[nagm10kedgar001.jpg]Form 10-K

NORTH AMERICAN GAMING & ENTERTAINMENT CORP - NAGM

Filed: April 16, 2010 (period: December 31, 2009)

Annual report filed by small businesses                         UNITED STATES SECURITIES AND EXCHANGE COMMISSION    WASHINGTON, D.C. 20549  FORM 10-K (Mark One)  [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934  For the fiscal year ended December 31, 2009  OR  [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period _________________  to  _________________  Commission file number 0-5474  NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION --------------------------------------------------- (Name of small business issuer in its charter)  Delaware                       75-2571032 -------------------------------         ------------------- (State or other jurisdiction of        (I.R.S. Employer incorporation or organization)        Identification No.)   Seventeen Floor, Xinhui Mansion, Gaoxin Road, Hi-Tech Zone, Xi'An P. R. China  710075 ----------------------------------------------------- (Address of principal executive offices)   (Zip Code)   Issuer's telephone number, including area code: (86) 29-88331685  SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE  Securities  registered  pursuant to Section 12(g) of the Act: Common Stock, par value $.01 per share  Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [ ]  No [X]  Check whether the issuer  (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities  Exchange  Act  of 1934 during the past 12 months (or  for  such  shorter  period  that  the  issuer  was  required  to file such reports),and (2) has been subject to such filing requirements  for the  past 90 days. YES [X] NO [ ]  Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K contained herein, and none will 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-KSB or any amendment to this Form 10-KSB. [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]  The issuer's revenues for its most recent fiscal year were:  $1,097,872.  The aggregate market value of the voting common stock held by non-affiliates of the  issuer,  based  on  the  average  bid  and asked price of such stock,  was $484,321 at December 31, 2009 and the number of voting series C preferred stock issued was 500,000.   At December 31, 2009, the registrant had outstanding  24,216,058  shares of par value $.01 common stock.  DOCUMENTS INCORPORATED BY REFERENCE:  None  Transitional Small Business Disclosure Format (check one):  Yes ___  No   X    FOR FISCAL YEAR ENDED DECEMBER 31, 2009 FORM 10-KSB ANNUAL REPORT INDEX       PART I    Item 1. DESCRIPTION OF BUSINESS 1   Item 2. DESCRIPTION OF PROPERTY 15   Item 3. LEGAL PROCEEDINGS 16   Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 17    PART II    Item 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY                        17   Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 17   Item 7. FINANCIAL STATEMENTS 22   Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 32   Item 8A(T). CONTROLS AND PROCEDURES 32   Item 8B. OTHER INFORMATION 32    PART III   Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 33   Item 10. EXECUTIVE COMPENSATION 33   Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS                          35   Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 36  Item  13. EXIBIT  Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 36  SIGNATURES 36    PART I   ITEM 1.DESCRIPTION OF BUSINESS     DESCRIPTION OF BUSINESS  GENERAL   North  American  Gaming  and  Entertainment Corporation ("North American")  was incorporated under the laws of  the  State  of  Delaware  in 1969.  The Company changed its name from Western Natural Gas Company to North  American Gaming and Entertainment  Corporation  on October 17, 1994 in connection with  its  merger with OM Investors, Inc.  Until  August 20, 2001, the Company was engaged in the video  gaming  business  through  its  partial  ownership  of  three  operating companies  that  operated  video poker  machines  located  in  truck  stops  in Louisiana.  Effective August  20,  2001,  the Company sold all of the Company's interest in the three operating companies.   The Company did not liquidate as a result of the sale of its assets but began to  seek  business  and  acquisition opportunities,  leading  to  the  Transactions. Effective February 4, 2008,  we acquired a controlling interest in Shaanxi Chang Jiang Si You Neng Yuan Fa Zhang Gu Feng You Xian Gong Si ("Chang Jiang"),  a China corporation, in exchange for a controlling interest in the Company.   Since  our  acquisition  of  Chang  Jiang  our  primary  business  activity  is exploration and we expect to begin mining,  processing  and  distributing gold, zinc,  and  lead  in  2009.   Currently  all of our business is in the  Shaanxi Province,  China  .  We have engaged in exploration  and  expect  to  begin  to operate mines in the  Qinba Mountain Area at a geologic junction of "Shan, Zha, Zhen, Xun", which are the  four  primary  metallogenic prospective areas in the Shaanxi Province. This region has historically contained reserves of high-grade minerals of gold, lead and zinc. As this has  traditionally been a mining area, we  believe  we can meet our requirements for experienced  miners  and  general labor teams at an attractive cost.    Chang Jiang was  incorporated  in  the name of Weinan Industrial and Commercial Company Limited as a limited liability  company  in  the PRC on March 19, 1999. The  Company  became a joint stock company in January 2006  with  its  business activities as an  investment  holding  company and development of theme park in Xi'An, PRC. Beginning in August 2005, Chang  Jiang  contributed  $7,928,532  by injection  of certain land use rights in lieu of cash to the registered capital of Shaanxi Huanghe  Wetland  Park  Company  Limited  ("Huanghe"),  representing 92.93% of the equity of Huanghe.  Later this interest was swapped for a 20% interest in Dongfeng Mining.   The Company also leases a portion of the land to Huanghe Wet Land Park Co. Ltd which is substantively occupied for the development and operation of a theme park. The Huanghe Wet Land Park Co. Ltd is a related company. Rental income was derived from this lease of $1,097,872 (rmb 7,500,000) for the year ended December 31, 2009, which represents all of the revenues of the Company for the year ended December 31, 2009. The said lease only cover the 2009, The lease payment will be completed in 2010.    Shaanxi Changjiang Mining & New Energy Co., Ltd. (Changjiang) holds Land use right on 5,706,666.67m2(57,066.67acre) of the land in Huanghe Nantan,Heyang County, Shaanxi province. Land use right certification No.Heyang State owned(2006) 3240001.  After the first-stage construction of Biopark Projectcompleted and puts into operation in May, another lease for 2010 and afterwaod with price, duration will be fixed by both parties according to the lease marketing and the actual land using square.  The company did not owed the Huanghe Wet Land Park Co. Ltd, and also had no equity relationship with Huanghe, the Leasing of Land use right is the only business with Huanghe.   In  2007  Chang  Jiang  engaged  in a series of acquisitions, divestitures  and exchanges  that  reorganized  the  company  so  that  its  operations  are principally mining lead, zinc and gold  in  an  67.82  sq. km area in Jiao Shan Zhai,  Guo  Jia Ling, Xunyang County, in the Shaanxi Province  of  China.   The transactions and history of the Company is as follows.   On February 5,  2007,  Chang Jiang entered into an agreement with a third party to  acquire 40% of the equity  interest  in  Dongfang  Mining  Company  Limited ("Dongfang  Mining") at a consideration of $3,117,267 payable in cash. Dongfang Mining has engaged  in exploration for lead, zinc and gold mining near the city of  Xi'An in the Shaanxi Province of the, PRC.   On March 22, 2007, Chang  Jiang  entered into an agreement with a related party of  the Company to exchange its 92.93%  interest  in  Huanghe  for  20%  equity interest in Dongfang Mining owned by the related party.  On August  15,  2007,  97.2%  of the stockholders of Chang Jiang entered into a definitive agreement with Tai Ping  Yang  and the stockholders of Tai Ping Yang in which they disposed their ownership in Chang  Jiang to Tai Ping Yang for 98% of  ownership  in Tai Ping Yang and cash of $1,328,940  payable  on  or  before December 31, 2007.  Hongkong Wah Bon  Enterprise  Limited ("Wah Bon") was incorporated in Hong Kong on July 7, 2006 as an investment  holding  company  and  wholly  owned  foreign enterprise  ("WOFE".) On September 2, 2007, Wah Bon acquired 100% ownership  of Tai Ping Yang at a consideration of $128,205 in cash.   As a result of  these  various  transactions,  the  resulting company as of 31/12/2009 is as follows:  a. Wah Bon owns 100% of Tai Ping Yang;  b. Tai Ping Yang owns 97.2% of Chang Jiang; and  c. Chang Jiang owns 60% of Dongfang Mining.  The members have limited liability for the obligations or debts of the entity.  The resulting corporate structure is diagrammed below: [nagm10kedgar002.jpg]  In addttion, the sharelders of NAGM set up a new Company, name China Changjiang Mining & New energy Co.Ltd (China Chiangjiang), in the State of Nevada on September 19, 2008.China Changjiang shall be mergerred with NAGM,and replace the name of NAGM in the future. There is no asset or liability for China Changjiang so far.  1|Page    On February 4, 2008, we completed the Exchange pursuant to the Plan of Exchange (the  "Exchange"),  by   and  among  us,  Chang  Jiang,  and  the  Chang  Jiang Shareholders. Under the Agreement,  the  Wah  Bon shareholders received 500,000 shares  of  Series  C  Convertible Preferred Stock.  The  shares  of  Series  C Preferred Stock each carry  the  right  to  1,218  votes  per share and will be convertible into common stock at a rate sufficient to yield an aggregate of 609 Million  pre-split  common  shares  upon  conversion,  as  set  forth   in  the Certificate of Designations.  To  comply  with  requirements  of  Chinese  law  (referred  to  as "WOFE"), we established the acquisition of Wah Bon and Tai Ping Yang to serve  as  offshore foreign  entities  for  the  purpose  of  consummating  the acquisition. In the opinion  of our Chinese counsel this permits the transfer  of  at  least  97.2% shares of  Chang  Jiang  to  the  first  WOFE entity (Tai Ping Yang), then 100% shares of Tai Ping Yang to the second WOFE  entity  (Wah Bon.) Then 100% of the shares  of Wah Bon can be conveyed to NAGM, indirectly  making  Chang  Jiang  a foreign entity.  For  purposes of the acquisition, all of Chang Jiang's rights, responsibilities and benefits  are  assigned  to  and  assumed by Wah Bon. This procedure  requires  several  stages  of  governmental approval  by  provincial authorities in the PRC. As of the Closing Date  all required approvals had been obtained.   North American, Wah Bon, Tai Ping Yang, Chang Jiang  and  Dongfang  Mining  are hereafter referred to as (the "Company").  On September 19, 2008, the Company reincorporated to the state of Nevada under the name China Changjiang Mining and New Energy Company, Ltd. The Company authorized 100,000,000 shares at a par value of $0.001 in anticipation of the 10 for 1 reverse split following the conversion of its Series C Preferred stock, which shall yield a net fully diluted amount of 60,900,000 new common shares. In December, 2009 an application was made on behalf of the Company to FINRA for approval of corporate changes, including the corporate name, the symbol, the recapitalization of the reverse split and the conversion of the Series C Preferred Shares. The Company has received two letters of comment from FINRA, to which it has responded, but the corporate changes have not yet been approved as of this filing.  Sales and Marketing  Although  we  have  not yet begun to extract minerals from the property we have established a sales and  marketing  department.  