UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549



Form 10-Q



QUARTERLY REPORT UNDER THE SECURITIES
EXCHANGE ACT OF 1933



For the quarterly period ended September
30, 2012

Commission File No. 333-167964









China Shouguan Mining Corporation

(Exact name of registrant as specified
in its charter)



Nevada

(State or other jurisdiction of incorporation)



27-2513824

(IRS Employer Identification No.)



6009 Yitian Road

New World Center Rm. 3207

Futian District, Shenzhen

People’s Republic of China

Telephone 0086-755-82520008

Facsimile 0086-755-82520156

(Address and telephone number of registrant’s
principal executive offices)

__________________________



Law Office of Frank J. Hariton

1065 Dobbs Ferry Road

White Plains, NY 0607 USA

Telephone (914) 674-4373

Facsimile (91) 693-2963

(Name, address and telephone number of
agent for service)

__________________________



Securities registered pursuant to Section
12(b) of the Act: None.

Securities registered pursuant to Section
12(g) of the Act: Common Stock, $0.0001 par value



Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes__ No X



Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes__ No X



Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 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. Yes X No __



Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes__ No X



Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s
knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K.  ̈



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and
large accelerated filer” in Rule 12b-2 of the Exchange Act.



Large accelerated filer __ Accelerated
filer __ Non-accelerated filer __ Smaller reporting company X



Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes__ No X



As of September 30, 2012, there were
123,000,000 shares of our common stock issued and outstanding. Our common stock is currently listed and trading on NASDAQ OTCBB.
The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the $0.0001
par value price per share paid for the shares is approximately $8,118.





1











FORM 10-Q

China ShouGuan Mining Corporation

|                                                                                                                                         | Page No.
|---------------------------------------------------------------------------------------------------------------------------------------- | --------
|                                                                                                                                         |         
|Part I - Financial Information                                                                                                           | 3       
|                                                                                                                                         |         
|Item 1. Financial Statements                                                                                                             |         
|Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011 (Audited)                                           | 3       
|Condensed Consolidated Statements of Operations And Comprehensive Income for the Three and Nine Months ended September 30, 2012 and 2011 | 4       
|Condensed Consolidated Statements of Cash Flows for the Three and Nine Months ended September 30, 2012 and 2011                          | 5       
|Notes to Condensed Consolidated Financial Statements                                                                                     | 6 - 22  
|                                                                                                                                         |         
|Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations                                            | 23      
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                                                                       | 34      
|Item 4. Controls and Procedures                                                                                                          | 34      
|                                                                                                                                         |         
|Part II – Other Information                                                                                                              |         
|                                                                                                                                         |         
|Item 1. Legal Proceedings                                                                                                                | 35      
|Item 1A. Risk Factors                                                                                                                    | 35      
|Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                                                      | 35      
|Item 3. Defaults Upon Senior Securities                                                                                                  | 35      
|Item 4. Mine Safety Disclosures                                                                                                          | 35      
|Item 5. Other Information                                                                                                                | 35      
|Item 6. Exhibits                                                                                                                         | 36      
|Signature                                                                                                                                | 37      





2









Part I. FINANCIAL INFORMATION



Item 1. Financial Statements



CHINA SHOUGUAN MINING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2012 AND DECEMBER
31, 2011

(Currency expressed in United States
Dollars (“US$”), except for number of shares)



|                                                                                                                                         |  | September 30, 2012 |             | December 31, 2011
|---------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | -----------------
|                                                                                                                                         |  | (Unaudited)        |             | (Audited)        
|ASSETS                                                                                                                                   |  |                    |             |                  
|Current assets:                                                                                                                          |  |                    |             |                  
|Cash and cash equivalents                                                                                                                |  | $                  | 642,589     |                  
|Accounts receivable, trade                                                                                                               |  |                    | 284,090     |                  
|Amount due from a related party                                                                                                          |  |                    | 1,290       |                  
|Deposits and prepayments                                                                                                                 |  |                    | 1,237,291   |                  
|Prepaid mining rights, current                                                                                                           |  |                    | 2,083,991   |                  
|Total current assets                                                                                                                     |  |                    | 4,249,251   |                  
|                                                                                                                                         |  |                    |             |                  
|Non-current assets:                                                                                                                      |  |                    |             |                  
|Mining assets                                                                                                                            |  |                    | 5,683,612   |                  
|Prepaid mining rights, non-current                                                                                                       |  |                    | 1,628,776   |                  
|Property, plant and equipment, net                                                                                                       |  |                    | 3,323,150   |                  
|Construction in progress                                                                                                                 |  |                    | 498,063     |                  
|TOTAL ASSETS                                                                                                                             |  | $                  | 15,382,852  |                  
|                                                                                                                                         |  |                    |             |                  
|LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                     |  |                    |             |                  
|Current liabilities:                                                                                                                     |  |                    |             |                  
|Accounts payable                                                                                                                         |  | $                  | 550,767     |                  
|Amounts due to related parties                                                                                                           |  |                    | 189,051     |                  
|Income tax payable                                                                                                                       |  |                    | 216,406     |                  
|Notes payable                                                                                                                            |  |                    | -           |                  
|Short-term and loans payable, unsecured                                                                                                  |  |                    | 6,875,548   |                  
|Current portion of loan payable, related party                                                                                           |  |                    | 78,939      |                  
|Accrued liabilities and other payable                                                                                                    |  |                    | 780,865     |                  
|                                                                                                                                         |  |                    |             |                  
|Total current liabilities                                                                                                                |  |                    | 8,691,576   |                  
|                                                                                                                                         |  |                    |             |                  
|Long-term liabilities:                                                                                                                   |  |                    |             |                  
|Loans payable, unsecured                                                                                                                 |  |                    | 350,495     |                  
|Loans payable, related party                                                                                                             |  |                    | 536,786     |                  
|Total long-term liabilities                                                                                                              |  |                    | 887,281     |                  
|                                                                                                                                         |  |                    |             |                  
|Total liabilities                                                                                                                        |  | $                  | 9,578,857   |                  
|                                                                                                                                         |  |                    |             |                  
|Commitments and contingencies                                                                                                            |  |                    |             |                  
|                                                                                                                                         |  |                    |             |                  
|Stockholders’ equity:                                                                                                                    |  |                    |             |                  
|Common stock, $0.0001 par value; 300,000,000 shares authorized; 123,000,0000 and 101,000,000 shares issued and outstanding, respectively |  |                    | 12,300      |                  
|Subscription receivable                                                                                                                  |  |                    | (5,113,326) |                  
|Additional paid-in capital                                                                                                               |  |                    | 12,675,179  |                  
|Statutory reserve                                                                                                                        |  |                    | 340,046     |                  
|Accumulated other comprehensive income                                                                                                   |  |                    | 350,810     |                  
|(Accumulated deficits) retained earnings                                                                                                 |  |                    | (2,460,014) |                  
|                                                                                                                                         |  |                    |             |                  
|Total stockholders’ equity                                                                                                               |  |                    | 5,803,995   |                  
|                                                                                                                                         |  |                    |             |                  
|TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                               |  | $                  | 15,382,852  |                  
|                                                                                                                                         |  |                    |             |                  



See accompanying notes to condensed consolidated
financial statements.





3





CHINA SHOUGUAN MINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE AND
NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”), except for number of shares)

(Unaudited)



|                                                               | Three months ended
        September 30, |             | Nine months ended
        September 30, |  
|-------------------------------------------------------------- | ---------------------------------------- | ----------- | --------------------------------------- | -
|                                                               | 2012                                     |             | 2011                                    |  
|Revenues, net:                                                 |                                          |             |                                         |  
|- Product sales                                                | $                                        | 2,155,652   |                                         | $
|- Service income                                               |                                          | -           |                                         |  
|Total revenues, net                                            |                                          | 2,155,652   |                                         |  
|                                                               |                                          |             |                                         |  
|Cost of revenue                                                |                                          | (1,265,888) |                                         |  
|                                                               |                                          |             |                                         |  
|Gross profit (loss)                                            |                                          | 889,764     |                                         |  
|                                                               |                                          |             |                                         |  
|Operating expenses:                                            |                                          |             |                                         |  
|General and administrative                                     |                                          | (295,289)   |                                         |  
|                                                               |                                          |             |                                         |  
|Income (loss) from operations                                  |                                          | 594,475     |                                         |  
|                                                               |                                          |             |                                         |  
|Other income:                                                  |                                          |             |                                         |  
|Interest expense                                               |                                          | (66,477)    |                                         |  
|Interest income                                                |                                          | 721         |                                         |  
|Other income                                                   |                                          | (10)        |                                         |  
|                                                               |                                          |             |                                         |  
|Income(loss) before income taxes                               |                                          | 528,709     |                                         |  
|                                                               |                                          |             |                                         |  
|Income tax expense                                             |                                          | (216,649)   |                                         |  
|                                                               |                                          |             |                                         |  
|NET INCOME (LOSS)                                              | $                                        | 312,060     |                                         | $
|                                                               |                                          |             |                                         |  
|Other comprehensive income:                                    |                                          |             |                                         |  
|- Foreign currency translation gain                            |                                          | (56,009)    |                                         |  
|                                                               |                                          |             |                                         |  
|COMPREHENSIVE INCOME (LOSS)                                    | $                                        | 256,051     |                                         | $
|                                                               |                                          |             |                                         |  
|Net (loss) income per share – Basic and diluted                | $                                        | (0.00)      |                                         | $
|                                                               |                                          |             |                                         |  
|Weighted average common shares outstanding – Basic and diluted |                                          | 114,933,333 |                                         |  
|                                                               |                                          |             |                                         |  
|                                                               |                                          |             |                                         |  

See accompanying notes to condensed consolidated
financial statements.





4









CHINA SHOUGUAN MINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



|                                                                            |  | Nine months ended September 30,
|--------------------------------------------------------------------------- |  | -------------------------------
|                                                                            |  | 2012                           
|Cash flows from operating activities:                                       |  |                                
|Net loss                                                                    |  | $                              
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                                
|Depreciation                                                                |  |                                
|Amortization of prepaid mining rights                                       |  |                                
|Changes in operating assets and liabilities:                                |  |                                
|Accounts receivable                                                         |  |                                
|Deposits and prepayments                                                    |  |                                
|Rental deposit                                                              |  |                                
|Accounts payable                                                            |  |                                
|Income tax payable                                                          |  |                                
|Accrued liabilities and other payable                                       |  |                                
|                                                                            |  |                                
|Net cash provided by (used in) operating activities                         |  |                                
|                                                                            |  |                                
|Cash flows from investing activities:                                       |  |                                
|Purchase of plant and equipment                                             |  |                                
|Payments on mining rights                                                   |  |                                
|Payments on construction in progress                                        |  |                                
|                                                                            |  |                                
|Net cash used in investing activities                                       |  |                                
|                                                                            |  |                                
|Cash flows from financing activities:                                       |  |                                
|Proceeds from private placement                                             |  |                                
|roceeds from notes and loans payable                                        |  |                                
|Advances from related parties                                               |  |                                
|                                                                            |  |                                
|Net cash provided by financing activities                                   |  |                                
|                                                                            |  |                                
|Effect of exchange rate changes on cash and cash equivalents                |  |                                
|                                                                            |  |                                
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                     |  |                                
|                                                                            |  |                                
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                              |  |                                
|                                                                            |  |                                
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                    |  | $                              
|                                                                            |  |                                
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                           |  |                                
|Cash (refunded) paid for income taxes                                       |  | $                              
|Cash paid for interest                                                      |  | $                              
|                                                                            |  |                                
|NON-CASH TRANSACTION:                                                       |  |                                
|                                                                            |  |                                
|Conversion of
    loan to equity                                            |  |                                







See accompanying notes to condensed consolidated
financial statements.





