UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 2
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2012
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ____to _____
Commission File Number: 001-33907
CAM GROUP, INC.
f/k/a RT Technologies, Inc.
(Exact name of registrant as specified in its charter)
| Nevada | 57-1021913 |
| (State or other jurisdiction of | (IRS Employer Identification No.) |
| incorporation or organization) |
151 Shengli Avenue North, Jixing Building, Shijiazhuang, Hebei Province, P.R.China
(Address of principal executive offices)
(86) 0311-86964264
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated filer ¨Accelerated filer ¨
Non-accelerated filer¨ (Do not check if a smaller reporting company) Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.
Number of shares of common stock, par value $.001, outstanding as of June 30, 2012: 25,000,000
Number of shares of preferred stock, par value $.001, outstanding as of June 30, 2012: 1,000,000
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
The discussion contained in this 10-Q under the Securities Exchange Act of 1934, as amended, contains forward-looking statements that involve risks and uncertainties. The issuer's actual results could differ significantly from those discussed herein. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "the Company believes," "management believes" and similar language, including those set forth in the discussions under "Notes to Consolidated Financial Statements" and "Management's Discussion and Analysis or Plan of Operation" as well as those discussed elsewhere in this Form 10-Q. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. Statements contained in this Form 10-Q that are not historical facts are forward-looking statements that are subject to the "safe harbor" created by the Private Securities Litigation Reform Act of 1995.
| (1) |
| TABLE OF CONTENTS | ||||
| PART I. FINANCIAL INFORMATION | ||||
| ITEM 1. FINANCIAL STATEMENTS | 4 | |||
| ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 10 | |||
| ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 12 | |||
| ITEM 4. CONTROLS AND PROCEDURES | ||||
ITEM 4T. CONTROLS AND PROCEDURES | 12 | |||
| PART II. OTHER INFORMATION | ||||
| ITEM 1. LEGAL PROCEEDINGS | 13 | |||
| ITEM 1A. RISK FACTORS | 13 | |||
| ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 13 | |||
| ITEM 3. DEFAULTS UPON SENIOR SECURITIES | 13 | |||
| ITEM 4. MINE SAFETY DISCLOSURE | 13 | |||
| ITEM 5. OTHER INFORMATION | 13 | |||
| ITEM 6. EXHIBITS | 13 | |||
| SIGNATURES | 14 | |||
| INDEX TO EXHIBITS | 15 |
| (2) |
EXPLANATORY NOTE
This Amendment No. 1 to the Quarterly Report on Form 10-Q/A (the “Amendment”) amends the Quarterly Report on Form 10-Q ofCAM GROUP, INC.,f/k/a RT Technologies, Inc. (the “Company”) for the quarter ended June 30, 2012 (the “Original Filing”), that was originally filed with the U.S. Securities and Exchange Commission on August 20, 2012. The Amendment is being filed to submit Exhibit 101. The Amendment revises the exhibit index included in Part II, Item 6 of the Original Filing and Exhibit 101 (XBRL interactive data) is included as an exhibit to the Amendment.
In addition, the Amendment also modifies or updates the financial statement, footnotes and disclosures presented in, or exhibits to, the Original Filing to reclassify certain income statement items.
| (3) |
FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 2012
The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the periods presented have been made. These financial statements should be read in conjunction with the accompanying notes, and with the historical financial information of the Company.