These persons have focused on identifying and establishing relationships with Companies  that  are  likely to require  our products. Lead and zinc can be freely sold and marketed throughout the PRC. As China remains a net importer of these metals, we believe a customer base exists within China.   Mining Industry  General  Our primary  business  activity  is  anticipated  to  be mining, processing and distributing  gold, zinc, lead, and other mineral products  for  which  China's modernizing economy has experienced rapid growth in its manufacturing capacity. Despite high rankings  in world production of nonferrous metals, China is still a net importer of nonferrous  metals  including  lead and zinc. China's natural resources  include  coal,  iron  ore,  petroleum, natural  gas,  mercury,  tin, tungsten, antimony, manganese, molybdenum, vanadium, magnetite, aluminum, lead, zinc, and uranium.  There are governmental restrictions on foreign ownership of mines for gold and an outright ban on foreign ownership of mines for uranium.  We believe the increasing industrial capacity  of  China will continue to cause increased demand for industrial raw materials such as  non-ferrous  metals.  We expect the price of zinc and lead will rebound in the near future, and continue to increase although prices may experience significant fluctuation.     Mineral Deposits  Mining area:Guo Jia Ling---Jiao Shan Zhai mining area is located in eastern Xunyang county, under the jurisdiction of Gouyuan villiage, Guankou town and Shuhe town. It covers an area of 61.27 square kilometres. Its length from east to west is 15.4 kilometers, and its width from south to north is 2.3 kilometers.  The mineral deposits within this area are mainly including: Si Ren Gou, Da Ni Gou, Huo Shao Gou, Guan Zi Gou, Nan Sha Gou, Xiao Shui He mineral deposit.  Traffic condition: the mining area is 19.5 kilometers far away from the county town. The Xiang-yu Railway and 316 State Highway along the Hanjing pass through the southern side of this area. In addition, XunyangShuheXiaohe North Ring Road passes through the southern side and eastern margin. We have simply-built highway within our working area which is closely linked with 316 State Highway. Accordingly, the transportation here is convenient.  Industry within the area: There are cash crops such as yellow ginger, pepper, cured tobacoo,etc, abundant water resources electric power resources and labour resources, as well as various crop varieties, which is favourable to develop the economies with distinct characteristics.   Previous working situation within mining area:  From Fifties to the beginning of Eighties, Shaanxi Regional Geological Survey Team, Geology & Mineral Bureau, the first geological team and other exploration units have successively carried out a lot of exploration work in this area. The results and materials achieved have been used for fundamental material in companys mining and development. Since the mid- Eighties, the first geological team of Shaanxi Provincial Geology & Mineral Bureau have begun to conduct the geophysical prospecting and geochemical prospecting in this area. By this way, they have found the distribution of various minerals such as lead, zinc and gold, and have fixed distribution characteristics of tens of lead-zinc ore body, which provide the direction for companys prospecting.  Especially in the mid- Eighties, the first geological team of Shaanxi Provincial Geology & Mineral Bureau have conducted the general investigation for Si Ren GouNan Sha Gou area and have found:  Si Ren Gou: 19 lead and zinc ore bodies. They have ascertained 186,600 tons of lead-zinc metal D+E reserves, and 4,235,500 tons of mineral reserves in total. These ore bodies are shown in the -200 meters below in this mining area, and the general zinc grade is 1.56%3.80%.  Lan Tan Gou: 5 lead-zinc ore bodies, the grade of zinc is 2.75%11.60%, the grade of lead is 0.007.27%. These ore bodies are shown in 400 meters elevation below in this mining area.   Huo Shao Gou: 5 lead-zinc ore bodies, the grade of zinc is 4.65%9.51%, the grade of lead is 2.326.04% accompanied by 570g/t silver. They have ascertained 44,400 tons of lead-zinc metal 333+334 resources, and 300,000 tons of mineral reserves in total. These ore bodies are shown in 500 meters elevation below in this mining area.   There are more ore bodies found in Guan Zi Gou. The K4K8 ore body in the 200 meters below in deep part are the main mineral deposit in this area. They have ascertained 180,000 tons of lead-zinc metal 333+334 resources, and 2,540,000 tons of mineral reserves in total. These ore bodies are shown in 100 meters elevation ablve in this mining area.  They have found three ore bodies in Nan Sha Gou, that is K1、K2、K4. The grade of zinc is 9.99%——11.59%, the grade of lead is 1.70——5.96%. The mining elevation is 300 meters above in sea level. They have ascertained 290,000 tons of lead-zinc metal 333+334 resources, and 2,330,000 tons of mineral reserves in total. These ore bodies are shown in 0 meter elevation in this mining area.  Until the end of 2008, the company has found 15 gold ore bodies within area of gold mine in Jiao Shan Zhai and 7 gold mineralized bodies. According to the investigation on thickness and grade of K1、K2、K3 ore bodies, we speculated that the gold metal resources we can obtain is 1150.64 kilogram, and its value will be$33,700,000(230,000,000 RMB). The speculated lead-zinc resources in deep part of Si Ren Gou and Lan Tan Gou is 100, 000 tons, the speculated lead-zinc resources in Huo Shao GouGuan Zi Gou and Xiao Shui HeNan Sha Gou is both 100,000 tons. In addition, the speculated resources in exploration area is 300,000 tons, and its potential value is$ 702,000,000(4,800,000,000 RMB). The potential value of gold, lead-zinc resources in the mining area is over$ 730,000,000(5,000,000,000 RMB).  All of these miners will be the guarantee of generating benefit and basis of building the energy base of the company.                            Nonferrous Metals - Zinc  Lead  and zinc resources are relatively abundant around the world. There is  no deposit  only of zinc under natural conditions, and ordinarily zinc exists with metals such  as lead, copper, or gold, in the form of polymetallic ore. China's mining sector  has  experienced  strong growth since 2001. Investment in mining exploration totaled 316.2 billion yuan (42.6 billion U.S. dollars) in the first nine months of 2007 according to Wang Min, Vice Minister of Land and Resources. At the China Mining Conference 2007  (sponsored by China's Ministry of Land and Resources), it was reported that China's  mining output doubled to $190 Billion for the period 2000-2005. Iron ore production increased 38% to 406 Million tons and nonferrous metals increased 18% during that period.   Nonetheless, China is still a net importer of lead and zinc.  Zinc is a soft metal used to makes brass when  mixed  with Copper. Zinc is used in the automotive and construction industries to galvanize  steel, create metal alloys  and in certain chemical processes. Research is being conducted  in  the area of zinc-air batteries.  According  to  the  NONFERROUS  METALS  OUTLOOK,  YEAR  2007  published  by the Department  of  Natural  Resources  for  the  Canada  Ministry of Public Works, deficits  have  occurred  in  each  of  the past  five years  for  concentrate. Stockpiles have fallen and prices have risen  as  a  result.  In September 2006 China eliminated its 5% export rebate on refined lead  and  zinc  in September, resulting in increased costs for metal exported from China. Chinese exports had increased 16% in 2006 from the same ten months period in 2005.  On August 1, 2008, China eliminated the 5% export tax rebate on #0 zinc, which decreases the export of zinc, increases the provide and ultimately worsen the market.    2|Page     In 2007 China ranked 1st in the world both in zinc and lead production. The zinc output in China reached 3.72 million tons in 2007. increasing 17.8% compared to that of 2006 Calculated by the data in 2007, zinc output  in  China  took up about 32.55% of the total global output  Worldwide zinc usage has increased from approximately 6.1 Million tons in 1985 to 11 Million tons in 2005. But only slightly increased to 11.4 million in 2007, and 11.75 million tons in 2008.Refers to the report of institute, CHR, the demand of zinc in 2010 may slightly decrease to 11.1 million tons.  The recession of zinc partly because of the financial crisis, partly came from the immoderate Development in the past several year. And the recession was considered the natural adjustment Of the industry. In the long run ,the demand increase will recover.  Actually, the price of zinc has increase in a large range during 2009.  Average settlement prices for high grade zinc are listed below.  LONDON METAL EXCHANGE FOR HIGH GRADE ZINC  (ANNUAL  AVERAGE  SETTLEMENT  PRICES  2007 $3250.00 2008 $1925.00 2009 $2596.00  (US DOLLARS PER TON)  The 3 months zinc closing price of London metal exchange in April 4, 2010 has reached $2,400 per ton, decreasing 8%, comparing that of 2009.  The  bid/ask  price for 15 months zinc the London Metals Exchange on April 4, 2010 was $2,438 for bid and $2,433 for ask.       Source  London Metal Exchange  There are 433 above-surface  mine  enterprises  in  China,  distributing  in 24 provinces,  cities  and  autonomous  regions all over the country, including 37 enterprises whose respective annual output  of zinc concentrate is more than 10 thousand tons and the total output of which takes up 45% of the nation's total. In the first half of year 2008, zinc concentrate output of China was  1,430,700  tons and zinc output was 1,920,200 tons, increasing 6.11% and 21.13% respectively compared to those of 2007.  In 2009, the price of zinc in China increase rapidaly. The range of increase rank the top 3 among Nonferrous Metals.  We expected that the price of zinc shall go up for 2010, because the demand of zince increase In the world, especially in USA and Europ and the economic are recovering from the 2008 Financial crisis.    Lead   Lead is the heaviest common metal known for malleability. Lead is  resistant to corrosion  and  used  for  protection  against  harmful  X-Rays  and radiation. According  to  the  Nonferrous  Metals  Outlook published by the Department  of Natural Resources for the Canada Ministry  of Public Works, 75 % of the world's demand  for  lead  is  for  lead  acid batteries for  use  in  the  automobile, industrial and consumer sectors. It  is  also  used to attenuate radiation from radioactive sources and to provide corrosive resistant finishes to roofing.   World lead usage has increased from 4 Million Tons  in  1985  to 5  1/2 Million Tons  in  2001.  The  forecasts  are for increased usage up to approximately  6 Million tons. Usage slowed slightly  from 1999 to 2004 as lawsuits in the U. S. over lead based paints and emissions forced  closures  and damages. Exide, a U. S.  lead  acid  battery  producer,  was  forced into bankruptcy  and  the  Lead Industries  Association in the U. S. ceased  its  operations.  Both  cited  the lawsuits as the primary factor.   In 2007 China  ranked  the first in the production of lead with the total output Of 2,757,400 tons which accounted for 34% of the global output.  The Worldwide demand is expected to be stable in the future several years.    The average closing prices  for  lead  on  the  London  Metals  exchange are as follows:  LONDON METAL EXCHANGE FOR LEAD   2007 2008 2009 $2,375 $2,175 $2,595  (ANNUAL AVERAGE SETTLEMENT PRICES, (US DOLLARS PER TON)  Though the average settlement prices in 2009 still stayed above $ 2,000 per ton, actually the price at the end of 2008 has lower than $1,000, and fluctuate between $950 and $ 1,300 during the first quarter of 2009. The settlement price is $1,230 at March 12,2009.  The bid/ask price for 15 months lead on the London Metals Exchange on April  4,  2010 was $2,228 for bid and $2,223 for ask.  Source - london Metal Exchange.  As the tele industry is still booming in the future 10 year, the demand of lead shall be push up, but the supply of lead can not catch the demand, which may support the price in the future 3 year.  