015 | |
Policies | |
Foreign Currency Translation | Foreign Currency Translation The accompanying consolidated financial statements are presented in United States dollars (U.S. dollar). The functional currency of our Chinese subsidiaries is the Renminbi (RMB), the official currency of the Peoples Republic of China (PRC). Capital accounts of the consolidated financial statements are translated into U.S. dollars from RMB at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of the balance sheet date. Income and expenditures are translated at the average exchange rates for the three month periods ended December 31, 2015 and 2014, respectively. A summary of the conversion rates for the periods presented is as follows: December 31, 2015 September 30, 2015 December 31, 2014 Period end RMB: U.S. dollar exchange rate 6.4907 6.3538 6.1385 Average fiscal-year-to-date RMB: U.S. dollar exchange rate 6.3841 6.1543 6.1356 The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through PRC authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into United States dollars at the rates applied in the translation. |
Note 1 - Basis of Presentatio23
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies: Derivative Liabilities (Policies) | 3 Months Ended |
Dec. 31, 2015 | |
Policies | |
Derivative Liabilities | Derivative Liabilities The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations, in accordance with ASC 815-15, Derivative and Hedging. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. ASC Subtopic 815-40, Contracts in Entitys Own Equity, requires that entities recognize as derivative liabilities the derivative instruments, including certain derivative instruments embedded in other contracts that are not indexed to an entitys own stock. Pursuant to the provisions of ASC Section 815-40-15, ( formerly FASB Emerging Issues Task Force (EITF) Issue No. 07-5: Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own Stock (EITF 07-5) |
Note 1 - Basis of Presentatio24
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies: Reclassifications (Policies) | 3 Months Ended |
Dec. 31, 2015 | |
Policies | |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position. |
Note 1 - Basis of Presentatio25
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Dec. 31, 2015 | |
Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2015, the FASB issued ASU 2015-17, " Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes In January 2016, the FASB issued ASU 2016-01, " Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities |
Note 1 - Basis of Presentatio26
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies: Concentration of Credit Risks: Bank deposits by geographic area (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Bank deposits by geographic area | Country December 31, 2015 September 30, 2015 United States $ 46,216 31% $ 12,463 55% China 103,947 69% 10,171 45% Total cash and cash equivalents $ 150,163 100% $ 22,634 100% |
Note 1 - Basis of Presentatio27
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies: Recurring Fair Value Measurements: Financial assets and liabilities carried at fair value on a recurring basis (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Financial assets and liabilities carried at fair value on a recurring basis | Financial assets and liabilities Fair Value Level 1 Level 2 Level 3 Marketable equity securities $ 7,450 $ 7,450 $ - $ - Receivable of marketable equity securities 7,674 7,674 - - Derivative liabilities (11,974,601) - - (11,974,601) $ (11,959,477) $ 15,124 $ - $ (11,974,601) |
Note 1 - Basis of Presentatio28
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies: Recurring Fair Value Measurements: The financial assets and liabilities carried at fair value on a recurring basis at September 30, 2015 (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
The financial assets and liabilities carried at fair value on a recurring basis at September 30, 2015 | Financial assets and liabilities Fair Value Level 1 Level 2 Level 3 Marketable equity securities $ 22,800 $ 22,800 $ - $ - Receivable of marketable equity securities 7,200 7,200 - - Derivative liabilities (3,210,271) - - (3,210,271) $ (3,180,271) $ 30,000 $ - $ (3,210,271) |
Note 1 - Basis of Presentatio29
