China Energy DEF 14C Information statement

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Amendment No. 2

SCHEDULE 14C

(RULE 14c-101)

SCHEDULE 14C INFORMATION

Information Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934

Check the appropriate box:

Preliminary information statement.

Confidential, for use of the Commission only (as permitted by Rule 14c-5(d)(2)) d

Definitive information statement.

CHINA ENERGY CORPORATION

(Name of Registrant as Specified in its Charter)

Payment of filing fee (check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14c-5((g) and 0-1 I.

Title of each class of securities to which transaction applies:

Aggregate number of securities to which transaction applies:

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it is determined):

Proposed maximum aggregate value of transaction:

Total fee paid:

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of' its filing.

Amount previously paid:

Form, schedule or registration statement no.:

Filing party:

Date filed:

CHINA ENERGY CORPORATION

No. 57 Xinhua East Street

Hohhot, Inner Mongolia, P.R. China

Telephone Number: 86-471-466-8870

INFORMATION STATEMENT

WE ARE NOT ASKING YOU FOR A PROXY AND

YOU ARE REQUESTED NOT TO SEND US A PROXY.

The board of directors of China Energy Corporation, a Nevada corporation (the “Company,” “we” and/or “our”), is furnishing this Information Statement to all holders of record of the issued and outstanding shares of the Company’s common stock, par value $0.001 per share, as of the close of business on May 3, 2013 (the “Approval Record Date”), in connection with a transaction that will result in the termination of the registration of our common stock under the federal securities laws. This will eliminate the significant expense required to comply with the reporting and related requirements under these laws. Often referred to as a “going-private transaction,” the transaction is a reverse split of our common stock whereby each Twelve Million (12,000,000)shares of our common stock will be converted to one share of our common stock. The reverse stock split will be accomplished pursuant to an amendment to our Articles of Incorporation (the “Amendment”), a copy of which is attached hereto as Appendix A and is incorporated herein by this reference. Holders of less than one whole share after completion of the reverse stock split will receive cash in lieu of fractional interests in an amount equal to $0.14 for each pre-split share that becomes a fractional interest. As a result, stockholders owning fewer than 12,000,000 shares of our common stock prior to the reverse stock split at the close of business on the effective date of the reverse stock split will no longer be stockholders of the Company. Stockholders owning 12,000,000 or more shares of our common stock on a pre-split basis on the effective date of the reverse stock split will not be entitled to receive cash in lieu of whole or fractional shares of our common stock resulting from the reverse stock split. Our only stockholder owning 12,000,000 or more shares of our common stock on a pre-split basis at the effective time of the reverse stock split is Fortune Place Holdings Limited (“Fortune Place”), a corporation organized under the laws of the British Virgin Islands. Accordingly, as a result of the reverse stock split, Fortune Place will become our sole stockholder. Wenxiang Ding, our President, Chief Executive Officer and Director, is the beneficial owner of 100% of the equity interests of Fortune Place. The $0.14 per share price to be paid for fractional shares represents the fair value for a share of our common stock as determined by a special committee (the “Special Committee”) of our board of directors. The board of directors established the Special Committee, consisting of the sole independent member of our board of directors, to evaluate and review the going-private transaction. The Special Committee based its determination of fair value upon, among other things, the valuation report of Loveman-Curtiss, Inc., our financial advisor.

We are not asking you for a proxy and you are requested not to send us a proxy. Wenxiang Ding, our President, Chief Executive Officer and Director, Yi Ding, Hangzhou Dayuan Group Co. Ltd., Zhiyong Guo, Zhimin Li, and Xinghe County Haifu Coal, who collectively beneficially own approximately 63.9% of the votes entitled to be cast at a meeting of the Company’s stockholders (together, the “Approving Group”), previously consented in writing to the proposed reverse stock split and going-private transaction described in this Information Statement. The elimination of the need for a special meeting of the stockholders to approve the reverse stock split is authorized by Section 78.320 of the Nevada Revised Statutes. That Section provides that the written consent of the holders of outstanding shares of voting capital stock, having not less than the minimum number of votes which would be necessary to authorize or take action at a meeting at which all shares entitled to vote on the matter were present and voted, may be substituted for the special meeting.

The Company is engaging in the reverse stock split in order to reduce its number of stockholders of record to fewer than 300 and subsequently terminate the registration of its common stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after which the Company will no longer be subject to the public reporting obligations under federal securities laws, thereby “going private.” The Company and Mr. Ding are filing a Rule 13e-3 Transaction Statement on Schedule 13E-3 with the Securities and Exchange Commission simultaneously with the filing of this Information Statement since this reverse stock split is considered a “going private” transaction, as defined in Rule 13e-3 under the Exchange Act. As soon as practicable after the filing of the Amendment, the Company will terminate (i) its periodic reporting obligations under Sections 13 and 15 (d) of the Exchange Act; (ii) the registration of its common stock under Section 12(g) of the Exchange Act; and (iii) the quotation of its common stock on the OTC Bulletin Board.

We are pleased to take advantage of the Securities and Exchange Commission rule that allows companies to furnish proxy materials to their stockholders over the Internet. As a result, we are mailing to most of our stockholders a two-page Notice of Availability of Information Statement instead of a printed copy of this Information Statement. The Notice of Availability of Information Statement you have received provides instructions on how to access and review this Information Statement and also instructs you on how to request a printed copy of this Information Statement. We believe this process of sending a two-page notice reduces the environmental impact of printing and distributing hard copy materials and lowers the costs of such printing and distribution. The Company will pay the expenses of furnishing this Information Statement, including the cost of preparing and assembling this Information Statement and mailing the Notice of Availability of Information Statement. The Company anticipates that the Notice of Availability of Information Statement will be sent or given on or about May 10, 2013 to the record holders of common stock as of the close of business on the Approval Record Date, and that the amendment will be filed with the Nevada Secretary of State and become effective no earlier than the 20th day after this Information Statement is sent or given to those holders of common stock.

Under Nevada law, stockholders are entitled to dissenters’ rights of appraisal in connection with this type of going-private transaction. The accompanying Information Statement contains details on the transactions described in this letter, including important information concerning the reverse stock split and the de-registration of our common stock, as well as the dissenters’ rights of appraisal. We urge you to read it very carefully.

neither the securities and exchange commission nor any state securities commission has approved or disapproved the transaction described herein, passed upon the merits or fairness of the proposed transaction or passed upon the adequacy or accuracy of the disclosure in this document. any representation to the contrary is unlawful and a criminal offense. no person is authorized to give any information or to make any representation not contained in this document or related schedule 13E-3, and if given or made, such information or representation should not be relied upon as having been authorized by us.

TABLE OF CONTENTS

SUMMARY TERM SHEET			1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			4
SPECIAL FACTORS			5
Background of the Transaction			5
Purpose and Reasons for the Reverse Stock Split			7
Fairness of the Reverse Stock Split			8
Alternatives to the Reverse Stock Split			10
Effects of the Reverse Stock Split			10
Reports, Opinions or Appraisals			12
Board of Directors and Stockholder Approval			14
Dissenters’ Rights			14
Access Rights			15
Source and Amount of Funds			16
BACKGROUND			17
The Filing Persons			17
Structure of the Transaction			17
The Company’s Securities			18
Security Ownership of Certain Beneficial Owners and Management			18
Related Party Transactions			18
Management			19
Certain Legal Matters			19
Reservation of Right to Abandon the Reverse Stock Split			19
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT			19
Tax Consequences to the Company			19
Tax Consequences to Stockholders Who Do Not Receive Cash for Fractional Shares			19
Tax Consequences to Stockholders Whose Entire Interest in Our Common Stock, Both Directly and Indirectly, is Terminated			19
Tax Consequences to Stockholders Whose Entire Interest in Our Common Stock, Directly but Not Indirectly, is Terminated			20
FINANCIAL INFORMATION			21
Historical Financial Information and Management’s Discussion and Analysis of Financial Condition and Results of Operations			21
Pro Forma Consolidated Financial Statements (Unaudited)			21
Pro Forma Condensed Consolidated Nine Months Statement of Operations (Unaudited)			22
Pro Forma Condensed Consolidated Year-End Statement of Operations (Unaudited)			22
Ratio of Earnings to Fixed Charges			22
Book Value Per Share			22
Income Per Share for Continuing Operations			22
Changes and Disagreements with Accountants on Accounting and Financial Disclosure			22
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE			23
WHERE YOU CAN FIND ADDITIONAL INFORMATION			23
APPENDIX A - Form of Certificate of Amendment to the Articles of Incorporation of China Energy Corporation
APPENDIX B - Text of Statutory Provisions Governing Rights of Dissenting Stockholders
APPENDIX C - Form of Demand for Payment of Fair Value
APPENDIX D - Form of Transmittal Letter from Stockholders
APPENDIX E - Annual Savings Chart
APPENDIX F - Draft Valuation Report dated October 23, 2012, prepared by Loveman-Curtiss, Inc.
APPENDIX G - Final Valuation Report dated November 28, 2012, prepared by Loveman-Curtiss, Inc.
APPENDIX H - Fairness Opinion Letter dated November 28, 2012, prepared by Loveman-Curtiss, Inc.
APPENDIX I – Internet Availability Notice
APPENDIX J – Company’s Annual Report on Form 10-K for the year ended November 30, 2012

SUMMARY TERM SHEET

This summary term sheet highlights selected information from this Information Statement. This summary term sheet, however, may not contain all of the information that is important to you. For a more complete description of the reverse stock split, you should carefully read the entire Information Statement and all of its appendixes. For your convenience, we have directed your attention to the location in this Information Statement where you can find a more complete discussion of each item listed below.

As used in this Information Statement, the “Company,” “we,” “our” and “us” refer to China Energy Corporation.

The reverse stock split is considered a “going private” transaction as defined in Rule 13e-3 promulgated under the Exchange Act because it is intended to, and, if completed, will enable us to terminate the registration of our common stock under Section 15(d) of the Exchange Act and terminate our duty to file periodic reports with the Securities and Exchange Commission (“SEC”). In connection with the reverse stock split, we have filed with the SEC a Rule 13e-3 Transaction Statement on Schedule 13E-3.

Reverse Stock Split: We will effect a share combination or “reverse stock split” of our common stock whereby each 12,000,000 outstanding shares of our common stock will be converted into one whole share, and in lieu of our issuing fractional shares to stockholders owning less than one whole share of common stock after effectiveness of the share combination, we will pay cash equal to $0.14 multiplied by the number of pre-split shares held by a stockholder who owns fewer than 12,000,000 shares immediately prior to the split. Stockholders with fewer than 12,000,000 shares immediately prior to the reverse stock split will have no further equity interest in the Company and will become entitled only to a cash payment equal to $0.14 times the number of pre-split shares. See “Background - Structure of the Transaction” starting on page 17.

Approval of Stockholders: Consummation of the reverse stock split requires the affirmative vote or written consent of the holders of a majority of the issued and outstanding shares of the Company’s common stock as of the Approval Record Date. The members of the Approving Group, who hold approximately 63.9%, of the issued and outstanding shares of the Company, approved the reverse stock split by written consent. See “Special Factors – Board of Directors and Stockholder Approval” starting on page 14.

Timing: The Company intends to effect the reverse stock split as soon as practicable after all filing requirements have been satisfied. The Company proposes to consummate the reverse stock split no earlier than the 20th day after the date on which we first mail the Notice of Internet Availability of Information Statement to our stockholders. The effective date of the reverse stock split will be the date the Company files a Certificate of Amendment to its Articles of Incorporation with the Nevada Secretary of State (the “Effective Date”).

Purpose of Transaction: The primary purpose of the reverse stock split is to reduce the number of our stockholders of record to less than 300, thereby allowing us to “go private.” We would do so by promptly filing a Certificate of Termination of Registration (SEC Form 15) with the Securities and Exchange Commission under Section 15(d) of the Exchange Act as soon as possible after consummation of the reverse stock split so that we would no longer be required to file annual, quarterly or current reports. See “Special Factors - Purpose and Reasons for the Reverse Stock Split” starting on page 7, and “Background - Structure of the Transaction” starting on page 17.

Reasons for Transaction: Based on our relatively small size and limited financial resources, the Company does not believe that the costs and burdens of maintaining its status as a public company is justified given the high cost (in terms of both human capital and actual cash outlays) of remaining a public company, in the absence of interest from institutional investors and securities research analysts, and our inability to access the capital markets. Also, as a privately held company, the Company’s management may have greater flexibility to focus on improving the Company’s financial performance without the constraints caused by the public equity market’s valuation of the Company and emphasis on period-to-period performance. As a publicly traded company, the Company faces pressure from public shareholders and investment analysts to make decisions that might produce better short-term results, but over the long term lead to a reduction in the value of the Company’s equity. Furthermore, as an SEC-reporting company, the Company is required to disclose a considerable amount of business information to the public, some of which would be considered proprietary and would not be disclosed by a non-reporting company. As a result, our actual or potential competitors, customers, lenders and vendors all have ready access to this information which potentially may help them compete against us, make it more difficult for us to negotiate favorable terms with them, or facilitate legal claims against us as the case may be.

Approval of Special Committee: Our board of directors appointed the Special Committee, composed of our sole independent director, to evaluate, review and approve, if appropriate, various strategic alternatives to take the Company private. The Special Committee also retained the firm of Loveman-Curtiss, Inc., an independent business appraisal firm, to render a valuation report to the Special Committee, as to the fairness, from a financial point of view, of the price to be paid for fractional shares in a going private transaction involving a reverse stock split. After careful consideration, the Special Committee has determined that the reverse stock split is procedurally and substantively fair to and in the best interest of all of our unaffiliated stockholders. See “Special Factors – Fairness of the Reverse Stock Split” starting on page 8 and “Special Factors - Reports, Opinions or Appraisals” starting on page 12.

Fairness Determination by Board of Directors: The board of directors of the Company reasonably believes that the reverse stock split is substantively and procedurally fair to the stockholders of the Company. In making this determination, the board of directors considered many factors, including the valuation report of Loveman-Curtiss, Inc. that the price being offered for fractional shares is fair. See “Special Factors - Fairness of the Reverse Stock Split” starting on page 8.

Fairness Determination of Mr. Ding: Mr. Ding has adopted the findings of our Special Committee and board of directors regarding the reverse stock split. Mr. Ding reasonably believes that the reverse stock split is substantively and procedurally fair to the stockholders of the Company. See “Special Factors - Fairness of the Reverse Stock Split” starting on page 8.

Dissenters’ Rights: Upon effectiveness of the reverse stock split, any stockholder who believes that the $0.14 per share price is unfairly low will have the right to object and have a court in Nevada determine the value of such stockholder’s shares, and to be paid the appraised value determined by the court, which could be more than the $0.14 per share. A dissenters’ rights notice will be mailed to stockholders promptly after the Effective Date of the reverse stock split. See “Special Factors - Dissenters’ Rights” starting on page 14.

Effect of Transaction: Following consummation of the reverse stock split, there will only be one remaining stockholder. We do not anticipate any changes in our board or management following the reverse stock split. The Company has no present intention of changing the Company’s business operations as a result of the reverse stock split or to engage in any extraordinary transactions, such as a merger or sale of assets. See “Special Factors - Effects of the Reverse Stock Split” starting on page 10.

Source and Amount of Funds: The total amount of funds necessary to make the cash payments to stockholders in connection with the reverse stock split is estimated to be approximately $2,530,000. The Company expects that all of the funds necessary to carry out the reverse stock split will come from our currently available cash. See “Special Factors - Effects of the Reverse Stock Split” starting on page 10.

Certificates: Stockholders should not send stock certificates to the Company at this time. After the reverse stock split is effected, stockholders will be notified about forwarding certificates and receiving payment, and, if applicable, replacement certificates.

Tax Consequences: A stockholder who receives no cash payment as a result of the reverse stock split will not recognize any gain or loss for United States federal income tax purposes. A stockholder who receives a cash payment for a fractional share of our common stock as a result of the reverse stock split will recognize capital gain or loss for United States federal income tax purposes equal to the difference between the cash received for the common stock and the aggregate adjusted tax basis in such stock. See “Federal Income Tax Consequences of the Reverse Stock Split” starting on page 19.

Stockholder Rights: The reverse stock split has been approved through the written consent delivered by the holders of a majority of the voting shares of the Company. No further stockholder action is required to approve the reverse stock split. Stockholders will have dissenters’ rights, or so-called appraisal rights, under Nevada law. See “Special Factors – Board of Directors and Stockholder Approval” starting on page 14 and “Special Factors - Dissenters’ Rights” starting on page 14.

Reservation of Right to Terminate or Change the Terms of the Reverse Stock Split: The Company retains the right to terminate or modify the terms of the reverse stock split if it determines that the reverse stock split is not in the best interest of the Company and its stockholders. If we determine to cancel the reverse stock split, we may pursue other strategies which will result in our going private, including a change in the ratio of our reverse stock split.

Payment and Exchange of Shares: As soon as practicable after the Effective Date, we will cause to be sent to each stockholder owning fewer than 12,000,000 pre-reverse stock split shares an instruction letter describing the procedure for surrendering stock certificates in exchange for the cash payment. Upon receipt of properly completed documentation and stock certificates (if applicable), each such stockholder will be entitled to receive the cash payment. See “Special Factors - Effects of the Reverse Stock Split” starting on page 10.

Continuing Stockholder: The single stockholder owning more than 12,000,000 shares of our common stock on the Effective Date will continue to be a stockholder after the reverse stock split becomes effective. Such stockholder will not receive any cash payment for its whole or fractional shares. See “Special Factors - Effects of the Reverse Stock Split” starting on page 10.

Stockholders with Shares Held in Street Name: If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name” with respect to those shares, and this Information Statement is being forwarded to you by your broker or other nominee. Your broker or other nominee is considered, with respect to those shares, the stockholder of record. Although the reverse stock split is designed to reduce the number of stockholders of record, we will treat stockholders holding common stock in street name in substantially the same manner as stockholders whose shares are registered in their names for purposes of the reverse stock split. However, banks, brokers or other nominees may have different procedures, and stockholders holding common stock in street name should contact their bank, broker or nominee regarding the treatment of their shares.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This document contains certain statements of a non-historical nature constituting “forward-looking statements”. Such forward-looking statements may be identified by the use of terminology such as “may”, “will”, “expect”, “anticipate”, “estimate”, “should”, “or “continue” or the negative thereof or other variations thereof or comparable terminology. Those statements may include statements regarding the intent , belief or current expectations of the Company or its officers with respect to: (i) the Company’s plans and ability to complete the reverse stock split and subsequent deregistration of its common stock, (ii) the expenses associated with the reverse stock split and the subsequent deregistration, (iii) the number of stockholders following the reverse stock split, and (iv) the Company’s financial condition, operating results and capital resources following the reverse stock split. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those results currently anticipated or projected. Although the Company believes that the assumptions on which the forward-looking statements contained herein are reasonable, any of the assumptions could prove to be inaccurate given the inherent uncertainties as to the occurrence or nonoccurrence of future events. There can be no assurance that the forward-looking statements contained in this document will prove to be accurate. We undertake no obligation to release publicly the result of any revisions to these forward-looking statements, except as required by law. The “safe harbor” provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, however, do not apply to going-private transactions.

SPECIAL FACTORS

Background of the Transaction

In recent years, we have derived minimal benefits from being a reporting company. Our common stock has failed to attract institutional investors or market research attention which could have created a more active and liquid market for our common stock. Relatively low trading volume and low market capitalization have reduced the liquidity benefits to our stockholders.

Our board of directors does not presently intend to raise capital through sales of securities in a public offering or to acquire other business entities using stock as consideration. Accordingly, we are not likely to make use of the advantages (for raising capital, effecting acquisitions or other purposes) that our status as a reporting company may offer. For a more detailed discussion of the ways in which we have not enjoyed the benefits typically afforded by public company status, please see “Special Factors - Reasons for the Transaction” below.

We incur direct and indirect costs associated with compliance with the Exchange Act’s filing and reporting requirements imposed on public companies, including those imposed upon public companies by the provisions of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”). The direct and indirect cost of complying with the Exchange Act’s reporting and control requirements is unduly burdensome and costly considering our size. We also incur substantial indirect costs as a result of, among other things, the executive time expended to prepare and review our public filings. As we have relatively few executive personnel, these indirect costs can be substantial.

In light of these considerations, beginning in the summer of 2012, members of our board of directors began discussing among themselves the relative advantages and disadvantages of being a publicly-reporting company. When those advantages were considered in light of the administrative burden, cost and competitive disadvantages associated with filing public reports with the SEC and otherwise complying with the requirements imposed under the Exchange Act, our board of directors began investigating the various alternative methods by which we could deregister.

On September 21, 2012, our board of directors held a telephonic board meeting at which time it appointed Ms. Shiwen Zhou (“Ms. Zhou”) to serve as a non-employee independent director on the board of directors to fill the vacancy created by the resignation of Tieming Ge on July 16, 2012.

On September 24, 2012, our board of directors held a telephonic board meeting, at which time the matter of “going private” and SEC-deregistration was formally introduced. At the request of our President, the Company’s U.S. legal counsel, with the advice and assistance of the Company’s People’s Republic of China (“PRC”) legal counsel, provided the board of directors with a summary of the process relating to deregistration of our common stock and the various alternatives methods, including a reverse stock split, to achieve such deregistration. Our U.S. legal counsel summarized the amount of time and expenses generally associated with the going private process and several examples of previous going-private transactions. The board of directors then discussed the advisability of forming a Special Committee for the purpose of evaluating the advisability and feasibility of going private and considering the fairness of any such transaction on the Company’s non-affiliated stockholders. After discussion, the board of directors approved a resolution directing the board to establish a Special Committee, the sole member of which would be Ms. Zhou, the Company’s sole independent director, to (i) consider the advisability and feasibility of going private, (ii) explore the alternative methods to going private and (iii) engage in discussions with professional advisors relating to its responsibilities, including an appraisal firm or investment bank with regards to delivering a fairness opinion relative to any cash consideration to be paid to stockholders in connection with such a transaction.

On September 29, 2012, the Special Committee met with representatives of the Company’s U.S. legal counsel and PRC legal counsel to discuss the objectives and responsibilities of the Special Committee. The Special Committee discussed the advantages and disadvantages of going private, the various alternative methods of going private, and the factors relevant in determining the fairness of a going private transaction on (i) the stockholders being cashed out and (ii) the stockholders who would remain after the transaction. The Special Committee and representatives of the Company’s U.S. legal counsel and PRC legal counsel also discussed the advisability of involving professional advisors in the transaction, including an independent appraisal firm or investment bank to provide a fairness opinion in connection with any such transaction. The Special Committee decided that it would be appropriate to retain the services of an outside firm to provide a fairness opinion in connection with any such transaction.

On October 3, 2012, the Special Committee held a meeting to review a fairness opinion proposal from Loveman-Curtiss, Inc. (“Loveman-Curtiss”), an independent valuation firm. At the meeting, Rand M. Curtiss, President of Loveman-Curtiss, described the firm’s professional expertise and prior experience providing fairness opinions in connection with going private and similar transactions. Mr. Curtiss also provided a summary of the process and timeline generally followed by Loveman-Curtiss in preparing a fairness opinion. The Special Committee, after consultation with the Company’s U.S. legal counsel and PRC legal counsel, concluded that it was in the best interests of the Company and its stockholders to retain Loveman-Curtiss to provide a fairness opinion regarding the consideration paid to stockholders being cashed out in connection with any going-private transaction that might ultimately be approved.

Prior to the meeting of the Special Committee on October 3, 2012, Ms. Zhou, acting as the Special Committee and with the assistance of the Company’s U.S. and PRC legal counsel, considered various alternatives “going private” methods, including those that had initially been presented to the board of directors at its meeting on September 24, 2012. The Special Committee also reviewed certain internal financial information with respect to the costs being incurred by the Company arising from its SEC-reporting status. At the meeting held on October 3, 2012, the Special Committee, based upon its discussion with legal counsel and an analysis of the financial information and various alternative “going private” methods presented to it, determined that it was in the best interests of the Company and its stockholders to go private through a reverse stock split which would reduce the number of stockholders of the Company to less than 300 and thereby terminate the Company’s SEC-reporting and filing requirements. Ms. Zhou identified those matters considered in connection with her determination, including the significant cost savings to be realized by the Company and the absence of meaningful benefits to the Company in being an SEC-reporting company. Ms. Zhou also summarized the Special Committee’s analysis of the alternative going-private methods considered by the Special Committee, and the reasons that the Special Committee recommended using the reverse stock split. At the conclusion of the meeting, the Special Committee instructed Loveman-Curtiss to provide an opinion as to the fairness, from a financial perspective, of the consideration to be paid to the unaffiliated stockholders whose shares would be purchased in a reverse stock split.

On November 2, 2012, the Special Committee met with Rand M. Curtiss, President of Loveman-Curtiss, and representatives of the Company’s U.S. legal counsel and PRC legal counsel to discuss, among other things, the draft valuation report of Loveman-Curtiss, dated October 23, 2012 (“Draft Valuation Report”) which had previously been provided to the Special Committee on November 1, 2012. The Draft Valuation Report is attached as Appendix F. Mr. Curtiss described the various factors and approaches used by his firm as set forth in the Draft Valuation Report. After discussing the relative importance of these factors and the major elements of each approach, Mr. Curtiss advised the Special Committee that it was his opinion that the fairest and most accurate valuation would be derived from utilizing a combination of the Income and Market approaches as set forth in the Draft Valuation Report. Since both approaches resulted in the same valuation of $0.17 per share, the Draft Valuation Report concluded that $0.17 was the fair value of each share. Mr. Curtiss noted, however, that this was only a preliminary conclusion and that the firm would consider any additional relevant information prior to providing its final valuation report. The Special Committee asked Mr. Curtiss several questions regarding his firm’s analysis, and the assumptions and calculations contained in the Draft Valuation Report. At the conclusion of Mr. Curtiss’ presentation, the Special Committee stated that it would further consider the Draft Valuation Report and the additional information provided by Mr. Curtiss at the meeting, and requested that Loveman-Curtiss review the Company’s internally-generated fiscal 2012 third quarter financial information (which had not been previously made available to Loveman-Curtiss) prior to the preparation of its final valuation report. Mr. Curtiss stated that he would review this additional financial information and any other publicly available information about the Company prior to providing the final valuation report.

On December 5, 2012, the Special Committee again met with Mr. Curtiss, as well as with representatives of the Company’s U.S. legal counsel and PRC legal counsel, at which time the Special Committee reviewed the final valuation report from Loveman-Curtiss dated November 28, 2012 (the “Final Valuation Report”), which had been previously provided to the Special Committee. A copy of the Final Valuation report is attached as Appendix G. Mr. Curtiss noted that the Final Valuation Report, similar to the Draft Valuation Report, references several different types of valuation approaches, including the Market and Income valuation approaches. While the valuation based on the Income approach used in the Final Valuation Report was substantially higher than the per share fair value resulting from the Market approach, Mr. Curtiss noted that this difference was virtually eliminated by the discount applied by Loveman-Curtiss to the Income approach valuation as a result of assumptions by Loveman-Curtiss made regarding the likely duration of currency controls by the Chinese government which would significantly impact the ability of the Company’s shareholders to realize value from their investment in the Company’s shares. The Special Committee, after considering the Final Valuation Report and the report of Mr. Curtiss at the meeting, agreed to accept $0.12 as the fair value of the Company’s shares for purposes of considering the going private transaction.

The Special Committee then considered whether it would be appropriate for the Company to pay a premium over fair value for shares redeemed by the Company in connection with the reverse stock split. After discussions with the Company’s U.S. legal counsel and PRC legal counsel, the Special Committee decided that it would be fair and reasonable to add a premium of $0.02 per share. Upon considering the various factors and conclusions set forth in the Final Valuation Report and based upon in its previous deliberations and discussions, the Special Committee determined that it was fair and in the best interests of the Company and its unaffiliated stockholders to go private through a reverse stock split and to cash out all post-split fractional shares based on a pre-split share value of $0.14.

The Special Committee then instructed the Company’s PRC legal counsel to discuss the proposed reverse stock split and going private transaction with the Company’s controlling stockholder, Mr. Ding, our CEO and President, who beneficially owns approximately 60% of the Company’s common shares and whose approval would be required in order to consummate any reverse stock split. Mr. Ding indicated that he would support the transaction recommended by the Special Committee and would consent to the filing of the necessary amendments to the Company’s Articles of Incorporation permitting the reverse stock split, provided that after such reverse stock split, he would be the sole remaining stockholder of the Company. The Company’s PRC legal counsel agreed to advise the Special Committee of Mr. Ding’s position.

