UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q





QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934





For the quarterly period ended March 31, 2011





Or





TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the transition period from ____________ to_____________





Commission File Number:000-52807





China Changjiang Mining & New Energy Co., Ltd.


(Exact name of registrant as specified in its charter)





Nevada

75-2571032(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)Seventeenth Floor, Xinhui Mansion, Gaoxin Road

Hi-Tech Zone, Xi’An P.R. China 71005

+86(29) 8833-1685(Address of Principal Executive Offices; Zip Code)

(Registrant’s Telephone Number, including area code)





Securities registered pursuant to Section 12(b) of the Act:





Title of each class

Name of each exchange on which registeredNone

None





Securities registered pursuant to Section 12(g) of the Act:





Title of each classCommon Stock, par value $0.01 per share





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yeso Nox




Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yeso Nox




Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. Yeso Nox




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 such shorter period that the registrant was required to submit and post such files). Yeso Nox




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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





(Check one):Large accelerated filer
o
Accelerated filer
oNon-accelerated filer
o
Smaller reporting company
x(Do not check if a smaller reporting company)





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Nox





The aggregate market value of the voting common stock held by non-affiliates of the issuer, based on the average bid and asked price of such stock, was $484,321 at March 31, 2011.





At March 31, 2011, the registrant had outstanding 3,774,625 shares of common stock, $0.01 par value.
















CHINA CHANGJIANG MINING AND NEW ENERGY COMPANY LTD.





For the Quarter Ended March 31, 2011





TABLE OF CONTENTS


PART IITEM 1,
FINANCIAL STATEMENTS


3ITEM 2,
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


18ITEM 3,
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


22ITEM 4,
CONTROLS AND PROCEDURES


22PART IIITEM 1,
LEGAL PROCEEDINGS


24ITEM 1A,
RISK FACTORS


24ITEM 2,
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


31ITEM 3,
DEFAULTS UPON SENIOR SECURITIES


31ITEM 4,
(REMOVED AND RESERVED).


31ITEM 5,
OTHER INFORMATION


31ITEM 6,
EXHIBITS


31SIGNATURES


32EX-31.1 (CERTIFICATION)EX-31.2 (CERTIFICATION)EX-32.1 (CERTIFICATION)EX-32.2 (CERTIFICATION)





2





PART 1.   FINANCIAL INFORMATION





ITEM 1.   FINANCIAL STAEMENT





CHINA CHANGJIANG MINING & NEW ENERGY CO., LTD.


FINANCIAL REPORT


At March 31, 2011 and December 31, 2010


For the Three Months Ended March 31, 2011 and 2010





INDEX




PAGECONSOLIDATED BALANCE SHEETS


4-5CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)


6CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY


7CONSOLIDATED STATEMENTS OF CASH FLOWS


8NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


9-17





3





CHINA CHANGJIANG MINING & NEW ENERGY CO., LTD.


CONSOLIDATED BALANCE SHEETS


AS OF March 31, 2011 AND December 31, 2010


(Stated in US Dollars)





March 31,


December 31,Notes


2011


2010ASSETS




(Unaudited)


(Audited)Current assetsCash and cash equivalents




$
19,552


$
97,174Due from related parties


6



712,724



286,307Other current assets and prepayments


3



53,049



503,248Total Current Assets






785,325



886,729Property, plant and equipment, net


4



162,129



169,456Land use rights, net


5



16,766,068



16,694,854Long-term investment






305,045



301,992Due from related parties


6



1,602,774



1,343,905TOTAL ASSETS





$
19,621,341


$
19,396,936





See accompanying notes to the unaudited consolidated financial statement




4
 
 
 CHINA CHANGJIANG MINING & NEW ENERGY CO., LTD


CONSOLIDATED BALANCE SHEETS (continued)


AS OF MARCH 31, 2011 AND DECEMBER 31, 2010


(Stated in US Dollars)





March 31,


December 31,Notes


2011


2010LIABILITIES & SHAREHOLDERS’ EQUITY




(Unaudited)


(Audited)Current LiabilitiesAccounts payable





-



-Other payables and accrued liabilities


7



1,233,853



75,380Notes payable - related parties






434,137



434,137Total Current Liabilities






1,667,990



509,517Non-current liabilitiesDue to related parties


8



2,282,914



4,147,403Due to shareholders


9



4,019,065



2,741,338Payable on acquisition of a subsidiary






1,905,459



1,886,383Total Long-term Liabilities






8,207,438



8,775,124SHAREHOLDERS’ EQUITYSeries C convertible preferred stock ($0.01 par value, 10,000,000 shares authorized, 499,630 shares outstanding as of March 31, 2011 and December 31, 2010


12



5,000



5,000Common stock ($0.01 par value, 250,000,000 shares authorized, 3,774,625 shares, issued and outstanding as of March 31, 2011 and December 31, 2010 )


13



37,746



37,746Treasury stock






(489,258
)


(489,258
)Additional paid-in capital






14,520,393



14,520,393Retained earnings






(6,355,748
)


(6,574,431
)Non-controlling interests






269,041



131,546Accumulated other comprehensive income






1,758,739



2,481,299TOTAL SHAREHOLDERS’ EQUITY






9,745,913



10,112,295TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY





$
19,621,341


$
19,396,936





See accompanying notes to the unaudited consolidated financial statement




5
 
 
 CHINA CHANGJIANG MINING & NEW ENERGY CO., LTD.


CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)


FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010


(Stated in US Dollars)





For the Three Months Ended

March 31,Notes


2011


2010(Unaudited)


(Unaudited & Unreviewed)Sales revenue


10


$
664,570


$
-Cost of revenue






(37,216
)


-Gross Profit






627,354



-Operating expensesAdministrative expenses






149,743



42,186Depreciation






8,871



8,724Amortization






97,211



101,337Total operating expenses






255,825



152,247Income from operations






371,529



(152,247
)Other Income (Expenses)Interest income






145



168Interest expenses






(368
)


-Other expenses










-Total Other Income (Expense)






(223
)


168Income (Loss) before tax






371,306



(152,079
)Income tax expenses


11



15,128



-Net Income(loss)





$
356,178


$
(152,079
)Net income attributable to:-Non-controlling interests(loss)





$
137,495


$
(7,225
)-Common Stockholders





$
218,683


$
(144,854
)Other comprehensive income/(loss)Foreign currency translation adjustments






(722,560
)


2,819Total Comprehensive Income





$
(366,382
)

$
(149,260
)Weighted average shares-Basic


1



3,774,625



37,716,588Weighted average shares-Diluted






64,629,559



37,716,588Earnings per share – Basic





$
0.09


$
(0.00
)Earnings per share – Diluted





$
0.01


$
(0.00
)





See accompanying notes to the unaudited consolidated financial statements




6





CHINA CHANGJIANG MINING & NEW ENERGY CO., LTD.


CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY


FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010


(Stated in US Dollars)


For the three months ended March 31,2011 (Unaudited)
 Preferred Stock

Common Stock

Treasury Stock

Additional

Non-

Accumulated Other



TotalNo. of Shares

Amount

No. of Shares

Amount

No. of

Shares

Amount

Paid-in Capital

Controlling Interest

Comprehensive Income

Retained Earnings

Shareholder's EquityBalance as of December 31, 2010 (Audited)


500,000


5,000


3,774,625


37,746


17,572,494


(489,258
)

14,520,393


131,546


2,481,299


(6,574,431
)

10,112,295Net income for three months ended March 31, 2011








-


-








-





-


356,178


356,178Apportionment of loss to non-controlling interest























137,495





(137,495
)

-Conversion from Preferred stock to Common Stock




















-











-Foreign currency translation adjustment








-


-








-


-


(722,560
)

-


(722,560
)Balance as of March 31, 2011


500,000


5,000


3,774,625


37,746


17,572,494


(489,258
)

14,520,393


269,041


1,758,739


(6,355,748
)

9,745,913


See accompanying notes to the unaudited consolidated financial statements




7





CHINA CHANGJIANG MINING & NEW ENERGY CO., LTD.


CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010


(Stated in US Dollars)





For the Three Months Ended

March 31,2011


2010CASH FLOWS FROM OPERATING ACTIVITIES

(Unaudited)


(Unaudited & Unreviewed)Net income/(loss)

$
356,178


$
(152,079
)Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization


106,082



106,082Changes in operating assets and liabilities:Other current assets and prepayments


454,752



(79,427
)Other payables and accrued liabilities


1,170,188



108,962CASH PROVIDED (USED) BY OPERATING ACTIVITIES


2,087,200



(16,462
)CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment


(397
)


(381
)Due from related parties


(692,216
)


-CASH PROVIDED (USED) IN INVESTING ACTIVITIES


(692,613
)


(381
)CASH FLOWS FROM FINANCING ACTIVITIESRepayment to related parties


(1,883,343
)


(1,216,341
)Proceeds from shareholders


1,290,648



1,091,866CASH PROVIDED (USED) BY FINANCING ACTIVITIES


(592,695
)


(124,475
)Effect of exchange rate changes on cash and cash equivalents


(879,514
)


125,593NET INCREASE (DECREASE) IN CASH


(77,622
)


(15,725
)CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD

$
97,174


$
27,194CASH AND CASH EQUIVALENTS AT END OF THE PERIOD

$
19,552


$
11,469Supplementary Disclosures for Cash Flow Information:Income taxes paid


-


$
-NON-CASH INVESTING AND FINANCING ACTIVITIESConversion from Preferred stock to Common Stock

$
-


$
-





See accompanying notes to the unaudited consolidated financial statements




8





1.ORGANIZATION AND PRINCIPAL ACTIVITIES





The Company was incorporated under the laws of the State of Delaware in 1969.





Hong Kong Wah Bon Enterprise Limited ("Wah Bon") was incorporated in Hong Kong on July 7, 2006 as an investment holding company.





Shaanxi Pacific New Energy Development Company Limited ("Shaanxi Pacific") was incorporated as a limited liability company in the People's Republic of China ("PRC") on July 20, 2007 as an investment holding company.





Shaanxi Changjiang Mining &New Energy Co., Ltd (“Shaanxi Changjiang”) (formerly Weinan Industrial and Commercial Company Limited) was incorporated as a limited liability company in the PRC on March 19, 1999. The Company became a joint stock company in January 2006 with its business activities in investment holding and the development of a theme park in Xi’An, PRC.





In August 2005, Shaanxi Changjiang contributed land use rights valued at $7,928,532 in lieu of cash to the registered capital ofShaanxi Huanghe Bay Springs Lake Theme Park Ltd. (“Huanghe”)representing 92.93% of the equity of Huanghe. Huanghe was incorporated as a limited liability company in the PRC on August 9, 2005 as Shaanxi Changjiang Petroleum and Energy Development Co., Limited and is engaged in the development of a theme park in Huanghe Bay (Huanghe Nantan), Heyang County, Shaanxi Province, PRC.





On February 5, 2007, Shaanxi Changjiang entered into an agreement with a third party to acquire 40% of the equity interest in Dongfang Mining Company Limited ("Dongfang Mining") for $3,117,267 in cash. Dongfang Mining is engaged in exploration for lead, zinc and gold for mining in Xunyan County, Shaanxi Province, PRC.





On March 22, 2007, Shaanxi Changjiang entered into an agreement with the majority shareholder of Shaanxi Changjiang to exchange its 92.93% interest in Huanghe for a 20% equity interest in Dongfang Mining owned by this related party.





On August 15, 2007, 97.2% of the shareholders of Shaanxi Changjiang entered into a definitive agreement with Shaanxi Pacific and the stockholders of Shaanxi Pacific in which they disposed their ownership in Shaanxi Changjiang to Shaanxi Pacific for 98% of ownership in Shaanxi Pacific and cash of $1,328,940 payable on or before December 31, 2007.





On September 2, 2007, Wah Bon acquired 100% ownership of Shaanxi Pacific for a cash consideration of $128,205.





On May 30, 2007, amended to July 5, 2007, North American Gaming and Entertainment Corporation (“North American”) entered into a Material Definitive Agreement, pursuant to which the shareholders of Shaanxi Changjiang exchanged all their shares in Shaanxi Changjiang for 500,000 shares of series C convertible preferred stock ("series C shares") in North American which carried the right of 1,218 votes per share and was convertible to 609,000,000 common shares. In connection with the exchange, Shaanxi Changjiang also delivered $370,000 to North American and certain non-affiliates of North American will transfer to North American or its designee a total of 3,800,000 shares of common stock, par value of $0.01 per share, of North American which had been held for longer than 2 years by such non-affiliates, in exchange for the issuance by North American to each of such non-affiliates of 2,250,000 shares of common stock of North American. Issued and outstanding share of series C preferred stock were automatically converted into that number of fully paid and non-assessable shares of common stock based upon the conversion rate upon the filing by the Company of an amendment to its Certificate of Incorporation, increasing the number of authorized shares of common stock to 800,000,000 shares, changing the Company's name to China Changjiang Mining & New Energy Co. Limited and implementing a one for ten reverse stock split. The transaction was closed on February 4, 2008 and Wah Bon became a wholly owned subsidiary of North American.





There was a 10 to 1 reverse stock split for the Company’s common stock during December 2009 and all the shares information are retroactively restated to reflect the reverse stock split. The Company will affect the reverse stock splits upon obtaining regulatory approval. The preferred stock holders will not convert their C convertible preferred stock until after the completion of the reverse stock split.




9





On February 9, 2010, we filed a Certificate of Amendment to our Articles of Incorporation to effect a 1-for-10 reverse stock split of our common stock, subject to FINRA approval. The 1-for-10 reverse split was approved by FINRA on July 30, 2010, effective August 2, 2010.





The Company was reincorporated from the state of Delaware to the state of Nevada with the intent to effect a statutory merger of the Delaware corporation "North American Gaming and Entertainment Corporation", into China Changjiang and to swap all issued and outstanding shares in the Delaware corporation for comparable shares in China Changjiang and dissolve the Delaware corporation.





The members have limited liability for the obligations or debts of the entity.





The merger of North American and Wah Bon was treated for accounting purposes as a capital transaction and recapitalization by Wah Bon ("the accounting acquirer") and re-organization by North American ("the accounting acquiree"). The consolidated financial statements have been prepared as if the reorganization had occurred retroactively.





On February 4, 2008, (the "Closing Date") we acquired Wah Bon and its three subsidiaries: Shaanxi Pacific; Shaanxi Changjiang and Dongfang Mining. Wah Bon owns 100% of Shaanxi Pacific. Shaanxi Pacific owns 97.2% of Shaanxi Changjiang; and Shaanxi Changjiang owns 60% of Dongfang Mining. The minority interests represent the minority shareholders' 2.8% and 40% share of the results of Shaanxi Changjiang and Dongfang Mining respectively.





Accordingly, the consolidated financial statements include the following:




(1)
The consolidated balance sheet consisting of the net assets of the acquirer at historical cost and the net assets of the acquiree at historical cost.





(2)
The statement of operations including the operations of the acquirer for the periods presented and the operations of the acquiree from the date of the merger or the period presented.





China Changjiang, Wah Bon, Shaanxi Pacific, Shaanxi Changjiang and Dongfang Mining are hereafter referred to collectively as "the Company".