| CAM GROUP, INC. | ||||||||
| f/k/a RT Technologies, Inc. | ||||||||
| Unaudited Consolidated Balance Sheets | ||||||||
| As of June 30, 2012 and December 31, 2011 | ||||||||
| June 30, 2012 | December 31, 2011 | |||||||
| Current Assets | ||||||||
| Cash and cash equivalent | $ | 718,207 | $ | 4,141 | ||||
| Prepayment and deposits | 67,207 | 67,768 | ||||||
| Other receivable | 7,083 | 0 | ||||||
| Total Current Assets | 792,497 | 71,909 | ||||||
| Plant and Equipment, Net | 34,931 | — | ||||||
| Total Assets | $ | 827,428 | $ | 71,909 | ||||
| Liabilities | ||||||||
| Due to shareholders | $ | 274,697 | 0 | |||||
| Due to related parties | 29,457 | 32,242 | ||||||
| Other payables | 2,411 | 2,858 | ||||||
| Income tax payable | 70,000 | 0 | ||||||
| Total Liabilities | 376,565 | 35,100 | ||||||
| Stockholders' Equity | ||||||||
| Preferred stock, $.001 par value, 1,000,000 shares authorized, 1,000,000 shares issued and outstanding as of June 30, 2012 and December 31, 2011, respectively | 1,000 | 1,000 | ||||||
| Common stock, $.001 par value, 90,000,000 shares authorized, 25,000,000 and 22,500,000 shares issued and outstanding as of June 30, 2012 and December 31, 2011, respectively | 25,000 | 22,500 | ||||||
| Additional paid-in capital | 207,085 | 129,192 | ||||||
| Accumulated other comprehensive income | (3,938 | ) | (1,482 | ) | ||||
| Retained earnings (deficits) | 172,798 | (100,362 | ) | |||||
| Non controlling interest | 48,918 | (14,039 | ) | |||||
| Total Stockholders' (Equity) | 450,863 | 36,809 | ||||||
| Total Liabilities and Stockholders' Deficit | $ | 827,428 | $ | 71,909 | ||||
| The accompanying notes are an integral part of these consolidated financial statements | ||||||||
| (4) |
| CAM GROUP, INC. | ||||||||
| f/k/a RT Technologies, Inc. | ||||||||
| Unaudited Condensed Consolidated Statements of Operations | ||||||||
| For the three and six months ended June 30, 2012 | ||||||||
| Three Months Ended | Six Months Ended | |||||||
| June 30, 2012 | June 30, 2012 | |||||||
| Revenue - related party | $ | 572,120 | $ | 572,120 | ||||
| Cost of revenue | 62,685 | 62,685 | ||||||
| Gross profit | 509,435 | 509,435 | ||||||
| Operating expenses: | ||||||||
| Selling and marketing expenses | — | — | ||||||
| General & administrative expenses | 105,018 | 166,275 | ||||||
| Total operating expenses | 105,018 | 166,275 | ||||||
| Operating income (loss) | 404,417 | 343,160 | ||||||
| Other income (expenses) | ||||||||
| Interest income | 40 | 0 | ||||||
| Total other income (expenses) | 40 | 0 | ||||||
| Income before income tax and non-controling interest | 404,457 | 343,160 | ||||||
| Income tax expense | 70,000 | 70,000 | ||||||
| Minority interest | — | — | ||||||
| Net income | 334,457 | 273,160 | ||||||
| Other Comprehensive loss | (2,134 | ) | (2,456 | ) | ||||
| Comprehensive income | $ | 332,323 | $ | 270,704 | ||||
| Net income (loss) per share: | ||||||||
| Basic | $ | 0.01 | $ | 0.01 | ||||
| Diluted | ** | ** | ||||||
| Weighted average number of shares | ||||||||
| Basic | 24,555,556 | 23,522,099 | ||||||
| Diluted | 124,555,556 | 123,522,099 | ||||||
| ** Less than $.01 | ||||||||
| The accompanying notes are an integral part of these consolidated financial statements | ||||||||
| (5) |
| CAM GROUP, INC. | ||||
| f/k/a RT Technologies, Inc. | ||||
| Unaudited Condensed Consolidated Statement of Cash Flows | ||||
| For the six months ended June 30, 2012 | ||||
| Six Months Ended | ||||
| Cash flows from operating activities: | June 30, 2012 | |||
| Net income (loss) | $ | 273,160 | ||
| Adjustments to reconcile net income to net cash | ||||
| provided by (used in) operating activities: | ||||
| Depreciation | 3,333 | |||
| Stock based compensation | 80,393 | |||
| Changes in operating assets and liabilities: | ||||
| Other receivable | (7,119 | ) | ||
| Other payables | (424 | ) | ||
| Taxes payable | 70,000 | |||
| Net cash provided by operating activities | 419,343 | |||
| Cash flows from investing activities: | ||||
| Purchase of property and equipment | (38,442 | ) | ||
| Net cash provided by investing activities | (38,442 | ) | ||
| Cash flows from financing activities: | ||||
| Capital contribution from non controlling interest | 62,957 | |||
| Proceeds from shareholder loan payable | 276,100 | |||
| Payments to related party loan payable | (2,531 | ) | ||
| Net cash provided by financing activities | 336,526 | |||
| Effect of changes in exchange rate | (3,361 | ) | ||
| Net increase/(decrease) in cash and cash equivalents | 714,066 | |||
| Cash and cash equivalents at the beginning of the year | 4,141 | |||
| Cash and cash equivalents at the end of the year | $ | 718,207 | ||
| The accompanying notes are an integral part of these consolidated financial statements | ||||
| (6) |
CAM GROUP, INC.
f/k/a RT Technologies, Inc .
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE three and six MONTHS ENDED JUNE 30, 2012
(Expressed in USD)
| 1. | BASIS OF PRESENTATION |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with both generally accepted accounting principles for interim financial information, and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) that are, in the opinion of management, considered necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year.
The unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the interim financial information have read or have access to the Company’s annual audited consolidated financial statements for the preceding fiscal year. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes for the years ended December 31, 2011 and 2010 thereto contained in the Current Report on Form 8-K filed with Securities and Exchange Commission on April 24, 2012.
2. ORGANIZATION AND BUSINESS BACKGROUND
CAM Group Inc., f/k/a RT Technologies Inc. (the “Company” or “RTTE”)was originally incorporated as Savannah River Technologies, Inc. under the laws of the State of South Carolina on March 2, 1995. On July 31, 2007, the Company formed a corporation pursuant to the laws of the State of Nevada having a par value of $0.001 for both the preferred and common stock. On August 11, 2007, the stockholders of the Company approved a change of corporate domicile which resulted in the dissolution of the South Carolina corporation and the Company became domiciled in the State of Nevada.
On April 17, 2012, RTTE completed a stock exchange transaction with China Agriculture Media Group Co., Ltd (“CAM Group”). CAM Group is organized and exists under the laws of Hong Kong Special Administrative Region of the People’s Republic of China (the “PRC”), which was incorporated on March 30, 2011. CAM Group is an investment holding company, whose only asset is 100% equity interest in China Agriculture Media (Hong Kong) Group Co. Ltd. (“CAM HK”). CAM HK is an investment holding company organized and exists under the laws of Hong Kong Special Administrative Region of PRC, with its only asset being a 60% equity interest in China Agriculture Media (Hebei) Co. Ltd. (the “CAM Hebei”). CAM Hebei was established in the Hebei Province, PRC on November 28, 2011 as a domestic enterprise.
The stock exchange transaction involved two simultaneous transactions:
RTTE issued to CAM Group Shareholders an amount equal to 22,500,000new investmentshares of Common Stock of RTTE and 1,000,000 shares of RTTE super-voting Preferred Stock in exchange for one hundred percent (100%) of the issued and outstanding share capital of CAM Group from CAM Group Shareholders.
RTTE issued 1,607,853 shares of Common Stock to RTTE prior management and an advisor for services previously rendered. Simultaneously, Angela Ross, the former Chief Executive Officer of RTTE, returned 2,500,000 shares of Common stock to the RTTE treasury for immediate cancelation.
Upon completion of the exchange, CAM Group and its subsidiaries became subsidiaries of RTTE and the former owners of CAM Group then owneda ‘controlling interest’ in RTTE representing 98% of the voting shares of RTTE and 90% of the issued and outstanding shares of Common Stock.
The stock exchange transaction has been accounted for as a reverse acquisition and recapitalization of the RTTE whereby CAM Group is deemed to be the accounting acquirer (legal acquiree) and RTTE to be the accounting acquiree (legal acquirer). The accompanying consolidated financial statements are in substance those of CAM Group and its subsidiaries, with the assets and liabilities, and revenues and expenses, of RTTE being included effective from the date of stock exchange transaction. RTTE is deemed to be a continuation of the business of CAM Group and its subsidiaries. Accordingly, the accompanying consolidated financial statements include the following:
(1) The balance sheet consists of the net assets of the accounting acquirer at historical cost and the net assets of the accounting acquiree at historical cost;
(2) The financial position, results of operations, and cash flows of the accounting acquirer for all periods presented as if the recapitalization had occurred at the beginning of the earliest period presented and the operations of the accounting acquiree from the date of stock exchange transaction.
RTTE, CAM Group, CAM HK and CAM Hebei are hereafter collectively referred to as the “Company”.
The Company’s plan of operation is to build and operate an outdoor advertising network via retail stores throughout the rural market of China. The Company is also authorized as a provincial distributor for advertisement in these retail stores within Hebei province. The stores are currently operated by the China Supply and Marketing Cooperative Association and China National Agricultural Means of Production Group Corporation, both of which are directly owned by Chinese Central Government. The retail network in Hebei province covers more than 40 million rural populations. After the success in Hebei province, the Company plans to implement the same business model in different provinces throughout China.
| (7) |
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenue and expenses in the financial statements and accompanying notes. Actual results could differ from such estimates.
Basis of consolidation
All inter-company transactions and balances within the Company have been eliminated upon consolidation.
Cash and cash equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
Prepayments and deposits
Prepayments and deposits represent the prepayment for the purchase of LCD displays. The amounts are carried at cost and will be transferred into the cost of the equipment when they are ready for their intended use.