After receiving the report of the Company’s PRC legal counsel’s discussion with Mr. Ding, the Special Committee considered the merits of engaging in a going private transaction whereby Mr. Ding, would be the sole remaining stockholder. The Special Committee considered the fact that a reverse stock split consummated in that manner would provide all of the Company’s stockholders (other than for Mr. Ding) with an efficient method to cash out their investment in the Company since there is a limited trading market in the Company’s shares. The Special Committee also took note of the fact a reverse stock split structured in that manner would permit all stockholders (other than for Mr. Ding) to receive the cash fair value of their shares rather than obligating them to remain as minority stockholders in a privately-held company. The Special Committee also took note that the Company would pay all of the transaction costs in connection with the reverse stock split and cash-out of post-split fractional shares saving stockholders the brokerage expenses that they would otherwise incur in cashing out of their investment.

Based upon these considerations, the Special Committee, at a meeting held on December 5, 2012, approved the filing of an amendment to the Company’s Articles of Incorporation to combine and reclassify the number of shares of Common Stock of the Company to give effect to a 12,000,000:1 reverse stock split which would then permit the Company to deregister its shares with the SEC and cause Mr. Ding to be the sole remaining beneficial stockholder. The Special Committee instructed the Company’s U.S. legal counsel to prepare and file as necessary all required documentation and stockholder disclosure documents with the SEC and to take such further legal action as necessary to consummate the reverse stock split. The Special Committee requested that Loveman-Curtiss deliver a fairness opinion based upon its Final Valuation Report to be attached to such SEC filings and stockholder communications as may be required.

On December 11, 2012, the Special Committee met with the entire board of directors and representatives of the Company’s U.S. legal counsel and PRC legal counsel. At this meeting, Ms. Zhou, on behalf of the Special Committee, advised the board of directors that she had determined that it was in the best interest of the Company and its stockholders to go private, and the preferred method to accomplish this was through a 12,000,000:1 reverse stock split that would reduce the number of stockholders to one and thereby enable the Company to terminate its SEC-reporting and filing requirements.

On December 28, 2012, Mr. Ding held a conference call with five (5) other stockholders of the Company: (i) Yi Ding, Mr. Ding’s son; (ii) Zhimin Li, Mr. Ding’s brother-in-law; (iii) Zhiyoung Guo, a close personal friend of Mr. Ding; (vi) Weijun Li, a former business partner of Mr. Ding (representing Hangzhou Dayuan Group Co. Ltd.); and (v) Liguo Zhang, a former business partner of Mr. Ding (representing Xinghe County Haifu Coal). During this conference call, Mr. Ding advised these individuals of his discussions with the representative of the Special Committee whereupon each stockholder also independently decided to execute a written stockholder consent dated December 28, 2012 in support of the transaction.

Purpose and Reasons for the Reverse Stock Split

The purpose of the reverse stock split is to reduce the number of record holders of our common stock to fewer than 300 so that we will be eligible to terminate the public registration of our common stock under the Exchange Act. Provided that the reverse stock split has the intended effect, we will file to deregister our common stock, the effect of which will be to terminate the eligibility of our common stock for quotation on the Over-The-Counter Bulletin Board (“OTCBB”). The Company anticipates that the registration of its common stock will terminate approximately 90 days after the Effective Date.

The Company has derived only minimal benefits from being an SEC-reporting company. Our common stock has failed to attract institutional investors or market research attention, and we do not expect these conditions to improve in the foreseeable future. This lack of investor and analyst interest has resulted in a very low trading volume for our shares which, in turn, has limited the liquidity benefit to our stockholders. Additionally, we are not currently contemplating a capital raise or other significant transaction through issuance of equity. Our management does not believe that we can prudently pay the expenses of complying with these legal requirements in light of the fact that we have realized so few of the benefits normally presumed to result from being a publicly traded company (such as the development or existence of an active trading market for our common stock, an enhanced corporate image, and the ability to use our common stock to attract, retain and grant incentives to employees.)

The legal requirements and compliance responsibilities of public companies, including those imposed by the Sarbanes-Oxley Act of 2002, create large administrative and financial burdens for any public company. If we cease to be subject to the reporting requirements under the Exchange Act, we estimate that our savings will be approximately $750,000 per year, including savings in legal, accounting and printing fees, and director and officer liability insurance premiums attributable to complying with such reporting requirements. A chart forecasting the cost-savings that would result from a termination of our SEC registration (the “Annual Savings Chart”) is attached as Appendix E. We would also expect reductions in other administrative costs associated with being a public company, including investor relations expenses. By eliminating the time and resources devoted to complying with SEC financial reporting requirements and managing stockholder relations, our management and employees will be able to devote more time and effort to improving our operations.

In light of these factors, the Company’s board of directors and Mr. Ding reasonably believe that the Company should go private through the reverse stock split. The Company and Mr. Ding believe that, by going private, the Company will reduce its expenses since the Company will no longer incur the costs required to comply with the SEC’s reporting requirements. Moreover, the reverse stock split will assure the Company of a permanent reduction in the number of its record shareholders to below 300, and provide all stockholders (except for Mr. Ding) with an efficient method of cashing out their investment because (i) there is a very limited trading market in the Company’s shares and by providing all stockholders (other than Mr. Ding) with the opportunity to receive the cash fair value of their shares, none of our unaffiliated stockholders would be required to remain as minority stockholders in a privately-held company and (ii) the Company would pay all of the transaction costs in connection with the reverse stock split and cash-out of post-split fractional shares, thus saving stockholders the brokerage expenses that they would otherwise incur in cashing out of their investment.

Fairness of the Reverse Stock Split

In the course of reaching its decision to approve the reverse stock split, the Special Committee considered various factors that would affect both the sole stockholder who would retains its shares of our common stock and those unaffiliated stockholders who would be cashed-out.

The Special Committee considered the following factors in determining that the transaction is fair to our unaffiliated stockholders:

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the opinion of Loveman-Curtiss that, as of November 28, 2012, the date of its fairness opinion, the consideration to be paid to cashed-out stockholders in the reverse stock split is fair, from a financial point of view, to such stockholders;

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that, as of the date of the fairness opinion of Loveman-Curtiss, the 50-day average trading price of the Company’s stock was $0.115 per share, 18% lower than the $0.14 being paid to the cashed-out stockholders in the reverse stock split;

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the opinion of Loveman-Curtiss that the value of the Company’s shares using the Income approach (which consists of a discounted equity cash flow value and non-operating asset value) should be significantly discounted due to the effects of the Chinese government’s foreign currency controls limiting the ability of the Company to pay dividends and of foreign investors to otherwise receive that value;

the opinion of Loveman-Curtiss that the Company’s liquidation value should not be considered by the Special Committee since the Company is a going concern, and minority stockholders cannot force a liquidation;

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the net book value of the Company was not considered by the Special Committee since Loveman-Curtiss did not consider it an appropriate valuation approach.

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the going concern value of the Company was not considered by the Special Committee because, based on the Company’s recent uneven earnings results and uncertain future business prospects, it was not considered a reliable indication of value.

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that a premium of $0.02 per pre-split share, 16.7% of the fair value as determined by Loveman-Curtiss, would be added to the final per share price to be paid to the cashed-out stockholders;

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the ability of stockholders to receive cash for their shares irrespective of the limited trading market for shares and without being burdened by disproportionately high service fees or brokerage commissions; and

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the fact that neither the Company nor Mr. Ding has purchased any shares of our common stock in the past two years.

The most weight was given to the recent historical trading performance of our shares on the OTCBB and the fairness opinion of Loveman-Curtiss. Approximate equal weighting was given to the other factors.

The Special Committee considered the following factors in determining that the transaction is fair to our sole stockholder who would continue to hold our shares after the reverse stock split:

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the anticipated reduction in Company expenses required to comply with the reporting and internal controls requirements of U.S. securities laws and the associated commitment of management time and attention;

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the anticipated difficulty of recruiting and retaining officers and directors necessary for our continued growth and profitability due to onerous regulatory requirements and potential individual personal exposure, exacerbated by the Special Committee’s belief that the higher cost of meaningful insurance coverage to mitigate this exposure was not justified in view of the Company’s other financial obligations;

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the disproportionate current and expected future increased cost of regulatory compliance and other necessary public company expenses relative to the Company’s current size, and its expected negative impact on our competitiveness and potential long-term success; and

the diminishing likelihood that the Company would (i) raise capital in the U.S. through sales of securities in a public offering or (ii) acquire other business entities using stock as consideration.

The Special Committee also considered the following potential adverse factors in connection with the transaction:

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following the reverse stock split, all minority stockholders will cease to hold any equity interest in the Company and will lose their ability to participate in our future growth, if any, or benefit from increases, if any, in the value of our common stock;

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under Nevada law, consummation of the reverse stock split would not require the approval of any of the Company’s unaffiliated stockholders since the Company’s controlling stockholder holds a sufficient number of shares to approve the transaction on his own;

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the board of directors did not select an independent representative to act solely on behalf of the unaffiliated stockholders. This, coupled with the lack of a vote by the unaffiliated stockholders, gave unaffiliated stockholders no say in negotiating the terms of the reverse stock split; and

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the cash payment for fractional shares is a taxable transaction for stockholders.

After taking into account all of the above-referenced factors, the Special Committee determined that the reverse stock split was fair to our unaffiliated stockholders. The Special Committee noted that no firm offers were made by any non-affiliate during the past two years related to (i) a merger or consolidation of the Company, (ii) the purchase of all or a substantial portion of the Company’s assets, or (iii) the purchase of securities in the Company such that the party would exercise control over the Company.

The Company’s board of directors, on behalf of the Company, and Mr. Ding have adopted the analysis and conclusions of the Special Committee in reaching their mutual decision to approve the reverse stock split and both the Company and Mr. Ding believe that the reverse stock split is substantively and procedurally fair to the security holders of the Company, including the Company’s unaffiliated stockholders. No director of the Company dissented to or abstained from voting on the reverse stock split or the going private transaction described herein.

The reverse stock split is being effected without the procedural safeguards set forth in Item 1014(c) and (d) of SEC Regulation M-A, which include approval of the reverse stock split by the unaffiliated stockholders of the Company and the majority of directors who are not employees of the Company retaining an unaffiliated representative to act solely on behalf of the unaffiliated stockholders. Since the reverse stock split has the approval of the Approving Group, which holds approximately 63.9% of the votes entitled to be cast at a stockholders’ meeting, the board of directors decided not to seek the approval of the Company’s unaffiliated stockholders or retain an unaffiliated representative to act on behalf of the unaffiliated stockholders because such actions would not effect the approval of the Approving Group and such actions would merely lead to additional expenses and delay the consummation of the reverse stock split and resulting termination of the Company’s SEC reporting status. However, in an effort to ensure procedural fairness to the unaffiliated stockholders, the board of directors appointed Ms. Zhou, the sole independent director on the Company’s board of directors, to constitute the Special Committee with the responsibility to review and evaluate the going-private transaction and determine a fair price to be paid to the stockholders to be cashed out should the Company complete a going-private transaction. Ms. Zhou is an “independent” director under NASDAQ listing standards and has no stock ownership in the Company. The board of directors placed no restrictions on the authority of the Special Committee to consider and approve or disapprove a going-private transaction.

The fairness opinion of Loveman-Curtiss is attached hereto as Appendix H and is incorporated herein by reference. We will also send a copy of the opinion by regular, first-class mail or e-mail to any interested stockholder or representative of such stockholder who has been so designated in writing upon written request and at our expense.

Alternatives to the Reverse Stock Split

The Special Committee considered several alternatives to the reverse stock split. The Special Committee considered carrying out the going-private transaction through an issuer tender offer. This alternative was rejected on the grounds that it could not provide adequate assurance of achieving the desired objective, i.e., termination of the Company’s SEC-reporting status. The Special Committee also considered carrying out a long-form merger with, or asset sale to, a third party, but determined that it would not be practical to pursue this course since it would require the approval of Mr. Ding, the majority stockholder of the Company, who indicated that he was not willing to enter into any such transaction. The Special Committee concluded that the reverse stock split was the most viable vehicle for terminating the Company’s SEC-reporting status and that there were no presently available alternative means that would provide the Company adequate assurance of permanently reducing the number of record holders of the Company below the necessary threshold of 300 so that the Company could terminate its SEC-reporting status.

Effects of the Reverse Stock Split

Effects on the Company. After consummation of the reverse stock split, we will terminate the registration of our common stock under the Exchange Act. We expect our underlying business and operations to continue, for the most part, in the manner in which they are presently conducted. The executive officers and directors of the Company will not change due to the reverse stock split. Neither the Company nor Mr. Ding has any current plans or proposals to do any of the following: effect any extraordinary corporate transaction (such as a merger, reorganization, liquidation, or sale or transfer of a material amount of assets); sell or transfer any material amount of the Company’s assets; change the composition of the Board or management of the Company or the number or terms of directors or to fill any existing vacancies on the board of directors; change materially the Company’s indebtedness or capitalization; or otherwise effect any material change in the Company’s corporate present dividend policy, structure or business.

Effects on our Stockholders. Based on information currently available to us, we estimate that the reverse stock split will reduce the total number of record stockholders of our common stock from approximately 317 to one. The permanent reduction in the number of our record stockholders below 300 will enable us to terminate the registration of our common stock under the Exchange Act and will substantially reduce the information required to be furnished by us to the public, including our stockholders.

We intend to apply for termination of registration of our common stock under the Exchange Act as soon as practicable following completion of the reverse stock split. However, the board of directors reserves the right, in its discretion, to abandon the reverse stock split or to change the ratio of our reverse stock split prior to the proposed Effective Date if it determines that abandoning or modifying the terms of the reverse stock split is in our best interests and the best interests of our stockholders. The board of directors believes that it is prudent to recognize that circumstances might change prior to the Effective Date such that it would not be appropriate or desirable to effect the reverse stock split at that time or on the terms currently proposed. Among other things, the board of directors may abandon or modify the terms of the reverse stock split if any of the following occur:

a change in the nature of our shareholdings that (a) would prevent us from reducing the number of record holders below 300 as a result of the reverse stock split, or (b) would provide sufficient assurance that the number of our record holders would remain below 300 for the foreseeable future without effecting the reverse stock split; or

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	·	any material adverse change in our financial condition or litigation that would render the reverse stock split inadvisable.

In any such event, the board of directors will consider whether to abandon or modify the terms of the reverse stock split. We will disclose and announce any abandonment or modification of the reverse stock split by issuing a press release, filing a Current Report on Form 8-K with the Securities and Exchange Commission, posting a notice of such abandonment on our website at www.chinaenergycorp.cn/en/ and by mailing a notice of such abandonment or modification to the stockholders to whom we distributed this Information Statement.

When the reverse stock split is consummated, stockholders owning fewer than 12,000,000 shares of common stock will no longer have any equity interest in the Company and will not participate in our future earnings or any increases in the value of our assets or operations. Thus, only our executive officers, directors and the continuing stockholder will benefit from any future increase in our earnings.

Stockholders owning fewer than 12,000,000 shares of common stock immediately prior to the reverse stock split will, following the reverse stock split, have their pre-reverse stock split shares cancelled and converted into the right to receive cash payment. As soon as practicable after the Effective Date of the reverse stock split, we will send these stockholders a letter of transmittal with instructions as to how such stockholders will be paid the cash payment. A copy of the Transmittal Letter is attached as Appendix D. The letter of transmittal will include instructions on how to surrender stock certificates to our stock transfer agent. The stockholder owning 12,000,000 or more shares of common stock immediately prior to the reverse stock split will not receive any cash payment for its whole or fractional shares of common stock resulting from the reverse stock split.

If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name” with respect to those shares, and this Information Statement is being forwarded to you by your broker or other nominee. Your broker or other nominee is considered, with respect to those shares, the stockholder of record. Although the transaction is designed to reduce the number of stockholders of record, we will treat stockholders holding common stock in street name in substantially the same manner as stockholders whose shares are registered in their names for purposes of the reverse stock split. However, banks, brokers or other nominees may have different procedures, and stockholders holding common stock in street name should contact their bank, broker or nominee regarding the treatment of their shares.

Potential Disadvantages of the Transaction to Stockholders. While we believe that the reverse stock split will result in the benefits described above, several disadvantages should also be noted:

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after the reverse stock split, our common stock will not be eligible for trading on the OTCBB, and our remaining stockholder will experience reduced liquidity for its shares of common stock;

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we will no longer engage independent accountants to audit the Company (although we may engage them to conduct a review of our financial statements);

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there will be a reduction in our working capital and assets in order to fund the purchase of fractional shares and to pay for the transaction costs of the reverse stock split;

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the stockholders owning fewer than 12,000,000 shares of common stock on the Effective Date will, after giving effect to the reverse stock split, no longer have any equity interest in the Company and, therefore, will not participate in our future earnings or growth, if any;

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the going private transaction will require stockholders who own fewer than 12,000,000 shares of common stock on the Effective Date to involuntarily surrender their shares in exchange for cash, rather than choosing their own time and price for disposing of their common stock;

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as a result of the termination of our reporting obligations under the Exchange Act, we will not have the ability to raise capital in the U.S. public capital markets; and

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we may have less flexibility in attracting and retaining executives and employees since equity-based incentives (such as stock options) tend not to be as attractive in a privately-held company.

Effects on Affiliated and Unaffiliated Security Holders. The following chart sets forth the effects on affiliates as well as unaffiliated security holders, including the effect the reverse stock split will have upon each affiliate’s interest in the net book value and net earnings of the Company in both dollar amounts and percentages:

		Before Reverse Stock Split			After Reverse Stock Split			Change
Wenxiang Ding (through his 100% ownership of Fortune Place Holdings Limited)
	Number of Shares		26,989,107			2.249			26,989,104.751
	% Ownership		59.9	%		100	%		40.1	%
	Earnings($)¹	$	8,690,999		$	14,509,180		$	5,818,181
	Net Book Value($)²	$	59,029,587		$	98,546,889			39,517,302
All Unaffiliated Stockholders³
	Number of Shares		18,070,893			0			18,070,893
	% Ownership		40.1	%		0			40.1	%
	Earnings($)	$	5,818,181			0		$	5,818,181
	Net Book Value($)		39,517,302			0			39,517,302

¹The Company’s total earnings can be found in the Company’s Form 10-K for the year ending November 30, 2012.

²The Company’s total net book value can be found in the Company’s Form 10-K for the year ending November 30, 2012.

³Includes all of the Company’s stockholders except Mr. Wenxiang Ding who beneficially owns his shares of the Company through Fortune Place Holdings Limited, a British Virgin Island company.

Financial Effect of the Transaction. Completion of the reverse stock split will require us to spend approximately $2,850,000, which includes legal, printing and other fees and costs related to the reverse stock split, including the fees paid to Loveman-Curtiss for its valuation services. This estimate includes the cost of the aggregate cash payment to stockholders holding fewer than 12,000,000 shares of common stock prior to the reverse stock split, which we estimate will be approximately $2,530,000. As a result, we may have decreased working capital following the reverse stock split and this could have a material adverse effect on our liquidity, results of operations and cash flow. These costs will be partially offset by the costs we would otherwise incur to comply with SEC reporting requirements, which we estimate to be approximately $750,000 per year. It is anticipated that the affiliated security holder who will be the sole stockholder upon completion of the reverse stock split will be the beneficiary of these savings on a recurring basis.

The estimated transaction expenses are as follows:

•	Legal expenses	$	250,000
•	Accounting expenses	$	15,000
•	Postage and printing expenses	$	35,000
•	Appraisal Firm fees	$	9,500
•	Miscellaneous expenses	$	10,500

Reports, Opinions or Appraisals

Valuation Report of Loveman-Curtiss.In connection with the proposed transaction, the Special Committee engaged Loveman-Curtiss to provide a valuation report as to the fair value of each pre-split share and to render an opinion as to the fairness of the consideration, from a financial point of view, to be received by stockholders whose shares we would acquire in the reverse stock split. Loveman-Curtiss was selected by the Special Committee based on its expertise and prior experience in the valuation of the shares of publicly-held companies engaged in going-private transactions, including Chinese-based companies.

On December 5, 2012, the Special Committee reviewed the Final Valuation Report of Loveman-Curtiss that, as of November 28, 2012, the fair market value of each pre-split share was $0.12. The Final Valuation Report, and accompanying fairness opinion, are attached hereto as Appendices G and H, respectively, and are incorporated herein by reference. Loveman-Curtiss has consented to the Company’s use of the fairness opinion in the Company’s filings with the Securities and Exchange Commission and to the Company making the fairness opinion available for use by its stockholders in conjunction with the going-private transaction.

The preparation of a valuation report is a complex process and is not necessarily susceptible to partial analysis or summary description. Nevertheless, the following is a brief summary of Loveman-Curtiss’s Final Valuation Report addressed to the Special Committee on December 5, 2012 that, subject to the assumptions, qualifications and limitations set forth in that report, the cash consideration of $0.12 per pre-split share to be paid by us to our stockholders who will receive cash in the proposed going-private transaction is fair from a financial point of view. Our stockholders are urged to, and should, read the Final Valuation Report carefully in its entirety for a complete statement of the considerations and procedures followed, factors considered, findings, assumptions and qualifications made, the bases for and methods of arriving at such findings, limitations on the review undertaken in connection with the valuation report, and judgments made or conclusions undertaken by Loveman-Curtiss in reaching its valuation. The Final Valuation Report was furnished for the use and benefit of the Special Committee in connection with its consideration of the proposed going-private transaction. Loveman-Curtiss believes, and so advised the Special Committee, that its analysis must be considered as a whole and that selecting portions of its analysis and the factors considered by it, without considering all factors and analysis, could create an incomplete view of the process underlying the Final Valuation Report.

Loveman-Curtiss’s Final Valuation Report addresses only the fairness, from a financial point of view, of the cash consideration to be paid in the going-private transaction to our stockholders. Loveman-Curtiss was not requested to opine as to, and its report does not address:

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the underlying business decision of the Special Committee or the board of directors or any other party to proceed with or effect the proposed going-private transaction;

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the fairness of any portion or aspect of the proposed going-private transaction not expressly addressed in its valuation report;

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the fairness of any portion of the proposed going-private transaction to the holders of any class of our securities, our creditors or to our other constituencies or any other party, other than those set forth in its valuation report;

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the relative merits of the proposed going-private transaction as compared to any alternative business strategies that might exist or the effect of any other transaction in which we might engage;

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the tax or legal consequences of the proposed going-private transaction to us, our security holders, or any other party; and

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the fairness of any portion or aspect of the proposed going-private transaction to any class or group of our security holders compared to any other class or group of our other security holders.

Furthermore, no opinion, counsel or interpretation was intended with respect to matters that require legal, regulatory, accounting, insurance, tax or other similar professional advice. In connection with its report, Loveman-Curtiss made such reviews, analyses and inquiries as it deemed necessary and appropriate under the circumstances. Among other things, Loveman-Curtiss:

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reviewed and analyzed certain publicly available financial and other data of ours;

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reviewed and analyzed the Company’s internally-generated financial information for the nine months ended August 31, 2012;

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reviewed the historical prices and trading activity for our common stock and analyzed its implied valuation multiples;

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reviewed certain publicly available financial data for going private transactions;

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reviewed the asset values of the Company as reflected in its public reports; and

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performed such other analyses and considered such other factors as they deemed appropriate.

In rendering its opinion, Loveman-Curtiss relied upon and assumed, without independent verification, the accuracy and completeness of the financial statements and other information provided by us or otherwise made available to it and has not assumed responsibility independently to verify such information. Loveman-Curtiss further relied upon the assurances made by us that the information provided has been prepared on a reasonable basis in accordance with industry practice, and that we are not aware of any information or facts that would make the information provided to Loveman-Curtiss incomplete or misleading. Loveman-Curtiss expressed no opinion regarding our forecasts of future business activities or the assumptions on which they were based.

Loveman-Curtiss’s Final Valuation Report was necessarily based upon the information available to it and facts and circumstances as they existed as of the date of the report and is subject to evaluation as of such date; events occurring after the date of the Final Valuation Report could materially affect the assumptions used by Loveman-Curtiss in preparing its fairness opinion.

Loveman-Curtiss expressed no opinion with respect to the prices at which shares of our common stock have traded or may trade following announcement or consummation of the reverse stock split or at any future time. Loveman-Curtiss also did not consider any benefits that may inure to any of our stockholders as a result of the reverse stock split or any related transaction other than in such party’s capacity as a stockholder who receives cash in the reverse stock split. Loveman-Curtiss did not recommend to the Special Committee any specific transaction consideration or advise the Special Committee that any specific amount of consideration constituted the only appropriate amount of consideration for the reverse stock split. The Special Committee, on behalf of the Company, determined the amount of consideration to be paid to cashed-out stockholders in the reverse stock split.

The following is a summary of the material analyses and other information that Loveman-Curtiss prepared or relied on in delivering its valuation report to the Special Committee.

Market Approach to Valuation. Loveman-Curtiss reviewed and analyzed recent and historical trading in our common stock, noting that in the 52 weeks ending November 28, 2012 (the date of their report), the OTCBB-reported closing price of the Company’s shares trended downwards from $0.49/sh. to $0.09/sh., and had closed at $0.12/sh. on the date of its report. Loveman-Curtiss noted that the 50-day average historical trading date average closing price was $0.115 and that the average daily trading volume during that period was 10,905 shares, approximately 0.0002% of the Company’s total issued and outstanding shares. Loveman-Curtiss did not consider the market valuations of comparable companies because it did not believe that any of the candidates were sufficiently comparable to the Company in terms of size, business or markets or there was not sufficient publicly available information on which to base a valuation. Based on its analysis of this market information, Loveman-Curtiss concluded that the fair value of each pre-split share under the Market approach is $0.12.

Income Approach to Valuation.Loveman-Curtiss analyzed the expected discounted equity cash flow from the Company in order to value the Company’s shares under the Income approach. Loveman-Curtiss first calculated the equity cash flow from the business and then applied certain risk factors to the Company’s projections of future equity cash flow. Based on its analyses of these factors, Loveman-Curtiss determined that it would be appropriate to use a discount rate of 25%. Loveman-Curtiss then took into consideration the Company’s non-operating assets and after adding their value to the discounted equity cash flow value per share, Loveman-Curtiss arrived at an initial fair value. This valuation approach assumes that the equity cash flow can ultimately be distributed. Loveman-Curtiss concluded that due to the foreign currency controls imposed by the Chinese government restricting foreign investors’ ability to receive the return of their investment from China and the Company’s stated intent not to pay dividends, Loveman-Curtiss applied a 97% discount on the initial fair value resulting from use of the Income approach.

Asset Approach. Loveman-Curtiss analyzed the liquidation value of the Company in connection with valuing the Company’s shares under the Asset Approach. The Asset Approach values a business by viewing it as a set of assets and liabilities and then assumes the liquidation of those assets. Using this approach, Loveman-Curtiss calculated the fair value of a share of our common stock to be $2.29. However, since the Company is a going concern and the Company’s stockholders could not force the liquidation of the Company without the approval of the Company’s controlling shareholder, Loveman-Curtiss did not consider the valuation obtained using this approach as relevant and gave it no consideration in arriving at its opinion of fair value.

Relative Weighting of the Market and Income Approaches to Valuation. Loveman-Curtiss advised the Special Committee that it was its opinion that the Income approach would significantly overstate the fair value of a share of the Company’s common stock if it did not take into account of the effect of Chinese currency controls restricting foreign investors from receiving the indicated value under the Income approach. By applying a Quantitative Marketability Discount Model, Loveman-Curtiss concluded in its Final Valuation Report that the value indicated by the Income approach should be discounted by approximately 97%, resulting in the same pre-split share value ($0.12) indicated by the Market approach. Loveman-Curtiss therefore concluded the fair value of the Company’s stock was $0.12 per share as of November 28, 2012.

Other. Loveman-Curtiss, as a customary part of its valuation and appraisal business, is engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, underwritings and secondary distributions of securities, private placements and valuations for estate, corporate and other purposes. Loveman-Curtiss has not previously provided us with any services or products and we do not contemplate seeking any such services or products from them in the future.

We have agreed to pay Loveman-Curtiss a fee of $9,500 (plus reimbursement for its out-of-pocket expenses) in connection with the services provided by it under an engagement agreement.That payment became due to Loveman-Curtiss upon delivery of its fairness opinion to the Special Committee. No portion of Loveman-Curtiss’s fee is contingent upon consummation of the reverse stock split or the conclusion reached by Loveman-Curtiss in its fairness opinion.

Board of Directors and Stockholder Approval

On December 11, 2012, the board of directors, which consists of Mr. Ding, Ms. Yanhua Li and the sole independent director, Ms. Zhou, unanimously ratified the action of the Special Committee approving the reverse stock split, the filing of the Amendment and the purchase by the Company of all resulting fractional shares at a price of $0.14 per share, subject to the right of the board of directors to abandon the reverse stock split at any time prior to the Effective Date. The reverse stock split also has been approved by the stockholders holding 63.9% of our outstanding common shares, through written consents delivered in accordance with Nevada law.