2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





The accounting policies and methods followed in preparing these unaudited condensed consolidated financial statements are those used by China Changjiang Mining And New Energy Company Ltd (the “Company”) as described in Note 2 of the notes to consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2010. The unaudited condensed consolidated financial statements for the three-month periods ended March 31, 2011 and 2010 have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and do not conform in all respects to the disclosure and information that is required for annual consolidated financial statements. The year-end condensed consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. These interim condensed consolidated financial statements should be read in conjunction with the most recent annual consolidated financial statements of the Company.





In the opinion of management, all adjustments, all of which are of a normal recurring nature, considered necessary for fair statement have been included in these interim condensed consolidated financial statements. Operating results for the three-month period ended March 31, 2011 are not indicative of the results that may be expected for the full year ending December 31, 2011.


Foreign Currency Translation





The Group maintains its consolidated financial statements in the functional currency. The functional currency of the Company is US dollar (“USD”), the functional currency of "Wah Bon" is Hong Kong dollar (“ HKD”), and the functional currency of "Shaanxi Pacific", "Shaanxi Changjiang" and "Dongfang Mining" are the Renminbi (“RMB”). Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.




10





For financial reporting purposes, the consolidated financial statements of the Company, "Wah Bon", "Shaanxi Pacific", "Shaanxi Changjiang" and "Dongfang Mining" which are prepared using the functional currency have been translated into United States dollars (“USD”). Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and stockholders’ equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity.





Exchange rates applied for the foreign currency translation during the period are as follows:





USD to RMB





March 31,

2011


December 31,

2010Period end US$ : RMB exchange rate


6.5564



6.6227Average periodic US$ : RMB exchange rate


6.5832



6.7255





USD to HKD





March 31,

2011


December 31,

2010Period end US$ : UHK exchange rate


7.7839



7.7832Average periodic US$ : UHK exchange rate


7.7760



7.7690





HK$ is pegged to US$ and hence there is no significant translation adjustment impact on these consolidated financial statements.





RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.




Earning/Loss per share





Basic earning/loss per share is computed by dividing earning/loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings/loss per share is computed in a manner similar to basic earning/loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.




3.OTHER CURRENT ASSETS AND PREPAYMENTS





Other current assets and prepayments mainly represent the small amount advances to the employees.The balances were $53,049 and $503,248 as of March 31, 2011 and December 31, 2010 respectively.




11





4.PROPERTY, PLANT AND EQUIPMENT





The following is a summary of property, plant and equipment:





March 31,

2011


December 31,

2010CostMotor vehicles

$
289,784


$
286,883Office equipment


60,622



60,143Total


350,406



347,026Accumulated depreciation


(188,277)



(177,570)Property, plant and equipment, net

$
162,129


$
169,456





Depreciation expenses for the three months ended March 31, 2011 and 2010 were $8,871 and $8,724 respectively.




5.INTANGIBLE ASSET





The following is a summary of intangible asset:





March 31,

2011

December 31,

2010Cost of Land use right

$
19,521,750


$
19,326,318Accumulated Amortization of Land use right


(2,755,682
)


(2,631,464
)Intangible Asset, net

$
16,766,068


$
16,694,854





The difference for the balance of cost was mainly due to the fluctuation of exchange rate of USD to RMB.


Amortization expenses were approximately $97,211 and $101,337 for the three months ended March 31, 2011, and 2010, respectively.





6.DUE FROM RELATED PARTIES





The balance of due from related parties represents the loan owned from related parties, which are unsecured and repayable on demand. It was classified as current and non-current according to the repayment status.




12





Due from related parties – non current consists of the following:





March 31, 2011


December 31, 2010

InterestDu Kang Liquor Development Co., Ltd

$
762,614



-

interest free for the first year and bear interestShaanxi Du Kang Liquor Group Co., Ltd

$
20,301



-

in the benchmark lending rate over the same period afterwardsZhongke Aerospace & Agriculture Development Stock Co.,Ltd

$
430,877



426,563

interest freeShaanxi Changfa Industrial Co., LTD

$
350,802



347,290

interest freeMr Chen Weidong

$
25,750



13,341

interest freeShaanxi Changjiang Zhongxiayou Investment Co.,Ltd

$
12,430



12,306

interest freeOthers






544,405

interest freeTotal


1,602,774



1,343,905





Due from related parties – current consists of the following:





March 31, 2011


December 31, 2010

InterestShaanxi Du Kang Liquor Group Co., Ltd

$
712,724



286,307

interest free for the first year and bear interest in the benchmark lending rate over the same period afterwards




7.OTHER PAYABLES AND ACCRUED EXPENSES





The following is a summary of other payables and accrued liabilities:





March 31,

2011


December 31,

2010Tax payable

$
52,781


$
-Salary and welfare payable


23,458



23,223Other payable


1,157,614



52,157$
1,233,853


$
75,380


The tax payable of $52,781 includes income tax payable of $52,558, business tax payable and other tax payable of $223.





8.DUE TO RELATED PARTIES





The balance of $2,282,914 due to related parties represents the loan owed to related parties, which are interest free, unsecured and repayable on demand.




13





Due to related parties consists of the following.





March 31,

2011


December 31,

2010Due to Huiton World Property Superintendent Company

$
381,307



377,490Due to Zhongke Lvxiang Development Stock Co., Ltd

$
1,067,659



1,056,971Due to Shaanxi Changjiang electricity & new energy Co.,Ltd

$
286,224



285,384Due to Du Kang Liquor Marketing co.,Ltd

$
125,069



123,817Due to Baishui Du Kang Brand Management Co.,Ltd

$
97,614



96,637Due to Shaanxi Xidenghui Technology Co. Ltd.

$
930



921Due to Shaanxi Huanghe Bey Springs Lake Theme Park Co.,Ltd

$
324,111



603,983Due to Shaanxi Dukang Liquor Group Co.,Ltd

$
-



278,419Due to Mr. Zhang Hongjun

$
-



1,323,781Total

$
2,282,914



4,147,403




9.DUE TO SHAREHOLDERS





The balance of $4,019,065 due to shareholders represents the loan owed to the shareholders, which are interest free, unsecured and repayable on demand.





Due to shareholders consists of the following.




March 31,

2011


December 31,

2010Due to Wang Shengli

$
2,102,356



2,081,309Due to Zhang Hongjun

$
1,337,167



-Due to Chen Min

$
444,015



439,570Others

$
135,527



220,459Total

$
4,019,065



2,741,338




10.SALES REVENUE





The details of Sales revenue are as follows:





For the three

months ended

March 31,

2011


For the three

months ended

March 31,

2010Land use right leasing

$
284,816


$
-Mines exploitation compensation


379,754



-Total

$
664,570


$
-




14





The Company entered into a lease and complementary agreements with the related company Huanghe dated July 26, 2010. According to the agreements, a piece of land with the area of 5,706,666.67 square meters was leased to Huanghe for traveling and amusement from January 1, 2011 to December 31, 2029. The annual rent in US dollars is approximately $1,139,263 (equivalent to RMB7,500,000). The rent revenue of $284,816 was recognized for the quarter ended March 31, 2011.





The Company has a joint exploration contract with Shaanxi Western Mining & Energy Co., Ltd dated July 16, 2010, which requires the Company to provide exploration rights, technical support, and related information in exchange for the exploitation compensation for the contract period from January 1, 2011 to December 31, 2011. The Company received $1,519,018 (equivalent to RMB10,000,000) until the end of the first quarter of 2011. The revenue of exploitation compensation was $379,754 for the quarter ended March 31, 2011.


