| STOCKHOLDERS' EQUITY | NOTE 7. STOCKHOLDERS’ EQUITY Common Stock On June 26, 2014, as compensation for consulting services performed for the Company, we issued 42,000 common shares valued at $420 to Mr. Sun Xueji. Because there is no “established trading market” for our common stock, the shares were valued at par value of $0.01 per share. The $420 was included in the general and administrative expense line item in the statement of operations. On July 16, 2014, as compensation for consulting services performed for the Company, we issued 42,000 common shares valued at $420 to Mr. Shumin Liao. Because there is no “established trading market” for our common stock, the shares were valued at par value of $0.01 per share. The $420 was included in the general and administrative expense line item in the statement of operations. Neither Mr. Xueji nor Mr. Liao are employees of the Company. Excluding the issued and subsequently cancelled 300,000,000 common shares, we issued the following common shares during the twelve month period ended December 31, 2015. Because there is no “established trading market” for our common stock, all of the issued shares were valued at par value of $0.01 per share. On July 28, 2014, we issued 95,909,826 common shares to 1,349 people, all of whom are residents of China, in connection with various promotions in China regarding the Technology. On October 10, 2014, we issued an additional 69,091,497 common shares to 1,619 people, all of whom are residents of China, in connection with various promotions in China regarding the Technology. On November 24, 2014, we issued an additional 2,011,000 common shares to 192 people, all of whom are residents of China, in connection with various promotions in China regarding the Technology. The forgoing 167, 012,323 shares are referred to as the “Promotional Shares.” We did not receive any cash consideration in connection with these Promotional Share issuances, and the $1,670,123 total value of the Promotional Shares was included in a separate marketing expense line item in the statement of operations. The offering and issuance of these Promotional Shares were not registered under the Securities Act, but were made in reliance upon the exemptions from the registration requirements of the Securities Act set forth in Section 4(2) and Rule 903 of Regulation S promulgated thereunder, insofar as the Promotional Shares were offered and sold in an “offshore transaction” and there were no “directed selling efforts” in or into the United States of the Promotional Shares, all within the meaning of Rule 902 of Regulation S. On January 12, 2015, there were 10,000 shares, at a par value of $0.01, issued to Mr. Wumaier as stock based compensation. On November 9, 2015, the Company issued 38,795,978 shares of common stock to 987 people, all of whom are residents of China, in connection with various promotions in China regarding the Technology. The forgoing 38,795,978 shares are referred to as the “ Promotional Shares .” Because there is no “established trading market” for our common stock, the Promotional Shares were valued at par value of $0.001 per share. The aggregate value of the Promotional Shares is $38,796. We did not receive any cash consideration in connection with the issuance of the Promotional Shares. Stock issuance during the twelve month period ended December 31, 2015, were as follows:
Dates shares issued
Shares Issued To/For
Amount/Stock Value (USD)
Shares Issued
Price Per Share
1/12/15
Mr. Wumaier / Stock based compensation
$
100
10,000
$
0.01
11/9/15
Multiple shareholders / Marketing shares
$
38,796
38,795,798
$
0.01
Total
$
38,896
38,805,798 As of December 31, 2015 and December 31, 2014, the Company had 298,007,767and 259,201,789 shares of common stock issued and outstanding, respectively. The Company has no options or warrants issued or outstanding. Series A Convertible Preferred Stock On July 24, 2014, the Company issued the Preferred Shares in connection with a transfer of the Institute's Technology to the Subsidiary. In exchange for the transfer of the Technology to the Subsidiary, the Company agreed to issue the Preferred Shares to the institute's sole legal representative, Mr. Andy Fan, our principal shareholder and sole director. The Technology had been valued at approximately $96.2 million by a government licensed independent third-party. From this valuation an approximate discount of 20% was applied, for consideration of the expanded voting rights for common stock. The Subsidiary agreed to purchase the Technology in exchange for the issuance of the Preferred Shares, which have an aggregate preferred liquidation value of $75 million and have the voting rights equivalent to 500,000,000 shares of common stock. The Preferred Shares have no par value and are convertible into 75,000,000 shares of our common stock. Because there is no “established trading market” for our common stock, our common stock is valued at par value of $0.01 per share. Under US GAAP, the transfer of technology between two entities, the Institute and the Subsidiary, both of which are under the common control of Mr. Fan, needs to take place at historic cost, not at appraised value. However, as it has not been possible to determine the historic costs associated with the development of the Technology, no value has been recognized on our balance sheet with respect to the Technology. The offering and issuance of the Preferred Shares was not registered under the Securities Act, but was made in reliance upon the exemptions from the registration requirements of the Securities Act set forth in Section 4(2) thereof. The recipient of the Preferred Shares took them for investment purposes without a view to distribution. Furthermore, he had access to information concerning us and our business prospects; there was no general solicitation or advertising in connection with the offering and issuance of the Preferred Shares; and the Preferred Shares are restricted pursuant to Rule 144 under the Securities Act. As of December 31, 2015, the Company had 5,000,000 shares of Series A Convertible Preferred Stock issued and outstanding, compared to December 31, 2014 with zero shares. |