Dissenters’ Rights

Pursuant to Chapter 92A of the Nevada Revised Statutes (“Chapter 92A”), stockholders who would be cashed-out in the reverse stock split are entitled to dissent and may elect to have the Company purchase pre-reverse stock split shares that would become fractional shares as a result of the reverse stock split for a cash price that is equal to the “fair value” of such shares, as determined in a judicial proceeding in accordance with the provisions of Chapter 92A. The fair value of the shares of any stockholder means the value of such shares immediately before the effectuation of the reverse stock split, excluding any appreciation or depreciation in anticipation of the reverse stock split, unless exclusion of any appreciation or depreciation would be inequitable.

Chapter 92A is set forth in its entirety in Appendix B to the Information Statement. If you wish to exercise your dissenters’ rights or preserve the right to do so, you should carefully review Appendix B to the Information Statement. If you fail to comply with the procedures specified in Chapter 92A in a timely manner, you may lose your dissenters’ rights. Because of the complexity of those procedures, you should seek the advice of counsel if you are considering exercising your dissenters’ rights.

Stockholders who have not validly tendered their shares of common stock will be entitled to exercise dissenters’ rights. Stockholders who perfect their dissenters’ rights by complying with the procedures set forth in Chapter 92A will have the fair value of their shares determined by the Nevada state court and will be entitled to receive a cash payment equal to such fair value. Any such judicial determination of the fair value of shares could be based upon any valuation method or combination of methods the court deems appropriate. The value so determined could be more or less than the $0.14 per share to be paid in connection with the reverse stock split. In addition, stockholders who invoke dissenters’ rights may be entitled to receive payment of a fair rate of interest from the effective time of the transaction on the amount determined to be the fair value of their shares.

Within 10 days after the effective date of the reverse stock split, the Company will send a written notice (a “Dissenters’ Rights Notice”) to all the record stockholders of the Company entitled to dissenters’ rights. The Dissenters’ Rights Notice will be accompanied by (i) a form for demanding payment from the Company that includes the date of the first announcement to the news media or to the stockholders of the terms of the proposed action and requires that the person asserting dissenters’ rights certify whether or not the person acquired beneficial ownership of the shares before that date, which the form is attached hereto as Appendix C; (ii) a copy of the provisions of Chapter 92A; and (iii) a brief description of the procedures that a stockholder must follow to exercise dissenters’ rights.

In order to maintain eligibility to exercise dissenters’ rights under Chapter 92A, you must take the following actions within 30 days of the date that the Dissenters’ Rights Notice was delivered: (i) deliver a written demand for payment on the form provided in the Dissenters’ Rights Notice; (ii) certify whether you acquired beneficial ownership of the shares before the date set forth in the Dissenters’ Rights Notice; and (iii) deliver the certificates representing the dissenting shares to the Company.

Within 30 days after receipt of a demand for payment, the Company must pay in cash to each dissenter who complied with the provisions of Chapter 92A the amount the Company estimates to be the fair value of such shares, plus interest from the effective date of the reverse stock split. The rate of interest shall be at the average rate currently paid by the Company on its principal bank loans or, if we have no bank loans at the time, at a rate that is fair and equitable under all of the circumstances. The payment will be accompanied by the following: (i) financial statements for the Company for the fiscal year ended November 30, 2012 and the most recent interim financial statements; (ii) a statement of the Company’s estimate of the fair value of the shares; (iii) a statement of the dissenter’s right to demand payment for the difference between the Company’s estimate of the fair value of the shares and the stockholder’s estimate of the fair value of the shares and that if any such stockholder does not exercise such right within the period specified, such stockholder shall be deemed to have accepted such payment in full satisfaction of the Company’s obligations under Chapter 92A; and (iv) a copy of Chapter 92A. If the Company does not deliver payment within 30 days of receipt of the demand for payment, the dissenting stockholder may enforce the dissenter’s rights by commencing an action in Clark County, Nevada or if the dissenting stockholder resides or has its registered office in Nevada, in the county where the dissenter resides or has its registered office.

If a dissenting stockholder disagrees with the amount of the Company’s payment, the dissenting stockholder may, within 30 days of such payment, notify the Company in writing of the dissenting stockholder’s own estimate of the fair value of the dissenting shares and the amount of interest due, and demand payment of such estimate, less any payments made by the Company. The Company may elect to withhold payment from a dissenter unless the dissenter was the beneficial owner of the shares before the date set forth in the dissenter’s notice as the first date of any announcement to the news media or to the stockholders of the reverse stock split. To the extent the Company elects to withhold payment, within 30 days after the Company receives the demand for payment, the Company may offer to pay the Company’s estimate of fair value, plus interest, in full satisfaction of the stockholder’s demands or demand appraisal, if the stockholder meets the other requirements set forth in Chapter 92A. The stockholder may reject the offer by the Company. If a dissenting stockholder submits a written demand as set forth above and the Company accepts the offer to purchase the shares at the offer price, then the stockholder will be sent a check for the full purchase price of the shares within 30 days of acceptance.

If a demand for payment remains unsettled, the Company must commence a proceeding in the Clark County, Nevada district court within 60 days after receiving the demand. Each dissenter who is made a party to the proceeding shall be entitled to a judgment in the amount, if any, by which the court finds the fair value of the dissenting shares, plus interest, exceeds the amount paid by the Company. If a proceeding is commenced to determine the fair value of the common stock, the costs of such proceeding, including the reasonable compensation and expenses of any appraisers appointed by the court, shall be assessed against the Company, unless the court finds the dissenters acted arbitrarily, vexatiously or not in good faith in demanding payment. The court may also assess the fees and expenses of the counsel and experts for the respective parties, in amounts the court finds equitable against the Company if the court finds that (i) the Company did not comply with Chapter 92A or (ii) against either the Company or a dissenting stockholder, if the court finds that such party acted arbitrarily, vexatiously or not in good faith with respect to the rights provided by Chapter 92A.

A person having a beneficial interest in shares that are held of record in the name of another person, such as a broker, fiduciary, depository or other nominee, must act to cause the record holder to follow the requisite steps properly and in a timely manner to perfect dissenters’ rights of appraisal. If the shares are owned of record by a person other than the beneficial owner, including a broker, fiduciary (such as a trustee, guardian or custodian), depository or other nominee, the written demand for dissenters’ rights of appraisal must be executed by or for the record owner. If shares are owned of record by more than one person, as in joint tenancy or tenancy in common, the demand must be executed by or for all joint owners. An authorized agent, including an agent for two or more joint owners, may execute a demand for appraisal for a stockholder of record, provided that the agent identifies the record owner and expressly discloses, when the demand is made, that the agent is acting as agent for the record owner. If a stockholder owns shares through a broker who in turn holds the shares through a central securities depository nominee such as CEDE & Co., a demand for appraisal of such shares must be made by or on behalf of the depository nominee and must identify the depository nominee as the record holder of such shares.

A record holder, such as a broker, fiduciary, depository or other nominee, who holds shares as a nominee for others, will be able to exercise dissenters’ rights of appraisal with respect to the shares held for all or less than all of the beneficial owners of those shares as to which such person is the record owner. In such case, the written demand must set forth the number of shares covered by the demand.

The foregoing summary of the rights of dissenting stockholders under Chapter 92A does not purport to be a complete statement of the procedures to be followed by stockholders desiring to exercise any dissenters’ rights of appraisal available under Chapter 92A. The preservation and exercise of dissenters’ rights of appraisal require strict adherence to the applicable provisions of Chapter 92A, and the foregoing summary is qualified in its entirety by reference to Appendix B to this Information Statement.

Access Rights

We have made no provision in connection with the reverse stock split to grant our unaffiliated stockholders access to our corporate files or to obtain counsel or appraisal services at our expense.

Source and Amount of Funds

The Company estimates that it will use approximately $2,850,000 in cash to complete the reverse stock split, which includes cash payments to be made in lieu of issuing fractional shares, professional fees and other expenses related to the reverse stock split. Total cash paid to stockholders in lieu of fractional shares will be approximately $2,530,000. This estimate is based on the number of shares outstanding, less the number of shares beneficially held by Mr. Ding, multiplied by $0.14 per pre-split share.

The estimated costs, including the amounts to be paid to stockholders holding fewer than 12,000,000 shares of our common stock, will be paid with the Company’s currently available cash and cash from operations. We do not expect to require any borrowings to pay for these costs or expenses.

BACKGROUND

The Filing Persons

The filing persons under Rule 13e-3 of the Exchange Act are the Company and Wenxiang Ding. Our principal executive office, and the business address for the individual filing person, is located No. 57 Xinhua East Street, Hohhot, Inner Mongolia 010010, China, and the telephone number for the Company and Mr. Ding is (86-471) 466-8870.

Mr. Ding is the Company’s President and Chief Executive Officer, Treasurer, Director, and the controlling stockholder of the Company. He has been President of the Company since 2004.Mr. Ding is the founder of the Company and has more than 12 years of experience in running the business operations of the Company. In 1993, Mr. Ding received training in coal mine management from Beijing Coal Management Institute. During 2002, Mr. Ding received further training in coal mine production and public utility management from the Inner Mongolia Coal Industry Bureau and the Urdos City Construction Bureau. Mr. Ding has not been convicted in a criminal proceeding within the past five years and has not been a party to any judicial or administrative hearings related to securities laws during the past five years. Mr. Ding is a citizen of the People's Republic of China.

Structure of the Transaction

The Special Committee and our Board have authorized the reverse stock split. The transaction consists of a 1-for-12,000,000 reverse split, such that stockholders owning fewer than 12,000,000 shares of common stock on the Effective Date will have such shares cancelled and converted into the right to receive the cash consideration set forth herein. The transaction is intended to take effect on the date we file a certain certificate of amendment to our Articles of Incorporation with the Secretary of State of the State of Nevada, or on any later date that we may specify in such certificate of amendment. Any stockholder owning fewer than 12,000,000 shares of the common stock on the Effective Date will receive the right to receive cash in exchange for the resulting fractional share thereof and will no longer be a stockholder. A stockholder owning 12,000,000 or more shares of common stock immediately before the reverse stock split will not receive any cash payment for whole or fractional shares resulting from the reverse stock split.

Upon the effectiveness of the reverse stock split, the total number of authorized shares of common stock that we may issue pursuant to our Articles of Incorporation will be reduced from 195 million shares to 16 shares. The total number of shares of our common stock issued and outstanding will decrease on a similar basis, and will further be decreased upon our payment in cash for the fractional shares of the stockholders owning fewer than 12,000,000 shares after the reverse stock split. After completion of the proposed acquisition of fractional share interests of all stockholders owning less than one whole share after the reverse stock split, we anticipate that the number of record stockholders of our common stock will be reduced from 317 to one. The cash out of fractional stockholder interests represents, on a pre-split basis, the anticipated cancellation of 18,070,893 shares of common stock, or approximately 40% of our outstanding shares of common stock on the Effective Date.

We estimate that the total cash to be paid to stockholders holding less than one whole share as a result of the reverse stock split will be approximately $2,530,000. The total expenses expected to be incurred to effect the reverse stock split, including the cash to be paid to stockholders holding less than one whole share, are estimated to be $2,850,000. These costs and expenses will be paid out of our currently available cash. The fractional shares acquired in the reverse stock split will be retired and returned to the status of authorized but unissued shares of common stock.

We intend to treat stockholders holding common stock in street name through a nominee (such as a bank or broker) in the same manner as stockholders whose shares are held of record in their own names, and nominees will be instructed to effect the reverse stock split for their beneficial holders. However, since nominees may have different procedures, stockholders holding shares in street name should contact their nominees with respect to the process to be followed in connection with this transaction.

The Special Committee has set the cash consideration to be paid to cashed-out stockholders owning fewer than 12,000,000 pre-split shares at $0.14 per share for each pre-split share of common stock. The Special Committee determined this value in good faith, based upon factors the Special Committee deemed relevant. We currently estimate that cashed-out stockholders will receive cash consideration for their cancelled shares within approximately four weeks after such stockholders submit their cancelled shares in accordance with the instruction letter to be sent by our exchange agent following the Effective Date.

Following the effectiveness of the reverse stock split, we will file a Form 15 with the Securities and Exchange Commission and the registration of our common stock under the Exchange Act will terminate 90 days after the filing of the Form 15. The transaction is considered a “going private” transaction as defined in Rule 13e-3 promulgated under the Exchange Act because it is intended to and, if completed, will likely terminate the registration of our common stock under Section 15(d) of the Exchange Act and suspend our duty to file periodic reports with the SEC. In connection with the reverse stock split, we have filed with the SEC a Rule 13e-3 Transaction Statement on Schedule 13E-3.

The Company’s Securities

The Company believes that there are approximately 317 record holders of our common stock, not including holders in street name, and there are 45,060,000 shares of common stock issued and outstanding as of the Approval Record Date. Our common stock is not listed on an exchange; however, market quotes for our common stock are available on the OTCBB under the symbol “CHGY”.

The following table shows the range of high and low closing prices per share of our common stock for the fiscal year periods indicated. The prices in this table represent prices between dealers, and do not include adjustments for retail mark-ups, markdowns or commissions and may not represent actual transactions.

		High		Low
2013	First Quarter	$	0.15	$	0.11
2012	First Quarter	$	0.45	$	0.27
	Second Quarter	$	0.39	$	0.26
	Third Quarter	$	0.32	$	0.11
	Fourth Quarter	$	0.18	$	0.11
2011	First Quarter	$	1.79	$	0.71
	Second Quarter	$	0.93	$	0.35
	Third Quarter	$	0.60	$	0.30
	Fourth Quarter	$	0.49	$	0.20

We did not declare or pay any cash dividends during the past two years, and we do not intend to pay dividends on our common stock in the foreseeable future. The declaration or payment of dividends, if any, on our capital stock in the future is subject to the discretion of our Board and will depend on our earnings, financial condition, capital requirements and other relevant factors.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information known to us with respect to the beneficial ownership of each class of our capital stock as of December 31, 2012 for (1) each person known by us to beneficially own more than 5% of any class of our voting securities, (2) each of our named executive officers, (3) each of our directors and (4) all of our named executive officers and directors as a group. Except as otherwise indicated, we believe that each of the beneficial owners of our capital stock listed below, based on information provided by these owners, has sole investment and voting power with respect to its shares, subject to community property laws where applicable. Unless otherwise indicated, each natural person is a citizen of the People’s Republic of China, and the address for each listed stockholder is c/o China Energy Corporation, No. 57 Xinhua East Street, Hohhot, Inner Mongolia 010010, China. All share amounts as set forth below are prior to the completion of the reverse stock split and include shares underlying options or warrants exercisable within 60 days.

	Beneficial Ownership of Common Stock
Name	Number		Percent
Wenxiang Ding		26,989,107		59.9	%
Yanhua Li		0		0	%
Shiwen Zhou		0		0	%
All named executive officers, directors and 5% stockholders as a group (3 persons)		26,989,107		59.9	%

During the past sixty days neither the Company nor any of its affiliates have acquired any stock in the Company.

Related Party Transactions

None.

Management

Information regarding our Board of Directors and executive officers is located at “Item 10: Directors, Executive Officers and Corporate Governance” of our Form 10-K for the fiscal year ended November 30, 2012 (attached to this Information Statement as Appendix J), and subsequent periodic filings with the SEC. Additionally, our Form 10-K for the fiscal year ended November 30, 2011 and other public filings can be found on the SEC website, located atwww.sec.gov.

None of our directors or executive officers has been convicted in a criminal proceeding during the past five years (excluding traffic violations or similar misdemeanors), nor has any such person been party to any judicial or administrative proceeding during such time that has resulted in a judgment, decree or final order enjoining such person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of a violation of federal or state securities laws.

Certain Legal Matters

We are not aware of any material governmental or regulatory approval or filing required for completion of the reverse stock split, other than compliance with the applicable federal and state securities laws and the corporate law of the State of Nevada.

Reservation of Right to Abandon the Reverse Stock Split

The board of directors has retained the right to abandon the reverse stock split, even though approved by the stockholders, if it determines prior to the Effective Date that the reverse stock split is not in the best interests of the Company or its stockholders. If we determine to abandon the reverse stock split, we may pursue other strategies which will result in our going private, including a change in the ratio of our reverse stock split. The board of directors will meet in the event of any extraordinary difficulties procedurally accomplishing the reverse stock split and will vote on whether to abandon or modify the reverse stock split. If such action is taken, the board of directors will send letters to all stockholders notifying them of that decision. We do not foresee any circumstances which would prevent the reverse stock split from taking place as presented, but it is always possible that some unforeseen market or business circumstance could arise to cause the board of directors to reevaluate the reverse stock split.

FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT

Summarized below are certain material federal income tax consequences to us and our stockholders resulting from the reverse stock split. This summary is based upon United States federal income tax law, as currently in effect, which is subject to differing interpretations or change, possibly on a retroactive basis. This summary addresses only those stockholders who have held their shares as capital assets. This summary does not discuss all aspects of federal income taxation that may be important to stockholders in light of their individual circumstances. In addition, this summary does not discuss any state, local, foreign, or other tax considerations. This summary assumes that each stockholder is a United States citizen and has held, and will hold, shares of common stock as capital assets under the Internal Revenue Code of 1986, as amended. Each stockholder should consult its tax advisor as to the particular federal, state, local, foreign, and other tax consequences, in light of their specific circumstances.

Tax Consequences to the Company

We believe that the reverse stock split will be treated as a tax-free “recapitalization” for federal income tax purposes and, accordingly, it should not result in any material federal income tax consequences to us. We will not apply for any ruling from the Internal Revenue Service, nor will we receive an opinion of counsel with respect to the tax consequences of the reverse stock split.

Tax Consequences to Stockholders Who Do Not Receive Cash for Fractional Shares

A stockholder who receives no cash payment as a result of the reverse stock split, but continues to hold shares of our common stock directly immediately after the reverse stock split, will not recognize any gain or loss for United States federal income tax purposes. The aggregate adjusted tax basis of the shares held immediately after the reverse stock split will equal the aggregate adjusted tax basis of the shares held immediately prior to the reverse stock split, and the holding period of the shares will be the same as immediately prior to the reverse stock split.

Tax Consequences to Stockholders Whose Entire Interest in Our Common Stock,Both Directly and Indirectly, is Terminated

A stockholder who receives a cash payment for a fractional share of our common stock as a result of the reverse stock split and does not continue to hold our shares directly, or indirectly by virtue of being related to a person who continues to hold shares of our common stock directly, immediately after the reverse stock split, will recognize capital gain or loss, for United States federal income tax purposes, equal to the difference between the cash received for the common stock and the aggregate adjusted tax basis in such stock.

Tax Consequences to Stockholders Whose Entire Interest in Our Common Stock,Directly but Not Indirectly, is Terminated

A stockholder that receives cash for a fractional share as a result of the reverse stock split, but is treated as a continuing stockholder by virtue of being related to a person who continues to hold our shares directly immediately after the reverse stock split, will recognize capital gain or loss in the same manner as set forth in the previous paragraph, provided that the receipt of cash either (1) is “not essentially equivalent to a dividend”, or (2) constitutes a “substantially disproportionate redemption of stock”, as described below.

(1) Not Essentially Equivalent to a Dividend. The receipt of cash is “not essentially equivalent to a dividend” if the reduction in the stockholder’s proportionate interest in us resulting from the reverse stock split (taking into account for this purpose the stock owned by persons to whom the stockholder is related) is considered a “meaningful reduction” given the stockholder’s particular facts and circumstances. The Internal Revenue Service has ruled that a small reduction by a minority stockholder whose relative stock interest is minimal and who exercises no control over the affairs of the corporation will satisfy this test.

(2) Substantially Disproportionate Redemption of Stock. The receipt of cash in the reverse stock split will be a “substantially disproportionate redemption of stock” if (a) the stockholder owns less than 50% of the total combined voting power of all classes of stock entitled to vote, and (b) the percentage of our voting stock owned by the stockholder (and by persons to whom the stockholder is related) immediately after the reverse stock split is less than 80% of the percentage of shares of voting stock owned by the stockholder immediately before the reverse stock split.

In applying the foregoing “Not Essentially Equivalent to a Dividend” and “Substantially Disproportionate Redemption of Stock” tests, the stockholder will be treated as owning shares of common stock actually or constructively owned by certain individuals and entities related to the stockholder. If the receipt of cash in exchange for a fractional share is not treated as capital gain or loss under either of the tests, it will be treated first as ordinary dividend income to the extent of the stockholder’s ratable share of our current and accumulated earnings and profits, then as a tax-free return of capital to the extent of the stockholder’s aggregate adjusted tax basis in the shares, and any remaining amount will be treated as capital gain. Capital gain or loss recognized will be long-term if the stockholder’s holding period with respect to the stock surrendered is more than one year at the time of the reverse stock split. The deductibility of capital loss is subject to limitations. In the case of a stockholder who is an individual, long-term capital gain and dividend income should generally be subject to United States federal income tax at a maximum rate of 20%. In addition, beginning in 2013, the capital gain and dividend income of individuals whose modified adjusted gross income (MAGI) exceeds certain threshold amount will also be subject to a 3.8% tax imposed on "net investment income." The MAGI threshold amounts are $250,000 for joint returns and surviving spouses, $125,000 for married filing separately, and $200,000 in all other cases.

The foregoing discussion summarizing certain federal income tax consequences does not refer to the particular facts and circumstances of any specific stockholder. Stockholders are urged to consult their own tax advisors for more specific and definitive advice as to the federal income tax consequences to them of the reverse stock split, as well as advice as to the application and effect of state, local and foreign income and other tax laws.

FINANCIAL INFORMATION

Historical Financial Information and Management’s Discussion and Analysis ofFinancial Condition and Results of Operations

Our historical financial information is located at “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and “Item 8 - Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the year ended November 30, 2012 (filed with the SEC on April 5, 2013). A copy of the 10-K accompanies this Information Statement as Appendix J.

Pro Forma Consolidated Financial Statements (Unaudited)

The following unaudited pro forma financial information presents the effect on our historical financial position of the $2,850,000 in fees and expenses we expect to incur in connection with the reverse stock split. Our unaudited pro forma consolidated balance sheet as of November 30, 2012 reflects the reverse stock split as if it occurred on that balance sheet date. Our book value per share is also as of November 30, 2012, the most recent balance sheet presented. The unaudited pro forma consolidated statements of operations for the year ended November 30, 2012 reflect the reverse stock split as if it occurred at the beginning of such period.

The following unaudited pro forma financial information is not necessarily indicative of what our actual financial position would have been had the reverse stock split been consummated as of the above-referenced date or of the financial position that may be reported by us in the future.

						Pro Forma
	November 30,		Pro Forma			November 30,
Pro Forma Consolidated Balance Sheet (Unaudited)	2012		Adjustments			2012
Assets
Cash and cash equivalents	$	11,815,027	$	(2,850,000	)(1)	$	8,965,027
Accounts Receivable, net		18,972,155					18,972,155
Other Receivables		4,636,311					4,636,311
Prepaid Expenses		678,402					678,402
Advances to Suppliers		60,837,720					60,837,720
Inventories, Net		14,018,922					14,018,922
Loan to Related Party		37,590,281					37,590,281
Total Current Assets		148,548,818					145,698,818

Noncurrent Assets		82,888,693					82,888,693

Total Assets	$	231,437,511				$	228,587,511

Liabilities and Stockholders’ Equity

Total Current Liabilities		108,472,372					108,472,372
Total Noncurrent Liabilities		24,418,250					24,418,250
Total Liabilities		132,890,622					132,890,622
Stockholders’ Equity		98,546,889		(2,850,000	)(1)		95,696,889
Total Liabilities and Stockholders’ Equity		231,437,511					228,587,511

____________

One-time expenses and fees related to the reverse stock split estimated to be approximately $2,850,000, including approximately $2,530,000 used to repurchase fractional shares of common stock.

Pro Forma Condensed Consolidated Year-End Statement of Operations (Unaudited)

							Pro Forma
	Year Ended			Pro Forma			Year Ended
	November 30, 2012			Adjustments			November 30, 2012
Revenues		246,062,847						246,062,847
Cost of Revenues		(209,125,559	)					(209,125,559	)
Gross Profit		36,937,288						36,937,288
Total Operating Expenses		(16,664,309	)	$	(750,000	)(1)		(15,914,309	)
Net Income from Continuing Operations		20,272,979			750,000			21,022,979
Other Income (expenses)		(766,239	)					(766,239	)
Provision for income taxes		(7,203,424	)					(7,203,424	)
Other comprehensive income		2,205,864						2,205,864
Net income		12,303,316			750,000			13,053,316
Net income per share - basic and diluted		0.27						0.29
Weighted average shares – basic and diluted		45,060,000						45,060,000

For the pro forma adjustment, in order to show what the year would have looked like if the transaction had occurred at the beginning of the year, we deducted from general and administrative expenses the expected annual savings of $750,000 in costs and expenses related to our public reporting and compliance obligations. The savings are based on, among other things, reduced legal and accounting expenses, reduced stockholder relations expenses, and reduced stock transfer agent fees.

Ratio of Earnings to Fixed Charges

	Year Ended
	November 30, 2012
Income before taxes		19,506,740
Interest		2,795,296
Earnings available for fixed charges		22,302,036
Fixed Charges:		2,795,296
Ratio of Earnings to
Fixed Charges		7.98

Book Value Per Share

Our Book Value Per Share as of November 30, 2012 was $2.19 based on a Stockholder’s Equity of $98,546,889 and 45,060,000 shares of common stock outstanding.

Income Per Share for Continuing Operations

Our income Per Share for Continuing Operations as of November 30, 2012 was $0.45 based on an Operating Income of $20,272,979 and 45,060,000 shares of common stock outstanding.

Changes and Disagreements with Accountants on Accounting and Financial Disclosure

None.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents that we previously filed with the Commission are incorporated by reference in this Information Statement, except for any discussion therein of the “safe harbor” protections for forward-looking statements provided under The Private Securities Litigation Reform Act of 1995: the Annual Report on Form 10-K for the year ended November 30, 2012. A copy of the 10-K accompanies this Information Statement.

All documents and reports that we filed with the commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Information Statement are not incorporated by reference into this Information Statement. New material information, if any, will be provided in an amended Information Statement.

Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Information Statement to the extent that a statement contained herein (or in any other subsequently filed documents which also is deemed to be incorporated by reference herein) modifies or supersedes the statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Information Statement.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

The reverse stock split will result in a going-private transaction subject to Rule 13e-3 of the Exchange Act. The Company is filing a Rule 13e-3 Transaction Statement on Schedule 13E-3 under the Exchange Act with respect to the reverse stock split simultaneously with the dissemination of this Information Statement. The Schedule 13E-3 contains additional information about us. Copies of the Schedule 13E-3 are available for inspection and copying at our principal executive offices during regular business hours by any interested stockholders, or a representative who has been so designated in writing, and may be inspected or copied, or obtained by mail, by written request to Wenxiang Ding, No. 57 Xinhua East Street, Hohhot, Inner Mongolia 010010, China. We are currently subject to the information requirements of the Exchange Act and file periodic reports and other information with the SEC. Copies of such reports, this Information Statement and the Schedule 13E-3 may be copied (at prescribed rates) at the public reference facilities maintained by the SEC at these facilities currently located at 100 F Street, NE, Room 1580, Washington, DC 20549. Some of this information may also be accessed on the World Wide Web through the SEC’s internet website atwww.sec.gov.

Appendix A

FORM OF
CERTIFICATE OF AMENDMENT TO

THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF
CHINA ENERGY CORPORATION

Pursuant to the provisions of §78.385 and §78.390 of the Nevada Revised Statutes, China Energy Corporation, a Nevada corporation, hereby adopts the following Certificate of Amendment to its Amended and Restated Articles of Incorporation.

The name of the entity is China Energy Corporation (the “Corporation”).

The Amended and Restated Articles of Incorporation of the Corporation are amended by deleting the first sentence of the current Article 4 in its entirety and substituting the following therefor:

“Authorized Capital Stock. The authorized capital stock of the Corporation consists of Seventeen (17) shares having a par value of one tenth of one cent ($.001) per share, divided into Sixteen (16) shares of Common Stock and One (1) share of Preferred Stock. Upon the effectiveness (the “Effective Time”) of the Certificate of Amendment to the Amended and Restated Articles of Incorporation, each twelve million (12,000,000) shares of issued Common Stock outstanding immediately prior to the Effective Time, shall be combined and reclassified into one (1) fully-paid and non-assessable share of Common Stock;provided, however, that in lieu of any fractional interests in shares of Common Stock to which any stockholder who would be entitledonly to receive such fractional interest (i.e., any stockholder owning fewer than 12,000,000 shares of Common Stock immediately prior to the Effective Time) would otherwise be entitled pursuant hereto (taking into account all shares of capital stock owned by such stockholder), the Corporation shall pay in cash for such fractional interest $0.14 per share of Common Stock held by such stockholder immediately prior to the Effective Time.”