5







CHINA
SHOUGUAN MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE –
1 BASIS OF PRESENTATION



The accompanying unaudited condensed consolidated
financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United
States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures
normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate
to make the information not misleading.



In the opinion of management, the consolidated
balance sheet as of December 31, 2011 which has been derived from audited financial statements and these unaudited condensed consolidated
financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods
presented. The results for the period ended September 30, 2012 are not necessarily indicative of the results to be expected for
the entire fiscal year ending December 31, 2012 or for any future period.



These unaudited condensed consolidated
financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial
statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2011.





NOTE –
2 ORGANIZATION AND BACKGROUND



China ShouGuan Mining Corporation (“CSMC”
or “the Company”) was incorporated in the State of Nevada on May 4, 2010.



The Company, through its subsidiaries
and variable interest entities, is principally engaged in the project management of gold mining operations in China. In May 2009,
the Company commenced its first project, the Cunli Ji Mine which is located in Shandong Province, the People Republic of China
(“PRC”).

The details of the Company’s subsidiaries
and VIEs are described below:



|Name                                                    |  | Place of incorporation
        and kind of
        legal entity |  | Principal activities
        and place of operation                 |  | Particulars of issued/
        registered share
        capital |  | Effective interest
        Held
|------------------------------------------------------- |  | --------------------------------------------------------------- |  | ------------------------------------------------------------------- |  | --------------------------------------------------------------- |  | -------------------------------
|                                                        |  |                                                                 |  |                                                                     |  |                                                                 |  |                                
|Bei Sheng Limited (“BSL”)                               |  | British Virgin Islands, a limited liability company             |  | Investment holding in GWIL and provision of mining technical advice |  | 50,000 issued shares of US$1 each                               |  | 100%                           
|                                                        |  |                                                                 |  |                                                                     |  |                                                                 |  |                                
|Golden Wide International Limited (“GWIL”)              |  | Hong Kong, a limited liability company                          |  | 100%-investment holding in SBCL                                     |  | 10,000 issued shares of HK$1 each                               |  | 100%                           
|                                                        |  |                                                                 |  |                                                                     |  |                                                                 |  |                                
|Shoujin Business Consulting (Shenzhen) Limited (“SBCL”) |  | The PRC, a limited liability company                            |  | Provision of consulting service in the PRC                          |  | RMB100,000                                                      |  | 100%                           
|                                                        |  |                                                                 |  |                                                                     |  |                                                                 |  |                                
|Shenzhen Shouguan Investment Co., Ltd (“SSIC”) #        |  | The PRC, a limited liability company                            |  | 99%-investment holding in JinGuan                                   |  | RMB10,180,000                                                   |  | N/A                            
|                                                        |  |                                                                 |  |                                                                     |  |                                                                 |  |                                
|Yantai Jinguan Investment Limited (“JinGuan”) #         |  | The PRC, a limited liability company                            |  | 100%-investment holding in XinGuan                                  |  | RMB5,000,000                                                    |  | N/A                            
|                                                        |  |                                                                 |  |                                                                     |  |                                                                 |  |                                
|Penglai Xinguan Investment Limited (“XinGuan”) #        |  | The PRC, a limited liability company                            |  | Exploration, drilling, mining and sale of gold products             |  | RMB37,000,000                                                   |  | N/A                            



# represents variable interest entity (“VIE”)

The Company and its subsidiaries and VIEs are
hereinafter collectively referred to as (“the Company”).





6









CHINA SHOUGUAN MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE –
3 GOING CONCERN UNCERTAINTIES



These condensed consolidated financial
statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of
assets and the discharge of liabilities in the normal course of business for the foreseeable future.



For the nine months ended September 30,
2012, the Company experienced a net loss of $1,309,110. The continuation of the Company as a going concern is dependent upon the
continuing financial support from its stockholders. Management believes that the existing stockholders will provide the additional
cash to meet with the Company’s obligations as they become due. However, there can be no assurance that the Company will
be able to obtain sufficient funds to meet its obligations on a timely manner.



These factors raise substantial doubt
about the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that
may result in the Company not being able to continue as a going concern.





NOTE –
4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



The accompanying condensed consolidated
financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere
in the accompanying condensed consolidated financial statements and notes.



Use
of estimates



In preparing these condensed consolidated
financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in
the balance sheet and revenues and expenses during the periods reported. Actual results may differ from these estimates.



Basis of consolidation



The condensed consolidated financial statements
include the financial statements of CSMC, its subsidiaries and VIEs. All inter-company balances and transactions between the Company
and its subsidiaries and VIEs have been eliminated upon consolidation.



The Company has adopted ASC Topic 810-10-5-8,
“Variable Interest Entities”, which requires a variable interest entity or VIE to be consolidated by a company if that
company is subject to a majority of the risk of loss for the VIEs or is entitled to receive a majority of the VIEs’ residual
returns.





7







CHINA SHOUGUAN MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE – 4 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES, Cont’d.



Variable interest entity



On May 15, 2010, the Company’s subsidiary,
SBCL entered into a series of agreements (“VIE agreements”) amongst SSIC, JinGuan, XinGuan and the individual owners
of SSIC, JinGuan and XinGuan and details of the VIE agreements are as follows :



1.
Exclusive Technical Service and Business Consulting Agreement, SBCL has the exclusive right to provide to SSIC, JinGuan and XinGuan
consulting services, including operational management, human resources management, research and development of the technologies
related to the operations of SSIC, JinGuan and XinGuan. SSIC, JinGuan and XinGuan pays to SBCL quarterly consulting service fees
in an amount equals to all of their revenue for such quarter. These agreements run for 10 year terms and are subject to automatic
renewal for an additional 10 year term provided that no objection is made by both parties on the renewal.



2.
Exclusive Option Agreement, SBCL has the option to purchase SSIC, JinGuan and XinGuan all assets and ownership at any time.



3.
Equity Pledge Agreement, SSIC JinGuan and XinGuan agree to pledge their legal interest to SBCL as a security for the obligations
under the Exclusive Technical Service and Business Consulting Agreement.



4.
Proxy Agreement, SSIC, JinGuan and XinGuan irrevocably grant and entrust SBCL the right to exercise its voting and other stockholder’s
right.



5.
Operating Agreement, SBCL agrees to participate in the operations of SSIC, JinGuan and XinGuan in different aspects.



With the above agreements, SBCL demonstrates
its ability to control SSIC, JinGuan and XinGuan as the primary beneficiaries and the operating results of the VIEs was included
in the condensed consolidated financial statements for the nine months ended September 30, 2012 and 2011.



Cash
and cash equivalents



Cash and cash equivalents are carried
at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments
with an original maturity of three months or less as of the purchase date of such investments.



Accounts
receivable



Accounts receivable are recorded at the
invoiced amount and do not bear interest. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing
basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s
financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered
necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential
for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. For
the nine months ended September 30, 2012 and 2011, no allowance for doubtful accounts was provided.



Mining assets

Mining assets represent the purchase price
for mining rights of Cunli Ji Gold Mine and are subject to depletion, based on their proven reserve.



For the Cunli Ji mine, the mining activities
were temporary halted in the first three quarters of 2012 because of the fact that (i) the mine was undergoing certain restructuring
activities in January before the Chinese New Year and (ii) the Chinese government’s regulation of disallowing mining activities
during the Chinese New year period from late January to late February and the “Two-Conferences Period” in Beijing immediately
after the Chinese New Year in March. For the Dayuan Mine, the mining activities were temporary halted from late January to end
of March because of the Chinese government’s regulation of disallowing mining activities during Chinese New Year period and
the “Two-Conferences Period” as mentioned above. For the three and nine months ended September 30, 2012, no impairment
loss for the above mines was provided. The Dayuan Mine was back to normal production status in the second quarter of 2012.





8







NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE – 4 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES, Cont’d.



Prepaid
mining rights



Prepaid mining rights represent certain
amount of lease prepayment made for the operation of the mining license of Dayuan Gold Mine under and are being amortized using
a straight-line basis over its scheduled lease term.



The rent expense on prepaid mining rights
for the three months ended September 30, 2012 and 2011 was $521,215 and $999,076, respectively.



The rent expense on prepaid mining rights
for the nine months ended September 30, 2012 and 2011 was $1,564,611 and $999,076, respectively.



|Year ending September 30: |   |          
|------------------------- | - | ---------
|2013                      | $ | 2,083,991
|2014                      |   | 1,399,853
|2015                      |   | 228,923  
|Total                     | $ | 3,712,767



Property,
plant and equipment



Property, plant and equipment are stated
at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line
basis over the following expected useful lives from the date on which they become fully operational and after taking into account
their estimated residual values:



|                    | Expected useful life |  | Residual value
|------------------- | -------------------- |  | --------------
|Plant and machinery | 10 years             |  | 5%            
|Motor vehicles      | 5 years              |  | 5%            
|Office equipment    | 3-5 years            |  | 5%            



Expenditure for repairs and maintenance
is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts
and any resulting gain or loss is recognized in the results of operations.



Depreciation expense for the three months
ended September 30, 2012 and 2011 were $85,847 and $14,372, respectively.



Depreciation expense for the nine months
ended September 30, 2012 and 2011 was $262,654 and $55,438, respectively.



Construction
in progress



Construction in progress is stated at
cost, which includes the costs of self-constructed assets, including mine development assets during the construction phase. Indirect
overhead costs are not included in the cost of self-constructed assets. Construction in progress is not depreciated until such
time as the assets are completed and put into operational use. No capitalized interest is incurred during the period of construction.



Impairment
of long-lived assets



In accordance with the provisions of ASC
Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as property, plant and equipment
and construction in progress held and used by the Company are annually reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated
by a comparison of the carrying amount of assets to estimated discounted net cash flows expected to be generated by the assets.
Future cash flows are based on estimated quantities of gold and other recoverable metals, expected price of gold and other commodity
(considering current and historical prices, price trends and related factors), production levels and cash costs of production,
capital and reclamation costs, all based on detailed engineering life-of-mine plans. If such assets are considered to be impaired,
the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of
the assets.