Fixed Assets, Net
Fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
| Depreciable life | Residual value | ||||||||
| Machinery and Equipment | 5 years | 0 | % | ||||||
| Furniture and fixture | 7 years | 0 | % | ||||||
| Computer and software | 3 years | 0 | % | ||||||
Expenditures for maintenance and repairs are expensed as incurred.
Revenue Recognition
In accordance with guidance in paragraph 605-10-S99-1 of the FASB ASC for revenue recognition, the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable and collectability is reasonably assured. The Company provides air time for the clients’ advertisement through the Company’s own media network. Revenue is recognized when the air time is used by the clients.
Cost of Revenues
Cost of revenues consists primarily of material costs, direct labor, depreciation and overhead, which are directly attributable to the manufacture of products and the provision of services. The depreciation expenses in connection with equipments for advertising and broadcasting are included in cost of revenues.
Income taxes
Income taxes are determined in accordance with Accounting Standards Codification Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
Comprehensive income (loss)
The Company conducts major businesses in the PRC and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the foreign tax authority. As of June 30, 2012, the Company had no outstanding tax due with its tax authority in the PRC.
FASB ASC 220,“Reporting Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during the year from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying consolidated balance sheets consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
Non-Controlling Interests
Non-controlling interest represent the 40% non-controlling interest of shareholder, Hebei Agricultural Means of Production Co. Ltd, which through its fully-owned subsidiary, owns 40% interest of CAM Hebei as of June 30, 2012.
The Parties shall share the profits, losses and risks of the Company in proportion to and, in the event of losses, to the extent of their respective contributions and contractual commitments to the registered capital of the Company.
The responsibility of Non-Controlling Interest Shareholder: (a) Enter into the Sales Contract in exchange for registered capital of the Company in accordance with the relevant provisions of this Contract;(b) Enter into, or cause its Affiliates to enter into, such contracts as is necessary for the establishment of the Company or Project Company;(c) Maintain and Insure the Ad Products and introduce current technology to the Company or Project Company and update it consistently. Assist the Company or Project Company in development of new products.(d)Assist the Company or Project Company in obtaining the Chinese tax preferences, exemptions and other preferential tax treatment available to or for the Company or Project Company;(e)Assist the Company or Project Company in obtaining the Certificate of Approval, Business License when setting up and other permission providing for a term of validity and scope of business acceptable to both Parties;(f)Assist the Company or Project Company, if requested, in handling all licenses, approvals and registrations for the importation of technology in accordance with the terms set forth in the Technology License Contract;(g)Assist the Company or Project Company, if requested, in making import customs declarations, obtaining relevant import licenses, approvals and exemptions from customs duties and taxes for any machinery and equipment to be sold to the Company or Project Company;(h)Recommend and assist in the recruitment of suitable Chinese management personnel, technical personnel and other necessary staff and workers to be employed by the Company or Project Company;(i)Provide assistance to foreign workers and staff in obtaining entry visas, work licenses, and other needs for their stay and travel in the PRC;(j)Assist the Company or Project Company to find other customers for its products;(k)Assist the Company or Project Company to obtain PRC government’s recognition as HI-TECH enterprise or Encouraged enterprise, if possible; and;(l) Assist the Company or Project Company in installation and establishment of the Ad Product network at 3,000 Hebei Province Ad Product network locations within the first 12 months and 18,000 Hebei Province Ad Product network locations within 24 months. Act in accordance with and pursuant to the Sales Contract;(m)Assist the Company or Project Company develop around 400,000 Ad Product network locations in nation wide within non-controlling interest shareholder’s Industrial system;(n)Handle other matters entrusted to it by the Company or Project Company and as agreed from time to time by non-controlling interest shareholder.
The rights of Non-Controlling Interest Shareholder: (a) Intellectual property contributed by non-controlling interest shareholder, if any, remains the sole and exclusive property of non-controlling interest shareholder; (b) The Board of Directors shall be composed of five Directors, of whom two shall be appointed by non-controlling interest shareholder.
Foreign currency translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.
The reporting currency of the Company is the United States Dollars ("US$"). The Company's subsidiaries in the PRC maintain its books and records in its local currency, Renminbi Yuan ("RMB"), which is functional currency as being the primary currency of the economic environment in which the entity operates.
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income.
Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective year:
| June 30, 2012 | ||||||
| Period ended RMB:US$1 exchange rate | 6.3535 | |||||
| Period average RMB:US$1 exchange rate | 6.3212 | |||||
Basic and diluted earnings per share
Basic and diluted earnings per share is computed by dividing income (loss) attributable to common shareholders by the weighted average number of ordinary shares outstanding during the year.