This Certificate of Amendment has been approved in the manner required by the Nevada Revised Statutes and the constituent documents of the Corporation.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its officers thereunto duly authorized this ___ day of ____________, 2013.

	China Energy Corporation



	By:
		Wenxiang Ding
		President and Chief Executive Officer

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Appendix B

CHAPTER 92A - MERGERS, CONVERSIONS, EXCHANGES AND DOMESTICATIONS

GENERAL PROVISIONS

NRS 92A.005 Definitions.

NRS 92A.007 “Approval” and “vote” defined.

NRS 92A.0075 “Articles,” “articles of incorporation” and “certificate of incorporation” defined.

NRS 92A.008 “Business trust” defined.

NRS 92A.009 “Charter document” defined.

NRS 92A.010 “Constituent document” defined.

NRS 92A.015 “Constituent entity” defined.

NRS 92A.020 “Domestic” defined.

NRS 92A.022 “Domestic business trust” defined.

NRS 92A.025 “Domestic corporation” defined.

NRS 92A.027 “Domestic general partnership” defined.

NRS 92A.030 “Domestic limited-liability company” defined.

NRS 92A.035 “Domestic limited partnership” defined.

NRS 92A.040 “Domestic nonprofit corporation” defined.

NRS 92A.045 “Entity” defined.

NRS 92A.050 “Exchange” defined.

NRS 92A.055 “Foreign” defined.

NRS 92A.060 “Limited partner” defined.

NRS 92A.070 “Member” defined.

NRS 92A.075 “Owner” defined.

NRS 92A.080 “Owner’s interest” defined.

NRS 92A.083 “Principal office” defined.

NRS 92A.085 “Record” defined. [Repealed.]

NRS 92A.090 “Resulting entity” defined.

NRS 92A.092 “Senior executive” defined.

NRS 92A.093 “Sign” defined. [Repealed.]

NRS 92A.097 “Signature” defined. [Repealed.]

NRS 92A.098 Notice and other communications.

AUTHORITY, PROCEDURE AND EFFECT

NRS 92A.100 Authority for merger; approval, contents and form of plan of merger.

NRS 92A.105 Authority for conversion; approval, form and contents of plan of conversion.

NRS 92A.110 Authority for exchange; approval, contents and form of plan of exchange.

NRS 92A.120 Approval of plan of merger, conversion or exchange for domestic corporation.

NRS 92A.130 Approval of plan of merger for domestic corporation: Conditions under which action by stockholders of surviving corporation is not required.

NRS 92A.135 Approval of plan of conversion for domestic general partnership.

NRS 92A.140 Approval of plan of merger, conversion or exchange for domestic limited partnership.

NRS 92A.150 Approval of plan of merger, conversion or exchange for domestic limited-liability company.

NRS 92A.160 Approval of plan of merger or exchange for domestic nonprofit corporation.

NRS 92A.165 Approval of plan of merger, conversion or exchange for domestic business trust.

NRS 92A.170 Abandonment of planned merger, conversion or exchange before filing of articles.

NRS 92A.175 Termination of planned merger, conversion or exchange after filing of articles.

NRS 92A.180 Merger of subsidiary into parent or parent into subsidiary.

NRS 92A.190 Merger or exchange with foreign entity.

NRS 92A.195 Conversion of foreign or domestic entity or foreign or domestic general partnership.

NRS 92A.200 Filing requirements for mergers or exchanges; dependency of terms of plan of merger, conversion or exchange on extrinsic facts.

NRS 92A.205 Filing requirements for conversions.

NRS 92A.207 Form required for filing of records.

NRS 92A.210 Filing fees.

NRS 92A.220 Duty when entire plan of merger, conversion or exchange is not set forth in articles.

NRS 92A.230 Signing of articles of merger, conversion or exchange.

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NRS 92A.240 Effective date and time of merger, conversion or exchange; articles of termination.

NRS 92A.250 Effect of merger, conversion or exchange.

NRS 92A.260 Liability of owner after merger, conversion or exchange.

NRS 92A.270 Domestication of undomesticated organization.

NRS 92A.280 Cancellation of filings.

RIGHTS OF DISSENTING OWNERS

NRS 92A.300 Definitions.

NRS 92A.305 “Beneficial stockholder” defined.

NRS 92A.310 “Corporate action” defined.

NRS 92A.315 “Dissenter” defined.

NRS 92A.320 “Fair value” defined.

NRS 92A.325 “Stockholder” defined.

NRS 92A.330 “Stockholder of record” defined.

NRS 92A.335 “Subject corporation” defined.

NRS 92A.340 Computation of interest.

NRS 92A.350 Rights of dissenting partner of domestic limited partnership.

NRS 92A.360 Rights of dissenting member of domestic limited-liability company.

NRS 92A.370 Rights of dissenting member of domestic nonprofit corporation.

NRS 92A.380 Right of stockholder to dissent from certain corporate actions and to obtain payment for shares.

NRS 92A.390 Limitations on right of dissent: Stockholders of certain classes or series; action of stockholders not required for plan of merger.

NRS 92A.400 Limitations on right of dissent: Assertion as to portions only to shares registered to stockholder; assertion by beneficial stockholder.

NRS 92A.410 Notification of stockholders regarding right of dissent.

NRS 92A.420 Prerequisites to demand for payment for shares.

NRS 92A.430 Dissenter’s notice: Delivery to stockholders entitled to assert rights; contents.

NRS 92A.440 Demand for payment and deposit of certificates; loss of rights of stockholder; withdrawal from appraisal process.

NRS 92A.450 Uncertificated shares: Authority to restrict transfer after demand for payment.

NRS 92A.460 Payment for shares: General requirements.

NRS 92A.470 Withholding payment for shares acquired on or after date of dissenter’s notice: General requirements.

NRS 92A.480 Dissenter’s estimate of fair value: Notification of subject corporation; demand for payment of estimate.

NRS 92A.490 Legal proceeding to determine fair value: Duties of subject corporation; powers of court; rights of dissenter.

NRS 92A.500 Assessment of costs and fees in certain legal proceedings.

_________

GENERAL PROVISIONS

NRS 92A.005 Definitions.As used in this chapter, unless the context otherwise requires, the words and terms defined in NRS 92A.007 to 92A.092, inclusive, have the meanings ascribed to them in those sections.

(Added to NRS by 1995, 2079; A 1997, 726; 1999, 1626; 2001, 1406, 3199; 2003, 3181; 2007, 2702; 2009, 1717; 2011, 2812)

NRS 92A.007 “Approval” and “vote” defined.“Approval” and “vote” as describing action by directors or stockholders mean the vote by directors in person or by written consent, or action of stockholders in person, by proxy or by written consent.

(Added to NRS by 1997, 726)

NRS 92A.0075 “Articles,” “articles of incorporation” and “certificate of incorporation” defined.“Articles,” “articles of incorporation” and “certificate of incorporation” are synonymous terms and, unless the context otherwise requires, include all certificates filed pursuant to NRS 78.030, 78.1955, 78.209, 78.380, 78.385 and 78.390 and any articles of merger, conversion, exchange or domestication filed pursuant to NRS 92A.200 to 92A.240, inclusive, or 92A.270. Unless the context otherwise requires, these terms include restated articles and certificates of incorporation.

(Added to NRS by 2003, 3180)

NRS 92A.008 “Business trust” defined. “Business trust” means:

A domestic business trust; or

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2. An unincorporated association formed pursuant to, existing under or governed by the law of a jurisdiction other than this State and generally described by NRS 88A.030.

(Added to NRS by 1999, 1626)

NRS 92A.009 “Charter document” defined.“Charter document” means the articles of incorporation of a foreign corporation, whether or not for profit, the articles of incorporation of a domestic corporation and a domestic nonprofit corporation, the articles of organization of a limited-liability company, the certificate of limited partnership of a limited partnership or the certificate of trust of a business trust and all amendments thereto.

(Added to NRS by 2003, 3180)

NRS 92A.010 “Constituent document” defined.“Constituent document” means the articles of incorporation or bylaws of a corporation, whether or not for profit, the articles of organization or operating agreement of a limited-liability company, the certificate of limited partnership or partnership agreement of a limited partnership, or the certificate of trust or governing instrument of a business trust.

(Added to NRS by 1995, 2079; A 2001, 1406, 3199)

NRS 92A.015 “Constituent entity” defined.“Constituent entity” means:

1. With respect to a merger, each merging or surviving entity;

2. With respect to an exchange, each entity whose owner’s interests will be acquired or each entity acquiring those interests; and

3. With respect to the conversion of an entity or a general partnership, the entity or general partnership that will be converted into another entity.

(Added to NRS by 1995, 2079; A 2001, 1407, 3199)

NRS 92A.020 “Domestic” defined.“Domestic” as applied to an entity means one organized and existing under the laws of this State.

(Added to NRS by 1995, 2079)

NRS 92A.022 “Domestic business trust” defined.“Domestic business trust” means a business trust formed and existing pursuant to the provisions of chapter 88A of NRS.

(Added to NRS by 1999, 1626)

NRS 92A.025 “Domestic corporation” defined.“Domestic corporation” means a corporation organized and existing under chapter 78, 78A or 89 of NRS, or a nonprofit cooperative corporation organized pursuant to NRS 81.010 to 81.160, inclusive.

(Added to NRS by 1995, 2079; A 1997, 726)

NRS 92A.027 “Domestic general partnership” defined.“Domestic general partnership” means a general partnership governed by the provisions of chapter 87 of NRS.

(Added to NRS by 2001, 1403; A 2001, 3199)

NRS 92A.030 “Domestic limited-liability company” defined.“Domestic limited-liability company” means a limited-liability company organized and existing under chapter 86 of NRS.

(Added to NRS by 1995, 2079)

NRS 92A.035 “Domestic limited partnership” defined.“Domestic limited partnership” means a limited partnership organized and existing under chapter 87A or 88 of NRS.

(Added to NRS by 1995, 2079; A 2007, 483)

NRS 92A.040 “Domestic nonprofit corporation” defined.“Domestic nonprofit corporation” means a corporation organized or existing under chapter 82 of NRS, including those listed in NRS 82.051.

(Added to NRS by 1995, 2079)

NRS 92A.045 “Entity” defined.“Entity” means a foreign or domestic:

1. Corporation, whether or not for profit;

2. Limited-liability company;

3. Limited partnership; or

4. Business trust.

(Added to NRS by 1995, 2079; A 1999, 1626; 2003, 3181)

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NRS 92A.050 “Exchange” defined.“Exchange” means the acquisition by one or more foreign or domestic entities of all an owner’s interests or one or more classes or series of an owner’s interests of one or more foreign or domestic entities.

(Added to NRS by 1995, 2079)

NRS 92A.055 “Foreign” defined.“Foreign” as applied to an entity means one not organized or existing under the laws of this State.

(Added to NRS by 1995, 2079)

NRS 92A.060 “Limited partner” defined.“Limited partner” means a person who has been admitted to a limited partnership as a limited partner in accordance with the partnership agreement.

(Added to NRS by 1995, 2079)

NRS 92A.070 “Member” defined.“Member” means:

1. A member of a limited-liability company, as defined in NRS 86.081; or

2. A member of a nonprofit corporation which has members.

(Added to NRS by 1995, 2080; A 2001, 1407, 3199)

NRS 92A.075 “Owner” defined.“Owner” means the holder of an interest described in NRS 92A.080 or a noneconomic member of a limited-liability company described in NRS 86.095.

(Added to NRS by 1995, 2080; A 2001, 1407, 3199)

NRS 92A.080 “Owner’s interest” defined.“Owner’s interest” means shares of stock in a corporation, membership in a nonprofit corporation, the interest of a member of a limited-liability company or a beneficial owner of a business trust, or the partnership interest of a general or limited partner of a limited partnership.

(Added to NRS by 1995, 2080; A 1999, 1626)

NRS 92A.083 “Principal office” defined.“Principal office” has the meaning ascribed to it in NRS 78.010.

(Added to NRS by 2007, 2702)

NRS 92A.085 “Record” defined.Repealed. (See chapter 455, Statutes of Nevada 2011, at page 2816.)

NRS 92A.090 “Resulting entity” defined.“Resulting entity” means, with respect to a conversion, the entity that results from conversion of the constituent entity.

(Added to NRS by 2001, 1403; A 2001, 3199)

NRS 92A.092 “Senior executive” defined.“Senior executive” means the chief executive officer, chief operating officer, chief financial officer or anyone in charge of a principal business unit or function of a domestic corporation.

(Added to NRS by 2009, 1717)

NRS 92A.093 “Sign” defined.Repealed. (See chapter 455, Statutes of Nevada 2011, at page 2816.)

NRS 92A.097 “Signature” defined.Repealed. (See chapter 455, Statutes of Nevada 2011, at page 2816.)

NRS 92A.098 Notice and other communications.Any notice or other communication sent pursuant to any provision of this chapter may be delivered by electronic transmission pursuant to NRS 75.150.

(Added to NRS by 2011, 2812)

AUTHORITY, PROCEDURE AND EFFECT

NRS 92A.100 Authority for merger; approval, contents and form of plan of merger.

1. Except as limited by NRS 78.411 to 78.444, inclusive, one or more domestic entities may merge into another entity if the plan of merger is approved pursuant to the provisions of this chapter.

2. Except as otherwise provided in NRS 92A.180, the plan of merger must set forth:

(a) The name and jurisdiction of organization of each constituent entity;

(b) The name, jurisdiction of organization and kind of entity or entities that will survive the merger;

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(d) The manner and basis, if any, of converting the owner’s interests of each constituent entity into owner’s interests, rights to purchase owner’s interests, or other securities of the surviving or other entity or into cash or other property in whole or in part or cancelling such owner’s interests in whole or in part.

3. The plan of merger may set forth:

(a) Amendments to the constituent documents of the surviving entity; and

(b) Other provisions relating to the merger.

4. The plan of merger must be in writing.

(Added to NRS by 1995, 2080; A 1997, 726; 2003, 3181; 2005, 2200)

NRS 92A.105 Authority for conversion; approval, form and contents of plan of conversion.

1. Except as limited by NRS 78.411 to 78.444, inclusive, one domestic general partnership or one domestic entity, except a domestic nonprofit corporation, may convert into a domestic entity of a different type or into a foreign entity if a plan of conversion is approved pursuant to the provisions of this chapter.

2. The plan of conversion must be in writing and set forth the:

(a) Name of the constituent entity and the proposed name for the resulting entity;

(b) Jurisdiction of the law that governs the constituent entity;

(d) Terms and conditions of the conversion;

(e) Manner and basis, if any, of converting the owner’s interest of the constituent entity or the interest of a partner in a general partnership that is the constituent entity into owner’s interests, rights of purchase and other securities in the resulting entity or cancelling such owner’s interests in whole or in part; and

(f) Full text of the charter documents of the resulting entity.

3. The plan of conversion may set forth other provisions relating to the conversion.

(Added to NRS by 2001, 1403; A 2001, 3199; 2003, 3181; 2005, 2200; 2011, 2812)

NRS 92A.110 Authority for exchange; approval, contents and form of plan of exchange.

1. Except as a corporation is limited by NRS 78.411 to 78.444, inclusive, one or more domestic entities may acquire all of the outstanding owner’s interests of one or more classes or series of another entity not already owned by the acquiring entity or an affiliate thereof if the plan of exchange is approved pursuant to the provisions of this chapter.

2. The plan of exchange must set forth:

(a) The name and jurisdiction of organization of each constituent entity;

(b) The name, jurisdiction of organization and kind of each entity whose owner’s interests will be acquired by one or more other entities;

(d) The manner and basis, if any, of exchanging the owner’s interests to be acquired for owner’s interests, rights to purchase owner’s interests, or other securities of the acquiring or any other entity or for cash or other property in whole or in part or cancelling such owner’s interests in whole or in part.

3. The plan of exchange may set forth other provisions relating to the exchange.

4. This section does not limit the power of a domestic entity to acquire all or part of the owner’s interests or one or more class or series of owner’s interests of another person through a voluntary exchange or otherwise.

5. The plan of exchange must be in writing.

(Added to NRS by 1995, 2080; A 1997, 726; 2005, 2201)

NRS 92A.120 Approval of plan of merger, conversion or exchange for domestic corporation.

1. After adopting a plan of merger, exchange or conversion, the board of directors of each domestic corporation that is a constituent entity in the merger or conversion, or the board of directors of the domestic corporation whose shares will be acquired in the exchange, must submit the plan of merger, except as otherwise provided in NRS 92A.130 and 92A.180, the plan of conversion or the plan of exchange for approval by its stockholders who are entitled to vote on the plan in accordance with the provisions of this section.

2. For a plan of merger, conversion or exchange to be approved:

(a) The board of directors must recommend the plan of merger, conversion or exchange to the stockholders, unless the board of directors determines that because of a conflict of interest or other special circumstances it should make no recommendation and it communicates the basis for its determination to the stockholders with the plan; and

(b) The stockholders entitled to vote must approve the plan.

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3. The board of directors may condition its submission of the proposed merger, conversion or exchange on any basis. The provisions of this section or this chapter must not be construed to permit a board of directors to submit, or to agree to submit, a plan of merger, conversion or exchange to the stockholders without the recommendation of the board required pursuant to paragraph (a) of subsection 2 unless the board of directors determines that because of a conflict of interest or other special circumstances it should make no recommendation and it communicates the basis for its determination to the stockholders with the plan. Any agreement of the board of directors to submit a plan of merger, conversion or exchange to the stockholders notwithstanding an adverse recommendation of the board of directors shall be deemed to be of no force or effect.

4. Unless the plan of merger, conversion or exchange is approved by the written consent of stockholders pursuant to subsection 7, the domestic corporation must notify each stockholder, whether or not the stockholder is entitled to vote, of the proposed stockholders’ meeting in accordance with NRS 78.370. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider the plan of merger, conversion or exchange and must contain or be accompanied by a copy or summary of the plan.

5. Unless this chapter, the articles of incorporation, the resolutions of the board of directors establishing the class or series of stock or the board of directors acting pursuant to subsection 3 require a greater vote or a vote by classes of stockholders, the plan of merger or conversion must be approved by a majority of the voting power of the stockholders.

6. Unless the articles of incorporation or the resolution of the board of directors establishing a class or series of stock provide otherwise, or unless the board of directors acting pursuant to subsection 3 requires a greater vote, the plan of exchange must be approved by a majority of the voting power of each class and each series to be exchanged pursuant to the plan of exchange.

7. Unless otherwise provided in the articles of incorporation or the bylaws of the domestic corporation, the plan of merger, conversion or exchange may be approved by written consent as provided in NRS 78.320.

8. If an officer, director or stockholder of a domestic corporation, which will be the constituent entity in a conversion, will have any liability for the obligations of the resulting entity after the conversion because the officer, director or stockholder will be the owner of an owner’s interest in the resulting entity, then that officer, director or stockholder must also approve the plan of conversion.

9. Unless otherwise provided in the articles of incorporation or bylaws of a domestic corporation, a plan of merger, conversion or exchange may contain a provision that permits amendment of the plan of merger, conversion or exchange at any time after the stockholders of the domestic corporation approve the plan of merger, conversion or exchange, but before the articles of merger, conversion or exchange become effective, without obtaining the approval of the stockholders of the domestic corporation for the amendment if the amendment does not:

(a) Alter or change the manner or basis of exchanging an owner’s interest to be acquired for owner’s interests, rights to purchase owner’s interests, or other securities of the acquiring entity or any other entity, or for cash or other property in whole or in part; or

(b) Alter or change any of the terms and conditions of the plan of merger, conversion or exchange in a manner that adversely affects the stockholders of the domestic corporation.

10. A board of directors shall cancel the proposed meeting or remove the plan of merger, conversion or exchange from consideration at the meeting if the board of directors determines that it is not advisable to submit the plan of merger, conversion or exchange to the stockholders for approval.

(Added to NRS by 1995, 2081; A 2001, 1407, 3199; 2003, 3182; 2005, 2201)

NRS 92A.130 Approval of plan of merger for domestic corporation: Conditions under which action by stockholders of surviving corporation is not required.

1. Action by the stockholders of a surviving domestic corporation on a plan of merger is not required if:

(a) The articles of incorporation of the surviving domestic corporation will not differ from its articles before the merger;

(b) Each stockholder of the surviving domestic corporation whose shares were outstanding immediately before the effective date of the merger will hold the same number of shares, with identical designations, preferences, limitations and relative rights immediately after the merger;

(c) The number of voting shares issued and issuable as a result of the merger will not exceed 20 percent of the total number of voting shares of the surviving domestic corporation outstanding immediately before the merger; and

(d) The number of participating shares issued and issuable as a result of the merger will not exceed 20 percent of the total number of participating shares outstanding immediately before the merger.

2. As used in this section:

(a) “Participating shares” means shares that entitle their holders to participate without limitation in distributions.

(b) “Voting shares” means shares that entitle their holders to vote unconditionally in elections of directors.

(Added to NRS by 1995, 2082; A 2011, 2813)

NRS 92A.135 Approval of plan of conversion for domestic general partnership.Unless otherwise provided in the partnership agreement, all partners must approve a plan of conversion involving a domestic general partnership.

(Added to NRS by 2001, 1403; A 2001, 3199)

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NRS 92A.140 Approval of plan of merger, conversion or exchange for domestic limited partnership.

1. Unless otherwise provided in the partnership agreement or the certificate of limited partnership, a plan of merger, conversion or exchange involving a domestic limited partnership must be approved by all general partners and by limited partners who own a majority in interest of the partnership then owned by all the limited partners. If the partnership has more than one class of limited partners, the plan of merger, conversion or exchange must be approved by those limited partners who own a majority in interest of the partnership then owned by the limited partners in each class.

2. For the purposes of this section, “majority in interest of the partnership” means a majority of the interests in capital and profits of the limited partners of a domestic limited partnership which:

(a) In the case of capital, is determined as of the date of the approval of the plan of merger, conversion or exchange.

(b) In the case of profits, is based on any reasonable estimate of profits for the period beginning on the date of the approval of the plan of merger, conversion or exchange and ending on the anticipated date of the termination of the domestic limited partnership, including any present or future division of profits distributed pursuant to the partnership agreement.

3. If any partner of a domestic limited partnership, which will be the constituent entity in a conversion, will have any liability for the obligations of the resulting entity after the conversion because the partner will be the owner of an owner’s interest in the resulting entity, then that partner must also approve the plan of conversion.

(Added to NRS by 1995, 2082; A 1997, 727; 2001, 1409, 3199)

NRS 92A.150 Approval of plan of merger, conversion or exchange for domestic limited-liability company.

1. Unless otherwise provided in the articles of organization or an operating agreement:

(a) A plan of merger, conversion or exchange involving a domestic limited-liability company must be approved by members who own a majority of the interests in the current profits of the company then owned by all of the members; and

(b) If the company has more than one class of members, the plan of merger, conversion or exchange must be approved by those members who own a majority of the interests in the current profits of the company then owned by the members in each class.

2. If any manager or member of a domestic limited-liability company, which will be the constituent entity in a conversion, will have any liability for the obligations of the resulting entity after the conversion because the manager or member will be the owner of an owner’s interest in the resulting entity, then that manager or member must also approve the plan of conversion.

(Added to NRS by 1995, 2082; A 1997, 727; 1999, 1627; 2001, 1409, 3199)

NRS 92A.160 Approval of plan of merger or exchange for domestic nonprofit corporation.

1. A plan of merger or exchange involving a domestic nonprofit corporation must be adopted by the board of directors. The plan must also be approved by each public officer or other person whose approval of a plan of merger or exchange is required by the articles of incorporation of the domestic nonprofit corporation.

2. If the domestic nonprofit corporation has members entitled to vote on plans of merger or exchange, the board of directors of the domestic nonprofit corporation must recommend the plan of merger or exchange to the members, unless the board of directors determines that because of a conflict of interest or other special circumstances it should make no recommendation and it communicates the basis for its determination to the members with the plan.

3. The board of directors may condition its submission of the proposed merger or exchange on any basis.

4. The members entitled to vote on a plan of merger or exchange must approve the plan at a meeting of members called for that purpose, by written consent pursuant to NRS 82.276, or by a vote by written ballot pursuant to NRS 82.326.

5. The corporation must notify, in the manner required by NRS 82.336, each nonprofit member of the time and place of the meeting of members at which the plan of merger or exchange will be submitted for a vote.

6. Unless the articles of incorporation of the domestic nonprofit corporation or the board of directors acting pursuant to subsection 3 require a greater vote or a vote by classes of members, the plan of merger or exchange to be authorized must be approved by a majority of a quorum of the members unless a class of members is entitled to vote thereon as a class. If a class of members is so entitled, the plan must be approved by a majority of a quorum of the votes entitled to be cast on the plan by each class.

7. Separate voting by a class of members is required:

(a) On a plan of merger if the plan contains a provision that, if contained in the proposed amendment to articles of incorporation, would entitle particular members to vote as a class on the proposed amendment; and

(b) On a plan of exchange by each class or series of memberships included in the exchange, with each class or series constituting a separate voting class.

(Added to NRS by 1995, 2082)

NRS 92A.165 Approval of plan of merger, conversion or exchange for domestic business trust.Unless otherwise provided in the certificate of trust or governing instrument of a domestic business trust, a plan of merger, conversion or exchange must be approved by all the trustees and beneficial owners of each domestic business trust that is a constituent entity in the merger.

(Added to NRS by 1999, 1626; A 2001, 1409, 3199; 2003, 3183)

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NRS 92A.170 Abandonment of planned merger, conversion or exchange before filing of articles.After a merger, conversion or exchange is approved, and at any time before the articles of merger, conversion or exchange are filed, the planned merger, conversion or exchange may be abandoned, subject to any contractual rights, without further action, in accordance with the procedure set forth in the plan of merger, conversion or exchange or, if none is set forth, in the case of:

1. A domestic corporation, whether or not for profit, by the board of directors;

2. A domestic limited partnership, unless otherwise provided in the partnership agreement or certificate of limited partnership, by all general partners;

3. A domestic limited-liability company, unless otherwise provided in the articles of organization or an operating agreement, by members who own a majority in interest in the current profits of the company then owned by all of the members or, if the company has more than one class of members, by members who own a majority in interest in the current profits of the company then owned by the members in each class;

4. A domestic business trust, unless otherwise provided in the certificate of trust or governing instrument, by all the trustees; and

5. A domestic general partnership, unless otherwise provided in the partnership agreement, by all the partners.

(Added to NRS by 1995, 2083; A 1999, 1627; 2001, 1409, 3199)

NRS 92A.175 Termination of planned merger, conversion or exchange after filing of articles.After a merger, conversion or exchange is approved, at any time after the articles of merger, conversion or exchange are filed but before an effective date specified in the articles which is later than the date of filing the articles, the planned merger, conversion or exchange may be terminated in accordance with a procedure set forth in the plan of merger, conversion or exchange by filing articles of termination pursuant to the provisions of NRS 92A.240.

(Added to NRS by 1999, 1626; A 2001, 1410, 3199)

NRS 92A.180 Merger of subsidiary into parent or parent into subsidiary.

1. A parent domestic corporation, whether or not for profit, parent domestic limited-liability company, unless otherwise provided in the articles of organization or operating agreement, or parent domestic limited partnership owning at least 90 percent of the outstanding shares of each class of a subsidiary corporation entitled to vote on a merger, 90 percent of the percentage or other interest in the capital and profits of a subsidiary limited-liability company then owned by each class of members entitled to vote on a merger or 90 percent of the percentage or other interest in the capital and profits of a subsidiary limited partnership then owned by both the general partners and each class of limited partners entitled to vote on a merger may merge the subsidiary into itself without approval of the owners of the owner’s interests of the parent domestic corporation, parent domestic limited-liability company or parent domestic limited partnership or the owners of the owner’s interests of the subsidiary domestic corporation, subsidiary domestic limited-liability company or subsidiary domestic limited partnership.

2. A parent domestic corporation, whether or not for profit, parent domestic limited-liability company, unless otherwise provided in the articles of organization or operating agreement, or parent domestic limited partnership owning at least 90 percent of the outstanding shares of each class of a subsidiary corporation entitled to vote on a merger, 90 percent of the percentage or other interest in the capital and profits of a subsidiary limited-liability company then owned by each class of members entitled to vote on a merger, or 90 percent of the percentage or other interest in the capital and profits of a subsidiary limited partnership then owned by both the general partners and each class of limited partners entitled to vote on a merger may merge with and into the subsidiary without approval of the owners of the owner’s interests of the subsidiary domestic corporation, subsidiary domestic limited-liability company or subsidiary domestic limited partnership.