9







CHINA SHOUGUAN MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE – 4 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES, Cont’d.



Numerous factors including, but not limited
to, such things as unexpected grade changes, gold recovery problems, shortages of equipment and consumables, equipment failures,
and collapse of pit walls, could impact our ability to achieve forecasted production schedules from proven and probable reserves.
Additionally, commodity prices, capital expenditure requirements and reclamation costs could differ from the assumptions used in
the cash flow models used to assess impairment. The ability to achieve the estimated quantities of recoverable minerals from exploration
stage mineral interests involves further risks in addition to those factors applicable to mineral interests where proven and probable
reserves have been identified, due to the lower level of confidence that the identified mineralized material can ultimately be
mined economically. There has been no impairment charge for the periods presented.



Revenue
recognition



In accordance with the ASC Topic 605,
“Revenue Recognition”, the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of
title has occurred or services have been rendered, the selling price is fixed or determinable and collectability is reasonably
assured.



(a) Product
sales



The Company derives revenues from the
sales of non-refined gold concentrate to smelters, whereas the smelter usually takes 6 days for the production from non-refined
gold concentrate to gold bullion. The Company generally recognizes its revenues, net of value-added taxes ("VAT") at
the time of gold bullion is produced by the smelter and its selling price is determined by the market value of gold bullion quoted
by the Shanghai Gold Exchange.



The Company is subject to VAT which is
levied on the standard gold products at the standard rate of 17% on the invoiced value of sales. The Company’s VIE, XinGuan
is granted with a preferential tax treatment under the Chinese tax law of the “Notice from Ministry of Finance and State
Tax Bureau in Relation to Exemption of Value Added Tax on Gold Production” and “Notice regarding issues on Tax Policy
on Gold Transaction”, whereas gold produced and sold by gold mining and smelting enterprises are exempted from VAT.



(b) Service
revenue



Service revenue is primarily derived from
the provision of mining consulting and technical services that are not an element of an arrangement for the sale of products. These
services are generally billed on a time-cost plus basis, for a period of service time from 2 to 6 months. Revenue is recognized
when service is rendered and accepted by the customers.



(c) Interest
income



Interest income is recognized on a time
apportionment basis, taking into account the principal amounts outstanding and the interest rates applicable.





10







CHINA SHOUGUAN MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE – 4 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES, Cont’d.



Resource
compensation fees



In accordance with the relevant regulations
under the Chinese Law, a company that is engaged in exploiting mineral resources is required to pay a resource tax and resources
compensation levy to the local government as the compensation for the depletion of mineral resources. Pursuant to “Provisional
Regulations on Resources Tax of the PRC” and “Administrative Rules on the Levy of Mineral Resources Compensation”,
the amounts of the resource tax and resources compensation levy are computed on the basis of the sales revenue of mineral products.
The Company was required to pay resource compensation fees of $0 and $1,031 for the three months ended September 30, 2012 and 2011
and $25,081 and $9,835 for the nine months ended September 30, 2012 and 2011, respectively.



Comprehensive
income



ASC Topic 220, “Comprehensive Income”,
establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive
income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income,
as presented in the accompanying condensed consolidated statement of stockholders’ equity, consists of changes in unrealized
gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense
or benefit.



Income
taxes



The Company adopts ASC Topic 740, “Income
Taxes” regarding accounting for uncertainty in income taxes which prescribes the recognition threshold and measurement attributes
for financial statement recognition and measurement of tax positions taken or expected to be taken on a tax return. In addition,
the guidance requires the determination of whether the benefits of tax positions will be more likely than not sustained upon audit
based upon the technical merits of the tax position. For tax positions that are determined to be more likely than not sustained
upon audit, a company recognizes the largest amount of benefit that is greater than 50% likely of being realized upon ultimate
settlement in the financial statements. For tax positions that are not determined to be more likely than not sustained upon audit,
a company does not recognize any portion of the benefit in the financial statements. The guidance provides for de-recognition,
classification, penalties and interest, accounting in interim periods and disclosure.



For the three and nine months ended September
30, 2012 and 2011, the Company did not have any interest and penalties associated with tax positions. As of September 30, 2012,
the Company did not have any significant unrecognized uncertain tax positions.



The Company conducts major businesses
in the PRC and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that
are subject to examination by the foreign tax authority.





11









CHINA SHOUGUAN MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE – 4 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES, Cont’d.



Net
(loss) income per share



The Company calculates net income per
share in accordance with ASC Topic 260, “Earnings per Share.” Basic income per share is computed by dividing the net
income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar
to basic income 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 stock equivalents had been issued and if the additional common shares were dilutive.



Foreign
currencies translation



Transactions denominated in currencies
other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of
the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into
the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are
recorded in the statement of operations.



The reporting currency of the Company
is the United States Dollars ("US$"). The Company's subsidiary in the PRC maintain its books and records in its local
currency, Renminbi Yuan ("RMB"), which is functional currency as being the primary currency of the economic environment
in which the entity operates.



In general, for consolidation purposes,
assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC
Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and
expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial
statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement
of stockholders’ equity.



Translation of amounts from RMB into US$1
has been made at the following exchange rates for the respective period:



|                                      |  |  | September 30, 2012 |  | September 30, 2011
|------------------------------------- |  |  | ------------------ |  | ------------------
|Period-end RMB:US$1 exchange rate     |  |  | 6.3340             |  | 6.4018            
|Period average RMB:US$1 exchange rate |  |  | 6.3275             |  | 6.5060            
|                                      |  |  |                    |  |                   



Related
parties



Parties, which can be a corporation or
individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or
exercise significant influence over the other party in making financial and operational decisions. Companies are also considered
to be related if they are subject to common control or common significant influence.





12







CHINA SHOUGUAN MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE – 4 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES, Cont’d.



Segment
reporting



ASC Topic 280, “Segment Reporting”
establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal
organization structure as well as information about geographical areas, business segments and major customers in financial statements.
For the three and nine months ended September 30, 2012, the Company operates in two reportable operating segments in the PRC.



Fair
value of financial instruments



The carrying value of the Company’s
financial instruments include cash, accounts receivable, amounts due from (to) related parties, deposits and prepayments, other
receivables, accounts payable, income tax payable, accrued liabilities and other payable. Fair values were assumed to approximate
carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair
values. The carrying value of the Company’s loans and note payable approximated its fair value based on the current market
prices or interest rates for similar debt instruments.



The Company also follows the guidance
of ASC Topic 820-10, “Fair Value Measurements and Disclosures” ("ASC 820-10"), with respect to financial
assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes
the inputs used in measuring fair value as follows:



|· | Level 1 : Observable inputs such as quoted prices in active markets;
|- | --------------------------------------------------------------------



|· | Level 2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
|- | ------------------------------------------------------------------------------------------------------------------------



|· | Level 3 : Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions
|- | -------------------------------------------------------------------------------------------------------------------------------------------



Fair value estimates are made at a specific
point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and
involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions
could significantly affect the estimates.



Recent
accounting pronouncements



The Company has reviewed all recently
issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may
be expected to cause a material impact on its financial condition or the results of its operations.



In July 2012, the Financial Accounting
Standards Board issued ASC Update No. 2012-02, “Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible
Assets for Impairment” (“ASU 2012-02”). ASU 2012-02 provides companies with the option to assess qualitative
factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived
intangible asset is impaired. If the Company concludes that it is more likely than not that the asset is impaired, it is required
to determine the fair value of the intangible asset and perform the quantitative impairment test by comparing the fair value with
the carrying value in accordance with Topic 350. The Company does not expect the adoption of ASU 2012-02 to impact its results
of operations or financial position.





13







CHINA SHOUGUAN MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE – 5 PRIVATE PLACEMENT



On August 3, 2012, the Company entered
into definitive agreements with certain investors relating to the private placement of a total of 22,000,000 common stocks at a
subscription price of $0.5 per share, for an aggregate gross cash purchase price of $11,000,000 under Regulation S. Prior to closing.
As of September 30, 2012, approximately $5.11 million of outstanding payment for the private placement are recorded as subscription
receivable in the Company’s balance sheet. The Company expects to receive the proceeds of $5.11 million in November 2012.





NOTE –
6 AMOUNTS DUE FROM A RELATED PARTY



As of September 30, 2012, amount due from
a related party represented temporary advances made to Mr. Jingfeng Lv, the director of a subsidiary, SSIC, which is unsecured,
interest-free and repayable on demand.





NOTE –
7 AMOUNTS DUE TO RELATED PARTIES



As of September 30, 2012, amounts due
to related parties represented temporary advances made by Mr. Zhang, the director of the Company and his spouse, which were unsecured,
interest-free with no fixed repayment term.

























14









CHINA SHOUGUAN MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE –
8 SHORT-TERM BORROWINGS



For the nine months ended September 30,
2012, the Company’s operating subsidiary, SSIC, obtained short-term borrowings of $868,330 (equivalent to RMB5,500,000) from
a financial institution in the PRC, which bears interest rate at 1.3 times of the Bank of China Benchmark Lending Rate, monthly
payable, due January 19, 2013, and is secured by the property owned by Mr. Zhang, the director.





NOTE –
9 NOTES PAYABLE



During the nine months ended September
30, 2012, the Company converted the notes into shares at a price of $0.5 per share, with an aggregate of 8,000,000 shares of common
stock of the Company.





NOTE –
10 LOANS PAYABLE, UNSECURED



As of September 30, 2012, the Company
had a short-term loan of $2,019,671 (equivalent to RMB12,792,600) with several independent third parties, due August 8, 2013 on
an extension basis, which carried annual interest at Bank of China Benchmark Lending Rate, payable at maturity.