Related parties
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence. A material related party transaction has been identified in Note7 in the financial statements.
Recently Issued Accounting Standards
In May 2011, FASB issued Accounting Standards Update No. 2011-04,“Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”(“ASU 2011-04”). ASU 2011-04 changes the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements to ensure consistency between U.S. GAAP and IFRS. ASU 2011-04 also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This new guidance is to be applied prospectively. The Company anticipates that the adoption of this standard will not materially expand its financial statement note disclosures.
In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income”. Under the amendments in this ASU, an entity has two options for presenting its total comprehensive income: to present total comprehensive income and its components along with the components of net income in a single continuous statement, or in two separate but consecutive statements. The amendments in this ASU are required to be applied retrospectively and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. The Company intends to conform to the new presentation required in this ASU beginning January 1, 2012.
Except for the ASUs above, in the year ended December 31, 2011, the FASB has issued ASU No. 2011-01 through ASU 2011-12, which is not expected to have a material impact on the consolidated financial statements upon adoption
| (8) |
4. CASH AND CASH EQUIVALENTS
As of June 30, 2012, the Company had cash on hand of US$718,207 and cash of US$569,744 held in major financial institutions located in Hong Kong. Management believes that these major financial institutions have acceptable credit rating.
5. PREPAYMENTS AND DEPOSITS
Prepayments and deposits were paid to a manufacturer of LCD displays used for building the advertising network in Hebei province. As of June 30, 2012, the Company had prepayments and deposits amounting to US$67,207, representing 50% of the manufacturing cost of 300 of LCD displays.
6. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are comprised of the following amounts at the respective dates:
| As of | ||||||||
| June 30, 2012 | December 31, 2011 | |||||||
| Cost: | ||||||||
| Computer equipment and software | $ | 11,728 | $ | 0 | ||||
| Advertising equipment | 26,518 | 0 | ||||||
| Total | 38,246 | 0 | ||||||
| Accumulated depreciation | (3,315 | ) | (0 | ) | ||||
| Net | $ | 34,931 | $ | 0 | ||||
During the reporting periods, depreciation expense is included in the following accounts on the accompanying consolidated income statements:
| Three months ended | Six months ended | |||||||
| June 30, 2012 | June 30, 2012 | |||||||
| Cost of goods sold | $ | 1,469 | $ | 2,938 | ||||
| General and administrative expenses | $ | 554 | $ | 1,107 | ||||
| Total | $ | 2,023 | $ | 4,405 | ||||
7. RELATED PARTY BALANCES AND TRANSACTIONS
(a) Hebei Agricultural Means of Production Co. Ltd.
During the six months ended June 30, 2012, the Company earned all its revenues from Hebei Agricultural Means of Production Co. Ltd. (“Hebei AMP”), a 40% shareholder of CAM Hebei. As of June 30, 2012, the balance due to Hebei AMP was $29,457.
(b) Precursor Management Inc.
On March 30, 2011, the Company entered into an agreement with Precursor Management Inc. (“PMI”) which is controlled by the Company’s President and is also a shareholder of the Company. Since March 2011, PMI has assisted the Company with listing on the over the counter stock market and SEC compliance work in exchange for service fees. The fees accrued as of June 30, 2012 were $198,016. In addition, the Company had a short-term loan payable to PMI in amount of approximately $76,681 as of June 30, 2012, which was used to fund registered capital requirement in China. The loan was an oral agreement between the shareholders and the Company and due on demand. No interest was accrued and any effects of accruing imputed interest would be immaterial to the financial statements taken as a whole.
8. COMMITMENT AND CONTINGENCY
During the Period, the Company ordered 300 of LCD displays, and made deposits of US$67,768 to the manufacturer of these LCD displays. As of June 30, 2012, the capital commitment for this purchase order was US$67,207. The Company will pay the balance upon the receipt of these LCD displays.
The expected delivery date of all 300 of LCDs will be July 31, 2012 due to the processing time of the manufactory company.
Except as disclosed above, the Company did not have any significant capital commitments or lease commitments as of June 30, 2012.
9. STOCK BASED COMPENSATION
Simultaneously upon completion of the exchange between the Company and CAM Group, the Company issued 1,607,853 shares of Common Stock to the Company’s prior management and an advisor for services previously rendered. The fair value of this stock issuance was determined by the fair value of the Company’s Common Stock on the grant date, at a price of approximately $.05 per share. Accordingly, the Company calculated the stock based compensation of $80,393 at its fair value.
10. INCOME TAXES
United States
The Company was incorporated in the United States of America and is subject to U.S. tax. No provisions for income taxes have been made as the Company has no taxable income for the years presented.