3. The board of directors of a parent corporation, the managers of a parent limited-liability company with managers unless otherwise provided in the operating agreement, all members of a parent limited-liability company without managers unless otherwise provided in the operating agreement, or all general partners of a parent limited partnership shall adopt a plan of merger that sets forth:

(a) The names of the parent and subsidiary; and

(b) The manner and basis of converting the owner’s interests of the disappearing entity into the owner’s interests, obligations or other securities of the surviving or any other entity or into cash or other property in whole or in part.

4. The parent shall mail a copy or summary of the plan of merger to each owner of the subsidiary who does not waive the mailing requirement in writing.

5. Articles of merger under this section may not contain amendments to the constituent documents of the surviving entity except that the name of the surviving entity may be changed.

6. The articles of incorporation of a domestic corporation, the articles of organization of a domestic limited-liability company, the certificate of limited partnership of a domestic limited partnership or the certificate of trust of a domestic business trust may forbid that entity from entering into a merger pursuant to this section.

(Added to NRS by 1995, 2083; A 1997, 727; 1999, 1627; 2001, 1410, 3199; 2005, 2203; 2009, 1717)

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NRS 92A.190 Merger or exchange with foreign entity.

1. One or more foreign entities may merge or enter into an exchange of owner’s interests with one or more domestic entities if:

(a) In a merger, the merger is permitted by the law of the jurisdiction under whose law each foreign entity is organized and governed and each foreign entity complies with that law in effecting the merger;

(b) In an exchange, the entity whose owner’s interests will be acquired is a domestic entity, whether or not an exchange of owner’s interests is permitted by the law of the jurisdiction under whose law the acquiring entity is organized;

(c) The foreign entity complies with NRS 92A.200 to 92A.240, inclusive, if it is the surviving entity in the merger or acquiring entity in the exchange and sets forth in the articles of merger or exchange its address where copies of process may be sent by the Secretary of State; and

(d) Each domestic entity complies with the applicable provisions of NRS 92A.100 to 92A.180, inclusive, and, if it is the surviving entity in the merger or acquiring entity in the exchange, with NRS 92A.200 to 92A.240, inclusive.

2. When the merger or exchange takes effect, the surviving foreign entity in a merger and the acquiring foreign entity in an exchange shall be deemed:

(a) To appoint the Secretary of State as its agent for service of process in a proceeding to enforce any obligation which accrued before the merger or exchange became effective or the rights of dissenting owners of each domestic entity that was a party to the merger or exchange. Service of such process must be made by personally delivering to and leaving with the Secretary of State duplicate copies of the process and the payment of a fee of $100 for accepting and transmitting the process. The Secretary of State shall forthwith send by registered or certified mail one of the copies to the surviving or acquiring entity at its specified address, unless the surviving or acquiring entity has designated in writing to the Secretary of State a different address for that purpose, in which case it must be mailed to the last address so designated.

(b) To agree that it will promptly pay to the dissenting owners of each domestic entity that is a party to the merger or exchange the amount, if any, to which they are entitled under or created pursuant to NRS 92A.300 to 92A.500, inclusive.

3. This section does not limit the power of a foreign entity to acquire all or part of the owner’s interests of one or more classes or series of a domestic entity through a voluntary exchange or otherwise.

(Added to NRS by 1995, 2086; A 1997, 728; 1999, 1628; 2001, 3192; 2003, 3183; 2003, 20th Special Session, 125)

NRS 92A.195 Conversion of foreign or domestic entity or foreign or domestic general partnership.

1. One foreign entity or foreign general partnership may convert into one domestic entity if:

(a) The conversion is permitted by the law of the jurisdiction governing the foreign entity or foreign general partnership and the foreign entity or foreign general partnership complies with that law in effecting the conversion;

(b) The foreign entity or foreign general partnership complies with the applicable provisions of NRS 92A.205, 92A.207, 92A.210, 92A.230 and 92A.240; and

2. One domestic entity or domestic general partnership may convert into one foreign entity if:

(a) The conversion is permitted by the law of the jurisdiction governing the resulting foreign entity and the resulting foreign entity complies with that law in effecting the conversion; and

(b) The domestic entity complies with the applicable provisions of NRS 92A.105, 92A.120, 92A.135, 92A.140, 92A.165, 92A.205, 92A.207, 92A.210, 92A.230 and 92A.240.

3. When a conversion pursuant to subsection 2 takes effect, the resulting foreign entity shall be deemed to have appointed the Secretary of State as its agent for service of process in a proceeding to enforce any obligation. Service of process must be made personally by delivering to and leaving with the Secretary of State duplicate copies of the process and the payment of a fee of $100 for accepting and transmitting the process. The Secretary of State shall send one of the copies of the process by registered or certified mail to the resulting entity at its specified address, unless the resulting entity has designated in writing to the Secretary of State a different address for that purpose, in which case it must be mailed to the last address so designated.

(Added to NRS by 2001, 1403; A 2001, 3199; 2003, 20th Special Session, 126; 2011, 2813)

NRS 92A.200 Filing requirements for mergers or exchanges; dependency of terms of plan of merger, conversion or exchange on extrinsic facts.

1. After a plan of merger or exchange is approved as required by this chapter, the surviving or acquiring entity shall deliver to the Secretary of State for filing articles of merger or exchange setting forth:

(a) The name and jurisdiction of organization of each constituent entity;

(b) That a plan of merger or exchange has been adopted by each constituent entity or the parent domestic entity only, if the merger is pursuant to NRS 92A.180;

(c) If approval of the owners of one or more constituent entities was not required, a statement to that effect and the name of each entity;

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(d) If approval of owners of one or more constituent entities was required, the name of each entity and a statement for each entity that the plan was approved by the required consent of the owners;

(e) In the case of a merger, the amendment, if any, to the charter document of the surviving entity, which amendment may be set forth in the articles of merger as a specific amendment or in the form of an amended and restated charter document or attached in that form as an exhibit; and

(f) If the entire plan of merger or exchange is not set forth, a statement that the complete signed plan of merger or plan of exchange is on file at the registered office if a corporation, limited-liability company or business trust, or office described in paragraph (a) of subsection 1 of NRS 87A.215 or paragraph (a) of subsection 1 of NRS 88.330 if a limited partnership, or other place of business of the surviving entity or the acquiring entity, respectively.

2. Any of the terms of the plan of merger, conversion or exchange may be made dependent upon facts ascertainable outside of the plan of merger, conversion or exchange, provided that the plan of merger, conversion or exchange clearly and expressly sets forth the manner in which such facts shall operate upon the terms of the plan. As used in this section, the term “facts” includes, without limitation, the occurrence of an event, including a determination or action by a person or body, including a constituent entity.

(Added to NRS by 1995, 2084; A 1997, 729; 1999, 1629; 2001, 1411, 3199; 2003, 3184; 2003, 20th Special Session, 126; 2007, 483)

NRS 92A.205 Filing requirements for conversions.

1. After a plan of conversion is approved as required by this chapter, if the resulting entity is a domestic entity, the constituent entity shall deliver to the Secretary of State for filing:

(a) Articles of conversion setting forth:

(1) The name and jurisdiction of organization of the constituent entity and the resulting entity; and

(2) That a plan of conversion has been adopted by the constituent entity in compliance with the law of the jurisdiction governing the constituent entity.

(b) The charter document of the domestic resulting entity required by the applicable provisions of chapter 78, 78A, 82, 86, 87A, 88, 88A or 89 of NRS.

2. After a plan of conversion is approved as required by this chapter, if the resulting entity is a foreign entity, the constituent entity shall deliver to the Secretary of State for filing articles of conversion setting forth:

(a) The name and jurisdiction of organization of the constituent entity and the resulting entity;

(b) That a plan of conversion has been adopted by the constituent entity in compliance with the laws of this State; and

3. If the entire plan of conversion is not set forth in the articles of conversion, the filing party must include in the articles of conversion a statement that the complete signed plan of conversion is on file at the registered office or principal place of business of the resulting entity or, if the resulting entity is a domestic limited partnership, the office described in paragraph (a) of subsection 1 of NRS 87A.215 or paragraph (a) of subsection 1 of NRS 88.330.

4. If the conversion takes effect on a later date specified in the articles of conversion pursuant to NRS 92A.240, the charter document to be filed with the Secretary of State pursuant to paragraph (b) of subsection 1 must state the name and the jurisdiction of the constituent entity and that the existence of the resulting entity does not begin until the later date.

5. Any records filed with the Secretary of State pursuant to this section must be accompanied by the fees required pursuant to this title for filing the charter document.

(Added to NRS by 2001, 1404; A 2001, 3199; 2003, 3185; 2003, 20th Special Session, 127; 2007, 484, 1343, 2702; 2009, 1718)

NRS 92A.207 Form required for filing of records.

1. Each record filed with the Secretary of State pursuant to this chapter must be on or accompanied by a form prescribed by the Secretary of State.

2. The Secretary of State may refuse to file a record which does not comply with subsection 1 or which does not contain all of the information required by statute for filing the record.

3. If the provisions of the form prescribed by the Secretary of State conflict with the provisions of any record that is submitted for filing with the form:

(a) The provisions of the form control for all purposes with respect to the information that is required by statute to appear in the record in order for the record to be filed; and

(b) Unless otherwise provided in the record, the provisions of the record control in every other situation.

4. The Secretary of State may by regulation provide for the electronic filing of records with the Office of the Secretary of State.

(Added to NRS by 2003, 20th Special Session, 125)

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NRS 92A.210 Filing fees.

1. Except as otherwise provided in this section, the fee for filing articles of merger, articles of conversion, articles of exchange, articles of domestication or articles of termination is $350. The fee for filing the charter documents of a domestic resulting entity is the fee for filing the charter documents determined by the chapter of NRS governing the particular domestic resulting entity.

2. The fee for filing articles of merger of two or more domestic corporations is the difference between the fee computed at the rates specified in NRS 78.760 upon the aggregate authorized stock of the corporation created by the merger and the fee computed upon the aggregate amount of the total authorized stock of the constituent corporation.

3. The fee for filing articles of merger of one or more domestic corporations with one or more foreign corporations is the difference between the fee computed at the rates specified in NRS 78.760 upon the aggregate authorized stock of the corporation created by the merger and the fee computed upon the aggregate amount of the total authorized stock of the constituent corporations which have paid the fees required by NRS 78.760 and 80.050.

4. The fee for filing articles of merger of two or more domestic or foreign corporations must not be less than $350. The amount paid pursuant to subsection 3 must not exceed $35,000.

(Added to NRS by 1995, 2085; A 1999, 1629; 2001, 1412, 3192, 3199; 2003, 3186; 2003, 20th Special Session, 128)

NRS 92A.220 Duty when entire plan of merger, conversion or exchange is not set forth in articles.If the entire plan of merger, conversion or exchange is not set forth in the articles of merger, conversion or exchange, a copy of the plan of merger, conversion or exchange must be furnished by the surviving, acquiring or resulting entity, on request and without cost, to any owner of any entity which is a party to the merger, conversion or exchange.

(Added to NRS by 1995, 2085; A 2001, 1413, 3199)

NRS 92A.230 Signing of articles of merger, conversion or exchange.Articles of merger, conversion or exchange must be signed by each foreign and domestic constituent entity as follows:

1. By an officer of a corporation, whether or not for profit;

2. By one of the general partners of a limited partnership;

3. By a manager of a limited-liability company with managers or by one member of a limited-liability company without managers;

4. By a trustee of a business trust; and

5. By one general partner of a general partnership.

(Added to NRS by 1995, 2085; A 1997, 730; 1999, 1630; 2001, 101, 1413, 2726, 3199; 2003, 48, 3186)

NRS 92A.240 Effective date and time of merger, conversion or exchange; articles of termination.

1. A merger, conversion or exchange takes effect:

(a) At the time of the filing of the articles of merger, conversion or exchange with the Secretary of State;

(b) Upon a later date and time as specified in the articles, which date must not be more than 90 days after the date on which the articles are filed; or

(c) If the articles specify a later effective date but do not specify an effective time, at 12:01 a.m. in the Pacific time zone on the specified later date.

2. If the filed articles of merger, conversion or exchange specify such a later effective date or effective date and time, the constituent entity or entities may file articles of termination before the effective time, setting forth:

(a) The name of each constituent entity and, for a conversion, the resulting entity; and

(b) That the merger, conversion or exchange has been terminated pursuant to the plan of merger, conversion or exchange.

3. The articles of termination must be signed in the manner provided in NRS 92A.230.

(Added to NRS by 1995, 2085; A 1999, 1630; 2001, 1413, 3199; 2003, 3187; 2011, 2814)

NRS 92A.250 Effect of merger, conversion or exchange.

1. When a merger takes effect:

(a) Every other entity that is a constituent entity merges into the surviving entity and the separate existence of every entity except the surviving entity ceases;

(b) The title to all real estate and other property owned by each merging constituent entity is vested in the surviving entity without reversion or impairment;

(d) A proceeding pending against any constituent entity may be continued as if the merger had not occurred or the surviving entity may be substituted in the proceeding for the entity whose existence has ceased;

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(e) The articles of incorporation, articles of organization, certificate of limited partnership or certificate of trust of the surviving entity are amended to the extent provided in the plan of merger; and

(f) The owner’s interests of each constituent entity that are to be converted into owner’s interests, obligations or other securities of the surviving or any other entity or into cash or other property are converted, and the former holders of the owner’s interests are entitled only to the rights provided in the articles of merger or any created pursuant to NRS 92A.300 to 92A.500, inclusive.

2. When an exchange takes effect, the owner’s interests of each acquired entity are exchanged as provided in the plan, and the former holders of the owner’s interests are entitled only to the rights provided in the articles of exchange or any rights created pursuant to NRS 92A.300 to 92A.500, inclusive.

3. When a conversion takes effect:

(a) The constituent entity is converted into the resulting entity and is governed by and subject to the law of the jurisdiction of the resulting entity;

(b) The conversion is a continuation of the existence of the constituent entity;

(c) The title to all real estate and other property owned by the constituent entity is vested in the resulting entity without reversion or impairment;

(d) The resulting entity has all the liabilities of the constituent entity;

(e) A proceeding pending against the constituent entity may be continued as if the conversion had not occurred or the resulting entity may be substituted in the proceeding for the constituent entity;

(f) The owner’s interests of the constituent entity that are to be converted into the owner’s interests of the resulting entity are converted;

(g) An owner of the resulting entity remains liable for all the obligations of the constituent entity to the extent the owner was personally liable before the conversion; and

(h) The domestic constituent entity is not required to wind up its affairs, pay its liabilities, distribute its assets or dissolve, and the conversion is not deemed a dissolution of the domestic constituent entity.

(Added to NRS by 1995, 2085; A 1999, 1630; 2001, 1413, 3199)

NRS 92A.260 Liability of owner after merger, conversion or exchange.An owner that is not personally liable for the debts, liabilities or obligations of the entity pursuant to the laws and constituent documents under which the entity was organized does not become personally liable for the debts, liabilities or obligations of the surviving entity or entities of the merger or exchange or the resulting entity of the conversion unless the owner consents to becoming personally liable by action taken in connection with the plan of merger, conversion or exchange.

(Added to NRS by 1995, 2081; A 2001, 1414, 3199)

NRS 92A.270 Domestication of undomesticated organization.

1. Any undomesticated organization may become domesticated in this State as a domestic entity by:

(a) Paying to the Secretary of State the fees required pursuant to this title for filing the charter document; and

(b) Filing with the Secretary of State:

(1) Articles of domestication which must be signed by an authorized representative of the undomesticated organization approved in compliance with subsection 6;

(2) The appropriate charter document for the type of domestic entity;

(3) The information required pursuant to NRS 77.310;

(4) A certified copy of the charter document of the undomesticated organization; and

(5) A certificate of good standing, or the equivalent, from the jurisdiction where the undomesticated organization was chartered immediately before filing the articles of domestication pursuant to subparagraph (1).

2. The articles of domestication must set forth the:

(a) Date when and the jurisdiction where the undomesticated organization was first formed, incorporated, organized or otherwise created and, if applicable, any date when and jurisdiction where the undomesticated organization was chartered after its formation;

(b) Name of the undomesticated organization immediately before filing the articles of domestication;

(d) Jurisdiction that constituted the principal place of business or central administration of the undomesticated organization, or any other equivalent thereto pursuant to applicable law, immediately before filing the articles of domestication.

3. Upon filing the articles of domestication and the charter document with the Secretary of State, and the payment of the requisite fee for filing the charter document of the domestic entity, the undomesticated organization is domesticated in this State as the domestic entity described in the charter document filed pursuant to subsection 1. The existence of the domestic entity begins on the date the undomesticated organization began its existence in the jurisdiction in which the undomesticated organization was first formed, incorporated, organized or otherwise created.

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4. The domestication of any undomesticated organization does not affect any obligations or liabilities of the undomesticated organization incurred before its domestication.

5. The filing of the charter document of the domestic entity pursuant to subsection 1 does not affect the choice of law applicable to the undomesticated organization. From the date the charter document of the domestic entity is filed, the law of this State applies to the domestic entity to the same extent as if the undomesticated organization was organized and created as a domestic entity on that date.

6. Before filing articles of domestication, the domestication must be approved in the manner required by:

(a) The document, instrument, agreement or other writing governing the internal affairs of the undomesticated organization and the conduct of its business; and

(b) Applicable foreign law.

7. When a domestication becomes effective, all rights, privileges and powers of the undomesticated organization, all property owned by the undomesticated organization, all debts due to the undomesticated organization, and all causes of action belonging to the undomesticated organization are vested in the domestic entity and become the property of the domestic entity to the same extent as vested in the undomesticated organization immediately before domestication. The title to any real property vested by deed or otherwise in the undomesticated organization is not reverted or impaired by the domestication. All rights of creditors and all liens upon any property of the undomesticated organization are preserved unimpaired and all debts, liabilities and duties of an undomesticated organization that has been domesticated attach to the domestic entity resulting from the domestication and may be enforced against it to the same extent as if the debts, liability and duties had been incurred or contracted by the domestic entity.

8. When an undomesticated organization is domesticated, the domestic entity resulting from the domestication is for all purposes deemed to be the same entity as the undomesticated organization. Unless otherwise agreed by the owners of the undomesticated organization or as required pursuant to applicable foreign law, the domestic entity resulting from the domestication is not required to wind up its affairs, pay its liabilities or distribute its assets. The domestication of an undomesticated organization does not constitute the dissolution of the undomesticated organization. The domestication constitutes a continuation of the existence of the undomesticated organization in the form of a domestic entity. If, following domestication, an undomesticated organization that has become domesticated pursuant to this section continues its existence in the foreign country or foreign jurisdiction in which it was existing immediately before the domestication, the domestic entity and the undomesticated organization are for all purposes a single entity formed, incorporated, organized or otherwise created and existing pursuant to the laws of this State and the laws of the foreign country or other foreign jurisdiction.

9. The owner liability of an undomesticated organization that is domesticated in this State:

(a) Is not discharged, pursuant to the laws of the previous jurisdiction of the organization, to the extent the owner liability arose before the effective date of the articles of domestication;

(b) Does not attach, pursuant to the laws of the previous jurisdiction of the organization, to any debt, obligation or liability of the organization that arises after the effective date of the articles of domestication;

(c) Is governed by the law of the previous jurisdiction of the organization, as if the domestication has not occurred, for the collection or discharge of owner liability not discharged pursuant to paragraph (a);

(d) Is subject to the right of contribution from any other shareholder, member, trustee, partner, limited partner or other owner of the undomesticated organization pursuant to the laws of the previous jurisdiction of the organization, as if the domestication has not occurred, for the collection or discharge of owner liability not discharged pursuant to paragraph (a); and

(e) Applies only to the debts, obligations or liabilities of the organization that arise after the effective date of the articles of domestication if the owner becomes subject to owner liability or some or all of the debts, obligations or liabilities of the undomesticated entity as a result of its domestication in this State.

10. As used in this section:

(a) “Owner liability” means the liability of a shareholder, member, trustee, partner, limited partner or other owner of an organization for debts of the organization, including the responsibility to make additional capital contributions to cover such debts.

(b) “Undomesticated organization” means any incorporated organization, private law corporation, whether or not organized for business purposes, public law corporation, limited-liability company, general partnership, registered limited-liability partnership, limited partnership or registered limited-liability limited partnership, proprietorship, joint venture, foundation, business trust, real estate investment trust, common-law trust or any other unincorporated business formed, organized, created or the internal affairs of which are governed by the laws of any foreign country or jurisdiction other than this State.

(Added to NRS by 2001, 1405; A 2001, 3199; 2003, 3187; 2007, 2702; 2009, 1719, 2859)

NRS 92A.280 Cancellation of filings.If an entity has made a filing with the Secretary of State pursuant to this chapter and the Secretary of State has not processed the filing and placed the filing into the public record, the entity may cancel the filing by:

1. Filing a statement of cancellation with the Secretary of State; and

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2. Paying a fee of $50.

(Added to NRS by 2009, 2859)

RIGHTS OF DISSENTING OWNERS

NRS 92A.300 Definitions.As used in NRS 92A.300 to 92A.500, inclusive, unless the context otherwise requires, the words and terms defined in NRS 92A.305 to 92A.335, inclusive, have the meanings ascribed to them in those sections.

(Added to NRS by 1995, 2086)

NRS 92A.305 “Beneficial stockholder” defined.“Beneficial stockholder” means a person who is a beneficial owner of shares held in a voting trust or by a nominee as the stockholder of record.

(Added to NRS by 1995, 2087)

NRS 92A.310 “Corporate action” defined.“Corporate action” means the action of a domestic corporation.

(Added to NRS by 1995, 2087)

NRS 92A.315 “Dissenter” defined.“Dissenter” means a stockholder who is entitled to dissent from a domestic corporation’s action under NRS 92A.380 and who exercises that right when and in the manner required by NRS 92A.400 to 92A.480, inclusive.

(Added to NRS by 1995, 2087; A 1999, 1631)

NRS 92A.320 “Fair value” defined. “Fair value,” with respect to a dissenter’s shares, means the value of the shares determined:

1. Immediately before the effectuation of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable;

2. Using customary and current valuation concepts and techniques generally employed for similar businesses in the context of the transaction requiring appraisal; and

3. Without discounting for lack of marketability or minority status.

(Added to NRS by 1995, 2087; A 2009, 1720)

NRS 92A.325 “Stockholder” defined. “Stockholder” means a stockholder of record or a beneficial stockholder of a domestic corporation.

(Added to NRS by 1995, 2087)

NRS 92A.330 “Stockholder of record” defined. “Stockholder of record” means the person in whose name shares are registered in the records of a domestic corporation or the beneficial owner of shares to the extent of the rights granted by a nominee’s certificate on file with the domestic corporation.

(Added to NRS by 1995, 2087)

NRS 92A.335 “Subject corporation” defined.“Subject corporation” means the domestic corporation which is the issuer of the shares held by a dissenter before the corporate action creating the dissenter’s rights becomes effective or the surviving or acquiring entity of that issuer after the corporate action becomes effective.

(Added to NRS by 1995, 2087)

NRS 92A.340 Computation of interest.Interest payable pursuant to NRS 92A.300 to 92A.500, inclusive, must be computed from the effective date of the action until the date of payment, at the rate of interest most recently established pursuant to NRS 99.040.

(Added to NRS by 1995, 2087; A 2009, 1721)

NRS 92A.350 Rights of dissenting partner of domestic limited partnership. A partnership agreement of a domestic limited partnership or, unless otherwise provided in the partnership agreement, an agreement of merger or exchange, may provide that contractual rights with respect to the partnership interest of a dissenting general or limited partner of a domestic limited partnership are available for any class or group of partnership interests in connection with any merger or exchange in which the domestic limited partnership is a constituent entity.

(Added to NRS by 1995, 2088)

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NRS 92A.360 Rights of dissenting member of domestic limited-liability company.The articles of organization or operating agreement of a domestic limited-liability company or, unless otherwise provided in the articles of organization or operating agreement, an agreement of merger or exchange, may provide that contractual rights with respect to the interest of a dissenting member are available in connection with any merger or exchange in which the domestic limited-liability company is a constituent entity.

(Added to NRS by 1995, 2088)

NRS 92A.370 Rights of dissenting member of domestic nonprofit corporation.

1. Except as otherwise provided in subsection 2, and unless otherwise provided in the articles or bylaws, any member of any constituent domestic nonprofit corporation who voted against the merger may, without prior notice, but within 30 days after the effective date of the merger, resign from membership and is thereby excused from all contractual obligations to the constituent or surviving corporations which did not occur before the member’s resignation and is thereby entitled to those rights, if any, which would have existed if there had been no merger and the membership had been terminated or the member had been expelled.

2. Unless otherwise provided in its articles of incorporation or bylaws, no member of a domestic nonprofit corporation, including, but not limited to, a cooperative corporation, which supplies services described in chapter 704 of NRS to its members only, and no person who is a member of a domestic nonprofit corporation as a condition of or by reason of the ownership of an interest in real property, may resign and dissent pursuant to subsection 1.

(Added to NRS by 1995, 2088)

NRS 92A.380 Right of stockholder to dissent from certain corporate actions and to obtain payment for shares.

1. Except as otherwise provided in NRS 92A.370 and 92A.390 and subject to the limitation in paragraph (f), any stockholder is entitled to dissent from, and obtain payment of the fair value of the stockholder’s shares in the event of any of the following corporate actions:

(a) Consummation of a plan of merger to which the domestic corporation is a constituent entity:

(1) If approval by the stockholders is required for the merger by NRS 92A.120 to 92A.160, inclusive, or the articles of incorporation, regardless of whether the stockholder is entitled to vote on the plan of merger; or

(2) If the domestic corporation is a subsidiary and is merged with its parent pursuant to NRS 92A.180.

(b) Consummation of a plan of conversion to which the domestic corporation is a constituent entity as the corporation whose subject owner’s interests will be converted.

(c) Consummation of a plan of exchange to which the domestic corporation is a constituent entity as the corporation whose subject owner’s interests will be acquired, if the stockholder’s shares are to be acquired in the plan of exchange.

(d) Any corporate action taken pursuant to a vote of the stockholders to the extent that the articles of incorporation, bylaws or a resolution of the board of directors provides that voting or nonvoting stockholders are entitled to dissent and obtain payment for their shares.

(e) Accordance of full voting rights to control shares, as defined in NRS 78.3784, only to the extent provided for pursuant to NRS 78.3793.

(f) Any corporate action not described in this subsection that will result in the stockholder receiving money or scrip instead of a fraction of a share except where the stockholder would not be entitled to receive such payment pursuant to NRS 78.205, 78.2055 or 78.207. A dissent pursuant to this paragraph applies only to the fraction of a share, and the stockholder is entitled only to obtain payment of the fair value of the fraction of a share.

2. A stockholder who is entitled to dissent and obtain payment pursuant to NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action creating the entitlement unless the action is unlawful or fraudulent with respect to the stockholder or the domestic corporation.

3. Subject to the limitations in this subsection, from and after the effective date of any corporate action described in subsection 1, no stockholder who has exercised the right to dissent pursuant to NRS 92A.300 to 92A.500, inclusive, is entitled to vote his or her shares for any purpose or to receive payment of dividends or any other distributions on shares. This subsection does not apply to dividends or other distributions payable to stockholders on a date before the effective date of any corporate action from which the stockholder has dissented. If a stockholder exercises the right to dissent with respect to a corporate action described in paragraph (f) of subsection 1, the restrictions of this subsection apply only to the shares to be converted into a fraction of a share and the dividends and distributions to those shares.

(Added to NRS by 1995, 2087; A 2001, 1414, 3199; 2003, 3189; 2005, 2204; 2007, 2438; 2009, 1721; 2011, 2814)

NRS 92A.390 Limitations on right of dissent: Stockholders of certain classes or series; action of stockholders not required for plan of merger.

1. There is no right of dissent with respect to a plan of merger, conversion or exchange in favor of stockholders of any class or series which is:

(a) A covered security under section 18(b)(1)(A) or (B) of the Securities Act of 1933, 15 U.S.C. § 77r(b)(1)(A) or (B), as amended;

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(b) Traded in an organized market and has at least 2,000 stockholders and a market value of at least $20,000,000, exclusive of the value of such shares held by the corporation’s subsidiaries, senior executives, directors and beneficial stockholders owning more than 10 percent of such shares; or

(c) Issued by an open end management investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and which may be redeemed at the option of the holder at net asset value, unless the articles of incorporation of the corporation issuing the class or series provide otherwise.