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies: Foreign Currency Translation: Schedule of Exchange Rate (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Exchange Rate | December 31, 2015 September 30, 2015 December 31, 2014 Period end RMB: U.S. dollar exchange rate 6.4907 6.3538 6.1385 Average fiscal-year-to-date RMB: U.S. dollar exchange rate 6.3841 6.1543 6.1356 |
Note 2 - Earnings (loss) Per 30
Note 2 - Earnings (loss) Per Share: Schedule of Earnings Per Share, Basic and Diluted (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Earnings Per Share, Basic and Diluted | For the Three Months Ended December 31, 2015 For the Three Months Ended December 31, 2014 Net loss allocable to common stockholders: Net loss from continuing operations $ (12,477,121) $ (445,791) Net loss from discontinued operations 0 (19,033) Net loss allocable to common stockholders (12,477,121) (464,824) Less: preferred stock dividends 20,130 20,130 Net loss allocable to common stockholders less preferred stock dividends $ (12,497,251) $ (484,954) Basic weighted average common shares outstanding 229,781,930 62,309,431 Dilutive weighted-average common shares outstanding 229,781,930 62,309,431 Net loss per common share - basic: Net loss from continuing operations $ (0.05) $ (0.01) Net loss from discontinued operations 0 (0.00) Net loss per common share - basic $ (0.05) $ (0.01) Net loss per common share - diluted: Net loss from continuing operations $ (0.05) $ (0.01) Net loss from discontinued operations 0 (0.00) Net loss per common share - diluted $ (0.05) $ (0.01) |
Note 3 - Marketable Securitie31
Note 3 - Marketable Securities Available-for-sale: Schedule of Available-for-sale Securities Reconciliation (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Available-for-sale Securities Reconciliation | Company December 31, 2015 % of Total September 30, 2015 % of Total China Logistics Group, Inc. $ 2,450 33% $ 2,800 12% Dragon Capital Group, Corp. 5,000 67% 20,000 88% Marketable securities available-for-sale $ 7,450 100% $ 47,352 100% |
Note 3 - Marketable Securitie32
Note 3 - Marketable Securities Available-for-sale: Schedule of Fair market values 2015 (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Fair market values 2015 | For the Three Months Ended December 31, 2015 September 30, 2015 Fair value received/sold Cost basis adjustment for other than temporary impairment Unrealized gain (loss) December 31, 2015 Investment in marketable securities available-for-sale $ 2,800 $ 0 $ 0 $ (350) $ 2,450 Investment in marketable securities available-for-sale-related party 20,000 (45,000) 0 30,000 5,000 Total investment in securities available-for-sale $ 22,800 $ (45,000) $ 0 $ 29,650 $ 7,450 |
Note 3 - Marketable Securitie33
Note 3 - Marketable Securities Available-for-sale: Schedule of Fair market values 2014 (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Fair market values 2014 | For the Three Months Ended December 31, 2014 September 30, 2014 Fair value received/sold Cost basis adjustment for other than temporary impairment Unrealized loss December 31, 2014 Investment in marketable securities available-for-sale $ 7,352 $ 0 $ 0 $ 2,800 $ 4,552 Investment in marketable securities available-for-sale-related party 40,000 0 0 25,000 15,000 Total investment in securities available-for-sale $ 47,352 $ 0 $ 0 $ 27,800 $ 19,552 |
Note 5 - Loans Payable_ Schedul
Note 5 - Loans Payable: Schedule of Loans payable (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Loans payable | Description December 31, 2015 September 30, 2015 Current portion China Direct Investments loan from Draco Resources, Inc. Due on March 18, 2015 with 2% annual interest rate. The loan is unsecured and currently in default. $ 200,000 $ 200,000 CDII loan from TCA Global Credit Master Fund, LP. Due on October 15, 2016 with 18% annual effective interest rate including 10% annual interest rate per the loan agreement and 8% other fees and charges. The loan is secured by pledge of assets of CDII. (1) 910,787 643,000 China Direct Investments loan from Kong Tung, a Chinese citizen. Originally due on January 7, 2015 and extended to December 31, 2015. 2% interest rate per month. Currently in default. Secured by pledge of assets of CDII. (2) Also see Note 6 for derivative liabilities. 