Hong Kong
Our subsidiary in Hong Kong, CAM HK, is subject to Hong Kong profit tax. Provisions for profit taxes have been accrued.
PRC
Our subsidiary, CAM Heibei, is subject to PRC enterprises income tax at the applicable tax rates on the taxable income as reported in its Chinese statutory accounts in accordance with the relevant enterprises income tax laws applicable to domestic enterprises.
The Company uses the asset and liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. There are no material timing differences and therefore no deferred tax asset or liability at June 30, 2012 and December 31, 2011. There are no net operating loss carry forwards at June 30, 2012 and December 31, 2011.
The effective income tax expense for the three and six months ended June 30, 2011 and 2010 is as follows:
| As of | For the three months ended June 30, | For the six months ended June 30, | ||||||
| 2012 | 2012 | |||||||
| Tax at statutory rate | $ | 70,000 | $ | 70,000 | ||||
| Tax exemption | 0 | 0 | ||||||
| $ | 70,000 | $ | 70,000 | |||||
Income tax expenses(benefit) consists of the following | ||||||||
| June 30, 2011 | December 31, 2010 | |||||||
| Current | ||||||||
| Federal | $ | 70,000 | ||||||
| State | — | — | ||||||
| — | ||||||||
| Deferred | — | |||||||
| Federal | — | — | ||||||
| State | — | — | ||||||
| — | ||||||||
| Current and deferred | — | — | ||||||
| Valuation allowance | — | — | ||||||
| Total | $ | 70,000 | — | |||||
11. SUBSEQUENT EVENTS
In accordance with ASC Topic 855-10,the Company has analyzed its operations subsequent to June 30, 2012 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements, other than the followings.
During the third quarter of 2012, the Company changes its name from RT Technologies Inc. to CAM Group, Inc.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Special Note Regarding Forward-Looking Statements
This periodic report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the Plan of Operations provided below, including information regarding the Company’s financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive positions, growth opportunities, and the plans and objectives of management. The statements made as part of the Plan of Operations that are not historical facts are hereby identified as "forward-looking statements."
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the unaudited Financial Statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions. The Company believes there have been no significant changes during the six month period ended June 30, 2012, to the items disclosed as significant accounting policies in management's Notes to the Financial Statements in the Company's current report on Form 8-K filedwith Securities and Exchange Commission on April 24,2012.
Corporate History
As used herein the terms "We", the "Company", "RTTE", the "Registrant," or the "Issuer" refers to CAM Group, Inc., formerly known as “RT Technologies, Inc.”, its subsidiaries and predecessors, unless indicated otherwise. Since the termination of its prior business in 1998, the Company has had no operations and has been seeking an acquisition or merger to bring an operating entity into the Company. The Company did not propose to restrict its search for a business opportunity to any particular industry or geographical area and may, therefore, engage in essentially any business in any industry. The Company had unrestricted discretion in seeking and participating in a business opportunity, subject to the availability of such opportunities, economic conditions, and other factors.
On April 17, 2012, we, a Nevada corporation, and China Agriculture Media Group Co., Ltd, a company organized and existing under the laws of the Hong Kong (including its successors and assigns “CAMG”) entered into a Plan of Exchange (the “POE” or “Agreement”) for the 100% acquisition of CAMG by RTTE. Subsequent to closing of the POE, RTTE beneficially owned 100% of the issued and outstanding shares of CAMG. Immediately upon the Closing date, RTTE issued to the CAMG shareholders 22,500,000 new investment shares of RTTE Common Stock and 1,000,000 shares of RTTE super-voting Preferred Stock to the CAMG Shareholders.
PLAN OF OPERATIONS
Overview:
Since the reverse merger was consummated, we have continued operations of China Agriculture Media Group Co., Ltd (“CAMG), a company which is principally engaged instore rental, media, wholesale and retail, and value-added services in the PRC. CAMG aims to fully develop a network (the “Network”) of retail stores located in the Chinese rural market. The stores are currently operating under the state owned system of China Supply and Marketing Cooperative Association (“China Co-Op”) and China National Agricultural Means of Production Group Corporation (“National AMP”). Both are directly owned by Chinese Central Government. The existing Hebei Network has been operating for 60 years and draws a large percentage of the Hebei rural population consisting of farmers who visit the pre-existing National AMP Group and China Co-op stores in order to take advantage of government subsidies on state controlled agriculture products only sold within Hebei Network stores. Although farmers are free to visit stores outside of the Hebei Network, the restrictions on the sale of fertilizer products and subsidized pricing of the Hebei Network significantly reduce competition. As a result, our Network has a “captive” audience consisting of farmers who would otherwise be priced out of purchasing fertilizer at other locations because these government subsidies are only available within the Network stores.