Gold  In  2008,  the  gross industrial output value realized by gold enterprises over the country was 282 ton,  with  a growth of 4.26% compared to the same period of last year; and the gross production had growed for 2005,2006 and 2007, with the grow rate of 5.51%,7.15% and 12.67%.  Gold is the rare metal, which makes it impossible to fluctuate much higher or lower in supply. The market forcasts the slight increase of supply in the near future.  It is estimated  that gold consumption in China will increase from previous 200 tons per year to 400-500  tons over the next several years, which may influence the international gold market price to a certain extent.  Despite the recession of the global economy in 2008, the gold price increased from $833 per ounce in the beginning year to $880 per ounce at year end, with the higest Price of $1,032 per ounce. Going with the economy depression, more and more investors choose the gold as the priority.  More and more investor consider the gold as a stable investment in the inflation. The demand is expected to be further increase.  In 2009, the price of gold continue to increase, reache $1,096 per ounce, abount 25% Increase comparing that of 2008. the price still keep slightly increase in the 1 quarter Of 2010.  LONDON METAL EXCHANGE FOR GOLD   2007 2008 2009 $833 $880 $1096                           Competition   Our competitors in the nonferrous  metals markets are expected to be local  and regional mining enterprise. Other companies in China that mine  lead  and  zinc include Dongshengmiao  Mining  Industry  Co,  Ltd,  Wancheng  Trading &  Mining Co., Ltd., Xinjiang Wuqia Tianzhen Mining Co., Ltd., and  Wulatehouqi  Qingshan Nonferrous Metal Development Co., Ltd.   These competitors have more experience in the operation of mines and mining activities  and  have  superior  financial resources than we do. China is still a net importer of lead and zinc along with the markets for many other non-ferrous metals. Since  supply  in general cannot meet  demand  we  do  not  expect  that  we  will have difficulty  selling  our ore for the near future. The gold market on a worldwide basis  has  seen  large increases in demand since  2001, resulting in more than threefold  increase  in prices per ounce, from $435 in 2004 to $872 in 2008, according  to the London Metals Exchange.  China has traditionally  protected  its  metallurgy industry with high tariffs, import quotas and restrictions on foreign ownership. These  tariffs  and  import  quotas  were  adopted  to  provide  protections to companies  such  as  ours  that  were  part of the domestic industry in  China. Due to WTO membership, China will lower tariffs, eliminate  import  quotas  and permit more foreign  competition, resulting in reduced  protection  for Chinese companies against foreign   competitors. To  maintain its WTO membership, China must gradually  reduce  these  tariffs  and  quotas  and commitments and permit foreign enterprises opportunities  to  sell and distribute in China. Eventually they  will  be  eliminated altogether. This is expected to increase  the effect of foreign competition  and  the importation of foreign products. We are unable to predict the effect these  changes  may  have  on  our   business,  earnings, financial condition or the value of our properties and securities.  3|Page    Government Regulation  We  are  subject  to  strict  regulations imposed on mining companies in China. Regulations are issued or implemented  by the Ministry of Land and Resources, a division of the China State Council, and  similar land use offices at the local level. These regulations cover virtually all  aspects of exploration and mining of natural resources in China.  Chinese  mining  companies  must  obtain two separate  permits  from  the  land resource divisions of the Provincial  government.  The  first  permit  must  be obtained  before  a  mining  enterprise  can  conduct exploring activities. The Company has obtained this license. The regulations also require a second mining license for extraction activities. We have obtained the first license for zinc, lead and gold.  To  maintain the licenses  the  Company  must  follow prescribed procedures in its exploring  or mining activities.During the period of obtaining mining license,we can also gain the revenues from the sales of ores deriving from exploration. Mining license will guarantee for our extraction activities.  On Dec. 31, 2009,The Ministry of Land and Resources Ministry issues a notice to futher regulate the management of the exploration right. It regulates and fixed a more high level on entry conditions for the Mineral resources exploration which makes a more detailed requirements for the newly approval, continuation, Merger, division, transfer and application of mining upgrades. It requires to establish the public exploration right trading market to avoid the self-dealing to protect the benefit of the Lawful holders. Based on this requirement, the company will complete the valid applications of the lawful rights and interests to get the approval.  It is hard to predict the length of time to get the mining license,. Though it is the third year that we are in the process of obtaining the License, we are confident of getting the license in these years because we are now performing the detail survey.   Chinese  regulations governing Work  Safety  require  that  we  have  a  safety certification.  These  are  administered  by  the Administration of Work Safety before  it can engage in either mining or extracting  activities.  All  of  our operating  subsidiaries have obtained appropriate safety certification from the Administration  of  Work Safety of local governments. We also have been granted  environmental certification from China Bureau of Environmental Protection.  Regulations governing the mining business in China include:  Exploration and  Mining  Regulation  (1958),  amended  to  allow foreign investment in 1996;  Exploration and Mining and Transfer of Rights Regulation (1998);  as well as numerous regulations governing safety by the China Mine  Safety  Law and environmental feasibility studies required by China Environmental Law.  The  Chinese  legal system is still developing and there is often confusion and uncertainty about  the  scope,  interpretation  and enforcement of its laws and regulations. The mining industry has been under scrutiny  for  its  safety  and environmental  record  and  we  cannot  predict  whether new laws or changes in interpretation  and scope of existing laws may adversely  affect  our  intended operations.  The Company has applied for excavation licenses in area for gold zinc and lead mining within the  land  use  area.  The geographical locations for these sites are:  Eastern longitude: 109* 26' 30'' - 109* 38' 30'' Northern latitude: 32* 55' 45''  -  33 * 01 ' 00 ''   We expect to make application for  the  final required permits of gold by and expect to obtain final approval this year. Upon approval,  we  will  have  the right to mine the specified areas. We expect to apply for additional mining licenses within the land use area that have yielded positive results upon the conclusion of the exploration.  Summary of the Exploration Works in the Dongfang Mining   4|Page     Geological Survey  The company commissioned a geological report from the First Geological Research Team  of Shaanxi Geological and Mineral Department. A report dated October  26, 2007 was  obtained  that  showed favorable results in several areas of the land use area. The report is summarized as follows:  1, Summary of the Geological  Survey  Report  by  the First Geological Research Team of Shaanxi Geological and Mineral Department dated January 13, 2008.  GEOLOGICAL CHARACTERISTICS OF THE MINING AREA  a. Stratum  The  surveyed  area  is mainly composed of metamorphic  rock  formed  in middle-to-upper Silurian  period  and lower Devonian period. Most of the rocks are phyllite, sandstone, calcirudite rock, lime and dolomite.  b. Structure  The surveyed area is situated in the  northern margin of the draped belt formed by Baishui River and Bai River.  The  frame  of  the structure is composed  by  Tizi  Rock-Shuhe  faultage, which extends by an  east-west position. The Nan Yangshan faultage  runs  through  the northern part of the  surveyed area. The main structure consists of on-growing  fractures and draped belts.  CHARACTERISTICS OF ORE / MINERALIZING ORE  Ore -containing  layer  of  lead-  zinc  ore  is explored out through the stratigraphic  identified by 1:10000 Geological  Survey.  In  the  fourth lithologic section  of  middle  Silurian  period at Shuanghe town and the merger layers of upper Silurian period at Shuidong  channel,  the  mining sections  are  mainly  composed of brown ferruginous sandstone, siltstone and grey-yellow powder phyllite  containing  sodium..  According  to  the survey, three lead-zinc mines and one gold mine were pitched:  a. Lead zinc mine  Mine  KH1  situates  at  Guan Men Zi Ya-Cai Miao Ya district and it's 1.0-1.5 meters wide, 700 meters long and averagely 0.76 meters thick. The  average grade of mineralization  is  Pb1.22%,  Zn0.67%.  Control Engineering: TC9, TC3, YK1, TC6, TC18. The shape of the area is : 215 o -32 o {angle} 12 o -32 o.  Mine KH2  is shown in the Wang Jia Cao area and its 2.10 meters wide, 100 meters  long and averagely2.06 meters thick. The average grade of mineralization  is  Pb0.85%  Zn0.23%.  Control  Engineering: CK1. The shape of the area is: 325 o {angle} 16 o. (Note:  Single  engineering control)  Mine  KH3  is  shown in the Gangou area and its 1-2 meters wide,  100 meters long and  averagely1.19  meters  thick.  The  average grade of mineralization is Pb0.71% Zn0.02%. Control Engineering:  D34 sampling point.  The  shape of the area is: 350 o {angle} 32 o. (Note:  single engineering control)  b. Gold Mine  Mine KH is shown  in  the  Dong Gou area and its 0.50 meter wide, 100 meters long and averagely 0.50  meter  thick.  The  average  grade of mineralization  is  Au1.01g / t. Control Engineering: sampling point, 20 meter in the North  of  D206.  The  shape  of  the area is : 340 o {angle} 17 o. (Note: single engineering control)  5|Page     THE CHARACTERISTICS OF THE PROPOSED MINES  The study revealed approximately 16 gold minerals, primarily  in  4  large deposits  located  at  areas  denoted  as K1, K2 ,K3 and K11. Samplings in others areas are all single engineering control sites:  a. K1   The surface is controlled by six trenching  structures.  The  length are  360  meters  and  the  thickness  is  0.29-4.30 m, with an average thickness of 1.23 m. Ore body grade is 1.24  - 10.06 g / t ,the average grade of mineralization is 2.7 g/t and the ore  body occurrence  is1* - 356 * {angle} 11 * - 50 *.  b. K2   Being  controlled  by three trenching structures. The  length  are  130 meters and the thickness  is  0.22-0.89 m, with an average thickness of 0.55 m. Ore body grade is 1.29-9.51  g / t. , the average grade is 5.71 g / t and the ore body occurrence  is 24 * - 320 * {angle} 9 * - 24 * .  c. K3   Being controlled by two trenching structures.  The  length  are  100 meters  and  the  thickness  is  0.43-3.48 m, with an average thickness of 1.96  m. The Ore body grade  is  5.10-12.94 g / t , the average grade is  2.7 g / t and the ore body occurrence  is -310 * - 320 * {angle} 20 * - 24 *.  d. K11   Being controlled by 1 trenching engineering  and 2 pitting structures. The length are 100 meters and the thickness is   0.13-1.62  m, with an average thickness of0.86  m. The average grade is  4.86-7.76  g  /  t, and the ore body occurrence  is 225 * -255 * {angle} 16 * -24 *  GEOLOGICAL CONDITIONS OF THE ENGINEERING  The  roof  and  floor  of the mines in the area mainly consist of sericite phyllite and sandstone.  The  fresh bedrock structure is dense. The cracks and holes show minimal changes, indicating a stable rock layer. This layer provides a very suitable foundation  for  excavation. During the course of construction there may be some small-scale  breaks and cracks that need to be  fortified.  