As of September 30, 2012, the Company
also held the following long-term loans payable to third parties:



|                                                                                                                                                                      | September 30, 2012 |             | December 31, 2011
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | ----------- | -----------------
|                                                                                                                                                                      | (Unaudited)        |             | (Audited)        
|                                                                                                                                                                      |                    |             |                  
|Loans payable to four individuals in the PRC, unsecured:                                                                                                              |                    |             |                  
|                                                                                                                                                                      |                    |             |                  
|Equivalent to RMB4,500,000 with interest rate at 2.7% per annum, payable at its maturity, due May 7, 2013                                                             | $                  | 710,452     |                  
|                                                                                                                                                                      |                    |             |                  
|Equivalent to RMB9,400,000 with interest rate at 2.7% per annum, payable at its maturity, due May 7, 2013                                                             |                    | 1,484,053   |                  
|                                                                                                                                                                      |                    |             |                  
|Equivalent to RMB8,000,000 with interest rate at 5.18% per annum, payable at its maturity, due June 14, 2013                                                          |                    | 1,263,025   |                  
|                                                                                                                                                                      |                    |             |                  
|Equivalent to RMB2,700,000 with interest rate at 5.18% per annum, payable at its maturity, due March 29, 2013                                                         |                    | 426,271     |                  
|                                                                                                                                                                      |                    |             |                  
|Equivalent to RMB 2,877,157 (2011: RMB0) with effective interest rate at 8.97% per annum, payable with monthly principal and interest payments, due February 28, 2017 |                    | 454,241     |                  
|Total long-term loans payable                                                                                                                                         |                    | 4,338,042   |                  
|Less: current portion                                                                                                                                                 |                    | (3,987,547) |                  
|Long-term loans payable, net of current portion                                                                                                                       | $                  | 350,495     |                  
|                                                                                                                                                                      |                    |             |                  



As of September 30, 2012, the minimum
future payments of the aggregate long-term loans payable in the next five years are as follow:



|Year ending September 30: |   |          
|------------------------- | - | ---------
|2013                      | $ | 3,987,547
|2014                      |   | 91,757   
|2015                      |   | 100,335  
|2016                      |   | 109,714  
|2017                      |   | 48,689   
|Total borrowings          | $ | 4,338,042





15









CHINA SHOUGUAN MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE –
11 LOANS PAYABLE, RELATED PARTY



As of September 30, 2012, the loan amounted
to $615,725 (equivalent to RMB3,900,000) with Mr. Zhang, the director of the Company, due April 2, 2014, which was unsecured, carried
annual interest at Bank of China Benchmark Lending Rate and payable in a monthly installment.



As of September 30, 2012, the minimum
future payments of the aggregate loan payable from a related party in the next two years are as follows:



|Year ending September 30: |   |        
|------------------------- | - | -------
|2013                      | $ | 78,939 
|2014                      |   | 536,786
|Total borrowings          | $ | 615,725
|                          |   |        



NOTE –
12 INCOME TAXES



For the nine months ended September 30,
2012 and 2011, the local (United States) and foreign components of (loss) income before income taxes were comprised of the following:



|                                  |  | Nine months ended September 30,
|--------------------------------- |  | -------------------------------
|                                  |  | 2012                           
|Tax jurisdictions from:           |  |                                
|– Local                           |  | $                              
|– Foreign                         |  |                                
|(Loss) income before income taxes |  | $                              



The provision for income taxes consisted
of the following:



|                            |  | Nine months ended September 30,
|--------------------------- |  | -------------------------------
|                            |  | 2012                           
|Current:                    |  |                                
|– Local                     |  | $                              
|– Foreign, representing by: |  |                                
|Hong Kong                   |  |                                
|The PRC                     |  |                                
|                            |  |                                
|Deferred:                   |  |                                
|– Local                     |  |                                
|– Foreign                   |  |                                
|Income tax expense          |  | $                              



The effective tax rate in the periods
presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates.
The Company has subsidiaries that operate in various countries: United States, BVI, Hong Kong and the PRC that are subject to taxes
in the jurisdictions in which they operate, as follows:



United States of America



The Company is registered in the State
of Nevada and is subject to the tax laws of the United States of America.



British Virgin Island



Under the current BVI law, Bei Sheng is
not subject to tax on its income or profits. For the nine months ended September 30, 2012, Bei Sheng suffered from an operation
loss of $34,892.



Hong Kong



Golden Wide is subject to Hong Kong Profits
Tax, which is charged at the statutory income rate of 16.5% on assessable income. For the nine months ended September 30, 2012
and 2011, Golden Wide suffered from an operating loss of $3,074 and $7,112, respectively.





16









CHINA SHOUGUAN MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE – 12 INCOME TAXES, Cont’d.



The PRC



The Company generated its major income
from its subsidiaries and VIEs operating in the PRC for the nine months ended September 30, 2012 and 2011, which are subject to
the Corporate Income Tax Law of the People’s Republic of China (the “New CIT Law”) at a unified income tax rate
of 25%. A reconciliation of income tax rate to the effective income tax rate for the nine months ended September 30, 2012 and 2011
is as follows:



|                                                        |  | Nine months ended September 30, |            
|------------------------------------------------------- |  | ------------------------------- | -----------
|2012                                                    |  | 2011                            |            
|                                                        |  |                                 |            
|Loss before income taxes                                |  | $                               | (1,069,919)
|Statutory income tax rate                               |  |                                 | 25%        
|                                                        |  |                                 |            
|Income tax expense at the statutory rate                |  |                                 | (267,480)  
|Tax adjustments                                         |  |                                 | (69,530)   
|Net operating loss not recognized as deferred tax asset |  |                                 | 251,681    
|Non-deductible items                                    |  |                                 | 238,361    
|Income tax expense                                      |  | $                               | 153,032    
|                                                        |  |                                 |            
|                                                        |  |                                 |            



As of September 30, 2012, the Company
incurred $2,904,687 of aggregate net operating loss carry forwards available to offset its taxable income for income tax purposes.
The Company has provided for a full valuation allowance against the deferred tax assets of $725,421 on the expected future tax
benefits from the net operating loss carry forwards as the management believes it is more likely than not that these assets will
not be realized in the future.





NOTE –
13 SEGMENT INFORMATION



The Company’s business units have
been aggregated into two reportable segments, as defined by ASC Topic 280:



§ Mining
management business – project management of gold mining operations;

§ Mining
technical service business – provision of mining technical services.



The Company operates these business segments
in the PRC and all of the identifiable assets of the Company are located in the PRC during the periods presented.



The accounting policies of the segments
are the same as those described in the summary of significant accounting policies. The Company has no inter-segment sales for the
three and nine months ended September 30, 2012 and 2011. The Company’s reportable segments are strategic business units that
offer different products and services. They are managed separately because each business requires different technology and marketing
strategies. Summarized financial information concerning the Company’s reportable segments is shown in the following table
for the three and nine months ended September 30, 2012 and 2011.





17







CHINA SHOUGUAN MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE – 13 SEGMENT INFORMATION, Cont’d.



|                                  |  | Three months ended September 30, 2012 |            
|--------------------------------- |  | ------------------------------------- | -----------
|                                  |  | Mining management business            |            
|Operating revenues, net:          |  |                                       |            
|- Products                        |  | $                                     | 2,155,652  
|- Service                         |  |                                       | -          
|Total operating revenues          |  |                                       | 2,155,652  
|Cost of revenues                  |  |                                       | (1,265,888)
|                                  |  |                                       |            
|Gross loss                        |  |                                       | 889,764    
|Depreciation and amortization     |  |                                       | 607,062    
|Total assets                      |  |                                       | 15,382,852 
|Expenditure for long-lived assets |  | $                                     | 478,246    
|                                  |  |                                       |            



|                                  |  | Nine months ended September 30, 2012
|--------------------------------- |  | ------------------------------------
|                                  |  | Mining management business          
|Operating revenues, net:          |  |                                     
|- Products                        |  | $                                   
|- Service                         |  |                                     
|Total operating revenues          |  |                                     
|Cost of revenues                  |  |                                     
|                                  |  |                                     
|Gross loss                        |  |                                     
|Depreciation and amortization     |  |                                     
|Total assets                      |  |                                     
|Expenditure for long-lived assets |  | $                                   
|                                  |  |                                     



|                                  |  | Three months ended September 30, 2011
|--------------------------------- |  | -------------------------------------
|                                  |  | Mining management business           
|Operating revenues, net:          |  |                                      
|- Products                        |  | $                                    
|- Service                         |  |                                      
|Total operating revenues          |  |                                      
|Cost of revenues                  |  |                                      
|                                  |  |                                      
|Gross profit                      |  |                                      
|Depreciation and amortization     |  |                                      
|Total assets                      |  |                                      
|Expenditure for long-lived assets |  | $                                    
|                                  |  |                                      



|                                  |  | Nine months ended September 30, 2011
|--------------------------------- |  | ------------------------------------
|                                  |  | Mining management business          
|Operating revenues, net:          |  |                                     
|- Products                        |  | $                                   
|- Service                         |  |                                     
|Total operating revenues          |  |                                     
|Cost of revenues                  |  |                                     
|                                  |  |                                     
|Gross profit                      |  |                                     
|Depreciation and amortization     |  |                                     
|Total assets                      |  |                                     
|Expenditure for long-lived assets |  | $                                   
|                                  |  |                                     





18









CHINA SHOUGUAN MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE –
14 CONCENTRATIONS OF RISK



The Company is exposed to the following
concentrations of risk:



(a) Major customers



For the three
and nine months ended September 30, 2012 and 2011, the customer who accounts for 10% or more of the Company’s revenuesand
its outstanding balance at period-end date, are presented as follows:

|           |        |  | Three months ended September 30, 2012 |           | September 30, 2012           
|---------- | ------ |  | ------------------------------------- | --------- | -----------------------------
|Customer   |        |  | Revenue                               |           | Percentage
        of revenue
|           |        |  |                                       |           |                              
|Customer A |        |  | $                                     | 1,249,907 |                              
|Customer C |        |  |                                       | 905,745   |                              
|           |        |  |                                       |           |                              
|           | Total: |  | $                                     | 2,155,652 |                              



|           |        |  | Nine months ended September 30, 2012 |           | September 30, 2012           
|---------- | ------ |  | ------------------------------------ | --------- | -----------------------------
|Customer   |        |  | Revenue                              |           | Percentage
        of revenue
|           |        |  |                                      |           |                              
|Customer A |        |  | $                                    | 1,249,907 |                              
|Customer B |        |  |                                      | 1,097,479 |                              
|Customer C |        |  |                                      | 945,260   |                              
|           |        |  |                                      |           |                              
|           | Total: |  | $                                    | 3,292,646 |                              





|           |        |  | Three months ended September 30, 2011 |           | September 30, 2011           
|---------- | ------ |  | ------------------------------------- | --------- | -----------------------------
|Customer   |        |  | Revenue                               |           | Percentage
        of revenue
|           |        |  |                                       |           |                              
|Customer A |        |  | $                                     | 665,059   |                              
|Customer C |        |  |                                       | 323,608   |                              
|Customer D |        |  |                                       | 115,474   |                              
|           |        |  |                                       |           |                              
|           | Total: |  | $                                     | 1,104,141 |                              



|           |        |  | Nine months ended September 30, 2011 |           | September 30, 2011           
|---------- | ------ |  | ------------------------------------ | --------- | -----------------------------
|Customer   |        |  | Revenue                              |           | Percentage
        of revenue
|           |        |  |                                      |           |                              
|Customer A |        |  | $                                    | 2,484,215 |                              
|Customer B |        |  |                                      | 572,308   |                              
|           |        |  |                                      |           |                              
|           | Total: |  | $                                    | 3,056,523 |                              





19









CHINA SHOUGUAN MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE – 14 CONCENTRATIONS OF RISK
, Cont’d.