2. The applicability of subsection 1 must be determined as of:

(a) The record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the corporate action requiring dissenter’s rights; or

(b) The day before the effective date of such corporate action if there is no meeting of stockholders.

3. Subsection 1 is not applicable and dissenter’s rights are available pursuant to NRS 92A.380 for the holders of any class or series of shares who are required by the terms of the corporate action requiring dissenter’s rights to accept for such shares anything other than cash or shares of any class or any series of shares of any corporation, or any other proprietary interest of any other entity, that satisfies the standards set forth in subsection 1 at the time the corporate action becomes effective.

4. There is no right of dissent for any holders of stock of the surviving domestic corporation if the plan of merger does not require action of the stockholders of the surviving domestic corporation under NRS 92A.130.

5. There is no right of dissent for any holders of stock of the parent domestic corporation if the plan of merger does not require action of the stockholders of the parent domestic corporation under NRS 92A.180.

(Added to NRS by 1995, 2088; A 2009, 1722)

NRS 92A.400 Limitations on right of dissent: Assertion as to portions only to shares registered to stockholder; assertion by beneficial stockholder.

1. A stockholder of record may assert dissenter’s rights as to fewer than all of the shares registered in his or her name only if the stockholder of record dissents with respect to all shares of the class or series beneficially owned by any one person and notifies the subject corporation in writing of the name and address of each person on whose behalf the stockholder of record asserts dissenter’s rights. The rights of a partial dissenter under this subsection are determined as if the shares as to which the partial dissenter dissents and his or her other shares were registered in the names of different stockholders.

2. A beneficial stockholder may assert dissenter’s rights as to shares held on his or her behalf only if the beneficial stockholder:

(a) Submits to the subject corporation the written consent of the stockholder of record to the dissent not later than the time the beneficial stockholder asserts dissenter’s rights; and

(b) Does so with respect to all shares of which he or she is the beneficial stockholder or over which he or she has power to direct the vote.

(Added to NRS by 1995, 2089; A 2009, 1723)

NRS 92A.410 Notification of stockholders regarding right of dissent.

1. If a proposed corporate action creating dissenters’ rights is submitted to a vote at a stockholders’ meeting, the notice of the meeting must state that stockholders are, are not or may be entitled to assert dissenters’ rights under NRS 92A.300 to 92A.500, inclusive. If the domestic corporation concludes that dissenter’s rights are or may be available, a copy of NRS 92A.300 to 92A.500, inclusive, must accompany the meeting notice sent to those record stockholders entitled to exercise dissenter’s rights.

2. If the corporate action creating dissenters’ rights is taken by written consent of the stockholders or without a vote of the stockholders, the domestic corporation shall notify in writing all stockholders entitled to assert dissenters’ rights that the action was taken and send them the dissenter’s notice described in NRS 92A.430.

(Added to NRS by 1995, 2089; A 1997, 730; 2009, 1723)

NRS 92A.420 Prerequisites to demand for payment for shares.

1. If a proposed corporate action creating dissenters’ rights is submitted to a vote at a stockholders’ meeting, a stockholder who wishes to assert dissenter’s rights with respect to any class or series of shares:

(a) Must deliver to the subject corporation, before the vote is taken, written notice of the stockholder’s intent to demand payment for his or her shares if the proposed action is effectuated; and

(b) Must not vote, or cause or permit to be voted, any of his or her shares of such class or series in favor of the proposed action.

2. If a proposed corporate action creating dissenters’ rights is taken by written consent of the stockholders, a stockholder who wishes to assert dissenters’ rights with respect to any class or series of shares must not consent to or approve the proposed corporate action with respect to such class or series.

3. A stockholder who does not satisfy the requirements of subsection 1 or 2 and NRS 92A.400 is not entitled to payment for his or her shares under this chapter.

(Added to NRS by 1995, 2089; A 1999, 1631; 2005, 2204; 2009, 1723)

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NRS 92A.430 Dissenter’s notice: Delivery to stockholders entitled to assert rights; contents.

1. The subject corporation shall deliver a written dissenter’s notice to all stockholders entitled to assert dissenters’ rights.

2. The dissenter’s notice must be sent no later than 10 days after the effective date of the corporate action specified in NRS 92A.380, and must:

(a) State where the demand for payment must be sent and where and when certificates, if any, for shares must be deposited;

(b) Inform the holders of shares not represented by certificates to what extent the transfer of the shares will be restricted after the demand for payment is received;

(c) Supply a form for demanding payment that includes the date of the first announcement to the news media or to the stockholders of the terms of the proposed action and requires that the person asserting dissenter’s rights certify whether or not the person acquired beneficial ownership of the shares before that date;

(d) Set a date by which the subject corporation must receive the demand for payment, which may not be less than 30 nor more than 60 days after the date the notice is delivered and state that the stockholder shall be deemed to have waived the right to demand payment with respect to the shares unless the form is received by the subject corporation by such specified date; and

(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.

(Added to NRS by 1995, 2089; A 2005, 2205; 2009, 1724)

NRS 92A.440 Demand for payment and deposit of certificates; loss of rights of stockholder; withdrawal from appraisal process.

1. A stockholder who receives a dissenter’s notice pursuant to NRS 92A.430 and who wishes to exercise dissenter’s rights must:

(a) Demand payment;

(b) Certify whether the stockholder or the beneficial owner on whose behalf he or she is dissenting, as the case may be, acquired beneficial ownership of the shares before the date required to be set forth in the dissenter’s notice for this certification; and

2. If a stockholder fails to make the certification required by paragraph (b) of subsection 1, the subject corporation may elect to treat the stockholder’s shares as after-acquired shares under NRS 92A.470.

3. Once a stockholder deposits that stockholder’s certificates or, in the case of uncertified shares makes demand for payment, that stockholder loses all rights as a stockholder, unless the stockholder withdraws pursuant to subsection 4.

4. A stockholder who has complied with subsection 1 may nevertheless decline to exercise dissenter’s rights and withdraw from the appraisal process by so notifying the subject corporation in writing by the date set forth in the dissenter’s notice pursuant to NRS 92A.430. A stockholder who fails to so withdraw from the appraisal process may not thereafter withdraw without the subject corporation’s written consent.

5. The stockholder who does not demand payment or deposit his or her certificates where required, each by the date set forth in the dissenter’s notice, is not entitled to payment for his or her shares under this chapter.

(Added to NRS by 1995, 2090; A 1997, 730; 2003, 3189; 2009, 1724)

NRS 92A.450 Uncertificated shares: Authority to restrict transfer after demand for payment.The subject corporation may restrict the transfer of shares not represented by a certificate from the date the demand for their payment is received.

(Added to NRS by 1995, 2090; A 2009, 1725)

NRS 92A.460 Payment for shares: General requirements.

1. Except as otherwise provided in NRS 92A.470, within 30 days after receipt of a demand for payment, the subject corporation shall pay in cash to each dissenter who complied with NRS 92A.440 the amount the subject corporation estimates to be the fair value of the dissenter’s shares, plus accrued interest. The obligation of the subject corporation under this subsection may be enforced by the district court:

(a) Of the county where the subject corporation’s principal office is located;

(b) If the subject corporation’s principal office is not located in this State, in the county in which the corporation’s registered office is located; or

(c) At the election of any dissenter residing or having its principal or registered office in this State, of the county where the dissenter resides or has its principal or registered office. The court shall dispose of the complaint promptly.

2. The payment must be accompanied by:

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(a) The subject corporation’s balance sheet as of the end of a fiscal year ending not more than 16 months before the date of payment, a statement of income for that year, a statement of changes in the stockholders’ equity for that year or, where such financial statements are not reasonably available, then such reasonably equivalent financial information and the latest available quarterly financial statements, if any;

(b) A statement of the subject corporation’s estimate of the fair value of the shares; and

(c) A statement of the dissenter’s rights to demand payment under NRS 92A.480 and that if any such stockholder does not do so within the period specified, such stockholder shall be deemed to have accepted such payment in full satisfaction of the corporation’s obligations under this chapter.

(Added to NRS by 1995, 2090; A 2007, 2704; 2009, 1725)

NRS 92A.470 Withholding payment for shares acquired on or after date of dissenter’s notice: General requirements.

1. A subject corporation may elect to withhold payment from a dissenter unless the dissenter was the beneficial owner of the shares before the date set forth in the dissenter’s notice as the first date of any announcement to the news media or to the stockholders of the terms of the proposed action.

2. To the extent the subject corporation elects to withhold payment, within 30 days after receipt of a demand for payment, the subject corporation shall notify the dissenters described in subsection 1:

(a) Of the information required by paragraph (a) of subsection 2 of NRS 92A.460;

(b) Of the subject corporation’s estimate of fair value pursuant to paragraph (b) of subsection 2 of NRS 92A.460;

(c) That they may accept the subject corporation’s estimate of fair value, plus interest, in full satisfaction of their demands or demand appraisal under NRS 92A.480;

(d) That those stockholders who wish to accept such an offer must so notify the subject corporation of their acceptance of the offer within 30 days after receipt of such offer; and

(e) That those stockholders who do not satisfy the requirements for demanding appraisal under NRS 92A.480 shall be deemed to have accepted the subject corporation’s offer.

3. Within 10 days after receiving the stockholder’s acceptance pursuant to subsection 2, the subject corporation shall pay in cash the amount offered under paragraph (b) of subsection 2 to each stockholder who agreed to accept the subject corporation’s offer in full satisfaction of the stockholder’s demand.

4. Within 40 days after sending the notice described in subsection 2, the subject corporation shall pay in cash the amount offered under paragraph (b) of subsection 2 to each stockholder described in paragraph (e) of subsection 2.

(Added to NRS by 1995, 2091; A 2009, 1725)

NRS 92A.480 Dissenter’s estimate of fair value: Notification of subject corporation; demand for payment of estimate.

1. A dissenter paid pursuant to NRS 92A.460 who is dissatisfied with the amount of the payment may notify the subject corporation in writing of the dissenter’s own estimate of the fair value of his or her shares and the amount of interest due, and demand payment of such estimate, less any payment pursuant to NRS 92A.460. A dissenter offered payment pursuant to NRS 92A.470 who is dissatisfied with the offer may reject the offer pursuant to NRS 92A.470 and demand payment of the fair value of his or her shares and interest due.

2. A dissenter waives the right to demand payment pursuant to this section unless the dissenter notifies the subject corporation of his or her demand to be paid the dissenter’s stated estimate of fair value plus interest under subsection 1 in writing within 30 days after receiving the subject corporation’s payment or offer of payment under NRS 92A.460 or 92A.470 and is entitled only to the payment made or offered.

(Added to NRS by 1995, 2091; A 2009, 1726)

NRS 92A.490 Legal proceeding to determine fair value: Duties of subject corporation; powers of court; rights of dissenter.

1. If a demand for payment remains unsettled, the subject corporation shall commence a proceeding within 60 days after receiving the demand and petition the court to determine the fair value of the shares and accrued interest. If the subject corporation does not commence the proceeding within the 60-day period, it shall pay each dissenter whose demand remains unsettled the amount demanded by each dissenter pursuant to NRS 92A.480 plus interest.

2. A subject corporation shall commence the proceeding in the district court of the county where its principal office is located in this State. If the principal office of the subject corporation is not located in this State, the right to dissent arose from a merger, conversion or exchange and the principal office of the surviving entity, resulting entity or the entity whose shares were acquired, whichever is applicable, is located in this State, it shall commence the proceeding in the county where the principal office of the surviving entity, resulting entity or the entity whose shares were acquired is located. In all other cases, if the principal office of the subject corporation is not located in this State, the subject corporation shall commence the proceeding in the district court in the county in which the corporation’s registered office is located.

3. The subject corporation shall make all dissenters, whether or not residents of Nevada, whose demands remain unsettled, parties to the proceeding as in an action against their shares. All parties must be served with a copy of the petition. Nonresidents may be served by registered or certified mail or by publication as provided by law.

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4. The jurisdiction of the court in which the proceeding is commenced under subsection 2 is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers have the powers described in the order appointing them, or any amendment thereto. The dissenters are entitled to the same discovery rights as parties in other civil proceedings.

5. Each dissenter who is made a party to the proceeding is entitled to a judgment:

(a) For the amount, if any, by which the court finds the fair value of the dissenter’s shares, plus interest, exceeds the amount paid by the subject corporation; or

(b) For the fair value, plus accrued interest, of the dissenter’s after-acquired shares for which the subject corporation elected to withhold payment pursuant to NRS 92A.470.

(Added to NRS by 1995, 2091; A 2007, 2705; 2009, 1727; 2011, 2815)

NRS 92A.500 Assessment of costs and fees in certain legal proceedings.

1. The court in a proceeding to determine fair value shall determine all of the costs of the proceeding, including the reasonable compensation and expenses of any appraisers appointed by the court. The court shall assess the costs against the subject corporation, except that the court may assess costs against all or some of the dissenters, in amounts the court finds equitable, to the extent the court finds the dissenters acted arbitrarily, vexatiously or not in good faith in demanding payment.

2. The court may also assess the fees and expenses of the counsel and experts for the respective parties, in amounts the court finds equitable:

(a) Against the subject corporation and in favor of all dissenters if the court finds the subject corporation did not substantially comply with the requirements of NRS 92A.300 to 92A.500, inclusive; or

(b) Against either the subject corporation or a dissenter in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously or not in good faith with respect to the rights provided by NRS 92A.300 to 92A.500, inclusive.

3. If the court finds that the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated, and that the fees for those services should not be assessed against the subject corporation, the court may award to those counsel reasonable fees to be paid out of the amounts awarded to the dissenters who were benefited.

4. In a proceeding commenced pursuant to NRS 92A.460, the court may assess the costs against the subject corporation, except that the court may assess costs against all or some of the dissenters who are parties to the proceeding, in amounts the court finds equitable, to the extent the court finds that such parties did not act in good faith in instituting the proceeding.

5. To the extent the subject corporation fails to make a required payment pursuant to NRS 92A.460, 92A.470 or 92A.480, the dissenter may bring a cause of action directly for the amount owed and, to the extent the dissenter prevails, is entitled to recover all expenses of the suit.

6. This section does not preclude any party in a proceeding commenced pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68 or NRS 17.115.

(Added to NRS by 1995, 2092; A 2009, 1727)

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Appendix C

FORM OF DEMAND FOR PAYMENT OF FAIR VALUE

CHINA ENERGY CORPORATION

c/o Agency Services of Nevada

245 East Liberty Street

P O Box 6477

Reno, NV 89513

Attn: Wenxiang Ding, President and CEO

Re: Demand for Payment of Fair Value of Fractional Share in Connection with Reverse Stock Split

It is understood that a reverse stock split is to be effected by the Company as described in the Information Statement, dated ____________, 2013, made available or sent by the Company to its stockholders (the “Reverse Stock Split”). The undersigned stockholder of China Energy Corporation (the “Company”) hereby demands, pursuant to Section 92A.420, Nevada Revised Statutes, that the company pay to the undersigned the fair value of the shares of Common Stock, par value $0.001 per share. The fair value is to be determined based on the fair value that the undersigned would be entitled to in connection with the Reverse Stock Split if the Company had not elected to pay cash in lieu of issuing such fractional share.

The undersigned hereby certifies that he/she currently beneficially owns _____ shares of the Company’s Common Stock, before giving effect to the proposed Reverse Stock Split. The undersigned hereby certifies that he/she acquired beneficial ownership of _____ of such shares before ______, 2013, the date on which the Company first publicly announced, by current report filed with the United States Securities and Exchange Commission, its intention to effect the Reverse Stock Split. The undersigned hereby certifies that he or she did not vote for the transaction. The undersigned does not accept the Company’s offer of the estimated fair value. The undersigned estimates that the fair value of the shares currently owned is $_____________ per share. The undersigned hereby makes a demand for payment of this estimated value plus interest.


(Name as it appears on share certificates)


Address


(Signature)


(Date)

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Appendix D

FORM OF TRANSMITTAL LETTER
OF CHINA ENERGY CORPORATION

Return this form with your original stock certificate in the enclosed envelope to:

Quicksilver Stock Transfer, LLC

6623 Las Vegas Blvd. South #255
Las Vegas, Nevada 89119

DO NOT RETURN THIS FORM TO CHINA ENERGY CORPORATION

DIRECT ANY QUESTIONS TO QUICKSILVER STOCK TRANSFER, LLC (702) 629-1883

Please carefully review the instructions before completing this Transmittal Letter. Quicksilver Stock Transfer, LLC (“Quicksilver”), the processing agent, can assist you if needed in completing this Transmittal Letter.

This Transmittal Letter is for use of holders of common shares of China Energy Corporation (the “Company”) in connection with the proposed reverse stock split of the common shares as more fully described in the steps listed below:

(a) Effective at the midnight MST of ________, 2013 (the “Effective Time”), the shares of the Company’s common stock will reverse split on a 12,000,000 for 1 basis (the “Reverse Split”);

(b) Thereupon, each 12,000,000 pre-split the Company’s common shares will be converted to one common share, with holders of less than one whole share after the completion of the Reverse Split entitled to receive cash in lieu of fractional shares in an amount equal to $0.14 per pre-split share. As a result, stockholders owning fewer than 12,000,000 pre-split the Company’s common shares at the Effective Time will be cashed out and no longer be stockholders of the Company.

The records of Quicksilver show that you are a holder of common shares of the Company. By completing this Transmittal Letter, you hereby represent and warrant that you are the owner of the number of common shares of the Company which are represented by the stock certificate(s), described below and delivered herewith and have full power and authority to herewith deposit such shares. You hereby surrender the shares under the certificates listed below. The undersigned hereby authorizes and directs Quicksilver to issue (please select one):

[ ] a certificate for new common shares to which the undersigned is entitled to because the undersigned owns 12,000,000 or more pre-split common shares of the Company; or

[ ] a check in the amount equal to $0.14 per pre-split share because the undersigned owns less than 12,000,000 pre-split common shares of the Company.

1. About You and Your Shares—Indicate Address Change as Necessary Below

Name: _______________________________________________________________
Street: _______________________________________________________________
City, State ZIP: ________________________________________________________
Email address: _________________________________________________________

Total Number of Certificated Shares Enclosed:
Number of Shares	Certificate Number

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2. Required Signatures—All stockholders must sign below exactly as shown on your stock certificates that you are tendering to Quicksilver.

X_____________________________________________________________________________

Signature of Stockholder Date

_______________________________________________________

Name of Stockholder (Print)

(______) _______—__________ (Daytime Phone Number, including Area Code)

3. Lost, Missing or Destroyed Certificate(s)

To replace any lost, missing or destroyed certificates, please contact Quicksilver, the processing agent for the Company’s common stock, immediately at (702) 629-1883. Replacement of any lost, missing or destroyed certificates may require you to provide a bond, indemnity, or other reasonable assurances required by Quicksilver.

4. Special Delivery Instructions

Stock certificates will be mailed to the person and address shown in box 1 above unless you indicate a different address below:

ADDRESS __________________________________________________________

CITY STATE ZIP_____________________________________________________

INSTRUCTIONS FOR COMPLETING THE TRANSMITTAL LETTER

All stockholders in possession of the Company’s shares must surrender their original stock certificates to Quicksilver in order to receive the new stock certificates evidencing the 12,000,000:1 Reverse Split or cash if the stockholder owns less than 12,000,000 pre-split shares (the “Exchange”).

Until the Company’s stock certificates are received by Quicksilver at the address set forth in the Transmittal Letter, together with such documents as Quicksilver may require, and until such documents are processed for Exchange by Quicksilver, the holder of such stock certificates shall not be entitled to receive the new certificate(s) or cash.

If your stock certificates are lost, stolen or destroyed, please refer to Instruction 9 below. The Reverse Split is subject to the terms, conditions and limitations described in the information statement mailed to stockholders on or about ______, 2013.

YOUR STOCK CERTIFICATES FOR ANY CERTIFICATED SHARES YOU HOLD MUST BE RETURNED WITH THE TRANSMITTAL LETTER FOR YOUR EXCHANGE TO BE VALID.

IF YOU HOLD ANY OF YOUR SHARES OF THE COMPANY WITH A STOCKBROKER IN STREET NAME, YOU WILL RECEIVE AND SHOULD FOLLOW THE SEPARATE TRANSMITTAL INSTRUCTIONS FROM YOUR BROKER.

Instruction 1 Exchange Deadline

To make a valid Exchange and have the Company pay for all costs associated with the Exchange you must deliver this Transmittal Letter, properly completed, and your stock certificates to Quicksilver at the address shown on the Transmittal Letter as soon as possible and preferably before ______, 2013. Stockholders will be responsible for any costs associated with the Exchange if they tender their shares to Quicksilver after ______, 2013. Please do this in a timely manner to ensure a prompt Exchange. Quicksilver will have reasonable discretion to determine whether any Transmittal Letter is received on a timely basis and whether a Transmittal Letter has been properly completed. Any such determinations are conclusive and binding.Failure to return a Transmittal Letter and surrender stock certificates may result in the stockholder being responsible for any costs associated with the Exchange.

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Instruction 2 Signatures on Transmittal Letter, Stock Powers and Endorsements

(a)

All signatures must correspond exactly with the name written on the face of the stock certificate without alteration, variation or any change whatsoever.

(b) If the stock certificates surrendered are held of record by two or more joint owners, all such owners must sign the Transmittal Letter.

(c) If any surrendered the Company’s shares are registered in different names on several stock certificates, it will be necessary to complete, sign and submit as many separate Transmittal Letters as there are different registrations of stock certificates.

(d) If this Transmittal Letter is signed by a person(s) other than the record holder(s) of the Company’s stock certificates delivered (other than as set forth in paragraph (e) below), such certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the record holder(s) appears on such certificate.

(e) If this Transmittal Letter is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity and such person is not the record holder of the accompanying stock certificates, he or she must indicate the capacity when signing and must submit proper evidence of his or her authority to act.

Instruction 3 Signature Guarantees Usually Not Required

Signatures on the Transmittal Letter need not be guaranteed unless you intend to place new certificate, if you are entitled one, in a different name than is on the current certificate. In such event, signatures on this Transmittal Letter must be guaranteed by an officer of a commercial bank, trust company, credit union or savings & loan who is a member of the Medallion Program, or by a stockbroker who is a member of such Program. Public Notaries cannot execute acceptable guarantees of signatures and the signature of a Notary Public is not acceptable for this purpose. You must also contact Quicksilver on anything else they would require from you to transfer your certificate.

The following are frequently requested types of registration changes. If your circumstances differ from those listed below, or if you have any other questions, please contact Quicksilver at (702) 629-1883.

Name change due to marriage or transfer of ownership to another individual:

Obtain a signature guarantee for the stockholder whose name is printed on the Transmittal Letter. If it is a joint account, both owners must sign and have their signatures guaranteed. Each signature must be guaranteed. (See Instruction 3 for information on Signature Guarantees).

Stockholder whose name is printed on the Transmittal Letter is deceased. You are the executor or administrator of the estate:

Provide a certified (under raised seal) copy of the Court Qualification appointing the legal representative (dated within 60 days).

Obtain a signature guarantee for the legal representative. (See Instruction 3 for information on Signature Guarantees).

Contact Quicksilver for any other Instructions.

The account is a joint account and one of the account holders is deceased. Transferring shares to the survivor only:

Provide a certified (under raised seal) copy of death certificate.

Provide survivor’s signature (signature guarantee is not necessary in this case).

The account is a joint account and one of the account holders is deceased. Transferring shares to the survivor and adding a name:

Provide a certified (under raised seal) copy of death certificate.

Survivor must obtain a signature guarantee. (See Instruction 3 for information on Signature Guarantees.)

Contact Quicksilver for any other Instructions.

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The account is a custodial account and the former minor has reached the legal age of majority:

The former minor must obtain a signature guarantee. (See Instruction 3 for information on Signature Guarantees.)

Provide a certified (under raised seal) copy of the birth certificate for the former minor.

Contact Quicksilver for any other Instructions.

If the request is being made by the minor who has now reached the age of majority:

The former minor must obtain a signature guarantee. (See Instruction 3 for information on Signature Guarantees.)

Contact Quicksilver for any other Instructions.

You want to have the account registered in the name of a trust:

Obtain a signature guarantee for the stockholder whose name is printed on the Transmittal Letter. If it is a joint account, both owners must sign and have their signatures guaranteed. (See Instruction 3 for information on Signature Guarantees.)

Provide a copy of the first and last pages of the trust agreement.

Contact Quicksilver for any other Instructions.

Instruction 4 Special Delivery Instructions

Complete Box 4 only if you want the Company’s stock certificate or cash from the surrender of your shares to be delivered to an address other than the one printed in Box 1 entitled “About You and Your Shares.” Note: Your address of record will not be affected by completing this section.

Instruction 5 Delivery of Transmittal Letter and Stock Certificates

This Transmittal Letter, properly completed and duly executed, together with the certificate(s) representing the Company’s shares, should be delivered to Quicksilver at the address set forth on the front of the Transmittal Letter. The method of delivery of the Company’s stock certificates and all other required documents is at the election and risk of the holder of such shares; however, if such certificates are sent by mail, it is recommended that they be sent by registered mail, appropriately insured, with return receipt requested. Insert in the box at the top of the Transmittal Letter the certificate number(s) of the Company’s common stock certificate(s) which you are surrendering and the number of shares represented by each certificate. If the space provided is insufficient, attach a separate sheet listing this information.

Instruction 6 Validity of Surrender, Irregularities

All questions as to validity, form and eligibility of any surrender certificates will be determined, in its sole discretion, by the Company (which may delegate the power to so determine in whole or in part to Quicksilver), and such determination shall be final and binding. The Company reserves the right to waive any irregularities or defects in the surrender of any certificate(s) and its interpretation of the terms and conditions of the Transmittal Letter or any other documents delivered therewith with respect to such irregularities or defects shall be final and binding. Surrender will not be deemed to have been validly made until all irregularities and defects have been cured or waived.

Instruction 7 Lost, Stolen, or Destroyed Certificates

If your stock certificate(s) of the Company are lost, stolen or destroyed, please contact Quicksilver at (702) 629-1883 immediately for instructions on how to proceed.

Instruction 8 Holders Who Are Nominees, Trustees or Other Representatives

Each holder of record of the Company’s shares is entitled to make an election and submit a Transmittal Letter covering all Company’s shares actually held of record by such holder. Nominee record holders, which include brokers, trustees or any other person that holds Company’s shares in any capacity whatsoever on behalf of more than one person or entity, are entitled to make an election for such nominee record holders as well as an election on behalf of each beneficial owner of Company’s shares held through such nominee record holders, but such elections must be made on one Election Form. Beneficial owners who are not record holders are not entitled to submit Election Forms. Persons submitting a Transmittal Letter on behalf of a registered stockholder as trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or acting in another fiduciary or representative capacity should refer to above.

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Instruction 9 Miscellaneous

Neither the Company nor Quicksilver is under any duty to give notification of defects in any Transmittal Letter. The Company and Quicksilver shall not incur any liability for failure to give such notification, and the Company and Quicksilver has the absolute right to reject any and all Transmittal Letters not in proper form or to waive any irregularities in any Transmittal Letter.

Instruction 10 Information and Additional Copies

Additional copies of this document may be obtained by telephoning Quicksilver at (702) 629-1883. All inquiries with respect to the completion of the Transmittal Letter or the surrender of the Company’s stock certificates should be made directly to Quicksilver at (702) 629-1883.

Instruction 11 Substitute Form W-9

You are required to provide Quicksilver with a correct Taxpayer Identification Number (“TIN”) on the Substitute Form W-9 included herein. Failure to provide the information on the form may subject you to a _____ federal income tax withholding on the payment of any amounts due for the certificate(s). The certificate included at the bottom of the form must be completed if you have not been issued a TIN and have applied for a number or intend to apply for a number in the near future. If the certificate is completed and Quicksilver is not provided a TIN within sixty (60) days, Quicksilver will withhold ____ on payment of any amount due for the certificate(s) until a TIN is provided to Quicksilver.

IMPORTANT TAX INFORMATION

Under federal income tax law, a stockholder is required to provide Quicksilver (as payer) with such stockholder’s correct Taxpayer Identification Number (TIN) on the Substitute Form W-9 included herein. If such stockholder is an individual, the TIN is his or her social security number. If the Exchange Agent is not provided with the correct TIN, the stockholder may be subject to a $___ penalty imposed by the Internal Revenue Service. In addition, payments that are made to such stockholder with respect to surrendered certificates may be subject to backup withholdings. Exempt stockholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholdings and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, that stockholder must submit a statement, signed under penalties of perjury, attesting to the individual’s exempt status. Such statements can be obtained from Quicksilver. See the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for additional instructions. If backup withholding applies, Quicksilver is required to withhold ___ of any amount otherwise payable to the stockholder. Backup withholdings is not an additional tax. Any amount withheld under backup withholding is allowable as a refundable credit against your federal income tax liability, provided you furnish the required information to the Internal Revenue Service. Such amounts, once withheld, are not refundable by Quicksilver.