The  transportation system is convenient  and  the  water, electricity resources are sufficient to meet the construction needs.  ESTIMATION OF RESOURCES  Chang Jiang Shi You Neng  Yuan  Gong  Si currently owns 3 main rich mining areas with large-scale gold reserves. It is primarily estimated that there are3-5 tons of gold reserves and there are 300 - 500 million tons of lead- zinc reserves. The average grade is 8-15%,  with  some  ranging as high as 45%.  6|Page    BASIS  The  estimation of resources methods and requirements of this  exploration is  based  on  GB/T17766-1999"  CLASSIFICATION  FOR  RESOURCES/RESERVES OF SOLID  FUELS  AND  MINERAL  COMMODITIES  "  and GB/T13908-2002  "  General requirements  for  solid mineral exploration" DZ/T0214-2002  "  Geological prospecting  criterion   for   copper,  lead,  zinc,  silver,  nickel  and molybdenum ore", "Reference manual  of the mineral resource standard  "and combined with the "opinion to the gold  ore industry standard in `Shaan Xi Xun Yang Guo Jia Ling- Jiao Shan Zhai lead, zinc, gold ore exploration'" by Shaan Dong Kuang Fa*2007*002.to make out the industry standard to Jiao Jin Shan gold ore exploration.  Cutoff Grade  0.5 g / t  Minimum Industrial Grade 1.2 g / t  The average grade of ore deposit 1.6 g / t  The Minimum Mining Thickness  *0.8 M  Thickness of the Interlayer to be Eliminated  *2.0 M  When  the  ore  body  thickness is smaller than  the  Minimum  Mining  Thickness, using m {multiply} g / t.  RESOURCE ESTIMATION RESULTS  As  mines K2 and K11 are  relatively  small,  so  we  just  made  resource estimation to K1 and K3 getting the intrinsic economic resources (334) .The ore is  69460.43 tons and the metal is 244.31 kg. The ore in K1 is 43639.07 TONS, AND  THE  metal  is103.26 kg; The ore in K3 is 25821.36 TONS, AND THE metal is 141.05 kg;  MINERALIZATION FORECAST  The exploration area is  located  in  the  northern  margin  of  southern Qinling,  Indo-  Fold  Belt  Baishui Jiang- Bai He Fold Belt; the South East edge of Shan Zha Xun Chen Ji Pen Di. The area mainly exposes the sedimentary of paleozoic shallow metamorphised  clastic  rocks  and  carbonate rocks. Da Yang Synclinorium, Xun Yang anticline and Nan Yang Shan fault,  Da  Ling-Shu He  fault  form the the backbone of this area. The structure line lies  from east to west.  The  characteristics of the rocks are easy of deformation and weak of metamorphism.  1:50000 stream sediment survey and 1:10000 soil measurement fix a 5 km long,  four km wide gold anomalies  area around Jiao Yang Shan Zhai about 15 square  kilometres, and the anomaly area  is  about 0.11-3.15 square kilometers with  abnormal value as high as 2900 PPbin the  centrel concentration and 277.1ppb  for an average value.    7|Page    Environmental Regulation  Environmental protection laws in China are established  on  a national basis by the   State   Environmental  Protection  Administration.  Provincial  and local authorities can  set  local  regulations which may be more restrictive than the national  standards.  Environmental  standards  govern  a  variety  of  matters including disposal of solid waste, discharge of contaminated water and handling of gases, and emissions.  The  local  authorities generally monitor and enforce the regulations, including the assessment  and  collection  of  fees, fines and administrative orders.  We  have  only been engaged in exploration efforts to date so our environmental impact has  been  limited.  If  we  are successful in commencing our extraction operations, we expect to generate waste  water,  gases and solid waste. We will therefore  be  subject  to all national and local regulations  governing  these activities.  We will likely require a  license  for  the disposal of water and solid wastes. Licenses must be renewed annually. We expect  to  be  able  to  comply with the regulations including the rules governing water and solid waste disposal.  Research and Development  With  the acquisition of Dong Fang we now have land use rights in mineral explorationin  61.27  sq.km parcel  located in Xunyang County, Shaanxi Province, PRC.  Employees  As of  December  31, 2009, we have 16 full-time employees. This includes 2 people in marketing, 1  in  manufacturing, 4  in  research  and development and quality control, 2 in financial and accounting, and 7 in general  management. A breakdown of employees by subsidiary is below.   Full-time Marketing Research and Financial and Manufacturing Management development     accounting  CHANG JIANG 10 1 0 3 0 6 DONG FANG 6 0 4 0 1 1 TAI PIN YANG 0 0 0 0 0 0 WAHBON 0 0 0 0 0 0 TOTAL 16 1 4 3 1 7   RISK FACTORS   Our  Company  and  its  securities  are  subject  to  significant  risks to its business, operations and financial condition. You should carefully consider the risks described in this section as well as the remainder of the information  in this report.  If we are unable to manage these risks or if any of the risks are realized,  our  business,  operations, and financial condition and the value of our stock would likely suffer.  In  that  event  our investors and stockholders could lose all or part of their investment.   RISKS RELATING TO OUR BUSINESS   WE  ARE  AN  EARLY STAGE EXPLORATION COMPANY FACING SIGNIFICANT  FINANCIAL  AND OPERATING RISKS.   We operate in  two segments: real estate and an exploration stage mining company  that has acquired land use rights and exploration permits to a tract of land in an  area  traditionally  associated  with  mining  in the Shaanxi  Province  of  central  China.  We  are currently focused on the mining segment, determining the degree of mineralization of lead, zinc and gold within our properties. While we believe that there may  be  an  opportunity  to obtain commercially viable amounts of lead, zinc and gold from our property, we  still face  substantial  hurdles.  The exploration and extraction of mineral deposits such as lead, zinc and  gold  incur significant financial risks. The results of exploratory  investigations  are  not  always  reliable  or  accurate  even  if conducted in strict compliance  with  professional guidelines. Furthermore, the investment  must  occur over a significant  period  of  time  even  though  the quantity of minerals  within any property is always finite. Many properties are unable to develop commercially  viable  mines  even  with  positive exploration results.  Successful  extraction  depends on very expensive processes  such  as drilling, mine construction and establishment  of processing facilities.  Mines are also hazardous and only a limited number of  qualified,  experienced miners exist.  The Company must obtain additional permits and must ramp  up operations after permitting to begin extraction. We are unable to assure you that  we will ultimately  be  successful  in meeting these challenges or, even if so, it will result in our mining operations  becoming  a  commercial  viable  or profitable enterprise.  OUR INDEPENDENT AUDITORS HAVE NOTED THAT THERE IS SUBSTANTIAL DOUBT  ABOUT  OUR ABILITY TO CONTINUE AS A GOING CONCERN.  Our independent auditors have noted that there is doubt that we can continue  as  a  going  concern. Thouth we have generate the rental income in 2009, and  are expecting to receive the cash in 2010  As  reflected in the accompanying consolidated financial  statements,  the  Company has  an  accumulated  deficit  during  the exploration stage of $13,366,785 at December 31, 2009 which includes a net loss of $104,557 for the year ended  December  31,  2009.  The  Company's  current liabilities  exceed its current assets by $7,787,760 and the Company used  cash in operation of  $531,480.  These  factors  raise  substantial  doubt about its ability  to  continue  as  a  going  concern.  In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the  accompanying  consolidated  balance  sheet  is  dependent  upon  continued operations  of the company, which in  turn  is  dependent  upon  the  Company's ability to raise additional capital, obtain financing and succeed in its future operations. The  financial statements do not include any adjustments relating to the recoverability  and  classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.     8|Page     WE HAVE NOT YET OBTAINED ALL OF THE EXTRACTION LICENSE NEWLY REQUIRED BY THE CHINA NATURAL RESOURCES MINISTRYDURING THE PRIOD OF GAINING THE REVENUE FROM EXPLORATION   China employs a two stage permitting  process  for  permission  to  explore and extract  minerals.  The  first  permit  allows  a  mining company to engage  in exploration  activities, such as boring exploratory holes,  conducting  mineral assays, field  testing  and  so  on. The Company's subsidiary, Dongfang Mining, acquired this license in 2003 and  has since engaged in activities to determine the estimated mineralization of the  property  and  relative  cost  and process needed to extract. .   The  second  permit  is for exploitation, which permits excavation and sale  of extracted minerals. The  Company are ready to  apply for the gold exploitation permit, but has not yet obtained. While  government  officials  have  informally suggested that the permit will be approved, there can be no assurance  that the Company will successfully obtain the required permit. In that event, the value of  our  interest  in the properties would be seriously impaired and would like result in a significant  loss  of value for the Company's assets as well as its securities.Although the revenues from the exploration would not be absolutely prevented, the  beneficial interest of the company would be obviously impaired.  We have not meet all of the conditions of getting the exploitation permit,the important Factor of approval is the enough content of zinc, lead or gold. With the help of professional Instruction from the team 1 of shaanxi geology exploration bureau, we are confident of geting the permit in these years.   THERE IS NO ASSURANCE THAT OUR PROPERTY  WILL  CONTAIN SUFFICIENT QUANTITIES OF COMMERCIALLY MARKETABLE MINERALS FOR US TO BECOME  COMMERCIALLY  VIABLE OR THAT WE WILL BE ABLE TO ECONOMICALLY EXTRACT THE MINERALS.   We  are  an  exploration  stage  Company and have not yet begun the process  of excavating minerals from our propertyin scale.. We have engaged in limited investigation and geologic testing. Based on our  preliminary  findings,  we believe there is sufficient mineralization to begin a commercially viable mining business. There can be no assurance however that our exploratory efforts will  prove correct or that a commercially mineable mineralization exists on our property. Even if the conclusion  that  a sufficient quantity of minerals exists proves  correct,  it still may not be economically feasible to profitably extract the minerals for a wide variety of reasons,  many  of  which  are  beyond the Company's ability to control. Therefore we can offer no assurance that  a profitable mining business will result from our efforts.    WE ARE AN EXPLORATION STAGE COMPANY AND WE HAVE HAD A LIMITED OPERATING HISTORY AND A HISTORY OF FINANCIAL LOSSES RESULTED FROM CURRENCY AND EQUITY.  9|Page    We  acquired  a  mining company that has begun attempts to the complete operation and revenue in the establish a mine for lead, zinc and gold in February 2008.   The Company, through its subsidiaries, obtained  a  permit to begin exploratory efforts in 2003 and has not yet commenced actual mining  of the land. We intend to  commence gold extractions in this year. We expect to obtain certain revenues in the future upon which to base an evaluation of our business and prospects.   We have had limited revenues  and do not anticipate significant revenues until the exploitation permits  are obtained, the mine  infrastructure  has  been  completed  and  the extraction  of  minerals  has  begun.  The Company leases a portion of the land to Huanghe Wet Land Park Co. Ltd, a company under the control of the same parent company, which is substantively occupied for the development and operation of a theme park.  