(b) Major vendors



For the three and nine months ended September
30, 2012 and 2011, the vendors who account for 10% or more of the Company’s purchases and its outstanding balance at period-end
date, are presented as follows:



|         |        |  | Three months ended September 30, 2012 |           | September 30, 2012             
|-------- | ------ |  | ------------------------------------- | --------- | -------------------------------
|Vendor   |        |  | Purchases                             |           | Percentage
        of purchases
|         |        |  |                                       |           |                                
|Vendor A |        |  | $                                     | 1,055,036 |                                
|Vendor B |        |  |                                       | 411,892   |                                
|Vendor C |        |  |                                       | 215,979   |                                
|         |        |  |                                       |           |                                
|         | Total: |  | $                                     | 1,682,907 |                                
|         |        |  |                                       |           |                                



|         |        |  | Nine months ended September 30, 2012 |           | September 30, 2012             
|-------- | ------ |  | ------------------------------------ | --------- | -------------------------------
|Vendor   |        |  | Purchases                            |           | Percentage
        of purchases
|         |        |  |                                      |           |                                
|Vendor A |        |  | $                                    | 1,059,142 |                                
|Vendor B |        |  |                                      | 422,449   |                                
|Vendor C |        |  |                                      | 336,741   |                                
|         |        |  |                                      |           |                                
|         | Total: |  | $                                    | 1,818,332 |                                
|         |        |  |                                      |           |                                



|         |        |  | Three months ended September 30, 2011 |         | September 30, 2011             
|-------- | ------ |  | ------------------------------------- | ------- | -------------------------------
|Vendor   |        |  | Purchases                             |         | Percentage
        of purchases
|         |        |  |                                       |         |                                
|Vendor B |        |  | $                                     | 32,425  |                                
|Vendor C |        |  |                                       | 37,443  |                                
|Vendor D |        |  |                                       | 36,116  |                                
|Vendor E |        |  |                                       | 27,168  |                                
|         |        |  |                                       |         |                                
|         | Total: |  | $                                     | 133,152 |                                



|         |        |  | Nine months ended September 30, 2011 |         | September 30, 2011             
|-------- | ------ |  | ------------------------------------ | ------- | -------------------------------
|Vendor   |        |  | Purchases                            |         | Percentage
        of purchases
|         |        |  |                                      |         |                                
|Vendor A |        |  | $                                    | 273,795 |                                
|Vendor B |        |  |                                      | 224,143 |                                
|         |        |  |                                      |         |                                
|         | Total: |  | $                                    | 497,938 |                                





20









CHINA SHOUGUAN MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE – 14 CONCENTRATIONS OF RISK
, Cont’d.



(c) Credit risk



Financial instruments that are potentially
subject to credit risk consist principally of accounts receivables. The Company believes the concentration of credit risk in its
accounts and retention receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection
terms. The Company does not generally require collateral from customers. Credit is extended based on evaluation of a customer's
financial condition. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit
risk of specific customers, historical trends and other information.



(d) Exchange rate risk



The reporting currency of the Company
is US$, to date the majority of the revenues and costs are denominated in RMB and a significant portion of the assets and liabilities
are denominated in RMB. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations
may be affected by fluctuations in the exchange rate between US$ and RMB. If RMB depreciates against US$, the value of RMB revenues
and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments
that expose to substantial market risk.



(e) Economic and political risks



The Company's operations are conducted
in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political,
economic and legal environment in the PRC, and by the general state of the PRC economy.



The Company's operations in the PRC are
subject to special considerations and significant risks not typically associated with companies in North America and Western Europe.
These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange.
The Company's results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in
governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad,
and rates and methods of taxation.



(f) Mining industry risks



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



(g) Risk on changing price in gold



At present,
the price of gold in the PRC is generally in line with the price of gold in the international market. There are many factors influencing
the price of gold in the international market, including the international economic situation (in particular the economic situation
in the US), petroleum prices, fluctuations in the exchange rates of the US$, fluctuations in the stock and other financial investment
markets and various political, military, social and economic contingencies. These factors are beyond the control of the Company.
Changes in the prices of the gold in the PRC and in the exchange rate of Renminbi as a result of these may adversely affect the
operating results of the Company. Under the relevant PRC laws and regulations, hedging activities presently are not permitted in
gold tracing in the PRC market. The Company has not been involved in hedging transactions or any alternative measures to managers
the potential price risk.





21









CHINA SHOUGUAN MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2012 AND 2011

(Currency expressed in United States
Dollars (“US$”))

(Unaudited)



NOTE –
15 COMMITMENTS AND CONTINGENCIES



(a) Operating
leases



The Company is committed under various
non-cancelable operating leases for office premises and mine operating rights with the terms ranging from 12 months to 10 years,
with fixed monthly rentals, due through April 2021. Total rent expenses for the nine months ended September 30, 2012 and 2011 was
$1,627,663 and $1,067,918, respectively.



As of September 30, 2012, the Company
has the aggregate future minimum rental payments due under these non-cancelable operating leases, as follows:



|                          |  | Operating lease commitments
|------------------------- |  | ---------------------------
|                          |  | Office premises            
|Year ending September 30, |  |                            
|2013                      |  | $                          
|2014                      |  |                            
|2015                      |  |                            
|                          |  |                            
|Total:                    |  | $                          
|                          |  |                            



NOTE –
16 SUBSEQUENT EVENTS



The Company evaluated subsequent events
through the date the financial statements were issued and filed with this Form10-Q. There were no subsequent events that required
recognition or disclosure.













22







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



Forward Looking Statements



This report contains forward-looking statements.
All statements other than statements of historical facts contained in this report, including statements regarding our future results
of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking
statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any future results, performance or achievements expressed or implied
by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may,"
"will," "should," "expects," "plans," "anticipates," "could," "intends,"
"target," "projects," "contemplates," "believes," "estimates," "predicts,"
"potential" or "continue" or the negative of these terms or other similar words. These statements are only
predictions. We have based these forward-looking statements largely on our current expectations and projections about future events
and financial trends that we believe may affect our business, financial condition and results of operations. We discuss many of
the risks in greater detail under the heading "Risk Factors." Also, these forward-looking statements represent our estimates
and assumptions only as of the date of this report. Except as required by law, we assume no obligation to update any forward-looking
statements after the date of this report. This report also contains estimates and other statistical data made by independent parties
and by us relating to market size and growth and other industry data. This data involves a number of assumptions and limitations,
and you are cautioned not to give undue weight to such estimates. We have not independently verified the statistical and other
industry data generated by independent parties and contained in this report. In addition, projections, assumptions and estimates
of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree
of uncertainty and risk due to a variety of factors, including those described in “Risk Factors” and elsewhere in this
report. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent
parties and by us.



Plan of Operation



China ShouGuan Mining Corporation (“ShouGuan”,
“we” and the “Company”) was incorporated in the State of Nevada on May 4, 2010. We are a holding company
that conducts business operations through BSL, our operating company, and its subsidiaries and variable interest entities (VIEs)
in Shandong Province in the People’s Republic of China (“PRC”).



Mr. Feize Zhang, our Chairman and CEO,
Mr. JingFeng Lv, our CTO and Mr. Jianxi Yang, a director of Yantai JinGuan Investment Limited, founded SSIC in December 2008 and
later in early 2009 established SSIC’s subsidiaries JinGuan and XinGuan. These executive officers and managers are experts
in China who specialize in mining technologies, mining resources management and financial and strategic management. Our primary
focus is on acquiring existing gold mine projects in Shandong province of the PRC. These potential targets are mostly run with
low productivity because of inadequate funds and primitive technologies. We plan to re-engineer and redevelop these gold mines
through the transfer of advanced exploration and mining technologies, capital injection and effective management.



These advanced exploration and mining
technologies include mining data collection and analysis, identification of ore locations and running trends of veins, design of
exploration and mining plans, on-site mine construction planning, formulation and customization of mining methodologies, introduction
of modern exploration and mining technologies, supervision of subcontracting staff and provision of technical supports in relation
to production management, mine ventilation, water discharge, system upgrade, quality assurance, safety control, etc. The underground
mining works, like digging tunnels and wells and the underground transport of ore extracts will all be outsourced to third party
subcontractors.





23









Our business model includes sourcing of
early stage gold mines with good profit potential, conducting feasibility studies to identify suitable projects, leasing the suitable
mining sites and facilities, and managing the mining operations on these selected sites, with the goal of acquiring the mine if
the operations prove to be satisfactory, based on the review criteria set by our experienced management. In addition, we provide
consulting services in areas related to mine exploration and analysis to our clients.

Revenues are derived from the sales of
gold concentrates, the principal raw material used in gold smelting operation to produce gold. All mining operations are outsourced
to an independent third contractor and we only take possession of the gold concentrates when they are sold to smelters. At that
time, the selling prices are determined from two factors, the amount of gold in the gold concentrates and the price of gold on
the date of sale. The amount of gold in the gold concentrates is determined and agreed between the Company and the smelters and
then the selling price is determined according to the official gold price at the time of sale as indicated by the Shanghai Gold
Exchange (http://www.sge.sh), an entity governed by the PRC Government.



On the consulting side, revenues are derived
on a project-by-project basis and payment is collected as we complete our services as outlined in the scope of each individual
project.



We target to grow proactively through
continual sourcing of existing gold mines in the PRC and managing them. These projects will be executed by BSL and its subsidiaries,
VIEs or related companies in China. CunliJi Gold Mine was the first project commenced in May 2009. To ensure all mines are legally
and properly operated, all target gold mines are required to have full sets of government-approved licenses before effecting commencement
of any business operations. There is a limited supply of desirable gold mines in the PRC and we face strong competition for gold
mining rights from other gold mining companies, most of which have greater financial resources than we have, so we may not be able
to acquire any attractive gold mining rights we find on acceptable terms.



Mining rights are amortized based on actual
units of production over estimated proven and/ or probable reserves of the mines, subject to impairment. We intend to carefully
review the production plans and the reserve levels of our mines periodically. Accordingly, any material change in mining production
or modification of reserve levels may have a negative impact on our operating results.



We currently rely on one subcontractor
for all of our mining operations in the PRC - Wenzhou Mine Engineering Construction Group Co. Ltd. (“WMEC”),
which means our operations are affected by their performance and whose activities are substantially outside of our control.
If WMEC fails to achieve the conditions set forth in our Construction Project Agreement with them, e.g. monthly extraction volumes,
gold concentrate processing volumes, etc., or they otherwise fail to perform their obligations to us, we may be forced to
terminate their services, which would cause delays in our mineral production, require that we identify and engage one or more other
third-party contractors to do the work WMEC was doing, all of which would adversely affect our operating results. No relationship
exists between WMEC, the subcontractor we rely on for all of our mining operations in the PRC, and Penglai City Gold Mining
Holding Co. Limited, the legal owner and holder of the PRC State license to the Cunli Ji Mine; they are unrelated parties.