11.INCOME TAX





The provision for taxes on earnings consisted of:





For the three

months ended

March 31,

2011


For the three

months ended

March 31,

2010PRC Enterprise Income Tax

$
15,128


$
-United States Federal Income Tax

$
-


$
-Income tax, net

$
15,128


$
-





The income taxes expense (benefit), which is all incurred in PRC, consists of the following:





For the three

months ended

March 31,

2011


For the three

months ended

March 31,

2010Current income tax expense

$
85,763


$
-Deferred income tax benefit

$
(70,635
)

$
-Income tax, net

$
15,128


$
-





The following table reconciles the statutory U.S. federal income tax rate to the Company’s effective income tax rate:





For the three

months ended

March 31,

2011


For the three

months ended

March 31,

2010U.S. Federal statutory rate


35
%


35
%PRC Statutory rate (25%) difference


-10
%


-10
%Changes in valuation allowance for DTA


-21
%


-25
%Effective income tax rate


4
%


0
%




15





As of March 31, 2011, the Company had net taxable operating losses of approximately $23,610,028 carried forward from prior year. The PRC Income Tax allows the enterprises to offset their future taxable income with taxable operating losses carried forward in a 5-year period. Although the Company turned loss into profits for the three months ended March 31, 2011, the Management believes that the Company’s cumulative losses arising from recurring business in recent years constituted significant negative evidence that the deferred tax assets would not be realizable and this evidence outweighed the expectations that the Company would generate future taxable income. The valuation allowance of $5,902,507 was recorded.





Components of the Company’s net deferred tax assets are set forth below:





March 31,

2011


December 31,

2010Deferred tax assetsNet operating loss carry-forward

$
5,902,507


$
5,615,702Total of Deferred tax assets

$
5,902,507


$
5,615,702Less: valuation allowance

$
(5,902,507
)

$
(5,615,702
)Net deferred assets

$
-


$
-





12.RELATED PARTY TRANSACTIONS





In addition to the other transactions and balances disclosed elsewhere in the financial statements, the Company leased the land use right to Huanghe, a company with the same controlling person, and generated rent revenue of $284,816 for the three months ended March 31, 2011.




13.SEGMENT INFORMATION





The Company operates in two reportable segments, Land use right leasing and exploration for mineral ores. Summarized information by business segment for the three months ended March 31, 2011 and 2010 is as follows.




For the three months ended March 31,

2011


For the three months ended March 31,

2010RevenueLand use right leasing

$
284,816


$
-Mines exploitation compensation


379,754



-Cost of revenueLand use right leasing


15,950



-Mines exploitation compensation


21,266



-Gross ProfitsLand use right leasing


268,866



-Mines exploitation compensation


358,488



-





The Company evaluates segment performance based on income from operations. As a result, the components of operating income for one segment may not be comparable to another segment.




16





14.SUBSEQUENT EVENT


There were 499,630 shares of Series C Convertible Preferred Stock outstanding as of March 31, 2011, and each share carried the right to 1,218 votes. In August 2011, the shareholders converted all of the 499,630 shares of Series C Preferred Stock into 60,854,934 shares common stock. As a result, the common shares of the Company outstanding were 64,629,559 as of December 31, 2011, with the par value of $0.01 per share.





On June 1, 2012, the Company entered into an agreement with Xunyang Yongjin Mining Co., Ltd to transfer the exploration rights at a consideration of $2,380,612 (RMB15,000,000). Pursuant to the agreement, both parties would be exempted from the liabilities for breach of agreement, and the agreement would be terminated in advance, in case the transaction could not be approved by the Department of Land and Resources of Shaanxi Province. Up to present, the deposit of $317,415 (RMB2,000,000) has been settled and the second payment of $1,110,952 (RMB7,000,000) has been deposited in the condominium account. However, the administrative approval has not been obtained and the management could not determine if and when it would be approved.





The Company established a subsidiary, named Shaanxi Weinan Changjiang Solar Photovoltaic Energy Applied Science and Technology Co., Ltd (“Weinan Changjiang”), to develop the new energy business in April 2012. Shaanxi Changjiang accounted for 51% shares of Weinan Changjiang, and Mr. Zhang Hongjun, the actual controlling person, accounted for the other 49% shares.












17





ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.





In addition to the historical information contained herein, we make statements in this Quarterly Report on Form 10-Q that are forward-looking statements. Sometimes these statements will contain words such as "believes," "expects," "intends," "should," "will," "plans," and other similar words. Forward-looking statements include, without limitation, assumptions about our future ability to increase income streams, reduce and control costs, to grow revenue and earnings, and our ability to obtain additional debt and/or equity capital on commercially reasonable terms, none of which is certain.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors included in our periodic reports with the SEC.  Although forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment, actual results could differ materially from those anticipated in such statements.  Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.





The following discussion and analysis should be read in conjunction with our March 31, 2011 unaudited consolidated financial statements and related notes thereto included in the quarterly report and with our consolidated financial statements and notes thereto for the year ended December 31, 2010 and 2011.





Overview





Through our majority-controlled subsidiary, Dongfang Mining, we are engaged in the exploration for commercially recoverable metal-bearing mineral deposits, such as zinc, lead and gold. To date, our activities have not resulted in the location of proven reserves.We cooperated with Shaanxi Western Mining & Energy Co., Ltd (“Western Mining”) to develop our mines by providing the exploration rights, technical support and related information. We generated exploitation compensation revenue of $379,754 for the three months ended March 31, 2011.





Since 2003, Dongfang Mining has held licenses for the exploration of minerals and precious metals in the Shaanxi Province of China. Dongfang Mining was granted an exploration right for zinc, lead and gold at Gan Gou and Guan Zi Gou, Xunyang County, Shaanxi Province, PRC, on December 31, 2006.





As of March 31, 2011, we had applied for, but had not yet obtained, a license that will permit the excavation and extraction of minerals. Issuance of that license will depend, in part, on the results of exploration for zinc, lead and gold at the site. We have performed limited tests on the site but we have not yet determined if the site contains adequate mineralization to support mining activity.





We intended to transfer the exploration rights in the near future in order that we can direct our resources on the new clean energy business and we are trying to obtain the exploration rights transfer approval from the government currently.





We also hold land use rights in a land parcel and we lease a portion of the land use rights on the 5.7 square kilometer parcel to Shaanxi Huanghe Bay Springs Lake Theme Park Ltd. (“Huanghe”), a company with a common control person. The term of the lease agreement is from January 1, 2011 to December 31, 2029 and the annual rent is approximately $1.2 million.Our land use rights are amortized over their 50 year term.




18





The following is a summary of the book value of our land use rights as of March 31, 2011:





Cost

$
19,521,750Less: Accumulated amortization


2,755,682Land use rights, net

$
16,766,068





The amortization expense for the three months ended March 31, 2011 and March 31, 2010 was $97,211 and $101,337, respectively.





As reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit of $6,355,748 as at March 31, 2011, which includes net income of $356,178 for the three months ended March 31, 2011. The Company’s operations provided cash of $2,087,200 for the three months ended March 31, 2011.





We began to generate revenue for the quarter ended March 31, 2011, of which the revenue from land use right leasing was expected to provide stable cash flow. In the future, we expect that there will no longer be a need for us to continue to rely on loans from our directors and other related parties. We believe that we have adequate capital to assure that we will be able to meet our obligations or obtain sufficient capital to complete our plan of operations for the next twelve (12) months.





RESULTS OF OPERATIONS





Comparison of the three months ended March 31, 2011 and March 31, 2010





Sales revenue





We generated total revenue of $664,570 for the three months ended March 31, 2011, while no revenue was generated for the three months ended 31, 2010. This increase was because a lease of land use rights began on January 1, 2011 and we began the cooperation with Shaanxi Western Mining & Energy Co., Ltd to develop and exploit our mines at the beginning of 2011. These two business segments generated revenue of $284,816 and $379,754 respectively.