Rental income was derived from this lease of $1,097,872 (rmb 7,500,000) for the year ended December 31, 2009, which represents all of the revenues of the Company for the year ended December 31, 2009.  During the years ended December 31, 2009 and 2008, we had an operating profit (loss) of $254,963 and ($1,141,537), respectively.  Net losses during the years ended December 31, 2009 and 2008  were  $104,557  and  $1,467,426,respectively.  During the years ended December  31,  2009 and 2008, we  had comprehensive losses of $143,508 and $402,514. respectively.   These  losses  resulted  from our exploration activities and corporate expenses including the amortization of our land use right s which must be amortized over each year of its 50 year life, whether or not exploitation has occurred.   Our  prospects  must  be considered  in  light  of  the  risks,  expenses,  and difficulties frequently  encountered  by  companies  in  their  early  stage of development. There can be no assurance that we will be successful in addressing such  risks and any failure to do so may have a material adverse effect on  our business, prospects, financial condition, and results of operations.        The companys business contains two segments: mining and real estate. The using of the involved land is in compliance with the Land Use Rights provisions. The company is concentrating their strength and resources on the mining. Due to the impact of financial crisis, the world wide non-ferrous metal industry is in its trough in 2008 and the commodity value raising back slowly .China is a top tourism destination. One of the Eighth Wonder of the World---- terra-cotta warriors is in the province which our project lies in. The Yellow River wet land possessed by the company is the transfer stationfor Siberia migratory birds. In order to make sure that the company owns a good future prospect and can develop the business well, the company participated in the Yellow River wet land project by shares and the project is in construction stage.   The Land use right has been leased out for the Hechuan ecologic park from the end of 2008 by the Huanghe Wet land park Company.Ltd. As the wet land park is underconstruction during 2009, there is no cash flow for the rental revenue of $ 1,097,872 (rmb7,500,000) in 2009. But the Wet land park is going to open in May 2010, and the Company was promised to be paid the rental in 2010.   DUE TO OUR LIMITED OPERATING HISTORY,  WE WILL BE UNABLE TO ACCURATELY FORECAST MINING REVENUES.   Due to our limited operating history and  our  planned growth through increased sales, we are currently unable to accurately forecast  our future mining revenues. Our current and future expense levels are largely based on our investment plans and estimates  of  future  revenues, which are expected to increase.  Revenues  and operating results generally  depend  on  the  effectiveness  of  our  marketing strategies  to  penetrate  the  market  and  the  success  of  our research and development efforts which are difficult to forecast as we are in  a  relatively new  company.  We  may  be  unable  to  adjust  spending  in a timely manner to compensate for any unexpected revenue shortfall. Accordingly,  any  significant shortfall  in  revenues  in relation to our planned expenditures would have  an immediate adverse effect on  our  business, prospects, financial condition, and results of operations. Furthermore,  as  a strategic response to changes in our competitive environment, we may from time  to  time  make  certain  pricing  or marketing  decisions that could have a material adverse effect on our business, prospects, financial condition, or results of operations.   10|Page     WE WILL  NEED ADDITIONAL CAPITAL TO FUND OUR GROWING OPERATIONS, AND WE MAY NOT BE ABLE TO OBTAIN  SUFFICIENT  CAPITAL  AND MAY BE FORCED TO LIMIT THE SCOPE OF OUR OPERATIONS.   As  of  December 31, 2009 and December 31,  2008,  we  had  current  assets  of $1,159,435 and $253,521, respectively. The remainder of our assets consists of land use  rights  that are illiquid. As we begin to implement our strategies to excavate the property  and exploit the minerals, we will likely experience cash flow  deficits and increased  capital  needs  that  may  exceed  our  available capital. We may need to fund our future operations with additional funding. Our capital  needs  will  depend  on  numerous factors affecting our profitability, including (i) the time and expense  of  ramp  up  of the extraction activities, (ii) the amount and quality of minerals extracted, (iii) our ability to contain expenditures, especially for administrative and transportation  costs, and (iv) the amount of our expenditures. We cannot assure you that we will  be  able  to obtain funding in the future to meet our needs.  We  currently  have  no  lines  of credit or other arrangements for capital and cannot provide any assurance that  additional  funds  will  be available to us. Even if we locate available capital, it may be on unfavorable terms. Any future capital investments could dilute or otherwise materially and  adversely  affect the holdings or rights of our existing shareholders.  FLUCTUATION  OF  THE  CHINESE  CURRENCY  COULD  MATERIALLY AFFECT OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS.  We have not yet commenced mining operations and do not have mining revenues. Since all of  our  revenues  are  expected  to  be derived and expenses  and  liabilities incurred are in China, by exchange rate  fluctuations  of  the Chinese currency will affect our revenues and operating results. Presently we  do  not expect to sell our products outside of China but we could sell to foreign interests  as a result of competitive forces or changes to our business plan.   11|Page    For  over  a  decade  the value of the Chinese currency was pegged to the U. S. Dollar and fluctuations  in value were therefore relatively mild. In July 2005, China abandoned the peg and  changed to a floating exchange rate. The new rates are market based compared to a  basket  of  foreign  currencies.  These changes would  likely  strengthen the RMB as compared to the U.  S.  Dollar  and  would likely make our products more expensive for U. S. and foreign buyers. We cannot give any assurance  that  the  value  of the RMB will continue to remain stable against  the  US  dollar or any other foreign  currency.  Accordingly,  we  may experience economic  losses  and  negative  impacts on earnings and equity as a result of foreign exchange rate fluctuations.  Furthermore,  any devaluation of the  RMB  may adversely affect the dividends we may pay to our parent,  thereby adversely affecting the value of, and dividends payable on, our common stock.  We expect  our revenues to consist almost entirely of Renminbi or "RMB", which is the Chinese currency. The RMB is currently not a fully convertible currency. The Chinese government  may  restrict  future  access to foreign currencies for current account transactions. This may make it difficult  for  us  to  transfer money  from  China to other countries on an economically advantageous basis  or even at all. It  may  also  make it difficult for us to provide a return on the investment of foreign capital on a liquid basis.    WE MAY BE ADVERSELY AFFECTED BY ENVIRONMENTAL REGULATIONS.  We are subject to PRC national  and  local environmental protection regulations which currently impose fees for the discharge  of waste substances, require the payment  of  fines  for  pollution, and provide for  the  closure  by  the  PRC government of any facility  that  fails  to  comply with orders requiring us to cease or improve upon certain activities causing  environmental  damage. Due to the nature of our business, we produce significant amounts of waste water, gas, and solid waste materials during the course of our production. We  believe  our environmental  protection  facilities and systems are adequate for us to comply with the existing national,  provincial,  and  local  environmental  protection regulations. However, PRC national, provincial, or local authorities may impose additional  or  more  stringent  regulations  which  would  require  additional expenditure on environmental matters or changes in our processes or systems.  WE  DEPEND ON OUR SENIOR MANAGEMENT AND KEY EMPLOYEES, THE LOSS OF WHICH  COULD ADVERSELY AFFECT OUR OPERATIONS.  12|Page   Much of our success will depend to a large degree upon our ability to identify, hire,  and  retain  additional  personnel,  particular  experienced  miners and persons familiar with the marketing, manufacturing and administrative processes associated  with  mining.   We depend on the skills of our management team  and current key employees, such as  Mr. Chen Wei Dong, our Chairman, President, and Chief Executive Officer. We may be  unable to retain our existing key personnel or attract and retain additional key personnel.   The loss of any of our key employees  or  the  failure  to  attract, and retain experienced  miners  or additional key employees could have a material  adverse effect on our business and financial condition.    RISKS RELATED TO OUR INDUSTRY  RISKS ASSOCIATED WITH MINING.  The Company's operations  are  subject to all of the hazards and risks normally incident to the exploration for  and  development  and  production  of precious minerals, any of which could result in damage for which the Company may be held responsible. Many hazards are beyond our control, such as unusual or unexpected rock formations, bad weather, landslides, cave-ins, high water tables, flooding or  other unfavorable conditions that are unknown until we begin extraction  of minerals.  If  we  experience  losses  from  these or other risks, it may cause substantial  delays  and  require  significant additional  expenditures.  These conditions  would likely adversely affect  the  Company's  business,  financial condition and the value of our securities.  China has recently  experienced  a  number  of  serious incidents in its mining industry that resulted in loss of life and serious  personal injury. Some mines have collapsed or were otherwise forced to close due  to  unsafe conditions. We would likely suffer material losses if any of these events  were  to occur, and the effect on our business and the price of our securities would be adverse and maybe irreversible.   RISKS ASSOCIATED WITH  THE  REAL  ESTATE  INDUSTRY  The Yellow River wet land projectHechuan ecologic park lies in the Yellow River south beach, Heyang County, Shaanxi Province, China. Hechuan ecologic park contains six main functional areas: rural tourism & leisure resort, agricultural sightseeing demonstration plot,traditional  aquaculture area, eco wet land recreation area, wet land aquaculture area and eco wet land protection area.  Our rental income depends on the operation of the them park. And the theme park located in the wild area,whose future income is unpredictable. We can not change the usage of purpose for the land use right because it is limited in the purpose of tourism and crop farming which may increase our risk in the rental income.  13|Page    MARKET PRICES FOR NON-FERROUS METALS FLUCTUATE AND COULD ADVERSELY  AFFECT  THE VALUE OF OUR COMPANY AND OUR SECURITIES.  Market  prices  for lead, zinc and gold, the metals we primarily intend to mine experience significant fluctuations in price. We are entering the business at a time that the prices  of lead and zinc are going uo again, and just one year ago the price were on the extraordinarily low level, which means the value of the lead and zinc increase 1 time in a year. The profitability of our operations will be directly related  to the prices we will be able to obtain in the marketplace. The market prices of  lead,  zinc, gold and non-ferrous metals are subject to factors beyond our control. These  factors  include  changes  in legal  and  regulatory requirements,  changes  in  the  exchange  rates of the Renminbi and other currencies, worldwide economic recession, political and economic factors and variations in production costs among a number of other factors. A reduction in the  price  or demand for our metals would adversely impact our expected revenues.    