Our mining operations are subject to a
number of risks and hazards typical in the mining industry, including:



· environmental hazards;

· industrial accidents;

· unusual or unexpected geologic formations;

· explosive rock failures; and

· flooding and periodic interruptions
due to inclement or hazardous weather conditions.





24









Any such risks could result in:



· damage to or destruction of mineral
properties or production facilities;

· personal injury or death;

· environmental damage;

· delays in mining;

· monetary losses; and

· legal liability.



In addition, during the course of mining
activities, we use dangerous materials. We have established stringent rules relating to the storage, handling and use of such dangerous
materials, however, accidents could still occur. Should we be held liable for any such accident, we may be subject to penalties,
and possible criminal proceedings may be brought against our Company, BSL, its subsidiaries and/or VIEs or any of the employees.



We emphasize environmental protection
in our operations and related activities, and a significant financial commitment has been made towards the construction of environmental
protection facilities and the establishment of a sound environmental protection management and monitoring system. We are currently
in compliance with applicable environmental regulations of the PRC government, but any changes to these regulations may increase
our operating costs, which could adversely affect our results of operations.



We are also subject to numerous PRC rules
and regulations governing the mining industry, which are disclosed in detail in the Description of Business section of this report.
Our inability to comply with any of these current or future rules and/or regulations could severely impact our operations and financial
condition.



In addition, we provide mining management
consulting services to third party clients as an additional source of revenue. We only provide mining consulting services to mine
owners. We do not own, rent or participate in the mine operations of these clients. Instead, we utilize the described expertise
of our management team to help clients assess their mine conditions and provide technical advice, guidance and suggestions to further
improve management and operations of their mines, based on our management's experience.



Current Operations



In May 2009, we commenced our first project,
the Cunli Ji Mine, located in Shandong, China.



On May 4, 2009, the Company, through BSL
and its VIE, XinGuan, entered into a Master Agreement, an Operating Lease agreement and an Acquisition Agreement with Penglai City
Gold Mining Holding Co. Ltd. The Master Agreement sets out the general terms of the Operating Lease agreement and the Acquisition
Agreement. Pursuant to the Operating Lease Agreement, XinGuan agreed to pay a monthly rent of $15,636 (RMB 100,000) for the right
to lease and manage the gold mine for a term of 20 months, with a rental deposit of $3,147,178 (equivalent to RMB 20 million).
Pursuant to the terms of the Acquisition Agreement, XinGuan agreed to acquire the gold mine for a purchase consideration of $5,089,803
if the following conditions are satisfied upon the expiry of the operating lease agreement: 1) average daily ore production from
the CunliJi Mine has reached 80 tons ore more for the year 2010, and 2) the mine has obtained ISO (or equivalent) certification
on or before January 3, 2011.The above agreement was subsequently extended to January 3, 2012. On January 3, 2012 the above transaction
was closed. The Cunli Ji Mine was acquired by the Company and the rental deposit became part of the purchase consideration.





25









On September 1, 2009, XinGuan entered
into a Construction Project Agreement with Jinhai Mine Underground Engineering Ltd. ("Jinhai"), an unrelated third party,
to carry out the underground mining and ancillary work at the Cunli Ji Mine. Jinhai will conduct all underground mining activities
and construction work in accordance with the design and work drawings provided by XinGuan on a monthly basis and will be required
to meet all regulatory and safety standards specified by XinGuan and the PRC for underground mining operations in the Shandong
Province. The Agreement was effective on September 1, 2009 and was valid for one year. Through mutual consent by both parties,
this Agreement was renewed on August 28, 2010 for an additional year until August 28, 2011, with the contracted prices and all
other terms unchanged. No relationship exists between Jinhai, the subcontractor we rely on for all of our mining operations in
the PRC, and Penglai City Gold Mining Holding Co. Limited, the legal owner and holder of the PRC State license to the Cunli Ji
Mine; they are unrelated parties. On September 30, 2010, XinGuan and Jinhai mutually agreed to terminate the renewed agreement
unconditionally effective from November 1, 2010.



On October 1, 2010, XinGuan entered into
another Construction Project Agreement with Wenzhou Mine Engineering Construction Group Co. Ltd. (“WMEC”), an unrelated
third party, to carry out the underground mining and ancillary work at the Cunli Ji Mine. WMEC will conduct all underground mining
activities and construction work in accordance with the design and work drawings provided by XinGuan on a monthly basis and will
be required to meet all regulatory and safety standards specified by XinGuan and the PRC for underground mining operations in the
Shandong Province. The Agreement was effective on October 1, 2010 and was valid for one year. It was further renewed for another
year until September 30, 2012.



On June 18, 2010, XinGuan paid an additional
amount of $1,309,679 to Penglai City Gold Mining Holding Co. Ltd as an additional rental deposit, with the same terms stated in
the acquisition agreement, such additional deposit would became part of the purchase consideration upon successful closing of the
acquisition.



On May 6, 2011, we, through our VIE, Yantai
JinGuan Investment Co., Ltd. (JinGuan), entered into a lease arrangement with Longkou Dayuan Gold Mining Co. Ltd., an unrelated
third party being the legal owner and holding the mining license of the Dayuan gold mine (the “Lease Property”) regarding
Dayuan Gold Mine. Under the agreement, we agree to pay the aggregate rental payments of approximately $20 million in a term of
10 years commencing from April 1, 2011 through April 1, 2021, to obtain the right to manage and operate the Lease Property in the
repayment schedule, whereas we are committed to pay $12 million equal to 6 years’ rental, no later than September 30, 2011
and the remainder will be paid no later than March 1, 2017. On September 25, 2011, both parties signed a Supplemental Agreement
agreed to defer the aforesaid balance of payment of $6 million to March 31, 2012. On March 30, 2012, the payment was agreed to
extend to September 30, 2012. Concurrently, we entered into an equipment transfer agreement (the “Transfer Agreement”)
with Longkou Datong Industry and Trade Co., Ltd. for the acquisition of mining assets and auxiliary equipment currently being used
in the Dayuan gold mine at a purchase price of approximately $2.3 million.



Mining production was temporary halted
in the Cunli Ji Mine Area during the first and second quarter of 2012 and production was resumed in July 2012. Total mining production
of the Cunli Ji Mine Area during the three months ended September 30, 2012 was approximately 2,004 tons of gold ore or a monthly
average of 668 tons, with an average gold grade of 7.62g/t. Gold concentrate sold for the three months ended September 30, 2012
was 12.5 kg. Total mining production of the Cunli Ji Mine Area during the nine months ended September 30, 2012 was approximately
2,004 tons of gold ore or a monthly average of 223 tons, with an average gold grade of 7.62g/t. Gold concentrate sold for the nine
months ended September 30, 2012 was 12.5 kg.





26







The Dayuan Mine commenced operation in
July 2011. The production level, in units of daily tonnage of raw mineral rocks extracted, averaged 118 tons/day during the fiscal
year 2011. The operation was halted in the fourth quarter of 2011 due to (i) mine restructuring and exploration; (ii) technology
improvement; and (iii) government energy-saving program which resulted in electricity supply cut-down in December 2011. Mining
production of the Dayuan Mine for the three months ended September 30, 2012 was approximately 8,250 tons of gold ore or a monthly
average of 2,750 tons, with an average gold grade of 3.81 g/t. Gold concentrate sold for the three months ended September 30, 2012
was 27.77 kg. Metallurgical recovery rate of the Dayuan Mine during the period was around 96%. Mining production of the Dayuan
Mine for the nine months ended September 30, 2012 was approximately 13,399 tons of gold ore or a monthly average of 1,489 tons,
with an average gold grade of 4.12 g/t. Gold concentrate sold for the nine months ended September 30, 2012 was 48.73 kg. Metallurgical
recovery rate of the Dayuan Mine during the period was around 96%.



We have been deriving revenue since the
commencement of Cunli Ji Mine. Currently we derive our revenue from the sales of non-refined gold concentrates produced from Cunli
Ji Mine and Dayuan Mine. Our expenses are mainly amortization of mining rights, the direct costs associated with the operation
and overhead expenses such as staff salaries, smelting and extracting fee, depreciation of mining plants and other general administrative
expenses. Dayuan Mine experienced an operating loss during the fiscal year 2011 and the operation is expected to turn around in
2012 after the mine restructuring work is completed.





Results of Operations



We do not believe there have been any
recent trends in production, sales, inventory, or the state of the costs or selling prices of our products since the financial
year ended 2009, nor any known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material
effect on our net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that
would cause reported financial information not necessarily to be indicative of future operating results or financial condition.





27







The following table set forth key components
of our results of operations for the three months and nine months ended September 30, 2012 and 2011. All numbers referenced are
in U.S. Dollars:



|                                                               |  | Three months ended September 30, |             | Nine months ended September 30,
|-------------------------------------------------------------- |  | -------------------------------- | ----------- | -------------------------------
|                                                               |  | 2012                             |             | 2011                           
|                                                               |  |                                  |             |                                
|Revenues, net                                                  |  |                                  |             |                                
|- Product sales                                                |  | $                                | 2,155,652   |                                
|- Service income                                               |  |                                  | -           |                                
|Total revenues, net                                            |  |                                  | 2,155,652   |                                
|                                                               |  |                                  |             |                                
|Cost of revenue                                                |  |                                  | (1,265,888) |                                
|                                                               |  |                                  |             |                                
|Gross profit (loss)                                            |  |                                  | 889,764     |                                
|                                                               |  |                                  |             |                                
|Operating expenses:                                            |  |                                  |             |                                
|General and administrative                                     |  |                                  | (295,289)   |                                
|                                                               |  |                                  |             |                                
|Income (loss) from operations                                  |  |                                  | 594,475     |                                
|                                                               |  |                                  |             |                                
|Other income:                                                  |  |                                  |             |                                
|Interest expense                                               |  |                                  | (66,477)    |                                
|Interest income                                                |  |                                  | 721         |                                
|Other income                                                   |  |                                  | (10)        |                                
|                                                               |  |                                  |             |                                
|Income (loss) before income taxes                              |  |                                  | 528,709     |                                
|                                                               |  |                                  |             |                                
|Income tax expense                                             |  |                                  | (216,649)   |                                
|                                                               |  |                                  |             |                                
|NET INCOME (LOSS)                                              |  | $                                | 312,060     |                                
|                                                               |  |                                  |             |                                
|Other comprehensive income:                                    |  |                                  |             |                                
|- Foreign currency translation gain                            |  |                                  | (56,009)    |                                
|                                                               |  |                                  |             |                                
|COMPREHENSIVE INCOME(LOSS)                                     |  | $                                | 256,051     |                                
|                                                               |  |                                  |             |                                
|Net (loss) income per share – Basic and diluted                |  | $                                | (0.00)      |                                
|                                                               |  |                                  |             |                                
|Weighted average common shares outstanding – Basic and diluted |  | 178,900,000                      |             |                                
|                                                               |  |                                  |             |                                





28









Net Revenues



We commenced gold mining activity in May
2009 and began selling of gold concentrate in July 2009. Gold concentrate is mainly sold to smelting plants in the Shandong Province,
PRC. Apart from the selling of gold concentrate, we also provide mining consulting and technical services through our own experts.