Operating Expenses





Total operating expenses for the three months ended March 31, 2011 increased to $255,825 from $152,247 for the three months ended March 31, 2010. The increase was mainly due to an increase in the administrative expense, which increased to $149,743 from $42,186, due to the expansion of our businesses. The depreciation expense and amortization expense for the three months ended March 31, 2011 remained stable, as no addition or disposal occurred for Land use rights and slight changes occurred for fixed assets for the periods.





Income before taxes for the three months ended March 31, 2011 was $371,306 as compared to a loss of $152,079 for the three months ended March 31, 2010. The significant improvement for our operating results was attributable to the revenue of $664,570 generated for the three months ended March 31, 2011, while no revenue was recognized for the three months ended March 31, 2010.





Net Income





We achieved a net income of $356,178 for the three months ended March 31, 2011, compared to a net loss of $152,079 for the three months ended March 31, 2010. The achievement was primarily due to the revenue from land use right leasing and mines exploitation compensation amount of $664,570 for the three months ended March 31, 2011, while there was no revenue recognized for the three months ended March 31, 2010.




19





Comprehensive Income





Our comprehensive income for the three months ended March 31, 2011 was $366,382 compared with comprehensive loss of $149,260 for the three months ended March 31, 2010. The comprehensive income (loss) for each period only referred to the foreign currencies translation gain (loss), between the U.S. Dollar and the Chinese Yuan RMB (or Hong Kong Dollar for Wah Bon).





Stockholders’ Equity





Stockholders' equity decreased to $9,745,913 as of March 31, 2011, or approximately 3.62%, from $10,112,295 as of December 31, 2010. The decrease was primarily due to the decrease in our accumulated other comprehensive income from $2,481,299 as of December 31, 2010 to $1,758,739 as of March 31, 2011.





LIQUIDITY AND CAPITAL RESOURCES





Cash Flows From Operating Activities





Net cash provided by operating activities of $2,087,200 for the three months ended March 31, 2011 was primarily attributable to receiving a payment of $1,519,018 (equivalent to RMB10,000,000) for exploitation compensation. The adjustments to reconcile our net income to net cash flow mainly included depreciation expense of $8,871 and amortization of land use rights of $97,211. Furthermore, there was a decrease in operating assets of $454,752 and an increase in operating liability of $1,170,188, both of which contributed to operating cash inflow.





Cash Flows From Investing Activities




Net cash used in investing activities of $692,613 for the three months ended March 31, 2011 was incurred from purchase of property, plant and equipment and cash provided to the related parties.





Cash Flows From Financing Activities





Net cash of $592,695 used by financing activities for the three months ended March 31, 2011 resulted from $1,290,648 advances from shareholders and $1,883,343 repayment to related parties.





General





Collectability of our account receivable for the land use right leasing and exploitation compensation is important to our continuation of operation. In addition, we have the access to short and long term loans of cash from our directors or other related parties.





We provided loans of $692,216 to our related parties for the three months ended March 31, 2011.





We borrowed cash of $1,290,648 from our shareholders and returned $1,883,343 to the related parties for the three months ended March 31, 2011.





Though our current assets decreased by $101,404 and total assets increased by $224,405 slightly, we still maintained a stable cash flow for the three months ended March 31, 2011.





We have cash of $19,552 and $97,174 as of March 31, 2011 and December 31, 2010 respectively. We believe that we have sufficient cash to fund operations for approximately 12 months.




20





FINANCING





We anticipated the cash generated from operating activities will be sufficient to sustain our daily operations for the next twelve months, if we do not invest to expand the scale of operations.





INFLATION





Our management believes that inflation did not have a material effect on our results of operations for the quarter ended March 31, 2011.





OFF-BALANCE SHEET ARRANGEMENTS.





We do not have any off-balance sheet arrangements.





CONTRACTUAL OBLIGATIONS





None





CRITICAL ACCOUNTING POLICIES





Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities to comply with generally accepted accounting principles. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from our estimates, which would affect the related amounts reported in our financial statements.





An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimates are made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur, could materially impact the consolidated financial statements. We believe that the following critical accounting policies reflect the significant estimates and assumptions which are used in the preparation of the consolidated financial statements and affect our financial condition and results of operations.





Revenue Recognition





The Company recognizes revenue when the earnings process is complete, both significant risks and rewards of ownership are transferred or services have been rendered and accepted, the selling price is fixed or determinable, and collectability is reasonably assured.





(a)Land use right leasing





We are currently leasing the land use right to Huanghe for the development and operation of a theme park. We generally collect the annual rent every year, and then recognize land use right leasing revenue over the beneficial period described by the agreement, as the revenue is realized or realizable and earned.




21





(b)Mines exploitation compensation





We cooperated with Shaanxi Western mining & energy Co., Ltd in mines exploitation from the beginning of 2011.We offered exploration rights, technical support and information in exchange for the exploitation compensation. We generally collect the exploitation compensation every year, and then recognize revenue over the beneficial period described by the agreement, as the revenue is realized or realizable and earned.





Related Party





A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, member of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting party might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.





Our related parties are the following individuals and entities: (i) Mr. Wang Shengli (a director of the Company), Mr. Chen Weidong (our President, Chief Executive Officer and Chairman of the Board), Ms Li Ping (a director of the Company), and Ms. Chen Min (a director of the Company), all of whom are shareholders of the Company; (ii) Mr. Zhang Hong Jun, who is currently a director of the Company; (iii) Ms Li Ping (our Chief Financial Officer and who has the same name with our Director Ms Li Ping); and (iv) the following companies: Du Kang Liquor Development Co., Ltd., Huiton World Property Superintendent Company, Xi Deng Hui Development Stock Co., Ltd. Zhongke Lvxiang Development Stock Co., Ltd., Shaanxi Du Kang Liquor Group Co., Ltd., Shaanxi Bai Shui Du Kang Brand Management Co., Ltd, Shaanxi Changjiang electricity & new energy Co.,Ltd, Shaanxi Huanghe Bay Springs Lake Theme Park Ltd, Shaanxi Changfa Industrial Co.,LTD, Shaanxi Tangrenjie Advertising Media Co.,Ltd and Zhongke Aerospace & Agriculture Development Stock Co.,Ltd.





Cash flows from due from related parties are classified as cash flows from investing activities. Cash flows from due to related parties are classified as cash flows from financing activities.





ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.





Not required for a smaller reporting company.





ITEM 4. CONTROLS AND PROCEDURES.





Evaluation of Disclosure Controls and Procedures





In connection with the preparation of this Annual Report on Form10-K, an evaluation was carried out by the Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2011. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.





Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31, 2011.




22





Internal Control over Financial Reporting





Management’s Annual Report on Internal Control over Financial Reporting





Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.





Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2011. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework and Internal Control over Financial Reporting-Guidance for Smaller Public Companies. As a result of this assessment, management identified a material weakness in internal control over financial reporting.





A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.





We note the following deficiencies that management believes to be material weaknesses:





a)
Various members of the Company’s executive management are also members of its board of directors, including the board’s chairman. This situation prevents a truly independent review of the actions of the Company’s management.





b)
The Company does not have an independent audit committee to oversee the external financial reporting process and the internal control over financial reporting as required by the Sarbanes-Oxley Act of 2002. This, in combination with the lack of an independent board of directors, creates a material weakness in the oversight of the Company’s management, its internal control and its financial reporting process.





In addition, management notes the following deficiency that management considers to be a significant deficiency:





The Company does not have sufficient knowledge of all the necessary financial statement disclosures that are required to be made in accordance with U.S. generally accepted accounting principles.





Based on the material weakness described above, management has concluded that, as of March 31, 2011, the Company's internal control over financial reporting was not effective based on the criteria in Internal control - Integrated framework issued by the COSO.