Purpose of Substitute Form W-9

To prevent backup withholdings on payments that are made to a stockholder pursuant to the Reverse Split, the stockholder is required to notify Quicksilver of his or her correct TIN by completing the form certifying that the TIN provided in Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN) and (1) the stockholder has not been notified by the internal Revenue Service that he or she is subject to backup withholdings as a result of a failure to report all interest or dividends or (2) the Internal Revenue Service has notified the stockholder that he or she is no longer subject to backup withholdings. If a TIN is not provided to Quicksilver within sixty (60) days, Quicksilver is required to withhold ___ of all reportable payments thereafter made to the stockholder until a TIN is provided.

What Number to Give Quicksilver

The stockholder is required to give Quicksilver the social security number or employer identification number of the record owner of the certificates. If the certificates are in more than one name or are not in the name of the actual owner, consult the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for additional guidelines on which number to report.

D-5

PAYER:QUICKSILVER STOCK TRANSFER, LLC

	Part I-PLEASE PROVIDE YOUR TIN IN THE	Social Security Number
	SPACE AT RIGHT AND CERTIFY BY SIGNING
	AND DATING BELOW.	OR Employer identification number

SUBSTITUTE	Part II-	Part III
FormW-9 Department of the Treasury Internal Revenue Service	For Payees exempt from backup withholding, see the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 and complete as instructed therein.	Awaiting TIN Y
	Certification-UNDER PENALTIES OF PREJURY, I CERTIFY THAT:
	(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me),and
Payer's Request for
TaxpayerIdentification Number (TIN)	(2) 1 am not subject to backup withholding either because I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or the IRS has notified me that I am no longer subject to backup withholding.

	Certification Instructions.You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). Also see instruction in the enclosed Guidelines.

	SIGNATURE ......... ................... . ...... DATE .............................. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART III OF SUBSTITUTE F0RM W-9.

YOU MUST COMPLETE THE FOLLOWING CERTIFICATE

IF YOU CHECKED THE BOX IN PART III OF SUBSTITUTE F0RM W-9

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify, under penalties of perjury, that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that, notwithstanding that I have checked the box in Part III (and have completed this Certificate of Awaiting Taxpayer Identification Number), ___ of all cash payments made to me will be withheld until I provide a properly certified taxpayer identification number to the Processing Agent.

SIGNATURE ___________________________________ DATE ______________________________

D-6

Appendix E

CEC Annual Cost Analysis Chart

Independent certified public accountant audit costs	$	180,000
Outside securities legal counsel compliance costs	$	78,000
Investment advisory firm costs,Market maker costs,Marketing and Promotional costs	$	183,486
Internal staff costs,including executive time required to prepare and review public filings	$	48,000
Corporate registration fees and reporting costs, statutory agent costs and stock transfer agent costs	$	31,070
Independent director salary	$	50,525
Directors and officers liability insurance	$	163,000
Income tax return and State tax return Service costs	$	16,000
Total	$	750,081

E-1

	20010 Marchmont Road
	Shaker Heights, Ohio 44122
	voice 216.831.1795
	fax 1.800.749.7038

	rand@curtiss.com
	www.curtiss.com

Appendix F

October 23, 2012

Special Committee of the Board of Directors

China Energy Corporation

China Energy Corporation (the “Company”), a Nevada “C” Corporation, is considering the redemption via a reverse split of Company common stock (“equity”) shares owned by certain parties not deemed “insiders” by Securities and Exchange Commission regulations. You asked that I appraise the fair value of the Company’s common equity as of October 23, 2012based on information available as of that date, including Company financial results through August 31, 2012, its latest quarterly reporting period, to help establish the redemption price.

The Company is a holding company. It owns no assets and conducts no business operations other than its investments in its subsidiaries. Two of them, Inner Mongolia Tehong Coal & Power Group Co., Ltd. (“Coal Group”) and Inner Mongolia Zhunger Heat Power Co., Ltd. (“Heat Power”) are its only operating subsidiaries. Both are domiciled in the People’s Republic of China (“PRC”). Coal Group mines (from an Ordos City site), processes, and trades raw coal used for heating, electrical power generation, and steel coking. Heat Power distributes heated water and electricity to Xuejiwan, the administrative center of Zhunger, one of seven Ordos counties. Coal Group generated approximately 90% of 2012 fiscal year to date revenue, and Heat Power generated the remainder. Both subsidiaries operate under regulation by the PRC and its Inner Mongolia Autonomous Region.

On November 30, 2010, the Company entered into a series of contractual arrangements pursuant to which control, economic benefits, and costs of ownership of the operating subsidiaries flow directly to Beijing Tehong Energy Technology Consulting Co., Ltd., a PRC-designated “Wholly Foreign Owned Enterprise (“WFOE”), wholly owned by the Company through other subsidiaries.

The chart on the next page summarizes the holding company and subsidiary structure:

F-1

	20010 Marchmont Road
	Shaker Heights, Ohio 44122
	voice 216.831.1795
	fax 1.800.749.7038

	rand@curtiss.com
	www.curtiss.com

On November 30, 2010, the WFOE entered into a series of parallel agreements with both operating subsidiaries allowing it to manage and control of them.

Because of its holding company structure, the Company relies entirely on certain payments from the operating subsidiaries to Tehong Consulting, followed by dividend payments from Tehong Consulting to the Company. PRC accounting standards and regulations currently permit payment of dividends only out of accumulated profits, a portion of which must be set aside as statutory reserve funds.

Summarizing this appraisal:

PRC coal demand exceeds supply and will continue to do so for many years due to economic growth

Company coal reserves are declining and current production is unsustainable, but rising coal prices, increased coal trading revenue, and higher heat and electricity revenue will mitigate coal production declines

No additions to Company reserves are projected because information about them is insider information and undisclosed

F-2

	20010 Marchmont Road
	Shaker Heights, Ohio 44122
	voice 216.831.1795
	fax 1.800.749.7038

	rand@curtiss.com
	www.curtiss.com

The best indication of Company share fair value is its market price

Information on the PRC economy, its coal and heat / electricity distribution industries, the Company, and capital market data, integrated with multiple valuation approaches, metrics, and reasonability tests, built confidence that:

Company equity fair value was $0.17 per share as of October 23, 2012.

This opinion applies only for the stated purpose, use, and date. This appraiser:

Will not disclose engagement data, results, or occurrence unless authorized or legally required

Reached an objective, independent value conclusion limited by reported information and assumptions

Cannot attest to Company records’ accuracy or regulatory compliance

Has no present or prospective Company ownership and received no assistance or contingent compensation

Considered legal issues from a lay perspective and assumed unencumbered fee simple ownership

Cannot guarantee others’ acceptance of this report, or be deposed or testify without prior arrangements

Complied with professional business valuation standards and is a qualified appraiser as he:

Has valued over 3,500 businesses for taxation, transaction, litigation, and compliance purposes

Serves on The Institute of Business Appraisers (IBA) Education and Editorial Committees

Is an IBA Fellow (FIBA) and Master Certified Appraiser (MCBA) publishing extensively on valuation topics

Is President of Loveman–Curtiss, Inc., a Member of the American Business Appraisers National Network

Held financial management positions with The Boston Company, AmeriTrust, Progressive, and Standard Oil

Holds a Princeton B.A. (Economics, cum laude) and a Harvard M.B.A. (Finance, with distinction)

Is a Case Weatherhead Professional Fellow and an Adjunct Economics Professor at John Carroll University

Very truly yours,

This report is not final unless signed.

Rand M. Curtiss, FIBA, MCBA

F-3

	20010 Marchmont Road
	Shaker Heights, Ohio 44122
	voice 216.831.1795
	fax 1.800.749.7038

	rand@curtiss.com
	www.curtiss.com

Contents

Section	Topic	Page
Assumptions	Nevada Fair Value	4
Economic	Value Factors	6
Industry	Value Factors	6
Company	Value Factors	9
Methodology	Approaches and Metrics	13
Income Approach	Equity Cash Flow Value	14
Asset Approach	Liquidated Value	16
Market Approach	Comparables Value	17
Conclusion	Share Fair Value	18

Assumptions: Nevada Fair Value

Nevada Revised Statute §92A.320 defines fair value as “the value immediately before the effectuation of the corporate action…excluding any appreciation or depreciation in anticipation of the corporate action.” Recently, the Nevada Supreme Court answered several questions as to how to determine the fair value of shares under this statute inAmerican Ethanol, Inc. v. Cordillera Fund, L.P. (May 5, 2011). Noting that determining fair value “is not easy,” the Court concluded that a trial court might rely on “proof of value by any technique that is generally accepted in the relevant financial community and should consider all relevant factors, but the value must be fair and equitable to all parties.” This is substantially similar to language that the Nevada Legislature added to the definition of “fair value” in 2009: “customary and current valuation concepts and techniques generally employed for similar businesses in the context of the transaction requiring appraisal.”

The most authoritative general guidance on valuation consistent with the above isRevenue Ruling 59–60, which defines fair market value as the arm’s–length cash price negotiated by able, willing, hypothetical, informed, noncompulsed, unbiased parties like those owning a few shares of public companies, ceding power to management, and expecting dividends and value growth. Potential fair market investors are the Company, other owners, or passive third parties lacking special expertise. Value reflects facts knowable on the valuation date:

Consideration	Discussion	Report Section(s)
Business nature / history	Mongolian coal mining and heat distribution	Industry / Company
Economic outlook	Sustained but moderating growth	Economic / Industry
Industry outlook	Demand exceeds supply, but coal reserves are limited	Industry
Book value	Assumes liquidation, not going concern: irrelevant	Asset Approach
Financial condition	Cash flow positive, liquid, prudent debt	Company
Earning capacity	Equity cash flow measures this	Income Approach
Dividend capacity	Severely restricted by PRC currency controls	Income Approach
Goodwill / intangible value	Going concern equity value includes these	Income / Market Approaches
Past interest sales	Publicly traded (OTC) with very low volume	Market Approach
Interest size	1-share minority marketable interest	Conclusion
Similar interests’ prices	Insufficient for Company value, ample for discount	Conclusion

Certain assumptions (justified below) materially affected appraised fair market value. One, however, is highly significant: a Company investor cannot reasonably expect dividends, because:

F-4

	20010 Marchmont Road
	Shaker Heights, Ohio 44122
	voice 216.831.1795
	fax 1.800.749.7038

	rand@curtiss.com
	www.curtiss.com

Foreign investors doing business in the PRC under the WFOE legal form of organization, although permitted to control and manage the WFOE, are subject to unique restrictions which materially reduce their expected return.

The PRC State Administration of Foreign Exchange (“SAFE”) regulates foreign currency transactions including, but not limited to, dividends and other repatriations of funds. It exerts strong control over WFOE cash flow through a complex and time-consuming process of licensure, registration certification, and ongoing transaction approvals. “Current accounts” must be maintained for day-to-day transactions including dividends. “Capital accounts” must also be maintained, and are more restrictive.

Payments to a foreign parent company for services provided to a subsidiary (including management fees) may be subject to a 5% business tax and may not be allowed as a deduction by the PRC tax authority.

Payments of dividends are subject to withholding, and 10% of annual after-tax profits must be reserved and remain in equity until the cumulative reserve reaches 50% of “registered capital.” The cumulative reserve as of August 31, 2012 was $2,447,598, but the “registered capital” amount was not disclosed, so it is unclear whether the cumulative reserve meets the statutory requirement. (There is an additional safety and maintenance reserve fund of $7,040,719 unrelated to the preceding.)

Source: The Journal of Accountancy, “Business Basics in China,” May 2011

These restrictions significantly increase the risk that dividends may not be permitted due to deficient statutory reserves or failure to obtain state approval for payment. They also substantially increase their after-tax cost. Stated Company dividend policy is as follows, per its August 31, 2012 SEC 10-Q report:

Dividend Policy

We do not anticipate paying cash dividends in the foreseeable future. Presently, we intend to retain all of our earnings, if any, to finance development and expansion of our business.

We are a holding company incorporated in the State of Nevada and do not have any assets or conduct any business operations other than our investments in our subsidiaries. As a result of our holding company structure, we rely entirely on certain payments from the Operating Companies to Tehong Consulting, followed by dividend payments from Tehong Consulting. PRC accounting standards and regulations currently permit payment of dividends only out of accumulated profits, a portion of which is required to be set aside for certain reserve funds. In addition, PRC capital and currency regulations may limit our ability to pay dividends. Our inability to receive all of the revenues from the Operating Companies’ operations may provide an additional obstacle to our ability to pay dividends if we so decide in the future.

Tax costs, foreign currency restrictions, statutory reserve requirements, and Company dividend policy all indicate that it is unreasonable for foreign Company investors to expect dividends.

F-5

	20010 Marchmont Road
	Shaker Heights, Ohio 44122
	voice 216.831.1795
	fax 1.800.749.7038

	rand@curtiss.com
	www.curtiss.com

Economic Value Factors

Global political gridlock and short–term government policy compromises have created major real growth and unemployment risks. Inflation and interest rates will remain low. Europe is in recession. Emerging markets’ (Brazil, China, India, and Russia) growth is slowing.

Over the short- or medium-term, Chinese GDP will continue to grow at around 9% (the trend over last decade). This will be fostered by government policies favoring products that include Chinese intellectual property and content, subsidies for key industries including coal and electric power generation, and probable maintenance of the renminbi (‘RMB”) at a low rate relative to the U. S. dollar.

China’s most recent (12th) Five-Year Plan outlines a number of reform targets that, if implemented, will help China continue to grow. Targets include 7% annual GDP growth, urban registered unemployment no higher than 5%, and general price stability. This will involve increased domestic consumption, growth in emerging industries, higher service sector GDP, a more urbanized population, increased research and development outlays, environmental and clean energy initiatives, protection of the agricultural production base, a population ceiling of 1.4 billion, and other economic and social policies.

This outlook implies continued but decelerating real growth, low inflation and interest rates and lower unemployment rates. This in turn implies moderate to high investment returns with moderate risk. Multiple sources built confidence in it:

New York Times

Forbes Magazine

Economist Magazine

Wall Street Journal

Industry Value Factors

First Research Corporation’s October 8,2012 Coal Mining report describes the coal industry, noting that the PRC is the largest world producer of coal, accounting for 40% of global production. Demand is driven by electric power generation, steam (heat) generation, and steel production. Profitability depends on operating efficiency as coal is a commodity sold on price. Large companies have significant economies of scale in production and distribution. Smaller firms like the Company compete by securing long-term contracts and supplying local customers.

Due to its rapid economic growth, PRC demand for coal accounts for 50% of global demand, well in excess of domestic supply, necessitating net imports since 2009, primarily from the U.S. At current production rates, unless material new coal deposits are discovered, China will exhaust its proven reserves in about two decades.

High production rates have led to relatively high accident rates, creating the risk of stricter regulations.

The demand / supply imbalance has caused PRC producers to seek to acquire foreign coal reserves, particularly in the U. S., but these are subject to transportation cost, U. S. distribution and port capacity, and environmental limitations.

Mongolian coal production is growing rapidly, having quadrupled to over 40 million metric tons per year from 2008 production levels based on Energy Information Administration data.

F-6

	20010 Marchmont Road
	Shaker Heights, Ohio 44122
	voice 216.831.1795
	fax 1.800.749.7038

	rand@curtiss.com
	www.curtiss.com

The same source projects the impending peak production:

F-7

20010 Marchmont Road

Shaker Heights, Ohio 44122

Voice 216.831.1795

Fax 1.800.749.7038

rand@curtiss.com

www.curitiss.com

First Research Corporation’s August 20, 2012 Electric Power Generation report describes the industry, whose demand drives Coal Group and Heat Power revenue. The global electricity industry generates about 20 trillion kilowatt-hours of electricity. The PRC is the second largest national producer of electrical power. Demand is driven by commercial, government, and residential needs, which depend mainly on economic activity and population growth. Profitability is determined by government regulations and fuel costs. Large companies have an advantage in negotiating fuel contracts and being able to pass on the costs of implementing government regulations directly to consumers. Small companies can compete effectively by exploiting market niches, such as offering green power in regulated markets. The Company has an exclusive contract to supply heat to rural Mongolian areas, for which power is generated by coal combustion.

About half of China's electricity supply is run by five state-owned holding companies. China's power generation is expected to increase threefold between 2012 and 2035, with environmental concerns likely secondary to capacity expansion. Coal is expected to continue to dominate as a source of fuel for PRC power generation.

Company Value Factors

F-8

20010 Marchmont Road

Shaker Heights, Ohio 44122

Voice 216.831.1795

Fax 1.800.749.7038

rand@curtiss.com

www.curitiss.com

The Company’s operations may be adversely affected by political, economic, and social uncertainties in the PRC. The PRC government has been pursuing economic reform policies for more than twenty years. No assurance can be given that it will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption, or unforeseen circumstances. There is also no guarantee that the PRC government’s pursuit of economic reforms will be consistent or effective.

The Company’s mining operations are subject to extensive national and local governmental regulations, which may be revised or expanded. Generally, compliance with these regulations requires the Company to obtain permits issued by regulatory agencies. Certain permits require periodic renewal or review of their conditions. The Company cannot predict whether it will be able to obtain or renew such permits or whether material changes in permit conditions will be imposed. The inability to obtain or renew permits or the imposition of additional conditions could have a material adverse effect on the Company’s ability to develop and operate its mines.

As is customary in the PRC, except for auto coverage, Coal Group and Heat Power do not carry sufficient insurance. As a result, the Company is effectively self-insuring its risks of potential accidents or losses. Given the nature of the industry, the Company may be exposed to risks that could have a material adverse impact on its return.

A major risk factor is the declining level of Company coal reserves. In fiscal 2011, it produced 1,080,833 metric tons of coal, reducing its proven reserves to 5,966,360 tons and its probable reserves to 1,137,910 tons, for a total reserve of 7,104,270 tons. At this rate of production, reserves will be exhausted in 6.6 years.

History is not predictive, as it improbably assumes the future will be like the past. It cannot be, because the Company’s total coal reserves are declining and will be exhausted shortly. Company return (expected results) and risk (their uncertainty) determine value. That expectations may be incorrect in hindsight is irrelevant. Independently projected Company results reflect economic, industry and Company outlooks and assume that:

Coal production from the existing mine will peak and decline, with that revenue loss offset by higher coal prices, increased coal trading revenue, and slowly rising Heat Power revenue. These assumptions are highly speculative. There are no disclosed reserve acquisitions or development. The Company has accumulated cash, advanced amounts to suppliers, and acquired land adjacent to its mine. Based on information publicly available, there is no means of quantifying the potential for new reserves and production. As explained below, excess cash, supplier advances, and the land investment are added to equity value. This reflects their current values. It does not reflect the potential return or the risk of developing new reserves, for which redeemed shareholders will not be eligible. This appraiser believes this to be equitable valuation treatment consistent with the Nevada fair value statute.

Operating and net profit margins are unchanged; cost increases are passed on to buyers

Tax rates do not change

Working capital items vary with revenue

Fixed assets vary with revenue

F-9

20010 Marchmont Road

Shaker Heights, Ohio 44122

Voice 216.831.1795

Fax 1.800.749.7038

rand@curtiss.com

www.curitiss.com

Short- and long-term debt vary with revenue

Other assets and liabilities vary with revenue

No dividends are paid

When evaluating these projections, it is essential to note that:

This appraiser prepared them independently considering only cited information.

Company management was not asked to comment upon them, in order to protect confidential inside information and to maintain appraiser objectivity.

The Company does not provide “earnings guidance” and no securities analysts cover it.

These projections are speculative, reducing confidence in them for valuation purposes.

These risks are accounted for in the discounted cash flow analysis (below).

Projected cash flow to equity investors is not distributable to foreign investors.

Disclosed 2011 officer compensation rates were low: the President / CEO earned $12,000, the Vice General Manager, Coal Group $11,200 and the CFO (who resigned in late 2011) $55.500. These low rates are assumed to continue because of the PRC currency controls.

Historical annual, nine-month fiscal 2011 and 2012, and projected annual results (italicized):

$ [Δ = Change In]	Forecast	8			9			10			11			11Y			12Y			12			13			14			15			16
Sales	5% growth after 2012		19,884,097			41,715,003			88,045,275			157,686,054			101,533,393			146,703,801			195,556,167			188,829,035			182,333,316			176,061,050			170,004,550
Cost of Sales	Constant margin		(13,952,998	)		(29,357,944	)		(54,118,119	)		(104,933,710	)		(67,227,722	)		(118,427,782	)		(157,864,233	)		(152,433,704	)		(147,189,984	)		(142,126,649	)		(137,237,492	)
Gross Profit	Calculated		5,931,099			12,357,059			33,927,156			52,752,344			34,305,671			28,276,019			37,691,933			36,395,331			35,143,331			33,934,401			32,767,057
Operating Expense	Constant margin		(2,666,641	)		(5,463,771	)		(9,326,143	)		(13,180,635	)		(9,860,912	)		(12,721,797	)		(16,958,155	)		(16,374,795	)		(15,811,502	)		(15,267,586	)		(14,742,381	)
Operating Income	Calculated		3,264,458			6,893,288			24,601,013			39,571,709			24,444,759			15,554,222			20,733,778			20,020,536			19,331,830			18,666,815			18,024,676
Other Income	Constant margin		2,963,411			1,187,992			850,115			1,417,613			1,149,211			(2,591,401	)		(3,454,338	)		(3,335,508	)		(3,220,767	)		(3,109,972	)		(3,002,989	)
Net Interest Expense	Constant rate and debt level		(765,388	)		(793,670	)		(1,619,552	)		(2,780,628	)		(1,706,818	)		1,698,007			2,263,443			2,263,443			2,263,443			2,263,443			2,263,443
Other Income	Calculated		2,198,023			394,322			(769,437	)		(1,363,015	)		(557,607	)		(893,394	)		(1,190,894	)		(1,072,065	)		(957,324	)		(846,529	)		(739,546	)
Income Before Taxes	Calculated		5,462,481			7,287,610			23,831,576			38,208,694			23,887,152			14,660,828			19,542,884			18,948,471			18,374,506			17,820,285			17,285,130
Income Taxes	PRC statutory rates		(1,503,478	)		(2,181,391	)		(6,236,416	)		(10,573,467	)		(7,573,778	)		(5,727,710	)		(7,635,037	)		(7,402,812	)		(7,178,574	)		(6,962,051	)		(6,752,976	)
Net Income	Calculated		3,959,003			5,106,219			17,595,160			27,635,227			16,313,374			8,933,118			11,907,846			11,545,659			11,195,932			10,858,235			10,532,155
Shares Outstanding	Reported		45,000,000			45,000,000			45,000,000			45,060,000			45,060,000			45,060,000			45,060,000			45,060,000			45,060,000			45,060,000			45,060,000
Net Income Per Share	Calculated		0.09			0.11			0.39			0.61			0.36			0.20			0.26			0.26			0.25			0.24			0.23
Currency Translation	Highly unpredictable		1,883,321			43,559			1,010,025			2,891,182			2,778,992			350,554			467,288			0			0			0			0
Dividend	None		0			0			0			0			0			0			0			0			0			0			0
Cash	Retained balance		456,802			5,073,645			4,580,540			31,007,269						33,027,738			35,647,055			49,266,816			62,465,500			75,257,592			87,657,080
Receivables	Vary with revenue		3,006,456			4,600,667			5,748,007			17,364,962						10,562,097			10,562,097			10,198,761			9,847,923			9,509,155			9,182,040
Inventory	Vary with revenue		500,154			5,574,465			3,248,605			10,096,645						13,186,414			13,186,414			12,732,801			12,294,793			11,871,852			11,463,460
Other Current Assets	Vary with revenue		7,084,084			9,958,902			8,608,191			52,452,124						52,709,085			52,709,085			50,895,892			49,145,074			47,454,483			45,822,049
Current	Calculated		11,047,496			25,207,679			22,185,343			110,921,000						109,485,334			112,104,651			123,094,271			133,753,290			144,093,083			154,124,629
Net Fixed Assets	Vary with revenue		43,597,133			47,326,294			57,607,500			62,937,747						64,081,867			64,081,867			61,877,451			59,748,866			57,693,505			55,708,849
Intangible Assets	None		0			0			0			0						0			0			0			0			0			0
Other Assets	Vary with revenue		9,102,580			14,076,939			23,523,687			13,284,420						14,906,751			14,906,751			14,393,959			13,898,807			13,420,688			12,959,016
Assets	Calculated		63,747,209			86,610,912			103,316,530			187,143,167						188,473,952			191,093,269			199,365,680			207,400,963			215,207,276			222,792,494
Short-Term Debt	Varies with revenue		16,274,051			21,984,291			18,371,836			38,590,954						34,918,474			34,918,474			33,717,278			32,557,404			31,437,429			30,355,982
Payables	Vary with revenue		9,389,617			11,489,568			16,000,738			21,716,148						16,978,287			16,978,287			16,394,234			15,830,272			15,285,711			14,759,882
Other Liabilities	Vary with revenue		5,191,636			13,661,385			9,536,367			27,091,592						22,867,332			22,867,332			22,080,696			21,321,120			20,587,673			19,879,457
Current Liabilities	Calculated		30,855,304			47,135,244			43,908,941			87,398,694						74,764,093			74,764,093			72,192,208			69,708,796			67,310,814			64,995,322
Long-Term Debt	Varies with revenue		0			0			0			6,906,957						11,494,390			11,494,390			11,098,983			10,717,178			10,348,507			9,992,518
Other Liabilities	Vary with revenue		4,790,048			6,224,033			7,451,567			8,804,664						8,894,088			8,894,088			8,588,131			8,292,700			8,007,431			7,731,975
Equity	No change		28,101,857			33,251,635			51,956,022			84,032,852						93,321,381			95,940,698			107,486,358			118,682,290			129,540,524			140,072,679
Liabilities & Equity	Calculated		63,747,209			86,610,912			103,316,530			187,143,167						188,473,952			191,093,269			199,365,680			207,400,963			215,207,276			222,792,494
Net Income	Calculated					5,106,219			17,595,160			27,635,227									11,907,846			11,545,659			11,195,932			10,858,235			10,532,155
∆ Receivables	Calculated					(1,594,211	)		(1,147,340	)		(11,616,955	)								6,802,865			363,336			350,837			338,769			327,115
∆ Inventory	Calculated					(5,074,311	)		2,325,860			(6,848,040	)								(3,089,769	)		453,613			438,008			422,941			408,392
∆ Other Current A.	Calculated					(2,874,818	)		1,350,711			(43,843,933	)								(256,961	)		1,813,193			1,750,819			1,690,591			1,632,434
∆ Payables	Calculated					2,099,951			4,511,170			5,715,410									(4,737,861	)		(584,053	)		(563,962	)		(544,561	)		(525,828	)
∆ Other Current L.	Calculated					8,469,749			(4,125,018	)		17,555,225									(4,224,260	)		(786,636	)		(759,576	)		(733,447	)		(708,216	)
∆ Working Capital	Calculated					1,026,360			2,915,383			(39,038,293	)								(5,505,986	)		1,259,452			1,216,127			1,174,292			1,133,896
Operating Cash Flow	Calculated					6,132,579			20,510,543			(11,403,066	)								6,401,860			12,805,111			12,412,059			12,032,527			11,666,051
∆ Fixed	Calculated					(3,729,161	)		(10,281,206	)		(5,330,247	)								(1,144,120	)		2,204,416			2,128,584			2,055,361			1,984,657
∆ Intangible	Calculated					0			0			0									0			0			0			0			0
∆ Other Assets	Calculated					(4,974,359	)		(9,446,748	)		10,239,267									(1,622,331	)		512,792			495,152			478,119			461,672
Cash Uses	Calculated					(8,703,520	)		(19,727,954	)		4,909,020									(2,766,451	)		2,717,208			2,623,736			2,533,480			2,446,328
∆ Short-Term Debt	Calculated					5,710,240			(3,612,455	)		20,219,118									(3,672,480	)		(1,201,196	)		(1,159,874	)		(1,119,975	)		(1,081,448	)
∆ Long-Term Debt	Calculated					0			0			6,906,957									4,587,433			(395,407	)		(381,805	)		(368,671	)		(355,989	)
∆ Other Liabilities	Calculated					1,433,985			1,227,534			1,353,097									89,424			(305,957	)		(295,432	)		(285,269	)		(275,456	)
Cash Sources	Calculated					7,144,225			(2,384,921	)		28,479,172									1,004,377			(1,902,559	)		(1,837,111	)		(1,773,914	)		(1,712,892	)
∆ Equity	Calculated					43,559			1,109,227			4,441,603									0			0			(0	)		(0	)		(0	)
Equity Cash Flow	Calculated					4,616,843			(493,105	)		26,426,729									4,639,786			13,619,761			13,198,684			12,792,092			12,399,487
Dividend	Calculated					0			0			0									0			0			0			0			0
Retained	Calculated					4,616,843			(493,105	)		26,426,729									4,639,786			13,619,761			13,198,684			12,792,092			12,399,487
Opening	Calculated					456,802			5,073,645			4,580,540									31,007,269			35,647,055			49,266,816			62,465,500			75,257,592
Closing	Calculated					5,073,645			4,580,540			31,007,269									35,647,055			49,266,816			62,465,500			75,257,592			87,657,080