308,500 600,000 China Direct Investments loan from Yewen Xi, a Chinese citizen. $500,000 was due on December 31, 2015 and extended to September 30, 2016, and $200,000 is due on May 31, 2016. 12% annual interest rate. For the $500,000 and $200,000, Yewen Xi has the right to convert the outstanding principal amount and interest into common stock of CDII on and after January 1, 2016 and June 1, 2016, respectively. Conversion Price is equal to 75% of the average closing price of CDII common stock for five consecutive days prior to the conversion. Secured by pledge of assets of CDII. See Note 12 for more discussion of conversion. 700,000 700,000 CDII loan from Money Works Direct in the principal amounts of $100,000 and $50,000, monthly interest rates at 3.99% and 4.44%, due on April 30, 2016 and June 30, 2016, respectively. Secured by pledge of assets of CDII. China Direct Investments make cash repayment of $740 and $259, respectively, for the two loans per business day. 67,898 72,470 CDII loan from an institutional investor with a term of one year, due on October 22, 2016, convertible after 180 days and issued with $2,000 original issue discount (OID). Net of debt discount of $1,611 as of December 31, 2015. 8% annual interest rate and Conversion Price is equal to 60% of lowest trading price of CDII common stock in the 20 consecutive days prior to the conversion. Secured by pledge of assets of CDII. (3) 23,389 0 CDII loan from multiple institutional investors with a term of one year, convertible immediately and issued with OID of $28,000. Net of debt discount of $167,093 as of December 31, 2015, including debt discount related to OID of $27,582 and debt discount due to conversion feature of $139,511. 8% - 12% annual interest rate and Conversion Price is equal to 55% - 60% of lowest trading price of CDII common stock for certain consecutive days prior to the conversion. Secured by pledge of assets of CDII. (3) Also see Note 6 for derivative liabilities. 17,907 0 Loans and convertible notes payable, short-term, net 2,228,481 2,215,470 Non-current portion CDII loan from an institutional investor with a term of two years, due on October 12, 2017, net of debt discount of $24,776, convertible immediately. 12% annual interest rate and Conversion Price is equal to 60% of lowest trading price of CDII common stock in the 25 consecutive days prior to the conversion. Secured by pledge of assets of CDII. (3) Also see Note 6 for derivative liabilities. 3,002 0 Loans and convertible notes payable, long-term, net $ 3,002 $ 0 |
Note 6 - Derivative Liabiliti35
Note 6 - Derivative Liabilities: Fair value of the Company's derivative liabilities (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Fair value of the Company's derivative liabilities | Beginning balance as of September 30, 2015 $3,210,271 Additions due to debt discount on convertible notes 984,778 Write-off of derivative liabilities due to conversion of convertible notes (3,460,729) Change in the fair value of derivative liabilities (Gain) or loss related to derivative liabilities being marked to market 9,403,657 Write-off of derivative liabilities due to settlement of TCA note (710,425) Day one loss related to embedded conversion option 2,547,049 Ending balance as of December 31, 2015 $11,974,601 |
Note 7 - Related Party Transa36
Note 7 - Related Party Transactions: Accounts receivables - related party Table (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Accounts receivables - related party Table | CD International Subsidiary - Related Party December 31, 2015 September 30, 2015 China Direct Investments - Dragon Capital $ 1,374 $ 0 Total Accounts Receivables - Related Parties $ 1,374 $ 0 |
Note 7 - Related Party Transa37
Note 7 - Related Party Transactions: Loan payables - related party table (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Loan payables - related party table | CD International Subsidiary - Related Party December 31, 2015 September 30, 2015 China Direct Investments - James (Yuejian) Wang $ 396,182 $ 388,082 Total Loan Payables-Related Parties $ 396,182 $ 388,082 |
Note 7 - Related Party Transa38