RTTE had no revenue activities until June of 2012. On June 1, 2012, the Company entered into an agreement with Hebei Agricultural Means of Production Co. Ltd. (“Hebei AMP”), a 40%-interest shareholder of CAM Hebei. Pursuant to the Agreement, the Company provides air time for Hebei AMP’s advertisement through the Network at a price of approximately $.42 per second.
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Results of Operations
Revenues
We had revenue of $572,120 for the three and six months ended June 30, 2012. The revenue figure heretorepresented our sales in June of 2012 only because we had no revenue activity until June of 2012. Currently, we gained all our revenues from Hebei AMP pursuant to the Agreement, dated June 1, 2012. We charged Hebei AMP $.42 per second for the air time they used for their advertisement.
Cost of Revenues
Cost of revenues recorded at $62,685 during the three and six months ended June 30, 2012.Cost of revenues consists primarily of material costs, direct labor, depreciation and overheads, which are directly attributable to the provision of air time. The depreciation expenses in connection with equipments for advertising and broadcasting were included in cost of revenues, which were $2,938 for the six months ended June 30, 2012.
Net Income
We had net income of $334,457 and $273,160 for the three and six months ended June 30, 2012, respectively, due to sufficient gross profit to cover our operating expenses.
General and Administrative Expenses
We had general and administrative expenses of $105,018 and $166,275 for the three and six months ended June 30, 2012, respectively. The expenses were mainly composed of the expense of recruitment, travelling expenses and expenses related to expansion of its network. It also included $80,393resulting from the issuance of 1,607,853 shares of common stock at closing of the exchange between the Company and CAM Group to the Company’s prior management and an advisor for services previously rendered. The fair value of this stock issuance was determined by the fair value of the Company’s Common Stock on the grant date, at a price of approximately $.05 per share.
Liquidity and Capital Resources
Cash flows provided by operating activities were $419,343 for the six months ended June 30, 2012. Positive cash flows from operations were due primarily to the net income of $273,160, the increase in taxes payable in amount of $70,000, plus the non-cash expense of $80,393 due to stock issuance for services, partially offset by the increase in other receivable by $7,119.
Cash flows used in investing activities were $38,442 during the six months ended June 30, 2012, consisting of $11,924 used to purchase computers and software for daily operation and $26,518 used to purchase advertising equipments.
Cash flows provided by financing activities were $336,526 during the six months ended June 30, 2012 due primarily to proceeds of $276,100 from related parties loan, which bears zero interest and due on demand, and capital contribution from non controlling interest in amount of $62,957, offset by the payments of $2,531 to the shareholder loan.
Capital Expenditures
We project that we will need additional capital to fund operations over the next 12 months. We anticipate we will need a minimum of $1,000,000 additional funds after the year of 2012 to meet our expansion objectives.
Overall, we have funded our cash needs from inception through June 30, 2012 with a series of debt and equity transactions, primarily with related parties. If we are unable to receive additional cash from our related parties, we may need to rely on financing from outside sources through debt or equity transactions. Our related parties are under no legal obligation to provide us with capital infusions. Failure to obtain such financing could have a material adverse effect on our operations and financial condition.
We had cash of $718,207 on hand as of June 30, 2012. Currently, we have enough cash to fund our operations for the next 6 months. This is based on current positive cash flows from operation and working capital surplus. Our current level of operations would require capital of approximately $1,000,000 per year starting in 2013. Modifications to our business plans may require additional capital for us to operate. For example, if we are unable to raise additional capital in the future we may need to curtail our number of stores in the Network or limit our marketing efforts to the most profitable geographical areas. This may result in lower revenues and market share for us. In addition, there can be no assurance that additional capital will be available to us when needed or available on terms favorable to us.
On a long-term basis, liquidity is dependent on continuation and expansion of operations, receipt of revenues, and additional infusions of capital and debt financing. Our current capital and revenues are insufficient to fund such expansion. If we choose to launch such an expansion campaign, we will require substantially more capital. However, there can be no assurance that we will be able to obtain additional equity or debt financing in the future, if at all. If we are unable to raise additional capital, our growth potential will be adversely affected and we will have to significantly modify our plans. For example, if we are unable to raise sufficient capital to develop our business plan, we may need to:
·
| Curtail number of stores in the Network |
·
| Limit our future marketing efforts to areas that we believe would be the most profitable. |
Demand for the products and services will be dependent on, among other things, market acceptance of our services, advertising market in Hebei Province, PRC, and general economic conditions, which are cyclical in nature. Inasmuch as a major portion of our activities is the receipt of revenues from the sales of our products, our business operations may be adversely affected by our competitors and prolonged recession periods.