THE  CHINESE  GOVERNMENT  OWNS  ALL  LANDS  IN CHINA, AND CHINA ISSUES LAND USE RIGHTS INSTEAD OF LEGAL TITLE TO THE PROPERTIES. THERE IS NO ASSURANCE THAT OUR RIGHTS TO THE PROPERTIES WILL NOT BE SUBJECT TO IMPAIRMENT OR LOSS.  Despite modernization efforts in many areas, China still adheres to a communist scheme for ownership of property that essentially  vests  title  to  the entire country  in  the  Central  Government.  Rather than deeds or other evidence  of ownership, land use rights are always subject  to  fixed  periods  of permitted land use. These periods are frequently 50 years and may be renewable under some circumstances. Our land use right is 50 years and is amortized over  its  life. We  recorded  accumulated  amortization  expense  of  $2,049,710  and $1,638,232 at December 31, 2009 and 2008, respectively.  Disputes over mining claims are common. A loss of our property rights or mining rights  would likely cause irreversible damage to the Company and the price  of its securities and could result in the loss of the entire value of our Company.    NONFERROUS MINERALS ARE FINITE AND EACH MINE HAS A LIMITED USEFUL LIFE. WE HAVE PERFORMED ONLY LIMITED GEOLOGICAL STUDIES, AND OUR PLANS TO EXPLOIT OUR CURRENT PROPERTIES  FOR  NONFERROUS  METALS  MAY BE CURTAILED OR EXHAUSTED. WE HAVE NOT ENGAGED  IN  EFFORTS TO INVESTIGATE THE  ACQUISITION  OF  OTHER  AREAS  OR  ANY EXPANDED POTENTIAL FOR OUR PARCEL.  Mines have limited lives and usually cannot be re-commissioned after exhaustion of the economically  extractable  minerals. We must continually seek to replace and  expand our mineralization and reserves  through  the  acquisition  of  new properties.  Significant  competition  exists for the acquisition of properties producing or capable of producing gold and  non-ferrous  metals. We may be at a competitive disadvantage in acquiring additional mining properties  because  we must  compete  with  other  individuals  and  companies, many of which may have greater financial resources and larger technical  staffs  than  we  have.  As a result  of  this  competition,  we  may  be unable to acquire attractive mining properties on acceptable terms.  CHINA'S GROWTH HAD BEEN RAPIDLY ACCELERATING FOR THE PAST SEVERAL YEARS AND  THE FINANCIAL CRISIS DIRECTLY DEPRESS THE ECONOMY LAST YEAR, WHICH IMPLYS THE COMING OF CONTRACTION BUSINESS CYCLE.  Essentially  all  of our business is located in China and will be conducted  in China. We expect to  sell  all of our extracted minerals in China. The need for these minerals throughout the  world  is  affected  by the increasing demand in China. We are therefore depending on the continuation of the economic growth in China to maintain demand for our lead and zinc and, to  a  lesser extent, gold. The financial crisis abruptly and sharply slow down Chinas growth pace. The economy Contraction has adversely affected the non-ferrous metals industry. The stock price Came down with a great extent in a short time. Many Company in the industry had to Stock up the metals in order to lessen the impact.  Though the Chinese central government has recently stimulated the economy in all means, which may counteract some adverse effect. But the majority expected that the lower growth is unavoidable and the bottom of the economy has not yet reached. If the economic  growth  in China continue to slows or even reverses it would likely have an adverse effect on our business, its revenues  and  financial  condition,  and the  value of our properties and securities. We cannot assure you when the economic turning point will come.   SHORTAGES  OF  CRITICAL PARTS, EQUIPMENT AND SKILLED LABOR MAY ADVERSELY AFFECT OUR DEVELOPMENT PROJECTS.  The industry has  been  impacted  by  increased  worldwide  demand for critical resources  such  as  input commodities, drilling equipment, tires  and  skilled labor. These shortages have caused and may continue to cause unanticipated cost increases and delays in  delivery times, potentially impacting operating costs, capital expenditures and production schedules.   RISKS RELATING TO DOING BUSINESS IN THE PEOPLE'S REPUBLIC OF CHINA   WE ARE SUBJECT TO THE POLITICAL  AND  ECONOMIC POLICIES OF THE PEOPLES REPUBLIC OF CHINA, AND GOVERNMENT REGULATION COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR INTENDED BUSINESS.  All of our assets and operations are in  the  PRC.    As a result our operating results and financial performance as well as the value  of our securities could be affected by any adverse changes in economic, political and social conditions in China.  The  Chinese  government  adopted  an "open door" policy to transition  from  a planned economy to a market driven economy  in  1978. Since then the economy of the PRC has undergone rapid modernization although the Chinese government still exerts  a dominant force in the nation's economy.  This  continues  to  include reservation  to  the  state of land use rights or mining and exploration rights and  includes  controls  on   foreign   exchange   rates  and  restrictions  or prohibitions on foreign ownership in various industries  including mining.  All lands  in  China  are  state  owned and only restricted "land use  rights"  are conveyed to business enterprises or individuals.  All of our intended exploration  and  mining  activities require approvals from the local government authorities in China.  Obtaining  governmental approval is typically a lengthy and difficult process with no guaranty  of  success.  Since the lands where our mines are located were acquired through the grant of a land use  right,  changes  in government policy could adversely affect our business. This process may adversely affect our future business expansion.  The Chinese government  operates the economy in many industries through various five-year plans and even  annual  plans.  A  large  degree  of  uncertainty  is associated  with  potential  changes in these plans. Since the economic reforms have no precedent, there can be  no  assurance  that  future  changes  will not create materially adverse conditions on our business.  Some  of  the  measures  of  The  People's Republic of China are anticipated to negatively affect on us. For example,  the  government  maintains  control over capital investments in the mining of various precious metals, including  gold. While  we  believe we currently comply with all applicable regulations, changes could be materially  adverse. Also China has recently pronounced changes to tax regulations and regulations pertaining to business acquisitions.  Due to the limited effectiveness of judicial review, public opinion and popular voting  there are few avenues  available  if  the  governmental  action  has  a negative  effect. Any adverse changes in the economic conditions, in government policies, or  in  laws  and  regulations in China could have a material adverse effect on the overall economic  growth, which in turn could lead to a reduction in demand for our products and consequently  have  a material adverse effect on our business.  THERE  ARE RISKS INHERENT IN DOING BUSINESS IN CHINA  OVER  WHICH  WE  HAVE  NO CONTROL.  The political  and  economic  systems  of  the  PRC are very different from the United  States  and more developed countries. China  remains  volatile  in  its social, economic  and  political  issues  which  could  lead  to  revocation or adjustment  of  reforms.   There  are also issues between China and the  United States that could result in disputes  or  instabilities.  Both domestically and internationally the role of China and its government  remain  in flux and could suffer shocks, or setbacks that may adversely affect our business.  THE CHINESE LEGAL SYSTEM IS MUCH DIFFERENT FROM THAT OF THE UNITED  STATES WITH CONSIDERABLY  LESS  PROTECTION FOR INVESTORS, AND IT MAY BE EXTREMELY DIFFICULT FOR INVESTORS TO SEEK  LEGAL  REDRESS  IN  CHINA AGAINST US OR OUR OFFICERS AND DIRECTORS, INCLUDING CLAIMS THAT ARE BASED UPON U.S. SECURITIES LAWS.   All of our current operations are conducted  in  China.   All  of  our  current directors  and  officers are nationals or residents of China. All of the assets of these persons  are located outside the United States in China. The PRC legal system is a civil law  system.  Unlike  the  common  law  system, the civil law system is based on written statutes in which decided legal  cases  have  little value as precedents.  As a result there is no established body of law that  has precedential value as is the case in most western legal systems. Differences in interpretations and rulings can occur with little or no opportunity for redress or appeal.   As  a  result,  it  may not be possible to effect service of process within the United States or elsewhere outside China upon our officers and directors.  Even if service of process  was  successful,  considerable  uncertainty exists as to whether Chinese courts would enforce U. S. laws or judgments  obtained  in  the United  States.  Federal  and  state  securities  laws  in  the  U.  S.  confer substantial  rights  to  investors  and shareholders that have no equivalent in China. Therefore a claim against us or  our officers and/or directors or even a final judgment in the U. S. based on U. S.  may not be heard or enforced by the Chinese courts.  In 1979, the PRC began to adopt a complex and comprehensive system legal system and has approved many laws regulating economic  and  business  practices in the PRC including foreign investment. Currently many of the approvals  required for our  business can be obtained at a local or provincial level.  We believe  that it is  generally  easier  and faster to obtain provincial approval than central government approval. Changes  to  existing  laws that repeal or alter the local regulatory authority and replacements by national  laws could negatively affect our business and the value of our securities.  China's  regulations  and  policies  include  limits  on  foreign   investments including  investment  in  mining businesses and are still evolving. Definitive regulations and may affect percentage  ownership  allowed to foreign investment or even controls on the return on equity. Further,  the  various  proposals are conflicting and we may not be aware of possible violations.   NEW  CHINESE LAWS MAY RESTRICT OUR ABILITY TO CONTINUE TO MAKE ACQUISITIONS  OF BUSINESSES IN CHINA.  New regulations on the acquisition of businesses commonly referred to as "SAFE" regulations  (State Administration of Foreign Exchange) were jointly adopted on August 8,  2006   by   six  Chinese  regulatory  agencies  with  jurisdictional authority. Known as the  Regulations  on  Mergers  and Acquisitions of Domestic Enterprises  by Foreign Investors the new Rule requires  creation  of  offshore Special Purpose  Ventures, or SPVs, for overseas listing purposes. Acquisitions of domestic Chinese  companies  require approval prior to listing securities on foreign exchanges.  We  obtained  the  approvals  that  we  believe  are  required  in  making  the acquisitions  that formed the present  company.  Nonetheless,  our  growth  has largely been by  acquisition  and we intend to continue to make acquisitions of Chinese businesses. Since the "SAFE"  rules  are  very  recent  there  are many ambiguities  and  uncertainties  as  to interpretation and requirements.  These uncertainties and any changes or revisions  to  the  regulations could limit or eliminate  our ability to make new acquisitions of Chinese  businesses  in  the future.  WE MAY BE AFFECTED  BY  CHANGES  TO  CHINA'S FOREIGN INVESTMENT POLICY, WHICH WILL CHANGE THE INCOME TAX RATE FOR FOREIGN ENTERPRISES.  On January 1, 2008, a new Enterprise Income Tax  Law  took  effect.  The new law revises  income tax policy and sets a unified income tax rate for domestic  and foreign companies  at  25  percent.  It  also abolishes favorable treatment for foreign invested enterprises. When the new  law  takes effect, foreign invested enterprises will no longer receive favorable tax treatment.   