Note 7 - Related Party Transactions: Other payables-related parties table (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Other payables-related parties table | CD International Subsidiary - Related Party December 31, 2015 September 30, 2015 China Direct Investments - James (Yuejian) Wang $ 306,936 $ 331,935 CDI Shanghai Management - Xiaowen Zhuang 60,702 43,124 CDI Shanghai Management - Dragon Capital 6,163 6,295 Total Other Payable-Related Parties $ 373,801 $ 381,354 |
Note 9 - Segment Information_ S
Note 9 - Segment Information: Schedule of Segment Reporting Information, by Segment (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Schedule of Segment Reporting Information, by Segment | Revenues: For the Three Months Ended December 31, 2015 For the Three Months Ended December 31, 2014 Mineral Trading $ 0 $ 0 Consulting 34,215 114,941 Total revenue: $ 34,215 $ 114,941 Depreciation: Mineral Trading $ 0 $ 0 Consulting 5,755 5,009 Total depreciation: $ 5,755 $ 5,009 Interest expenses and interest expenses relate parties: Mineral Trading $ 0 $ 0 Consulting 933,629 455,694 Total interest expenses and interest expenses relate parties: $ 933,629 $ 455,694 Net loss from continuing operations: Mineral Trading $ 0 $ 13,268 Consulting 12,477,121 432,523 Total net loss from continuing operations: $ 12,477,121 $ 445,791 |
Note 9 - Segment Information_40
Note 9 - Segment Information: Segment tangible assets (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Segment tangible assets | December 31, 2015 September 30, 2015 Mineral Trading $ 0 $ 0 Consulting 56,159 63,088 Total tangible assets $ 56,159 $ 63,088 |
Note 10 - Discontinued Operat41
Note 10 - Discontinued Operations: Results of discontinued operations (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Tables/Schedules | |
Results of discontinued operations | For the Three Months Ended December 31, 2015 2014 Revenues $ 0 $ 0 Cost of revenues 0 0 Loss before income taxes 0 (19,033) Income tax expense 0 0 Loss from discontinued operations, net of taxes 0 (19,033) Gain from disposal, net of taxes 0 0 Total Loss from discontinued operations, net of taxes $ 0 $ (19,033) |
Note 1 - Basis of Presentatio42
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies: Concentration of Credit Risks (Details) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Details | ||
Deposit in China | $ 103,947 | $ 10,171 |
Note 1 - Basis of Presentatio43
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies: Concentration of Credit Risks: Bank deposits by geographic area (Details) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Details | ||
Deposit in US | $ 46,216 | $ 12,463 |
Deposit in China | 103,947 | 10,171 |
Cash and cash equivalents | $ 150,163 | $ 22,634 |
Note 1 - Basis of Presentatio44
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies: Foreign Currency Translation: Schedule of Exchange Rate (Details) | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Details | |||
Foreign Currency Exchange Rate | 6.4907 | 6.3538 | 6.1385 |
Average exchange rate | 6.3841 | 6.1543 | 6.1356 |
Note 2 - Earnings (loss) Per 45
Note 2 - Earnings (loss) Per Share: Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Details | ||
Net Income from Continuing operations | $ (12,477,121) | $ (445,791) |
Net Income from Discontinued operations | 0 | (19,033) |
Net loss allocable to common shareholders | (12,477,121) | (464,824) |
Preferred stock dividends | 20,130 | 20,130 |
Net (loss) income allocable to common stockholders plus assumed conversions | $ (12,497,251) | $ (484,954) |
Basic weighted average common shares outstanding | 229,781,930 | 62,309,431 |
Diluted weighted average common shares outstanding | 229,781,930 | 62,309,431 |
Net income (loss) from continuing operations | $ (0.05) | $ (0.01) |
Net income (loss) from discontinued operations | 0 | 0 |
Net (loss) income per common share - basic | (0.05) | (0.01) |
Net income (loss) from continuing operations - Diluted | (0.05) | (0.01) |
Net income (loss) from discontinued operations - Diluted | 0 | 0 |
Net (loss) income per common share - diluted | $ (0.05) | $ (0.01) |
Note 3 - Marketable Securitie46
Note 3 - Marketable Securities Available-for-sale: Schedule of Available-for-sale Securities Reconciliation (Details) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Details | ||
China Logistics Group, Inc. securities | $ 2,450 | $ 2,800 |
Dragon Capital Group, Corp. securities | 5,000 | 20,000 |
