SHARE CAPITAL | Note 8 – SHARE CAPITAL (a) Common shares The Company is authorized to issue up to 100,000,000 shares of common stock of par value of $0.001 per share and 3,558,046 shares of Series A preferred stock of par value of $0.001 per share. As of September 30, 2014 and December 31, 2013, the Company has a total of 40,956,631 and 17,956,631 shares of common stock and no shares of Series A Preferred Stock outstanding. For the year ended December 31, 2013 Shares issued Value i. issued for legal advisory services, valued at $0.02 per share 12,000 $ 240 ii. issued for legal advisory services, valued at $1.05 per share 4,000 4,200 iii. issued to employees for past services, valued at $1.25 per share 1,150,000 1,437,500 Total common stock issued during the year ended December 31, 2013 1,166,000 $ 1,441,940 For the nine months ended September 30, 2014 Shares issued Value iv. sale of shares of common stock to 10 different investors pursuant to a Stock Purchase Agreement, valued at $0.16 per share 23,000,000 $ 3,680,000 Total common stock issued during the nine months ended September 30, 2014 23,000,000 $ 3,680,000 These shares were fully vested and not subject to forfeiture when issued. (b) Deferred stock-based compensation On July 12, 2011, the Company issued an aggregate of 2,900,000 shares of the Company’s common stock to four independent parties, in exchange for market research and other advisory services from them pursuant to the terms of four consultancy agreements dated May 6, 2011, June 15, 2011, April 3, 2011 and May 5, 2011 respectively (“Consultancy Agreements”). The shares were fully vested and not subject to forfeiture when issued. The fair value of the shares issued was $0.31 per share and the total fair value of the shares issued was $899,000. The fair value of the shares issued was based on the quoted market price of the Company’s shares as of July 12, 2011. The total fair value of the shares issued are recognized as a share-based payment expense over the period from the date of the Consultancy Agreements to the consultancy services are completed. The consultancy services are to be performed for two to three years. For the three months ended September 30, 2014 and 2013, the Company amortized $2,733 and $66,183; for the nine months ended September 30, 2014 and 2013, the Company amortized $117,285 and $215,637 as share-based payment expense respectively. No unrecognized share-based payment expense was recognized as of September 30, 2014. There is no tax benefit related to the share-based payment expense recognized. (c) Stock purchase agreement On August 2, 2014, the Company entered into a stock purchase agreement (the “Share Transaction”) to issue 6,000,000 shares of the Company’s common stock to four arm’s length investor for total consideration of $960,000. Subsequent to September 30, 2014, on November 18, 2014, the Company received $407,000 (RMB2,500,000) in respect of the Share Transaction, the remainder of $569,800 (RMB3,500,000) is still outstanding. The transaction is expected to be completed by the end of year 2014 when the remainder of $569,800 is expected to be received and the stock certificates will then be delivered to the respective investors. As of the date hereof the Share Transaction has not yet been completed. |