The Company intends to take the following steps as soon as practicable to remediate the material weakness and significant deficiency we identified as follows:





1.
We intend to recruit independent directors such that at least a majority of our Board is independent.




2.
We intend to constitute audit, nominating and compensation committees comprised entirely of independent directors and to adopt committee charters for those committees, in accordance with the corporate governance standards of the New York Stock Exchange. We intend that at least one member of our Audit Committee will qualify as an “Audit Committee financial expert.”





Changes in Internal Controls over Financial Reporting





There has been no significant change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)- 15(f) of the Exchange Act) that occurred during the three months ended March 31, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.




23





PART  II





ITEM  1. LEGAL PROCEEDINGS.





We received a document subpoena dated April 4, 2011, pursuant to which the Enforcement Division of the SEC informed us that it was conducting an investigation of the Company to determine whether the Company has committed a violation of the federal securities laws. The subpoena required us to produce certain documents to the SEC, and we complied and responded on May 2, 2011.





On June 7, 2011, the SEC issued another subpoena in furtherance of its investigation and required the Company to produce additional documents relating to our land use right. We complied with the subpoena and responded on June 24, 2011 to the Los Angeles Regional Office of the SEC.





On September 5, 2012, the Securities and Exchange Commission officially notified us of its termination of the investigation against us that began in April 2011.  The SEC also confirmed that it had no intention of recommending any enforcement action by the Commission.





ITEM 1A. RISK FACTORS.





An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition and results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose part or all of your investment. You should read the section entitled “Special Notes Regarding Forward-Looking Statements” above for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this report.





RISKS RELATED TO OUR BUSINESS





WE INTEND TO TRANSITION OUR BUSINESS FROM MINING TO NEW CLEAN ENERGY BUSINESS, WHICH INVOLVES SIGNIFICANT TRANSITION AND INTEGRATION RISK





We are a currently a mining company but intend to transition our business to clean energy.  This change involves significant transition and integration risks, both because we are required to end our participation in mining operations and wind down our existing relationships prior to our being able to participate in a new energy business and because we may incur costs and/or a loss of revenue (or a delay in anticipated increased revenue from the new business) in connection with these changes.  The significant transition and integration risks include:





(1)
an inability to transition our business to clean energy due to a lack of applicable approvals or difficulty in satisfying entrance requirements;(2)
significant revenue dilution as we wind down our participation in mining operations and/or insufficient, or delay in receipt of, revenue from our participation in current operations, including an inability to maintain our key customer and business relationships as we transition to new energy; and(3)
difficulties integrating our technology processes.





If any of these risks or costs materialize, they could have a material adverse effect on our business, results of operations and financial condition.




24





WE ARE AN EXPLORATION COMPANY FACING SIGNIFICANT FINANCIAL AND OPERATING RISKS.





We are a mining company with land use rights to a 50.12 square kilometer tract of land in Shaanxi Province, in Central China. We also hold land use rights in a 5.7 square kilometer parcel located in Huanghe Nantan (Huanghe Bay), Heyang County, in the Shaanxi Province of China, which is not held for the purpose of mining.





We seek to determine if there are commercially adequate deposits of zinc, lead and gold within our properties. The exploration and extraction of mineral deposits involve significant financial risks. The results of exploratory investigations are not always reliable or accurate even if conducted in strict compliance with professional guidelines. Furthermore, exploration and extraction activities require substantial investment which must occur over a significant period of time even though the quantity of minerals within any property is finite. Many properties are unable to develop commercially viable mines even with positive exploration results. Successful extraction depends on very expensive processes such as drilling, mine construction and establishment of processing facilities. Mines are also hazardous and only a limited number of qualified, experienced miners exist. The Company must obtain additional government approvals and must ramp up operations after obtaining permission to begin extraction. We are unable to assure you that we will ultimately be successful in meeting these challenges or whether we will commence commercial mining operations. Our failure to do so would have a substantial adverse effect in the value of our company and our securities.





FLUCTUATION OF THE CHINESE CURRENCY COULD MATERIALLY AFFECT OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS.





We expect that our future revenue and expenses will be generated in China, but our reporting currency is US dollars and reported results will be affected by exchange rate fluctuations between the RMB and the US dollar. We cannot give any assurance that the value of the RMB will continue to appreciate, or even remain stable against the US dollar or any other foreign currency. Accordingly, we may experience economic losses and negative impacts, as reported in U.S. Dollars, as a result of foreign exchange rate fluctuations.





The RMB is currently not a fully convertible currency. The Chinese government may restrict future access to foreign currencies for current account transactions. This may make it difficult for us to transfer money from China to other countries on an economically advantageous basis or even at all. It may also make it difficult for us to pay cash returns on the investment of foreign capital.





WE DEPEND ON OUR SENIOR MANAGEMENT AND KEY EMPLOYEES, THE LOSS OF WHOM COULD ADVERSELY AFFECT OUR OPERATIONS.





Our success will depend to a large degree upon our ability to identify, hire, and retain personnel, particularly experienced miners and persons familiar with the marketing, manufacturing and administrative processes associated with mining. We depend on the skills of our management team and current key employees, such as Mr. Chen Wei Dong, our Chairman, President, and Chief Executive Officer. We may be unable to retain our existing key personnel or attract and retain additional key personnel.





The loss of any of our key employees or the failure to attract, and retain experienced miners or additional key employees could have a material adverse effect on our business and financial condition.





WE ARE EXPOSED TO BUSINESS CYCLE RISK.





Our business is located in China and will be conducted in China. We expect to sell any minerals we extract within China. The need for these minerals throughout the world is affected by the demand for such minerals in China. We are dependent on the continued economic growth in China to maintain demand for our mineral products. The recent global recession has adversely affected the non-ferrous metals industry. Our business and results of operation may be adversely affected if Chinese economic growth were to decline.




25





RISKS RELATED TO OUR MINING INDUSTRY





WE HAVE NOT YET OBTAINED ALL OF THE LICENSES REQUIRED BY CHINESE LAW.





China employs a two-stage permitting process for permission to explore and to extract minerals. Although we obtained the exploration license, as of March 31, 2011, we did not yet have the second required license needed to permit the excavation and subsequent sale of extracted minerals. We cannot give assurance that we will obtain this license. If we fail to do so, the value of our interests in the mining properties would be seriously impaired, and would result in a material loss of value to us and our investors.





THERE IS NO ASSURANCE THAT OUR PROPERTY WILL CONTAIN SUFFICIENT QUANTITIES OF COMMERCIALLY MARKETABLE MINERALS FOR US TO BECOME COMMERCIALLY VIABLE OR THAT WE WILL BE ABLE TO ECONOMICALLY EXTRACT THE MINERALS.





We have engaged in limited investigation and geologic testing. There can be no assurance that our initial exploratory efforts will prove satisfactory or correct, or that commercially mineable mineralization exists on our property. It may not be economically feasible to profitably extract the minerals for many reasons, including some reasons which are beyond our ability to control. We can offer no assurance that a profitable mining business will result from our efforts.





WE HAVE NOT CONDUCTED GEOLOGICAL EXPLORATION SUFFICIENT TO FORM A CONCLUSION THAT THERE ARE PROVEN OR PROBABLE MINERAL RESERVES ON OUR PROPERTY.





As of March 31, 2011 we had not yet conducted geological explorations sufficient to form a conclusion that there are proven or probable mineral reserves in the area in which we have exploration rights. The only surveys conducted on this land through the 2010 and the period ended March 31,2011 have been preliminary geological surveys conducted by a unit of the Shaanxi Provincial Government. It is costly to conduct detailed mineralogy studies, and we may not have the resources to undertake them. If we fail to identify commercially reasonable mineral resources, the value of our Company and our securities will be materially and adversely affected.