Total Marketable securities available for sale | $ 7,450 | $ 47,352 |
Note 3 - Marketable Securitie47
Note 3 - Marketable Securities Available-for-sale: Schedule of Fair market values 2015 (Details) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Details | ||||
Investment in marketable securities available for sale | $ 2,450 | $ 2,800 | $ 4,552 | $ 7,352 |
Investment in marketable securities available for sale Fair value received/sold | 0 | 0 | ||
Investment in marketable securities available for sale Cost basis adjustment for other than temporary impairment | 0 | 0 | ||
Investment in marketable securities available for sale Unrealized loss | (350) | 2,800 | ||
Investment in marketable securities available for sale related party | 5,000 | 20,000 | 15,000 | 40,000 |
Investment in marketable securities available for sale Fair value received/sold related party | (45,000) | |||
Investment in marketable securities available for sale Unrealized loss related party | 30,000 | 25,000 | ||
Investment in marketable securities available for sale total | 7,450 | $ 22,800 | 19,552 | $ 47,352 |
Investment in marketable securities available for sale Fair value received/sold total | (45,000) | 0 | ||
Investment in marketable securities available for sale Cost basis adjustment for other than temporary impairment total | 0 | 0 | ||
Investment in marketable securities available for sale Unrealized loss total | $ 29,650 | $ 27,800 |
Note 3 - Marketable Securitie48
Note 3 - Marketable Securities Available-for-sale: Schedule of Fair market values 2014 (Details) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Details | ||||
Investment in marketable securities available for sale | $ 2,450 | $ 2,800 | $ 4,552 | $ 7,352 |
Investment in marketable securities available for sale Fair value received/sold | 0 | 0 | ||
Investment in marketable securities available for sale Cost basis adjustment for other than temporary impairment | 0 | 0 | ||
Investment in marketable securities available for sale Unrealized loss | (350) | 2,800 | ||
Investment in marketable securities available for sale related party | 5,000 | 20,000 | 15,000 | 40,000 |
Investment in marketable securities available for sale Unrealized loss related party | 30,000 | 25,000 | ||
Investment in marketable securities available for sale total | 7,450 | $ 22,800 | 19,552 | $ 47,352 |
Investment in marketable securities available for sale Fair value received/sold total | (45,000) | 0 | ||
Investment in marketable securities available for sale Cost basis adjustment for other than temporary impairment total | 0 | 0 | ||
Investment in marketable securities available for sale Unrealized loss total | $ 29,650 | $ 27,800 |
Note 4 - Accounts Receivable 49
Note 4 - Accounts Receivable and Accounts Receivable - Related Party (Details) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Details | ||
Fair value of receivables of securities available for sale | $ 6,300 | $ 7,200 |
Note 5 - Loans Payable_ Sched50
Note 5 - Loans Payable: Schedule of Loans payable (Details) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Details | ||
China Direct Investments loan from Draco Resources, Inc. | $ 200,000 | $ 200,000 |
CDII loan from TCA Global Credit Master Fund, LP | 910,787 | 643,000 |
China Direct Investments loan from Kong Tung, | 308,500 | 600,000 |
China Direct Investments loan from Yewen Xi, | 700,000 | 700,000 |
CDII loan from Money Works Direct | 67,898 | 72,470 |
CDII loan from an institutional investor with a term of one year | 23,389 | 0 |
CDII loan from multiple institutional investors with a term of one year | 17,907 | 0 |
Loans and convertible notes payable, short-term, net | 2,228,481 | 2,215,470 |
CDII loan from an institutional investor with a term of two years, | 3,002 | 0 |
Loans and convertible notes payable, long-term, net | $ 3,002 | $ 0 |
Note 6 - Derivative Liabiliti51
Note 6 - Derivative Liabilities (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | |
Details | |||
Carrying amounts of the derivative liabilities for warrant B | $ 3,344 | $ 18,744 | |
Carrying amounts of the derivative liabilities for preferred stock conversion option | 10,690,059 | $ 2,603,626 | |
Net changes in fair value of derivative liabilities of warrant B and preferred stock | $ 8,071,033 | $ 444,797 |
Note 6 - Derivative Liabiliti52