Revenue for the three and nine months ended
September 30, 2012 and 2011 comprised the following:



|Three months ended  |   | 30-September-12 |  | %      |   | 30-September-11 |  | %      
|------------------- | - | --------------- |  | ------ | - | --------------- |  | -------
|Sales revenue       |   |                 |  |        |   |                 |  |        
|- Product           | $ | 2,155,652       |  | 100.00 | $ | 1,104,141       |  | 100.00 
|- Service           |   | -               |  | -      |   | -               |  | -      
|                    | $ | 2,155,652       |  | 100.00 | $ | 1,104,271       |  | 100.00 
|Nine months ended   |   |                 |  |        |   |                 |  |        
|Sales revenue       |   |                 |  |        |   |                 |  |        
|- Product           | $ | 3,292,646       |  | 100.00 | $ | 3,065,244       |  | 84.27  
|- Service           |   | -               |  | -      |   | 572,308         |  | 15.73  
|                    | $ | 3,292,646       |  | 100.00 | $ | 3,637,552       |  | 100.00 
|Three months ended  |   |                 |  |        |   |                 |  |        
|Cost of sales       |   |                 |  |        |   |                 |  |        
|- Product           | $ | 1,265,888       |  | 100.00 | $ | 2,423,323       |  | 99.90  
|- Service           |   | -               |  | -      |   | -               |  | 0.10   
|                    | $ | 1,265,888       |  | 100.00 | $ | 2,423,323       |  | 100.00 
|Nine months ended   |   |                 |  |        |   |                 |  |        
|Cost of sales       |   |                 |  |        |   |                 |  |        
|- Product           | $ | 3,399,040       |  | 100.00 | $ | 4,160,335       |  | 96.70  
|- Service           |   | -               |  | -      |   | 140,327         |  | 3.30   
|                    | $ | 3,399,040       |  | 100.00 | $ | 4,300,662       |  | 100.00 
|Three months ended  |   |                 |  |        |   |                 |  |        
|Gross (Loss)/Profit |   |                 |  |        |   |                 |  |        
|- Product           | $ | 889,764         |  | 100.00 | $ | (1,319,182)     |  | 99.82  
|- Service           |   | -               |  | -      |   | -               |  | 0.18   
|                    | $ | 889,764         |  | 100.00 | $ | (1,319,182)     |  | 100.00 
|Nine months ended   |   |                 |  |        |   |                 |  |        
|Gross (loss)        |   |                 |  |        |   |                 |  |        
|- Product           | $ | (106,394)       |  | 100.00 | $ | (1,095,091)     |  | 164.78 
|- Service           |   | -               |  | -      |   | 431,981         |  | (64.78)
|                    | $ | (106,394)       |  | 100.00 | $ | (663,110)       |  | 100.00 
|Three months ended  |   |                 |  |        |   |                 |  |        
|Gross Profit Margin |   |                 |  |        |   |                 |  |        
|- Product           |   | 41.28%          |  | N/A    |   | -119.48%        |  | N/A    
|- Service           |   | N/A             |  | N/A    |   | N/A             |  | N/A    
|Nine months ended   |   |                 |  |        |   |                 |  |        
|Gross Profit Margin |   |                 |  |        |   |                 |  |        
|- Product           |   | -3.23%          |  | N/A    |   | -35.73%         |  | N/A    
|- Service           |   | N/A             |  | N/A    |   | 75.23%          |  | N/A    





29







Revenue



Revenue generated from product sales for
the three months ended September 30, 2012 and September 30, 2011 were $2.16 million and $1.10 million respectively, both represented
100.00% of our total revenues. The increase of revenue derived from product sales for the three months ended September 30, 2012
when comparing with the corresponding period in 2011 was mainly attributable to the increase of world’s gold price.



Revenue generated from services income
for the three months ended September 30, 2012 and September 30, 2011 were both nil which represented 0% of our total revenue respectively.
There was no services income generated for such periods due to the expiration of the provision of mining consulting and technical
services to Longkou Shi Hou de Gold Company Limited on March 31, 2011.



Revenue generated from product sales for
the nine months ended September 30, 2012 and September 30, 2011 were $3.29 million and $3.07million respectively, which represented
100% and 84.27% of our total revenues. The increase of revenue derived from product sales for the nine months ended September 30,
2012 when comparing with the corresponding period in 2011 was mainly attributable to an increase in gold concentrate sold and the
increase of world’s gold price.



Revenue generated from services income
for the nine months ended September 30, 2012 and September 30, 2011 were nil and $0.57 million respectively, which represented
0% and 15.73% of our total revenue. The decrease of revenue derived from service for the nine months ended September 30, 2012 when
comparing with the corresponding period in 2011 was mainly attributable to the expiration of the provision of mining consulting
and technical services to Longkou Shi Hou de Gold Company Limited on March 31, 2011.



Cost of Revenue



Cost of revenue for the three months ended
September 30, 2012 and 2011 were $1.27 million and $2.42 million, respectively. Cost of revenue consisted primarily of direct materials,
direct labor, sub-contracting mining fee, extracting fees, mine rental expenses and other operating overhead, which were primarily
attributable to the sales of gold concentrates. Shipping and handling costs associated with the distribution of our products were
borne by the customers. The decrease in cost of revenue for the three months ended September 30, 2012 when comparing with the corresponding
period in 2011 was mainly attributable to additional direct cost incurred in 2011, amount to approximately $2,273,467, to develop
and operate the gold mines in DaYuan Project, such as rental charges, direct labor and material consumed.



Cost of revenue for the nine months ended
September 30, 2012 and 2011 were $3.40 million and $4.30 million respectively. Cost of revenue consisted primarily of direct materials,
direct labor, sub-contracting mining fee, extracting fees, mine rental expenses and other operating overhead, which were primarily
attributable to the sales of gold concentrates. Shipping and handling costs associated with the distribution of our products were
borne by the customers. The decrease in cost of revenue for the nine months ended September 30, 2012 when comparing with the corresponding
period in 2011 was mainly attributable to additional direct cost incurred in 2011, amount to approximately $3,155,881, to develop
and operate the gold mines in DaYuan Project, such as rental charges, direct labor and material consumed.



Gross Profit and Gross Profit Margin



Our gross profit for the three months
ended September 30, 2012 and 2011 were $0.89 million and ($1.32) million respectively and our gross margin for the sale of gold
concentrate and provision of service income were approximately 41.28% and (119.48%) respectively. The negative gross profit for
the three months ended September 30, 2011 can be attributed to the additional cost incurred, amount to approximately $2,273,467,
to develop and operate the gold mines in DaYuan Project during its setup stage.





30









Our gross profit for the nine months ended
September 30, 2012 and 2011 were ($0.11) million and ($0.66) million respectively and our gross margin for the sale of gold concentrate
and provision of service income were approximately (3.23%) and (18.23%) respectively. The decrease in gross profit in the nine
month ended September 30, 2012 is mainly due to the decrease in service income for the nine months ended September 30, 2012 as
compared to the same period in 2011. The increase in gross margin for the nine months ended September 30, 2012 as compared to the
same period of 2011 was mainly attributable to the cost efficiency.



General and Administrative Expenses



General and administrative expenses for
the three and nine months ended September 30, 2012 and 2011 comprised mainly of salaries and staff welfare expenses, legal and
professional fees, entertainment expenses, traveling and hotel accommodation expenses and other expenses in connection with general
operation.



Our general and administrative expenses
increase $116,432 from $178,857 for the three months ended September 30, 2011 to $295,289 for the three months ended September
30, 2012. Our general and administrative expenses decreased $8,579 from $913,418 for the nine months ended September 30, 2011 to
$904,839 for the nine months ended September 30, 2012. The decrease in general and administrative expenses for the nine months
ended September 30, 2012 as compared to the same period of 2011 was mainly attributable to the cost efficiency.



Interest Income/Expense



Interest income for the three and nine
months ended September 30, 2012 was $721 and $1,200, respectively, comparing to interest income of $404 and $2,426, respectively,
during the same period of 2011. The decrease for the nine months period was attributable to a decrease in bank interest income.



Interest expense for the three and nine
months ended September 30, 2012 was $66,477 and $177,613, respectively, comparing to interest expense of $0 and $0, respectively,
during the same period of 2011. The increase was attributable to an increase in bank loans.



Income Tax Expense



Our income taxes for the three months
ended September 30, 2012 and 2011 was $216,649 and $2,065, respectively. The increase was attributable to the increase in gross
profit and therefore income before income taxes for the three months ended September 30, 2012.



Our income taxes for the nine months ended
September 30, 2012 and 2011 was $153,032 and $320,752, respectively. The decrease was attributable to the decrease in gross profit
and therefore income before income taxes.



Through our operating company in the PRC,
BSL, we have subsidiaries and VIEs that operate in various countries: United States, British Virgin Islands, Hong Kong and the
People’s Republic of China that are subject to taxes in the jurisdictions in which they operate, as follows:



United States of America



We are incorporated in the State of Nevada
and are subject to the tax laws of the United States of America. Since no income is derived in the US, we believe that we are not
subject to US taxes.



British Virgin Islands



Under the current BVI law, Bei Sheng is
not subject to tax on its income or profits. For the nine months ended September 30, 2012, Bei Sheng suffered from an operation
loss of $34,892.





31









Hong Kong



Golden Wide is subject to Hong Kong Profits
Tax, which is charged at the statutory income rate of 16.5% on assessable income. For the nine months ended September 30, 2012
and 2011, Golden Wide suffered from an operating loss of $3,074 and $7,112, respectively.



The PRC



We have
generated all of our income through our subsidiaries and VIEs operating in the PRC during the three and nine months ended September
30, 2012 and 2011. Effective from January 1, 2008, all entities in the PRC are subject to the Corporate Income Tax Law of the People’s
Republic of China (the “New CIT Law”) at a unified income tax rate of 25%. As of September 30, 2012, we incurred $2,904,687of aggregate net operating loss carry forwards available to offset its taxable income for income tax purposes. We have provided
for a full valuation allowance against the deferred tax assets of $725,421on the expected future tax benefits from the net operating loss carry forwards as the management believes it is more likely than
not that these assets will not be realized in the future.