Any  earnings  we may obtain may be adversely affected by the new law.  CHINA CONTROLS THE CURRENCY CONVERSION AND EXCHANGE RATE OF ITS CURRENCY, WHICH COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.   The  Chinese  government  imposes  control  over  the conversion of the Chinese currency, the Renminbi, into foreign currencies, although recent pronouncements indicate  that  this  policy  may  be relaxed. Under the  current  system,  the People's Bank of China publishes a daily exchange rate based on the prior day's activity  which  controls the inter-bank  foreign  exchange  market.  Financial institutions are permitted  a  narrow  range  above  or below the exchange rate based  on  then  current market conditions. Since 1977 the  State  Council  has prohibited restrictions  on  certain  international  payments  or transfers for current account items. The regulations also permit conversion for distributions of dividends to foreign investors. Investment in securities, direct investment, and loans, and security investment, are still subject to certain restrictions.   For  more than a decade the exchange rate for the Renminbi ("RMB")  was  pegged against  the  United States dollar leaving the exchange rates relatively stable at roughly 8 RMB for 1 US Dollar. The Chinese government announced in 2005 that it  would begin  pegging  the  Renminbi  exchange  rate  against  a  basket  of currencies,  instead  of  relying  solely on the U.S. dollar. This has recently caused the dollar to depreciate as against  the  RMB.  As of December 31, 2009, the rate was 6.8282 RMB for 1 US Dollar.  Since all of our  expected operations are in China, significant fluctuations in the exchange rate may  materially and adversely affect our revenues, cash flow and overall financial condition.   CHINESE LAW REQUIRES APPROVAL BY CHINESE GOVERNMENT AGENCIES AND COULD LIMIT OR PROHIBIT  THE PAYMENT OF DIVIDENDS FROM ANY PROCEEDS OBTAINED FROM  LIQUIDATION OF OUR ASSETS.   All of our assets are located inside the Peoples Republic of China. Chinese law governs the  distributions  that  can  be  made  in the event of liquidation of assets of foreign invested enterprises.  While dividend distribution is allowed it is subject to governmental approval.  Liquidation  proceeds  would  also  be subject  to  foreign  exchange control. We are unable to predict the outcome in the event of liquidation insofar as it affects dividend payment to non- Chinese nationals.   CHINA HAS BEEN THE LOCALE  FOR  THE OUTBREAK OF VARIOUS DISEASES AND A PANDEMIC CAUSED BY DISEASES SUCH AS SARS,  THE AVIAN FLU, OR SIMILAR DISEASES COULD HAVE A MATERIALLY ADVERSE EFFECT ON OUR  WORKERS  AND  EVEN  THE  CHINESE ECONOMY IN GENERAL, WHICH MAY ADVERSELY AFFECT BUSINESS. 17  The World Health Organization reported in 2004 that large scale  outbreaks  of avian  flu  throughout  most  of  Asia,  including  China,  had nearly caused a pandemic that would have resulted in high mortality rates and which could cause wholesale  civil  and  societal  disruption.   There  have  also  been  several potential outbreaks of similar pathogens in China with the potential  to  cause large  scale  disruptions,  such  as  SARS, pneumonia and influenza. Any future outbreak which infiltrates the areas of  our  operations  would  likely have an adverse effect on our ability to conduct normal business operations.   RISKS RELATING TO OUR COMMON STOCK   THERE  IS  CURRENTLY  A  LARGE  MARKET OVERHANG IN OUR COMMON STOCK AND  FUTURE CONVERSIONS AND SALES OF OUR COMMON  STOCK  COULD  DEPRESS THE MARKET PRICE AND DIMINISH THE VALUE OF YOUR INVESTMENT.  The Company has issued 500,000 shares of Series  C  Convertible  Preferred Stock  in  the  exchange  of  securities  that  acquired our current assets and operations. Each share of Series C Preferred Stock  carries  the right to 1,218 votes per share. If each share is converted, the Series C Convertible Preferred Stock will be convertible into common stock at a rate sufficient  to  yield  an aggregate  of  approximately  609 Million  common  shares.After the pending reverse split at 1:10, the company will issue 63,321,605.8 common shares. Future conversion and sales of shares of our common stock or securities that are convertible into our common stock, could adversely affect the market price  of  our common stock. If any of our principal stockholders sells a large number of shares or if we issue a  large  number of  shares,  the  market  price  of  our  common  stock  could significantly decline. Moreover, the perception in the public  market  that our principal stockholders might  sell shares of common stock could further depress the  market  for  our common stock.   THERE IS  A  LARGE  NUMBER  OF  PREFERRED  SHARES OUTSTANDING THAT WILL RECEIVE PREFERENCES  OVER  THE  COMMON  STOCK  IN  THE  DISTRIBUTION  OF  DIVIDENDS  OR LIQUIDATED ASSETS AND VOTING RIGHTS, WHICH WILL LIMIT THE ABILITY OF THE COMMON STOCKHOLDERS TO HAVE AN EFFECTIVE VOICE IN THE MANAGEMENT OF THE COMPANY.   The  shareholders of HongKong Wah Bon and its subsidiary, Shaanxi Changjiang Mining & New Energy Co., Ltd. (CHAN JIANG) as of February 4, 2008 acquired 500,000 shares of Series  C  Convertible  Preferred stock outstanding in exchange for all of the outstanding stock of Chang Jiang.. Each  of  the  preferred  shares  is  entitled  to  receive preferential   treatment   in   connection   with  the  payment  of  dividends, distributions upon liquidation and voting rights.  Each preferred share carries the  right  to  vote  the  equivalent  of  1,218 votes of common  shares.  Each preferred share will be automatically converted  into  1,218 common shares upon approval and an amendment to the Certificate of Incorporation  to  increase the number  of authorized shares.  This effectively eliminates the ability  of  the common stock  holders  to participate in the management of the Company, such as the election of directors and corporate changes or conversions.   THE MARKET FOR SHARES OF  OUR  COMMON  STOCK HAS BEEN LIMITED AND SPORADIC, AND THERE IS NO GUARANTEE THAT A MARKET WILL  BE  AVAILABLE  FOR  YOU  TO SELL YOUR SHARES.   Shares  of our common stock are not listed on any exchange but are sporadically traded in over the counter transactions or in inter-dealer quotations from time to time.  Currently there are several market makers who have posted bid and ask prices for  our shares but there is no guarantee that they or any other brokers will continue  any  activities. Our stock has been very thinly traded and there are many days or weeks  that  the  shares  have  not traded at all. There is no assurance that any market will exist at the time that  a  shareholder wishes to sell the shares and there is no assurance that any market will continue.  OUR COMMON STOCK PRICE COULD BE VOLATILE AND MAY NOT APPRECIATE IN VALUE.  The market price of shares of our common stock has fluctuated  and is likely to continue to fluctuate significantly. Fluctuations could be rapid and severe and may provide investors little opportunity to react. Factors such  as  changes in commodity  prices,  conversion  of  our  preferred  shares,  results  from  our operations,  and  a  variety  of  other  factors,  many of which are beyond the control of the Company, could cause the market price  of  our  common  stock to fluctuate substantially. Also, stock markets in penny stock shares tend to have extreme  price  and  volume  volatility.  The  market  prices of shares of many smaller public companies securities are subject to volatility  for reasons that frequently  unrelated  to the actual operating performance, earnings  or  other recognized measurements  of value. This volatility may cause declines including very sudden and sharp declines  in  the  market  price  of our common stock. We cannot assure investors that the stock price will appreciate  in  value, that a market  will  be  available  to resell your securities or that the shares  will retain any value at all.    The Commission has adopted regulations  which  generally define a "penny stock" to be any equity security that has a market price  (as  therein  defined)  less than  $5.00  per  share or with an exercise price of less than $5.00 per share, subject to certain  exceptions.  Additionally,  if  the  equity security is not registered or authorized on a national securities exchange, the equity security also  constitutes  a  "penny  stock."  As  our  common stock falls  within  the definition of penny stock, these regulations require the delivery, prior to any transaction  involving  our  common  stock,  of  a  risk   disclosure  schedule explaining  the  penny  stock  market and the risks associated with  it.  These regulations generally require broker-dealers  who  sell penny stocks to persons other  than  established  customers  and  accredited  investors  to  deliver  a disclosure schedule explaining the penny stock market and  the risks associated with  that  market.  Disclosure is also required to be made about  compensation payable to both the broker-dealer and the registered representative and current quotations for the securities.  These  regulations  also  impose  various sales practice  requirements  on broker-dealers. In addition, monthly statements  are required to be sent disclosing  recent  price information for the penny stocks. The ability of broker/dealers to sell our  common  stock  and  the  ability  of shareholders  to sell our common stock in the secondary market is limited. As a result, the market  liquidity  for  our  common stock is severely and adversely affected. We can provide no assurance that trading in our common stock will not be subject to these or other regulations in  the future, which would negatively affect the market for our common stock.  14|Page    WE  MAY  INCUR  SIGNIFICANT  COSTS  TO ENSURE COMPLIANCE  WITH  U.S.  CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS.   We  expect  to  incur significant costs  associated  with  our  public  company reporting  requirements,  costs  associated  with  newly  applicable  corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other  rules implemented by the SEC. We expect all of these applicable rules and regulations  to increase our legal and financial compliance costs and to make some activities  more  time-consuming  and  costly. We also expect that these  applicable  rules and regulations may make it more  difficult  and  more expensive for us to  obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain  the  same  or  similar coverage. As a result, it may be more difficult for us to attract and retain  qualified  individuals to serve on our  board  of directors or as executive officers. We are currently  evaluating and monitoring  developments  with respect to these newly applicable rules, and we cannot predict or estimate the  amount  of  additional costs we may incur or the timing of such costs.   WE DO NOT FORESEE PAYING CASH DIVIDENDS IN THE FORESEEABLE FUTURE.   We have not paid cash dividends on our stock and  we  do  not  plan to pay cash dividends  on  our  stock in the foreseeable future.  We intend to  retain  any earnings  to  expand  our   operations   and   explore   additional  areas  and opportunities in our industry. Therefore an investment in  our  common stock is not appropriate for investors who require regular and periodic returns on their investments.   ITEM 2. DESCRIPTION OF PROPERTIES   All  land  in  China  is  owned  by  the  State. Individuals and companies  are permitted  to  acquire  rights to use land or  land  use  rights  for  specific purposes. In the case of land used for commercial purposes, the land use rights are granted for a period  of  50  years.  This  period  may  be  renewed at the expiration of the initial and any subsequent terms. Granted land use rights are transferable and may be used as security for borrowings and other obligations.  CORPORATE  HEADQUARTERS  Because of the maturity of the old lease, Our  corporate headquarters  removed to the the opposite mansion.   