Our success will be dependent upon implementing our plan of operations and the risks associated with our business plans. We provide air time for the clients’ advertisement through our own media network. We plan to strengthen our position in these markets. We also plan to expand our operations through aggressively marketing our concept.
Off-balance sheet arrangements
The Company does not have any off-balance sheet arrangements and it is not anticipated that the Company will enter into any off-balance sheet arrangements.
Forward-looking Statements
The Private Securities Litigation Reform Act of 1995 (the “Act”) provides a safe harbor for forward-looking statements made by or on behalf of our Company. Our Company and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this Quarterly Report and other filings with the Securities and Exchange Commission and in reports to our Company’s stockholders. Management believes that all statements that express expectations and projections with respect to future matters, as well as from developments beyond our Company’s control including changes in global economic conditions are forward-looking statements within the meaning of the Act. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and business performance. There can be no assurance, however, that management’s expectations will necessarily come to pass. Factors that may affect forward-looking statements include a wide range of factors that could materially affect future developments and performance, including the following:
Changes in Company-wide strategies, which may result in changes in the types or mix of businesses in which our Company is involved or chooses to invest; changes in U.S., global or regional economic conditions, changes in U.S. and global financial and equity markets, including significant interest rate fluctuations, which may impede our Company’s access to, or increase the cost of, external financing for our operations and investments; increased competitive pressures, both domestically and internationally, legal and regulatory developments, such as regulatory actions affecting environmental activities, the imposition by foreign countries of trade restrictions and changes in international tax laws or currency controls; adverse weather conditions or natural disasters, such as hurricanes and earthquakes, labor disputes, which may lead to increased costs or disruption of operations.
This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative, but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
N/A-Smaller Reporting Company
ITEM 4. CONTROLS AND PROCEDURES.
We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized and reported within the specified time periods. Our Chief Executive Officer and its Chief Financial Officer (collectively, the “Certifying Officers”) are responsible for maintaining our disclosure controls and procedures. The controls and procedures established by us are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.
As of the end of the period covered by this report, the Certifying Officers evaluated the effectiveness of our disclosure controls and procedures. Based on the evaluation, the Certifying Officers concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure.
The Certifying Officers have also concluded, based on their evaluation of our controls and procedures that as of June 30, 2012, our internal controls over financial reporting are effective and provide a reasonable assurance of achieving their objective.
The Certifying Officers have also concluded that there was no change in our internal controls over financial reporting identified in connection with the evaluation that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 4T. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our CEO and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our CEO and Principal Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our CEO and Principal Financial Officer, as appropriate to allow timely decisions regarding disclosure.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
Our management, with the participation of the CEO and Principal Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of June 30, 2012. Based on this evaluation, our management, with the participation of the CEO and Principal Financial Officer, concluded that, as of June 30, 2012, our internal control over financial reporting was effective in achieving their control objectives.
Changes in internal control over financial reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
None.
The information to be reported under this item has been reported in the Company's current report on Form 8-K filedwith Securities and Exchange Commission on April 24,2012. Therehas not changed since then.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Simultaneously upon completion of the exchange between the Company and CAM Group, the Company issued 1,607,853 shares of Common Stock to the Company’s prior management and an advisor for services previously rendered. The fair value of this stock issuance was determined by the fair value of the Company’s Common Stock on the grant date, at a price of approximately $.05 per share. Accordingly, the Company calculated the stock based compensation of $80,393 at its fair value.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURE
Not applicable.
None.
2 Plan of Exchange, dated April 17, 2012 (previously filed on April 24, 2012)
10 Agreement with Hebei AMP, dated June 1, 2012
31.1 Certification of Chief Executive Officer
31.2 Certification of Chief Financial Officer
32.1 Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
101 The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 formatted in Extensible Business Reporting Language (XBRL).
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
CAM Group, Inc.
f/k/a RT Technologies, Inc.
(Registrant)
Dated: September 14, 2012
By: /s/Cai, Wei Heng
Cai, Wei Heng
CEO, Principal Financial Officer
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| Exhibit No. | Description | |
| 2 | Plan of Exchange, dated April 17, 2012 (previously filed on April 24, 2012) | |
| 10 | ||
| 31.1 | Certification of President | |
| 31.2 | Certification of Chief Financial Officer | |
| 32.1 | Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2 | Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 | |
101 | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 formatted in Extensible Business Reporting Language (XBRL). | |