Net Income



Net income for the three months ended
September 30, 2012 was $0.31 million, as compared to net loss of $1.50 million for the three months ended September 30, 2011. Net
loss for the nine months ended September 30, 2012 and 2011 was $1.31 million and $1.85 million, respectively. The increase in net
income for the three and nine months ended September 30, 2012 when comparing with the corresponding periods in 2011 was mainly
due to the increase in product sales revenues in 2012, and additional direct cost and general and administrative cost to develop
and operate the gold mines in DaYuan Project in 2011.



Foreign Currency Translation Gains



Our operating subsidiaries are located
in China. Our operating subsidiaries purchase substantially all products and render all services in China, and receive payments
from customers in China using RMB as the functional currency. We do not engage in currency hedging.



On July 21, 2005, China reformed its foreign
currency exchange policy, revalued the RMB by 2.1 percent and allowed the RMB to appreciate as much as 0.3 percent per day against
the U.S. dollar. As a result, we implemented different exchange rates in translating RMB into U.S. dollars in our financial statements
for the third quarter of 2012 and 2011.



For the nine months ended September 30,
2012, we implemented the exchange rates of 6.3340 (period end) and 6.3275 (period average) in calculating the assets and liabilities,
revenue and expenses, and equity, respectively, which resulted in a foreign currency translation gain of $132,378. For the nine
months ended September 30, 2011, we utilized the exchange rates of 6.4018 (period end) and 6.5060 (period average), and in calculating
the assets and liabilities, revenue and expenses, and equity, respectively, which resulted in a foreign currency translation gain
of $165,967.





32









Liquidity and Capital Resources



We have committed and contracted for the
acquisition of mine and mining rent payments in the next twelve months. As of September 30, 2012, we have available cash of $642,589
and a working deficit of $4,442,326, whereas we may not have sufficient working capital to meet with the contingent payments. Our
continuation as a going concern is dependent upon the continuing financial support from our stockholders. Our management believes
that the existing stockholders will provide the additional cash to meet with our obligations as they become due. However, there
can be no assurance that we will be able to obtain sufficient funds to meet our obligations on a timely manner.



These factors raise substantial doubt
about our ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments
to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in us
not being able to continue as a going concern.



Our primary liquidity needs are to fund
operational expenses, capital expenditures and potential acquisition of gold mining properties in the Shandong province. To date,
we have financed our working capital requirements and capital expenditures through internally generated cash and capital contribution
from our existing shareholders.



General



As of September 30, 2012 and December
31, 2011, we had cash and cash equivalents of $0.64 million and $0.34 million, respectively. The following table provides detailed
information about our net cash flow for the nine months ended September 30, 2012 and 2011.



Cash Flow

|(All amounts in millions of U.S. dollars)
|-----------------------------------------
|                                         
|                                         
|Net cash (used in) operating activities  
|Net cash (used in) investing activities  
|Net cash provided by financing activities
|Effect of exchange rate changes on cash  
|Net cash (outflow) inflow                

Operating Activities:



Net cash provided by operating activities
was $0.11 million for the nine months ended September 30, 2012, as compared to net cash used in operating activities of $0.63 million
for the same period in 2011. The increase in net cash provided by operating activities in the nine months ended September 30, 2012
was primarily due to the net cash provided by amortization of prepaid mining rights, accrued liabilities and other payable and
depreciation.



Investing Activities:



Net cash used in investing activities
for the nine months ended September 30, 2012 was $0.50 million, which is a decrease of $8.53 million from net cash used in investing
activities of $9.03 million in the same period of 2011. This increase was primarily due to the decrease in the payments on mining
rights and acquisition of plant and equipment.



Financing Activities:



Net cash provided by financing activities
for the nine months ended September 30, 2012 totaled $0.65 million, as compared to $7.40 million in the same period of 2011. The
decrease in net cash provided by financing activities was mainly attributable to the less cash proceeds from notes and loans payable.





33









Off-Balance Sheet Arrangements



We have no off-balance sheet arrangements,
financings or other relationships.



Registration Statement



On December
28, 2010, our Form S-1 registration statement (the “Registration Statement”) was declared effective by the SEC, allowing
us to sell a total of 1,000,000 shares of our common stock and raise a total of $500,000, which we intend to use to implement our
business operations (the “Offering”). The Offering was expired on June 26, 2011 as stated in the Registration Statement
and the Board of Directors of the Company has held a special meeting and resolved to extend the offering period for an additional
180 days. As of October 30, 2011 we closed the offering after having raised a total of $200,000. On a per share basis, the offering
represented a 60% discount to the original offering price. This offering was the initial public offering of common stock of China
Shouguan Mining Corporation, no public market currently exists for our securities or the shares being offered.





ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK



Not required.





ITEM 4. CONTROLS AND PROCEDURES



As required by SEC rules, we have evaluated
the effectiveness of the design and operation of our disclosure controls and procedures at the end of the period covered by this
report. This evaluation was carried out under the supervision and with the participation of our management, including our chief
executive officer and principal financial officer. Based on this evaluation, these officers have concluded that the design and
operation of our disclosure controls and procedures are effective. During the nine months ended September 30, 2012, there were
no changes in our internal control over financial reporting or in other factors that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.



Disclosure controls and procedures are
our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that
we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in
the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed
to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and
communicated to our management, including chief executive officer and chief financial officer, as appropriate, to allow timely
decisions regarding required disclosure. During the fiscal quarter ended September 30, 2012, there were no changes in our disclosure
controls and procedures over financial reporting or in other factors that have materially affected, or are reasonably likely to
materially affect, our disclosure controls and procedures over financial reporting.





34









PART II - OTHER INFORMATION



Item 1. Legal Proceedings



We are not a party to any pending legal proceedings.





Item 1A. Risk Factors



There were no other material changes from
the risk factors disclosed in our annual report on Form 10-K for the fiscal year ended December 31, 2011.





Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds.



None.





Item 3. Defaults Upon Senior Securities



None.





Item 4. Mine Safety Disclosures



None.





Item 5. Other Information



None.







35









Item 6. Exhibits



|(a) | The following listed exhibits are filed as
        part of this quarterly report:
|--- | ---------------------------------------------------------------------------------



|Exhibit No. |  | Description                                                                   
|----------- |  | ------------------------------------------------------------------------------
|            |  |                                                                               
|23.1        |  | Consent of Auditors                                                           
|31.1        |  | Rule 13a-14(a)/15d-14(a) certification of Principal Executive Officer         
|31.2        |  | Rule 13a-14(a)/15d-14(a) certification of Principal Accounting Officer        
|32.1        |  | Certification pursuant to 18 USC, section 1350 of Principal Executive Officer 
|32.2        |  | Certification pursuant to 18 USC, section 1350 of Principal Accounting Officer



The following exhibits marked with one
asterisk have been omitted from this filing, are incorporated herein by this reference and can be found in their entirety in our
original Form S-1 registration statement filed on July 2, 2010. The following exhibits marked with two asterisks have been omitted
in this filing, are incorporated herein by this reference and can be found in their entirety in our Form S-1/A-1 filed on September
22, 2010. The following exhibits marked with three asterisks have been omitted in this filing, are incorporated herein by this
reference and can be found in their entirety in our Form S-1/A-2 filed on October 26, 2010. The following exhibits marked with
four asterisks have been omitted in this filing, are incorporated herein by this reference and can be found in their entirety in
our Form 10K filed on April 14, 2011. All documents listed can be found on the SEC website at www.sec.gov under our CIK Number
0001493893.:



| | Exhibit No. |  | Description                                                                                                                                                                                                        
| | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |             |  |                                                                                                                                                                                                                    
| | 2           |  | * Share Exchange Agreement                                                                                                                                                                                         
| | 3.1         |  | * Articles of Incorporation                                                                                                                                                                                        
| | 3.2         |  | * Bylaws                                                                                                                                                                                                           
| | 4           |  | * Form of Common Stock Certificate                                                                                                                                                                                 
| | 5           |  | * Opinion of Michael M. Kessler, Esq. re: Legality (** Amended Opinion filed with Form S1/A-1 on September 22, 2010)                                                                                               
| | 10.1        |  | * Operating Lease Agreement for Cunli Ji Gold Mine                                                                                                                                                                 
| | 10.2        |  | * Acquisition Agreement for Cunli Ji Gold Mine                                                                                                                                                                     
| | 10.3        |  | * Option Agreement to Purchase Equity Interests by and among Shoujin Business Consulting (Shenzhen), Shenzhen ShouGuan Investment Limited, Yantai JinGuan Investment Limited and Penglai XinGuan Investment Limited
| | 10.4        |  | * Equity Pledge Agreement                                                                                                                                                                                          
| | 10.5        |  | * Operating Agreement                                                                                                                                                                                              
| | 10.6        |  | * Exclusive Technical Service and Business Consulting Agreement                                                                                                                                                    
| | 10.7        |  | * Proxy Agreement                                                                                                                                                                                                  
| | 10.9        |  | * Office Lease - Yantai, China                                                                                                                                                                                     
| | 10.10       |  | * Office Lease - Shenzhen, China                                                                                                                                                                                   
| | 10.11       |  | ** Master Agreement between Penglai City Gold Mining Holding Co. Limited and Penglai XinGuan Investment Limited                                                                                                    
| | 10.12       |  | ** Construction Project Agreement between Penglai XinGuan Investment Limited and Jinhai Mine Underground Engineering Limited                                                                                       
| | 10.12(a)    |  | ***Renewed Construction Project Agreement to extend one year term to August 28, 2011                                                                                                                               
| | 10.13       |  | ** Gold Concentrate Processing Agreement between XinGuan and Shandong Humon Smelting Co., Ltd.                                                                                                                     
| | 10.14       |  | **** Termination Agreement between Penglai XinGuan Investment Limited and Jinhai Mine Underground Engineering Limited                                                                                              
| | 10.15       |  | **** Construction Project Agreement between Penglai XinGuan Investment Limited and Wenzhou Mine Engineering Construction Group Co. Ltd.                                                                            
| | 14          |  | * Code of Ethics                                                                                                                                                                                                   
| | 21          |  | * List of Subsidiaries/Variable Interest Entities of Registrant                                                                                                                                                    





36









SIGNATURES



Pursuant to the requirements of the Securities
Exchange Act of 1933, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized this 14th day of November, 2012.



|China ShouGuan Mining
        Corporation, Registrant
        By: /s/ Feize Zhang
        ___________________________________________
        Feize Zhang, Chairman and Principal
        Executive Officer |  | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 











China ShouGuan Mining Corporation , Registrant



By: /s/ Feize Zhang

Feize Zhang, Principal Executiv



By: /s/ K.F. Lam

By: K.F. Lam, Principal Financial Officer







37