Note 6 - Derivative Liabilities: Fair value of the Company's derivative liabilities (Details) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Details | ||
Derivative liabilities | $ 11,974,601 | $ 3,210,271 |
Additions due to debt discount on convertible notes | 984,778 | |
Write-off of derivative liabilities due to conversion of convertible notes | (3,460,729) | |
(Gain) or loss related to derivative liabilities being marked to market | 9,403,657 | |
Write-off of derivative liabilities due to settlement of TCA note | (710,425) | |
Day one loss related to embedded conversion option | $ 2,547,049 |
Note 7 - Related Party Transa53
Note 7 - Related Party Transactions: Accounts receivables - related party Table (Details) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Details | ||
Accounts receivables - China Direct Investments - Dragon Capital | $ 1,374 | $ 0 |
Accounts receivables - related party total | $ 1,374 | $ 0 |
Note 7 - Related Party Transa54
Note 7 - Related Party Transactions (Details) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Details | ||
Loan and Other Payable - related parties | $ 769,983 | |
Loans Payable - related parties | 396,182 | $ 388,082 |
Payable to James (Yuejian) Wang | $ 396,182 | $ 388,082 |
Note 7 - Related Party Transa55
Note 7 - Related Party Transactions: Loan payables - related party table (Details) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Details | ||
China Direct Investments - James (Yuejian) Wang | $ 396,182 | $ 388,082 |
Total Loans Receivable-related parties | $ 396,182 | $ 388,082 |
Note 7 - Related Party Transa56
Note 7 - Related Party Transactions: Other payables-related parties table (Details) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Details | ||
Other Payable China Direct Investments - James (Yuejian) Wang | $ 306,936 | $ 331,935 |
Other Payable CDI Shanghai Management - Xiaowen Zhuang | 60,702 | 43,124 |
Other Payable CDI Shanghai Management - Dragon Capital | 6,163 | 6,295 |
Other Payable Total Other Payable-Related Parties | $ 373,801 | $ 381,354 |
Note 8 - Capital Stock (Details
Note 8 - Capital Stock (Details) - shares | Dec. 31, 2015 | Sep. 30, 2015 |
Details | ||
Common stock issued and outstanding | 508,044,370 | 100,213,074 |
Note 9 - Segment Information_58
Note 9 - Segment Information: Schedule of Segment Reporting Information, by Segment (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Details | ||
Revenues Mineral Trading | $ 0 | $ 0 |
Revenues Consulting | 34,215 | 114,941 |
Total revenue | 34,215 | 114,941 |
Depreciation - Mineral Trading | 0 | 0 |
Depreciation - Consulting | 5,755 | 5,009 |
Total depreciation | 5,755 | 5,009 |
Interest expense and interest expense - relate party Mineral Trading | 0 | 0 |
Interest expense and interest expense - relate party Consulting | 933,629 | 455,694 |
Interest expense and interest expense - relate party | 933,629 | 455,694 |
Mineral Trading Net Loss | 0 | 13,268 |
Consulting Net Loss | 12,477,121 | 432,523 |
Segments Net Loss | $ 12,477,121 | $ 445,791 |
Note 9 - Segment Information_59
Note 9 - Segment Information: Segment tangible assets (Details) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Details | ||
Assets Mineral Trading | $ 0 | $ 0 |
Assets Consulting | 56,159 | 63,088 |
Total assets | $ 56,159 | $ 63,088 |
Note 10 - Discontinued Operat60
Note 10 - Discontinued Operations: Results of discontinued operations (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Details | ||
Discontinued operations - Revenues | $ 0 | $ 0 |
Discontinued operations - Cost of revenues | 0 | 0 |
Discontinued operations - Loss before income taxes | 0 | (19,033) |
Discontinued operations - Income tax expense | 0 | 0 |
Discontinued operations - Loss from discontinuing operations | 0 | (19,033) |
Discontinued operations - Gain from disposal, net of taxes | 0 | 0 |
Discontinued operations -Total Loss from discontinued operations | $ 0 | $ (19,033) |
Note 12 - Subsequent Events (De
Note 12 - Subsequent Events (Details) - USD ($) | Jan. 29, 2016 | Jan. 25, 2016 | Jan. 22, 2016 | Jan. 14, 2016 |
Details | ||||
S-8 Option issued | 10,000,000 | |||
TCA Note Sold | $ 100,000 | |||
Loan from Money Works Direct | $ 120,000 | |||
Convertible note issued | $ 35,000 | |||
Note Converted | $ 169,500 |