WE ARE A PRIVATE COMPANY MAINLY OPERATING IN CHINA, WHICH MAY RESULT IN A MORE DIFFICULT BUSINESS ENVIRONMENT FOR US, COMPAIRED WITH THE STATE OWNED COMPANY IN MINING INDUSTRY





Currently, the Mining industry is in recession period. The cost of operation continues to rise, at the same time, mineral prices are constantly going down. We are a private company operating in China in mining industry, which may incur more cost in obtaining administrative permit, prospecting, etc, while many competitors are state-owned Companies and operate in a preferable business environment.





WE MAY BE ADVERSELY AFFECTED BY ENVIRONMENTAL REGULATIONS.





We are subject to China’s national and local environmental protection regulations which currently impose fees for the discharge of waste substances, require the payment of fines for pollution, and provide for the closure by the Chinese government of any facility that fails to comply with orders requiring a company to cease or improve upon certain activities causing environmental damage. Due to the nature of the mining business, future mining operations could produce significant amounts of waste water, gas, and solid waste materials. Chinese national, provincial, or local authorities may impose legal requirements which would require additional expenditures on environmental matters or changes in our processes or systems, the cost of which may exceed our financial resources.




26





HAZARDS AND RISKS ASSOCIATED WITH MINING MAY CAUSE SUBSTANTIAL DELAYS OF OPERATIONS AND REQUIRE SIGNIFICANT EXPENDITURES.





The Company's operations are subject to all of the hazards and risks normally incident to the exploration for and development and production of minerals, any of which could result in damages for which the Company may be held responsible. Many hazards are beyond our control, such as unusual or unexpected rock formations, bad weather, and high water tables. We could also experience landslides, cave-ins, flooding or other unfavorable conditions. If we experience losses from these or other risks, it may cause substantial delays and require significant additional expenditures. These conditions would adversely affect the Company's business, financial condition and the value of our securities.





China has experienced a number of serious incidents in its mining industry that resulted in loss of life and serious personal injury. Some mines have collapsed or were otherwise forced to close due to unsafe conditions. We would suffer material losses if any of these events were to occur, and they would have a material adverse effect on our business and the value of our securities.





MARKET PRICES FOR NON-FERROUS METALS FLUCTUATE AND COULD ADVERSELY AFFECT THE VALUE OF OUR COMPANY AND OUR SECURITIES.





Market prices for zinc, lead and gold, the metals for which we explore, experience significant fluctuations in price. The profitability of any mining operations will be directly related to these market prices. The market prices of non- ferrous metals are subject to factors beyond our control. These factors include, but are not limited to, changes in legal and regulatory requirements, changes in the exchange rates of the RMB and other currencies, worldwide economic conditions, political and economic factors and variations in production costs. A reduction in the price or demand for lead, zinc or gold would adversely affect our Company and the value of our securities.





SHORTAGES OF CRITICAL PARTS, EQUIPMENT AND SKILLED LABOR MAY ADVERSELY AFFECT OUR DEVELOPMENT PROJECTS.





The mining industry has been impacted by increased worldwide demand for resources such as input commodities, drilling equipment, tires and skilled labor. These shortages have caused, and may continue to cause, unanticipated cost increases and delays in delivery times, potentially impacting operating costs, capital expenditures and production schedules.





RISKS RELATED TO THE REAL ESTATE INDUSTRY





THE CHINESE GOVERNMENT OWNS ALL LAND IN CHINA, AND CHINA ISSUES LAND USE RIGHTS INSTEAD OF LEGAL TITLE TO THE PROPERTIES. THERE IS NO ASSURANCE THAT OUR RIGHTS TO THE PROPERTIES WILL NOT BE SUBJECT TO IMPAIRMENT OR LOSS.





In China, all property is owned by the central government. Unlike deeds or other evidence of a fee simple ownership interest, land use rights are always subject to fixed periods and permitted land use, usually for long periods of time. These periods are frequently 50 years. Disputes over mining claims are common. A loss of our property rights or mining rights would cause material damage to the Company and the price of its securities and could result in the loss of the entire value of our Company.




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RISKS RELATED TO DOING BUSINESS IN THE PEOPLE'S REPUBLIC OF CHINA





WE ARE SUBJECT TO THE POLITICAL AND ECONOMIC POLICIES OF THE PEOPLE’S REPUBLIC OF CHINA, AND GOVERNMENT REGULATION COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR INTENDED BUSINESS.





All of our assets and operations are in the PRC. As a result, our operating results and financial performance as well as the value of our securities could be affected by adverse changes in economic, political and social conditions in China.





The Chinese government adopted a policy to transition from a planned economy to a market driven economy in 1978. Since then, the economy of the PRC has undergone rapid modernization, although the Chinese government still exerts a dominant force in the nation's economy. This continues to include reservation to the state of land use rights or mining and exploration rights, and includes controls on foreign exchange rates and restrictions or prohibitions on foreign ownership in various industries including mining. All lands in China are state owned and only limited “land use rights” are conveyed to business enterprises or individuals.





All of our intended exploration and mining activities require approvals from the local government authorities in China. Obtaining governmental approval is typically a lengthy and difficult process with no guaranty of success. Since the lands where our exploration activities are located were acquired through the grant of a land use right, changes in government policy could adversely affect our business.





The Chinese government operates the economy in many industries through various five-year plans and even annual plans. A large degree of uncertainty is associated with potential changes in these plans. Since China’s economic reforms have no precedent, there can be no assurance that future changes will not create materially adverse conditions for our business.





THERE ARE RISKS INHERENT IN DOING BUSINESS IN CHINA OVER WHICH WE HAVE NO CONTROL.





The political and economic systems of the PRC are very different from those of the United States and other western countries. China remains volatile with respect to certain social, economic and political issues which could lead to revocation or adjustment of reforms. There are also issues between China and the United States that could result in disputes or instabilities. The role of China and its government remain in flux both domestically and internationally, and could cause shocks or setbacks that may adversely affect our business.





THE CHINESE LEGAL SYSTEM DIFFERS FROM THAT OF THE UNITED STATES, PROVIDING LESS PROTECTION FOR INVESTORS, AND IT MAY BE DIFFICULT FOR INVESTORS TO SEEK LEGAL REDRESS AGAINST US OR OUR OFFICERS AND DIRECTORS, INCLUDING CLAIMS THAT ARE BASED UPON U.S. SECURITIES LAWS.





All of our current operations are conducted in China. All of our current directors and officers are nationals or residents of China. All of the assets of these persons are located in China. The PRC legal system is a civil law system. Unlike the common law system, the civil law system is based on written statutes in which decided legal cases have little value as precedents. Differences in interpretations and rulings can occur with limited opportunity for redress or appeal.





It may not be possible to effect service of process within the U.S. or elsewhere outside China upon our officers and directors. Even if service of process were successful, considerable uncertainty exists as to whether Chinese courts would recognize and enforce U. S. laws or judgments obtained in the U.S. federal and state securities laws as the U. S. laws confer substantial rights to investors and shareholders that have no equivalent in China. Therefore a claim against us or our officers and/or directors or even a final judgment in the U. S. may not be recognized or enforced by Chinese courts.




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In 1979, the PRC began to reform its legal system and has enacted numerous laws regulating economic and business development, including those related to foreign investment. Currently many of the approvals required for our business may be obtained at local or provincial level. We believe that it is relatively easier and faster to obtain provincial approval than central government approval. Changes to existing laws that repeal or alter local regulatory authority and preempt it with national laws could negatively affect our business and the value of our securities.





China's regulations and policies regarding investments, including investment in the mining business, are subject to continued reformation and revisions. They may change in a manner adverse to us and our stockholders.





CHINESE LAWS COULD RESTRICT THE PAYMENT OF DIVIDENDS FROM ANY PROCEEDS OBTAINED FROM LIQUIDATION OF OUR ASSETS.