F-10

20010 Marchmont Road

Shaker Heights, Ohio 44122

Voice 216.831.1795

Fax 1.800.749.7038

rand@curtiss.com

www.curitiss.com

% [Δ = Change In]	Forecast	8			9			10			11			11Y			12Y			12			13			14			15			16			*Avg.*
Sales	5% growth after 2012		100			100			100			100			100			100			100			100			100			100			100			100
Cost of Sales	Constant margin		(70	)		(70	)		(61	)		(67	)		(66	)		(81	)		(81	)		(81	)		(81	)		(81	)		(81	)		(81	)
Gross Profit	Calculated		30			30			39			33			34			19			19			19			19			19			19			19
Operating Expense	Constant margin		(13	)		(13	)		(11	)		(8	)		(10	)		(9	)		(9	)		(9	)		(9	)		(9	)		(9	)		(9	)
Operating Income	Calculated		16			17			28			25			24			11			11			11			11			11			11			11
Other Income	Constant margin		15			3			1			1			1			(2	)		(2	)		(2	)		(2	)		(2	)		(2	)		(2	)
Net Interest Expense	Constant rate and debt level		(4	)		(2	)		(2	)		(2	)		(2	)		1			1			1			1			1			1			1
Other Income	Calculated		11			1			(1	)		(1	)		(1	)		(1	)		(1	)		(1	)		(1	)		(0	)		(0	)		(1	)
Income Before Taxes	Calculated		27			17			27			24			24			10			10			10			10			10			10			10
Income Taxes	PRC statutory rates		(8	)		(5	)		(7	)		(7	)		(7	)		(4	)		(4	)		(4	)		(4	)		(4	)		(4	)		(4	)
Net Income	Calculated		20			12			20			18			16			6			6			6			6			6			6			6
Dividend	None		0			0			0			0			0			0			0			0			0			0			0			0
Cash	Retained balance		1			6			4			17						18			19			25			30			35			39			30
Receivables	Vary with revenue		5			5			6			9						6			6			5			5			4			4			5
Inventory	Vary with revenue		1			6			3			5						7			7			6			6			6			5			6
Other Current Assets	Vary with revenue		11			11			8			28						28			28			26			24			22			21			24
Current	Calculated		17			29			21			59						58			59			62			64			67			69			64
Net Fixed Assets	Vary with revenue		68			55			56			34						34			34			31			29			27			25			29
Intangible Assets	None		0			0			0			0						0			0			0			0			0			0			0
Other Assets	Vary with revenue		14			16			23			7						8			8			7			7			6			6			7
Assets	Calculated		100			100			100			100						100			100			100			100			100			100			100
Short-Term Debt	Varies with revenue		26			25			18			21						19			18			17			16			15			14			16
Payables	Vary with revenue		15			13			15			12						9			9			8			8			7			7			8
Other Liabilities	Vary with revenue		8			16			9			14						12			12			11			10			10			9			10
Current Liabilities	Calculated		48			54			42			47						40			39			36			34			31			29			34
Long-Term Debt	Varies with revenue		0			0			0			4						6			6			6			5			5			4			5
Other Liabilities	Vary with revenue		8			7			7			5						5			5			4			4			4			3			4
Equity	No change		44			38			50			45						50			50			54			57			60			63			57
Liabilities & Equity	Calculated		100			100			100			100						100			100			100			100			100			100			100
Net Income	Calculated					100			100			100									100			100			100			100			100			100
∆ Receivables	Calculated					(31	)		(7	)		(42	)								57			3			3			3			3			14
∆ Inventory	Calculated					(99	)		13			(25	)								(26	)		4			4			4			4			(2	)
∆ Other Current A.	Calculated					(56	)		8			(159	)								(2	)		16			16			16			15			12
∆ Payables	Calculated					41			26			21									(40	)		(5	)		(5	)		(5	)		(5	)		(12	)
∆ Other Current L.	Calculated					166			(23	)		64									(35	)		(7	)		(7	)		(7	)		(7	)		(13	)
∆ Working Capital	Calculated					20			17			(141	)								(46	)		11			11			11			11			(1	)
Operating Cash Flow	Calculated					120			117			(41	)								54			111			111			111			111			99
∆ Fixed	Calculated					(73	)		(58	)		(19	)								(10	)		19			19			19			19			13
∆ Intangible	Calculated					0			0			0									0			0			0			0			0			0
∆ Other Assets	Calculated					(97	)		(54	)		37									(14	)		4			4			4			4			1
Cash Uses	Calculated					112			(21	)		73									(31	)		(10	)		(10	)		(10	)		(10	)		(14	)
∆ Short-Term Debt	Calculated					0			0			25									39			(3	)		(3	)		(3	)		(3	)		5
∆ Long-Term Debt	Calculated					28			7			5									1			(3	)		(3	)		(3	)		(3	)		(2	)
∆ Other Liabilities	Calculated					1			6			16									0			0			(0	)		(0	)		(0	)		(0	)
Cash Sources	Calculated					90			(3	)		96									39			118			118			118			118			102
∆ Equity	Calculated					1			6			16									0			0			(0	)		(0	)		(0	)		(0	)
Equity Cash Flow	Calculated					91			4			112									39			118			118			118			118			102
Dividend	Calculated					0			0			0									0			0			0			0			0			0
Retained	Calculated					91			4			112									39			118			118			118			118			102
Opening	Calculated					0			0			0									0			0			0			0			0			0
Closing	Calculated					1,111			90			677									115			138			127			120			116			123

Equity cash flow (“ECF”) is yearly Company cash changes netting all receipts and payments. ECF analysis starts with operating profit margin and reflects interest / tax expenses, investment / financing needs, sales, asset, capital, debt, and equity. The major ECF value factor is high capital to equity (due to debt):

F-11

20010 Marchmont Road

Shaker Heights, Ohio 44122

Voice 216.831.1795

Fax 1.800.749.7038

rand@curtiss.com

www.curitiss.com

Ratio [%]	9		10			11			12		13		14		15		16		Measurement of	Risk	Basis
Operating Profit Margin		17		28			25			11		11		11		11		11	Operating profit per sales dollar	Low	Stable
Pretax / Operating Income		106		97			97			94		95		95		95		96	Interest and other expense	Low	Low debt
Pretax Margin		17		27			24			10		10		10		10		10	Pretax profit per sales dollar
Net / Pretax Margin		70		74			72			61		61		61		61		61	Tax rate and expense	Low	Stable
Net Income Margin		12		20			18			6		6		6		6		6	Net profit per sales dollar
Operating Cash Flow / Net Income		120		117			(41	)		54		111		111		111		111	Working capital needs	Low	Stable
Operating Cash Flow Margin		15		23			(7	)		3		7		7		7		7	Operating cash flow per sales dollar
Equity / Operating Cash Flow		75		(2	)		(232	)		72		106		106		106		106	Investment / financing needs	Low	Stable
Equity Cash Flow Margin		11		(1	)		17			2		7		7		7		7	Equity cash flow per sales dollar
Sales / Capital		76		125			122			137		124		113		103		94	Sales per dollar of debt and equity	Low	No change
Return on Capital		8		(1	)		20			3		9		8		7		7	Return on debt and equity
Capital / Equity		166		135			154			148		142		136		132		129	Ratio of debt and equity to equity	Low	Declining
Return on Equity		14		(1	)		31			5		13		11		10		9	Return on equity
Equity [$ 000]		33,252		51,956			84,033			0		93,321		95,941		107,486		118,682	Level of equity	Low	Growing
Equity Cash Flow [$ 000]		4,617		(493	)		26,427			0		11,825		10,670		10,614		10,506	Distributable cash	Low	Per above

Methodology: Approaches and Metrics

Company share value reflects return, risk, property, obligations, and similar businesses’ sale prices. Three valuation approaches mirror the market, replicating buyer–seller pricing behavior:

Approach	Basis	Premise	Perspective	Metric	Data
Income	Return and risk	Own	Future	ECF	Projections
Asset	Property and obligations	Liquidate	Current	Net assets	Adjusted book value
Market	Similar businesses’ sale prices	Sell	Lateral	Comparables	Sale transactions

The speculative projections and non-distributable nature of equity cash flow reduced confidence in the Income Approach. The Asset Approach liquidation premise was inappropriate: the Company is a going concern and minority owners cannot force it. Although there were no comparables, the market price of Company stock built confidence in the Market Approach.

This appraisal values equity. Investor–employee pay is return on labor, not investment. Investors earn ECF: return on equity. A famous investor said “What is relevant is what you keep:” ECF. ECF divided by equity value is cash return on equity. Equity worth $100 yielding $8 ECF earns 8% return. ECF is distributable, measuring dividend capacity, which is zero for the Company for the reasons cited above. Retained ECF creates appreciation return. Return on equity (zero dividends and appreciation) is ECF. Fair market value is cash value. ECF leads directly to it.

F-12

20010 Marchmont Road

Shaker Heights, Ohio 44122

Voice 216.831.1795

Fax 1.800.749.7038

rand@curtiss.com

www.curitiss.com

Majority (over 50% of the equity) values are “control,” others “minority.” Liquid (priced as if freely tradable) values are “marketable,” others “non–marketable.” One share of the 45,060,000 outstanding is a minority non–marketable interest

Income Approach: Equity Cash Flow Value

The Income Approach reflects ECF return and value factor risk. Value reflects compounding return. A $100 investment compounding 20% annually grows to $120 after one year, $144 (not $140) after two, and so forth. Retained current ECF raises future ECF. Labeling future value “FV”, present value “PV”, compound annual return “R” and ownership years "T", in T years an investment of PV grows toFV = PV × (1+R)^T. Discounting,PV = FV ÷ (1+R)^T: the PV of $100 received in one year is less than $100. Investment risk is FV uncertainty due to ECF risk.

Investors require higher return to take higher risk. Company investors’ required return is above mezzanine (subordinated debt) and below private equity rates of 20 to 40%. Low–risk investments earn 20 to 25% return, high–risk 35 to 40%. The 25% Company ECF discount rate reflects its moderate risk. The rate includes the risk–free U. S. Treasury Bond yield, addingSBBI Yearbook 1926–2011 incremental market returns earned during diverse economic conditions on large–company, small–company, and industry stocks. This is the market return. The Company premium reflects its ECF risks rated (1) / 0 / 1 if low / neutral / high. The total is Company investors’ required return: the ECF discount rate. It remains constant for five years and rises 10% post–forecast (“PF”) due to higher long–term risk (reserve depletion):

Market Risk	%			Source
Risk-Free Rate		2.4		20-Year Treasury '10/23/12
Equity Premium		6.6		Long Horizon
Industry Premium		2.6		SIC 122 "Coal Mining"
Size Premium		11.8		Decile 10z
Market Rate		23		Calculated, rounded
Company Risk	+/-			Basis
Sales Level / Growth		(1	)	Very rapid with low risk
Operating Profit		(1	)	High, stable margins
Interest Expense		(1	)	Prudent debt, flat rates
Tax Expense		0		No change
Working Capital		0		Stable need
Investment / Financing		0		No major needs
Capital Intensity		0		Stable
Debt to Equity		0		Prudent
Level of Equity		(1	)	High, growing
Key Person Risk		(1	)	Low
Factor Rating		(5	)	Sum of ratings
Factors Rated		10		Number of factors
Minimum Premium %		0		If factor rating is -10
Maximum Premium %		5		If factor rating is +10
Premium %		1		Interpolated
Discount Rate %		25		Market + Company Risk

F-13

20010 Marchmont Road

Shaker Heights, Ohio 44122

Voice 216.831.1795

Fax 1.800.749.7038

rand@curtiss.com

www.curitiss.com

Pepperdine University’s Private Cost of Capital Survey reports 16% mezzanine and 25% private equity returns for companies with EBIT (earnings before interest and tax expenses) of $50 million. Company 2012 EBIT (annualized) is $21.0 million. This built confidence that this discount rate is reasonable.

Operating assets generate ECF. Distribution of non–operating assets would not change return (ECF) or risk (its discount rate). Cash above the industry average (10% of assets per the Risk Management Association for this industry) and other indicated items were non–operating, totaling $85.2 million. Equity value of $4.72 per share is discounted ECF and non–operating asset values:

$	12		13		14		15		16		PF		Basis
Equity Cash Flow		22,715,992		39,738,983		38,280,090		36,871,384		35,511,137		37,286,694	Projected
Discount Rate %		25		25		25		25		25		30	Appraised
Growth Rate %												5	Projected
Capitalization Rate %												25	Calculated
Capitalized Value												149,146,776	Calculated
Discount Factor		0.80		0.64		0.51		0.41		0.33		0.25	Appraised
Discounted Value		18,172,794		25,432,949		19,599,406		15,102,519		11,636,289		37,594,166	Calculated
Cumulative Value		18,172,794		43,605,742		63,205,149		78,307,668		89,943,957		127,538,123	Calculated
Non-Operating Assets												85,159,774	Calculated
Equity Value												212,697,897	Calculated
Shares												45,060,000	Outstanding
Share Value												4.72	Calculated

Strong proof of value is that the operating assets, if acquired for appraised value, would:

●

Pay reasonable owner–manager compensation: projected variation with sales proves this

●

Service debt timely: projected debt reductions proves this

●

Generate adequate return: the 25.4%operating asset ECF return proves this:

$		PV				12				13				14				15				16				PF				IRR%
Equity Cash Flow			(41,615,730	)			4,639,786				13,619,761				13,198,684				12,792,092				12,399,487				52,077,847				25.4

Despite market return data, the risk premium and non–operating asset value, the high uncertainty of future results limited confidence that this value is reasonable. It is a minority (based on minority ECF) marketable (discount rates reflect free tradability) value. It also assumes that value is based on cash flow that can ultimately be distributed, but this is not appropriate for the reasons cited above.

Asset Approach: Liquidated Value

The Asset Approach values what the Company owns less what it owes if liquidated, reflecting fair market values of assets less liabilities. There was no basis for adjusting any item from reported (audited) financial statement values:

F-14

20010 Marchmont Road

Shaker Heights, Ohio 44122

Voice 216.831.1795

Fax 1.800.749.7038

rand@curtiss.com

www.curitiss.com

$ [Δ = Change In]	12Y		Δ		FMV		Basis
Cash		34,285,849		0		34,285,849	No change
Receivables		28,650,258		0		28,650,258	No change
Inventory		20,542,245		0		20,542,245	No change
Other Current Assets		57,868,693		0		57,868,693	No change
Current		141,347,045		0		141,347,045	Calculated
Net Fixed Assets		63,711,143		0		63,711,143	No change
Intangible Assets		0		0		0	No change
Other Assets		15,012,279		0		15,012,279	No change
Assets		220,070,467		0		220,070,467	Calculated
Short-Term Debt		39,417,426		0		39,417,426	No change
Payables		24,750,164		0		24,750,164	No change
Other Liabilities		30,815,609		0		30,815,609	No change
Current Liabilities		94,983,199		0		94,983,199	Calculated
Long-Term Debt		12,256,272		0		12,256,272	No change
Other Liabilities		9,447,352		0		9,447,352	No change
Equity		103,383,644		0		103,383,644	To balance
Liabilities & Equity		220,070,467		0		220,070,467	Calculated

$	FMV			Basis
Gross Proceeds		103,383,644		Equity FMV
Basis		(103,383,644	)	Reported
Gain		0		Calculated
Tax		0		No gain
Net Proceeds		103,383,644		Calculated
Shares		45,060,000		Outstanding
Share Value		2.29		Calculated

This is a control (owners receive pro rata proceeds) marketable (cash) value, but does not reflect the non-distributable nature of liquidated proceeds to foreign investors. Because minority shareholders cannot force liquidation and the Company is a going concern, this value indication was irrelevant and given no further consideration in the value conclusion.

Market Approach: Comparables Value

The Market Approach reflects similar businesses’ (“comparables”) sale prices:

Arm’s–length Company equity sales: Actual market prices were the major value indication

Enforceable Company ownership contracts: None

Similar businesses’ sale prices: Public company comparables were researched, but none were comparable:

Company shares (OTC: CHGY) were offered in the United States beginning in late 2008. During the last 52 weeks (ending October 23, 2012), their price trended down from $0.56 per share to $0.17 per share as of October 23, 2012. During the last three months, average trading volume was 16,076 shares, a small fraction of the 45,060,000 outstanding. Officers and directors owned 27,079,107 (60%) of the shares. No insider transactions have been reported since June 24, 2011, and they transactions occurred on non-U.S. exchanges, which do not disclose pricing. Based on trailing twelve-month earnings per share, the price / earnings multiple was 0.20 and the market value of equity was approximately $9.0 million:

F-15

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This value is minority (based on cash flow to minority shareholders) and marketable, although it does not reflect the lack of marketability associated with large blocks of shares due to limited trading volume. This is not relevant, because a single share is to be valued.

A search for comparable publicly traded companies yielded none. Of 22 potential candidates, 10 were far larger than is the Company, five had no or insufficient disclosure, three were private or state owned, two were not primarily engaged in coal mining, one was an energy trader, and one served primarily non-PRC markets.

F-16

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Company

Owner

Product / Market

Exchange

Symbol

Market Value

Yield

Non-Comparability

Banpu Public

Thailand, Indonesia

Non-PRC markets

China Coal Energy

1898

109,210,000,000

3.96

Too large

China Kingho

Private

Privately owned

China National Coal

OTN

CSUAY

68,000,000,000

3.86

Too large

China Shenhua Energy

OTN

CCOZY

14,100,000,000

3.99

Too large

China United Coalbed Methane

Methane

Non-coal related

CITIC Resources

Primarily oil

Non-coal related

Datong Coal Industry

601001

16,840,000,000

1.89

Too large

Fushun Mining

PRC

State owned

Hidili Industry International Development

1393

3,820,000,000

4.95

Dividend-paying

Huadian Power International

OTN

HPIFF

286,210,000

Insufficient disclosure

International Energy Mining Industry

Trading company

Not a production firm

Jizhong Energy Resources

000937

33,370,000,000

1.71

Too large

Kailuan Energy Chemical

600997

13,010,000,000

0.95

Too large

Mongolian Mining

OTN

MOGLF

1,870,000,000

Insufficient disclosure

Prophecy Coal

OTN

PRPCF

38,460,000

Insufficient disclosure

Shaanxi Coal & Chemical

122861

Insufficient disclosure

Shandong Energy

PRC

State owned

Shanxi Coking

600740

4,750,000,000

Too large

Shanxi Xishan Coal

000983

45,940,000,000

1.36

Too large

South Gobi Resources

OTN

SGQRF

671,360,000

Insufficient disclosure

Yanzhou Coal Mining

600188

48,050,000,000

Too large

Conclusion: Share Fair Value

Summarizing the relevant per-share value indications:

●

The Income Approach value was $4.72 (minority marketable)

●

The Market Approach value was $0.17 (minority marketable)

The difference between the two values is 97%. It arises because the Income Approach value takes no account of the effect of PRC currency restrictions that prohibit foreign investors from receiving the indicated value of discounted ECF and non-operating assets, while the Market Approach value reflects this.

The Quantitative Marketability Discount Model provides an explicit methodology for comparing these values. It uses on the Income Approach, and calculates the present value of expected cash flows to a shareholder. It requires the following assumptions:

Holding period: one to 30 years until cash is received (assuming that PRC currency controls are eliminated, allowing shareholders to realize dollar returns)

Expected dividend yield and growth: both zero, per Company policy

Annual appreciation: the long-term revenue and cash flow decline rate of 3.5%, based on the projections, which assume no new reserves are added

Premium or discount at sale: none

F-17

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Holding period return: 25% the ECF discount rate

Based on these assumptions, the model calculates the present value discount of funds received for the selected holding period, given all of the other assumptions. As shown in the second panel, holding periods of ten or more years imply discounts quite close to the 97% discount from the Income Approach to the Market Approach value, confirming it. The third panel details discounts for specific rates of return (discount rates) and holding periods.

ASSUMPTION	Value
Holding Period ("HP")	Low	1
	High	30
Expected Yield	No dividends	0.0	%
Expected Yield Growth	No dividends	0.0	%
Annual Appreciation	Revenue decline	-3.5	%
Premium / Discount	None	0.0	%
Holding Period Return	Low	25.0	%
	High	25.0	%

Average Discount for Holding Period
2-4 Year	53	%	5-10 Year	84	%
5-7 Year	78	%	10-15 Year	95	%
8-10 Year	90	%	15-20 Year	99	%
10-20 Year	97	%	20-30 Year	99	%

Required Return

		HP
		1			2			3			4			5			6			7			8			9			10			15			20			25			30
		LOMD
22	%		21	%		37	%		51	%		61	%		69	%		76	%		81	%		85	%		88	%		90	%		97	%		99	%		100	%		100	%
23	%		22	%		38	%		52	%		62	%		70	%		77	%		82	%		86	%		89	%		91	%		97	%		99	%		100	%		100	%
24	%		22	%		39	%		53	%		63	%		71	%		78	%		83	%		87	%		90	%		92	%		98	%		99	%		100	%		100	%
25	%		23	%		40	%		54	%		64	%		73	%		79	%		84	%		87	%		90	%		92	%		98	%		99	%		100	%		100	%
25	%		23	%		40	%		54	%		64	%		73	%		79	%		84	%		87	%		90	%		92	%		98	%		99	%		100	%		100	%
25	%		23	%		40	%		54	%		64	%		73	%		79	%		84	%		87	%		90	%		92	%		98	%		99	%		100	%		100	%
26	%		23	%		41	%		55	%		66	%		74	%		80	%		85	%		88	%		91	%		93	%		98	%		100	%		100	%		100	%
27	%		24	%		42	%		56	%		67	%		75	%		81	%		85	%		89	%		92	%		94	%		98	%		100	%		100	%		100	%
28	%		25	%		43	%		57	%		68	%		76	%		82	%		86	%		90	%		92	%		94	%		99	%		100	%		100	%		100	%

This analysis implies that, based on the difference between the Income and Market Approaches, currency controls are expected to remain in effect for at least 15 years, which is quite reasonable given the facts cited in this appraisal. In other words, by accounting for the probable duration of currency controls, the Income Approach value is equal to the Market Approach value of $0.17 per share, the concluded fair value of Company equity.

F-18

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Appendix G

November 28, 2012

Special Committee of the Board of Directors

China Energy Corporation

China Energy Corporation (the “Company”), a Nevada “C” Corporation, is considering the redemption via a reverse split of Company common stock (“equity”) shares owned by certain parties not deemed “insiders” by Securities and Exchange Commission regulations. You asked that I appraise the fair value of the Company’s common equity as of November 28, 2012 based on information available as of that date, including Company financial results through August 31, 2012, its latest quarterly reporting period, to help establish the redemption price.

The Company is a holding company. It owns no assets and conducts no business operations other than its investments in its subsidiaries. Two of them, Inner Mongolia Tehong Coal & Power Group Co., Ltd. (“Coal Group”) and Inner Mongolia Zhunger Heat Power Co., Ltd. (“Heat Power”) are its only operating subsidiaries. Both are domiciled in the People’s Republic of China (“PRC”). Coal Group mines (from an Ordos City site), processes, and trades raw coal used for heating, electrical power generation, and steel coking. Heat Power distributes heated water and electricity to Xuejiwan, the administrative center of Zhunger, one of seven Ordos counties. Coal Group generated approximately 92% of 2012 fiscal year to date revenue, and Heat Power generated the remainder. Both subsidiaries operate under regulation by the PRC and its Inner Mongolia Autonomous Region.

The chart on the next page summarizes the holding company and subsidiary structure:

G-1

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On November 30, 2010, the WFOE entered into a series of parallel agreements with both operating subsidiaries allowing it to manage and control of them.

Summarizing this appraisal:

●

PRC coal demand exceeds supply and will continue to do so for many years due to economic growth

●

No additions to Company reserves are projected because information about them is insider information and undisclosed

G-2

20010 Marchmont Road

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●

The best indication of Company share fair value is its market price

●

Company equity fair value was $0.12 per share as of November 28, 2012.

This opinion applies only for the stated purpose, use, and date. This appraiser:

●

Will not disclose engagement data, results, or occurrence unless authorized or legally required

●

Reached an objective, independent value conclusion limited by reported information and assumptions

●

Cannot attest to Company records’ accuracy or regulatory compliance

●

Has no present or prospective Company ownership and received no assistance or contingent compensation

●

Considered legal issues from a lay perspective and assumed unencumbered fee simple ownership

●

Cannot guarantee others’ acceptance of this report, or be deposed or testify without prior arrangements

●

Complied with professional business valuation standards and is a qualified appraiser as he:

●

Has valued over 3,500 businesses for taxation, transaction, litigation, and compliance purposes

●

Serves on The Institute of Business Appraisers (IBA) Education and Editorial Committees

●

Is an IBA Fellow (FIBA) and Master Certified Appraiser (MCBA) publishing extensively on valuation topics

●

Is President of Loveman–Curtiss, Inc., a Member of the American Business Appraisers National Network

●

Held financial management positions with The Boston Company, AmeriTrust, Progressive, and Standard Oil

●

Holds a Princeton B.A. (Economics, cum laude) and a Harvard M.B.A. (Finance, with distinction)

●

Is a Case Weatherhead Professional Fellow and an Adjunct Economics Professor at John Carroll University

Very truly yours,

Rand M. Curtiss, FIBA, MCBA

G-3

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Contents

Section	Topic	Page
Assumptions	Nevada Fair Value	4
Economic	Value Factors	6
Industry	Value Factors	6
Company	Value Factors	9
Methodology	Approaches and Metrics	13
Income Approach	Equity Cash Flow Value	14
Asset Approach	Liquidated Value	16
Market Approach	Comparables Value	17
Conclusion	Share Fair Value	18

Assumptions: Nevada Fair Value

Consideration	Discussion	Report Section(s)
Business nature / history	Mongolian coal mining and heat distribution	Industry / Company
Economic outlook	Sustained but moderating growth	Economic / Industry
Industry outlook	Demand exceeds supply, but coal reserves are limited	Industry
Book value	Assumes liquidation, not going concern: irrelevant	Asset Approach
Financial condition	Cash flow positive, liquid, prudent debt	Company
Earning capacity	Equity cash flow measures this	Income Approach
Dividend capacity	Severely restricted by PRC currency controls	Income Approach
Goodwill / intangible value	Going concern equity value includes these	Income / Market Approaches
Past interest sales	Publicly traded (OTC) with very low volume	Market Approach
Interest size	1-share minority marketable interest	Conclusion
Similar interests’ prices	Insufficient for Company value, ample for discount	Conclusion

Certain assumptions (justified below) materially affected appraised fair market value. One, however, is highly significant: a Company investor cannot reasonably expect dividends, because:

G-4

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Source: The Journal of Accountancy, “Business Basics in China,” May 2011

Dividend Policy

We do not anticipate paying cash dividends in the foreseeable future. Presently, we intend to retain all of our earnings, if any, to finance development and expansion of our business.

Tax costs, foreign currency restrictions, statutory reserve requirements, and Company dividend policy all indicate that it is unreasonable for foreign Company investors to expect dividends.

Economic Value Factors

G-5

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New York Times

Forbes Magazine

Economist Magazine

Wall Street Journal

Industry Value Factors

High production rates have led to relatively high accident rates, creating the risk of stricter regulations.

G-6

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Mongolian coal production is growing rapidly, having quadrupled to over 40 million metric tons per year from 2008 production levels based on Energy Information Administration data.

The same source projects the impending peak production:

G-7

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G-8

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Company Value Factors

Operating and net profit margins are unchanged; cost increases are passed on to buyers

Tax rates do not change

Working capital items vary with revenue

Fixed assets vary with revenue

G-9

	20010 Marchmont Road
	Shaker Heights, Ohio 44122
	voice 216.831.1795
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