All of our assets are located in China. Chinese law governs the distributions that can be made in the event of liquidation of assets of foreign invested enterprises. While dividend distribution is allowed, some distributions are subject to the approval from the foreign exchange authority in China. Liquidation proceeds would also be subject to foreign exchange control. We are unable to predict the outcome in the event of liquidation insofar as it affects payment to non-Chinese nationals.





RISKS RELATED TO OUR COMMON STOCK





SUSPENSION OF TRADING





The SEC announced a suspension, pursuant to Section 12(k) of the Exchange Act, of trading in the securities of the Company on April 1, 2011. Questions have arisen regarding the accuracy and completeness of information contained in the Company’s public filings with the SEC and concerning the company’s financial statements. The absence of a trading market adversely affects the value of our securities.





However, as of September 5, 2012, the Securities and Exchange Commission officially notified us of termination of the investigation against us that began in April 2011. We expect that our common stock would resume trading after filling all of the outstanding periodic reports.





THERE IS CURRENTLY A LARGE MARKET OVERHANG IN OUR COMMON STOCK AND FUTURE SALES OF OUR COMMON STOCK COULD DEPRESS THE MARKET PRICE AND DIMINISH THE VALUE OF YOUR INVESTMENT.





On February 9, 2010, we filed a Certificate of Amendment to our Articles of Incorporation to effect a 1-for-10 reverse split of our common stock, after which all shares of our Series C Preferred Stock were converted into an aggregate of 609 million shares of our common stock. This effectively eliminated the ability of our other common stock holders to have a significant role in the election of directors and other corporate changes. Future sales of shares of our common stock or securities that are convertible into our common stock could adversely affect the market price of our common stock. If any of our principal stockholders sells a large number of shares or if we issue a large number of shares, the market price of our common stock could significantly decline. Moreover, the perception in the public market that our principal stockholders might sell shares of common stock could further depress the market for our common stock.




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BECAUSE OUR OFFICERS AND DIRECTORS CONTROL THE MAJORITY OF THE VOTING POWER OF OUR COMMON STOCK, INVESTORS IN OUR COMMON STOCK WILL NOT BE ABLE TO DETERMINE THE OUTCOME OF STOCKHOLDER VOTES.





Our officers and directors currently control approximately 94% of our common stock. So long as they continue to hold, directly or indirectly, shares of common stock representing more than 50% of the combined voting power of our common stock, they will be able to direct the election of all of the members of our board of directors who will determine our strategic plans and financing decisions and appoint top management. They will also be able to determine the outcome of substantially all matters submitted to a vote of our stockholders, including matters involving mergers, acquisitions and other transactions resulting in a change of control of us, and our pursuit of corporate opportunities. They may seek to cause us to take courses of action that, in their judgment, could enhance their investment in us, but which might involve risks to holders of our common stock or adversely affect us or other investors.





THE MARKET FOR SHARES OF OUR COMMON STOCK HAS BEEN LIMITED AND SPORADIC, AND THERE IS NO GUARANTEE THAT A MARKET WILL BE AVAILABLE FOR YOU TO SELL YOUR SHARES.





Shares of our common stock are not listed on any exchange but have been sporadically traded in over the counter transactions or in inter-dealer quotations. The trading of our stock was suspended by the SEC in April 2011. There is no assurance that any market makers will in the future post bid and ask prices for our shares of common stock. Our stock has been very thinly traded and there were many days or weeks that the shares did not trade at all. There is no assurance that any market will exist at the time that a shareholder wishes to sell his or her shares and there is no assurance that any market will continue.





OUR COMMON STOCK PRICE IS VOLATILE AND MAY NOT APPRECIATE IN VALUE.





The trading of our stock was suspended on April 1, 2011 by the SEC. The market price of shares of our common stock fluctuated and, if trading resumes, is likely to continue to fluctuate significantly. Fluctuations could be rapid and severe and may provide investors little opportunity to react. Factors such as changes in commodity prices, conversion of our preferred shares, results of operations, and a variety of other factors, many of which are beyond the control of the Company, could cause the market price of our common stock to fluctuate substantially. Also, stock markets in penny stock shares tend to have extreme price and volume volatility. The market prices of the securities of many smaller public companies are subject to volatility for reasons that frequently are unrelated to operating performance, earnings or other recognized measurements of value. This volatility may cause declines, including very sudden and sharp declines, in the market price of our common stock. We cannot assure investors that the stock price will appreciate in value, that a market will be available to resell your securities or that the shares will retain any value at all.





WE DO NOT FORESEE PAYING CASH DIVIDENDS IN THE FORESEEABLE FUTURE.





We have not paid cash dividends on our stock and we do not plan to pay cash dividends on our stock in the foreseeable future. We intend to retain any earnings to help fund operations. Therefore an investment in our common stock is not appropriate for investors who require regular and periodic returns on their investments.





OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC’S PENNY STOCK REGULATIONS AND THE FINRA’S SALES PRACTICES, WHICH MAY LIMIT A STOCKHOLDER’S ABILITY TO BUY AND SELL OUR STOCK.





The trading of our stock was suspended on April 1, 2011, by the SEC. If trading resumes, our stock will be a penny stock. The SEC has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker- dealers who sell to persons other than established customers and “accredited investors”, as defined. Rule 15g-2 requires a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form required by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market, and cautions investors against making a hurried investment decision. The broker-dealer must also provide the customer with the current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction. The broker-dealer must also send a confirmation of these prices after the trade. After a purchase of penny stock, the broker-dealer must send a monthly account statement that gives an estimate of the value of each penny stock purchased.




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In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules.





Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in, and limit the marketability of, our common stock.





In addition to the “penny stock” rules promulgated by the SEC, the Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative, low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker- dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.





ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





On December 25, 2009, the Company issued an aggregate of 4,500,000 shares of common stock to Messrs. Donald R. Monroe and Stanley F. Wilson, the principals of Capital Advisory Services, Inc., in connection with our share exchange transaction. To the best of our knowledge, each of them now holds 2,250,000 shares of common stock the shares were issued without registration in reliance on section 4(2) of the Securities Act. All issued and outstanding shares of series C Preferred Stock have been converted into an aggregate amount of 609 million shares of our common stock which were issued without registration in reliance on SEC Regulation S and section 3(a)(9) of the Securities Act.





ITEM 3.DEFAULTS UPON SENIOR SECURITIES





None





ITEM 4.(REMOVED AND RESERVED).








ITEM 5.OTHER INFORMATION





None




ITEM 6.EXHIBITS
  31.1.

Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer31.2.

Rule 13a-14(a)/15d-14(a) Certifications of Chief Financial Officer32.1.

Section 1350 Certifications of Chief Executive Officer32.2.

Section 1350 Certifications of Chief Financial Officer




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SIGNATURES





Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





CHINA CHANGJIANG MINING AND NEW


ENERGY COMPANY, LTD.


(Registrant)





Date: April 20, 2013
By
/s/ Chen Wei DongChen Wei DongChief Executive Officer and PresidentDate: April 20, 2013
By
/s/ Li PingLi PingChief Financial Officer

(Principal Financial Officer)





Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.





Name

Capacity

Date/s/ Chen Wei Dong

Chief Executive Officer President and Chairman of Board of

April 20, 2013Directors (Principal Executive Officer)/s/ Li Ping

Chief Financial Officer (Principal Financial Officer)

April 20, 2013/s/ Zhang Hong Jun

Director

April 20, 2013/s/ Wang Sheng Li

Director

April 20, 2013/s/ Tian Hai Long

Director

April 20, 2013/s/ Chen Min

Director

April 20, 2013/s/ Li Ping

Director

April 20, 2013




32