The new location consists of  554  square  meters located at Seventeen Floor, Xinhui Mansion, Gaoxin Road, Hi-tech Zone, Xi'An,  Shaanxi  Provence  PRC, Postcode:710075. Our  Telephone  number Still is (86) 29-88331685 and  our fax  number of  (86)29-88332335 has not changed. The headquarters are leased from February, 2009 to January 31, 2011 at a rental rate $11,029 per year.  15|Page    THE DONGFANG PARCEL  Xunyang  County  in the Shaanxi Province of southwestern China has an extensive history in mining.  Called the "Golden State" in ancient times it is located in the Qinba Mountain Area at a geologic junction of "Shan, Zha, Zhen, Xun", which are the four primary  metallogenic  prospective  areas in the Shaanxi Province. This area, having been likened to China's "Ural" is  the resources reserve area of  several  metals in China including gold, silver, copper,  iron,  lead,  and zinc. Over 30  different  minerals  have  been  proven  up  in  Xunyang County, including reserves of basic raw materials such as lead & zinc, gold,  mercury & antimony, and limestone.  Our  subsidiary  Dongfang Mining,  obtained the mining rights to a 61.27  sq.km parcel in the Jiao  Shan  Zhai  Mining  Area, located in Xunyang County-Guo Jia Ling, Xunyang County, Shaanxi Province (the  "Donfang Parcel.") Approval of the exploration rights was granted by appropriate authorities in certificate number is 6100000720386.  The Dongfang Parcel is located in the Guo Jia  Ling- Jiao Shan Zhai Mining Area is located in eastern Xunyang County, under the  jurisdiction  of  Shuhe  Town, Guankou  Town  and  Gouyuan  Village,  Xunyang  County,  and  Shaanxi  Province according  to  its  administrative  division. The North end of this mining area starts at Cai Jia Gou, at the south end  at  Cai Miao Ya. It begins in the east from Shi Jia Gou Nao and ends at Si Ren Gou in  the  west, with a whole area of 67.82 sq.km. Longitude, 109*26*30*--109*38*30*, and North Latitude, 32*55*45*-- 33*01*00*.  The government was authorized the Exploration Right for the appved mining area that the company applied for in September 19, 2003. At the same year The First Geological Team of Shaanxi Provincial Bureau of Geology and Mineral Resources took commission from the company and started preliminary survey (1:10,000), geographical  profile survey and trenching in 1.15 square kilometers. They found lead-zinc orebody in the survied area and evalueated.  Yunnan Nonferrous Geological Institute Physical Branch was also committed to make survey by geophysical transient electromagnetic method. There are 12 TEM abnormalisms, 3 A class abnormalisms, 7 B class abnormalisms and 2 C class abnormalisms. A class abnormalism: located in the orebody known and its extension; B class abnormalisms: abnormalism shows great chance to find mineral deposite; C class abnormalisms: unkown its characteristcs and needs more research.  The First Geological Team of Shaanxi Provincial Bureau of Geology and Mineral Resources did mineral exploration in 2005. Changan University send a geographical research group did the field work on range of reconnaissance and remotesensing and geochemistry for gold exploitation in Jiaoshan Zhai. The group evaluated mining deposite in the synclinal basin, contains high percentage of Au、Ag、Cu、Pb、Zn、As、Sb、Bi、Hg. The group also pointing out 3 lead-zinc orebodes and 5 gold orebodies and evaluated the rough survey and the known orebodies.   The company bored drilling in Jiaojia Shan which named ZK1 and ZK2in Jan. 2007 and 2006. There are lead orebody and the orebody is partly rich in Ferrum、Sillicon and gypsum. Siluric layer through drillings.  3 lead orebodies were found. At the same year, the company found 5 gold orebidies, more than 30m for each of them, after the 60m for exploratory tunnel excavating and 24 cube trenching. The possibility of bigger gold orebody still exists.   The company did rough survey in Guojia Ling ---Jiaojia Shan gold field during 2007,2008 and 2009. At the end of Augest, 2007, they found 3 lead---zinc deposits and one gold deposit. 3 lead---zinc deposits in Weijia Shan, 15gold deposits in Jiaojia Zhai. K1、K2、K3 deposits contain 1150.64kg worthing $ 33,700,000(230,000,000RMB). Lead---zinc deposit in Siren Gou indicates 10,000t ore, Huoshao Gou---Guanzi Gou deposit indicates 10,000t ore and Xiaoshui He---Nansha Gou 10,000t ore for indication and all of their potential value will reach $702,000,000(4,800,000,000RMB).The potencial value of the gold and lead-zinc resource in the mining area is more than $730,000,000(5,000,000,000RMB). Lead---zinc 679.39t estimated, including 371.84t zinc and 162.52t Lead.   The company finished rough survey over 6.8 sq KM. In 2010 the company planned to do further survey and gets ready for mining.                ITEM 3. LEGAL PROCEEDINGS  We  are not presently involved in  any  litigation  that  is  material  to  our business.  We  are not aware of any pending or threatened legal proceedings. In addition, none of  our  officers,  directors,  promoters or control persons has filed or been involved for the past five years:  -   in any bankruptcy petition, -   in any conviction of a criminal proceeding  or involved in a pending criminal proceeding (excluding traffic violations and minor offenses), -   is  subject  to  any  order,  judgment or decree enjoining,  barring suspending  or  otherwise limiting their  involvement  in  any  type  of business, securities, or banking activities, -   or has been found  to have violated a federal or state securities or commodities law.   16|Page      Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS   None.    Item 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES    The Company's  Common Stock is  traded over-the-counter and quoted from time to time  in  the  OTC  Bulletin   Board   under   the  trading  symbol  "NAGM.OB". Consequently, there is currently  no  established public trading market for the Company's Common Stock. The following table  sets  forth  the range of high and low bid prices as reported by the OTC Bulletin Board for the periods indicated. Such quotations represent inter-dealer prices without retail  markup, markdown, or commission, and may not necessarily represent actual transactions   CALENDAR YEARS BY QUARTER BID PRICE -------------- ---------- -------------- HIGH LOW ----- -----  2009 First $0.035 0.01 Second 0.07 0.01 Third 0.14 0.02 Fourth 0.03 0.018   2008 First $0.035 0.01 Second 0.07 0.01 Third 0.014 0.05 Fourth 0.09 0.015     Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION   CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS  Forward Looking Statements  We  make  certain  forward-looking statements in this report. Statements   that are  not  historical   facts   included  in  this Form 10-K are "forward-looking statements"  within the meaning  of  the  Private  Securities Litigation Reform Act  of 1995 that  involve  risks and uncertainties  that  could  cause  actual results  to differ from projected  results. Such statements address activities, events  or   developments   that   the  Company   expects,  believes, projects, intends or anticipates will or may occur,  including   such   matters as future capital,    debt   restructuring,    pending   legal   proceedings,    business strategies,  expansion  and  growth of the Company's operations, and cash flow. Factors  that could cause actual  results  to  differ  materially  ("Cautionary Disclosures")  are  described  throughout this Form 10-K. Cautionary Disclosures include, among  others:  general   economic  conditions in China and elsewhere, the  Company's  ability  to  license, extract, refine  and  sell  minerals  and precious metals through our intended  operations  in  China,  the  strength and financial   resources   of   the   Company's   competitors,  environmental  and governmental regulation,  labor relations,  availability and cost of employees, material    and    equipment,   regulatory   developments    and    compliance, fluctuations  in  currency  exchange  rates and legal  proceedings.  Statements concerning our future operations, prospects,  strategies,  financial condition, future  economic performance (including growth and earnings),  demand  for  our services,  and  other  statements  of  our  plans,  beliefs,  or  expectations, including   the   statements  contained  under  the  captions  "Risk  Factors," "Management's Discussion  and  Analysis  or Plan of Operation," "Description of Business," as well as captions elsewhere in  this document, are forward-looking statements. In some cases these statements are  identifiable through the use of words such as "anticipate," "believe," "estimate,"  "expect," "intend," "plan," "project,"  "target,"  "can,""could,"  "may," "should,"  "will,"  "would,"  and similar expressions. We intend such forward-looking statements to be covered by the safe harbor provisions contained in  Section  27A  of the Securities Act of 1933, as amended (the "Securities Act") and in Section 21E  of  the  Securities Exchange  Act  of  1934, as amended (the "Exchange Act"). All written and  oral forward-looking statements  attributable   to   the   Company   are   expressly qualified  in  their  entirety  by  the  Cautionary  Disclosures.  The  Company disclaims  any obligation to update or revise any forward-looking statement  to reflect  events   or  circumstances  occurring  hereafter  or  to  reflect  the occurrence of anticipated or unanticipated events.  17|Page    The  nature of our business makes predicting the future trends of our revenues, expenses, and net income difficult. Thus, our ability to predict results or the actual  effect  of  our future plans or strategies is inherently uncertain. The risks and uncertainties  involved  in  our  business  could  affect the matters referred  to  in  any  forward-looking statements and it is possible  that  our actual results may differ  materially from the anticipated results indicated in these forward-looking statements.  Important  factors  that  could cause actual results to differ from those in the forward-looking statements include, without limitation,  the factors discussed in the section entitled "Risk  Factors"  and the following:   * the effect of political, economic, and market conditions and geopolitical events;  *  legislative and regulatory changes that affect our business;  *  the availability of funds and working capital;  *  the actions and initiatives of current and potential competitors;  *  investor sentiment; and  *  our reputation.   We do not undertake  any  responsibility  to  publicly release any revisions to these forward-looking statements to take into account  events  or circumstances that occur after the date of this report. Additionally, we do not undertake any responsibility  to  update  you  on the occurrence of any unanticipated  events which may cause actual results to differ from those expressed or implied by any forward-looking statements.  The following discussion and analysis  should  be  read in conjunction with our consolidated financial statements and the related notes  thereto  as filed with the SEC and other financial information contained elsewhere in this Form 10-K.   OVERVIEW  We operate in two segments. We are an exploration stage mining company although we have had no mining revenues  and  do not  expect  mining revenues  until  we begin the process of extracting minerals which will not start until 2010, if at  all.  We  have sustained considerable losses from our exploration and other activities to date.  Effective  August  20, 2001, the Company sold its  interests  in  video  gaming business for cash and notes receivable. During 2003, the Company sold the notes receivable for cash.  As  a  result,  the Company had no on-going operations or revenues.  Thereafter the Company was a  "shell"  as  defined by Rule 405 under the Securities Act and Rule 12b-2 under the Exchange Act. Its only activity was to explore for acquisition opportunities and the financing  required buying and supporting an operating business.  On  February  4,  2008,  (the  "Closing  Date")  we acquired HONGKONG  WAH  BON ENTERPRISE LIMITED ("Wah Bon") and its three subsidiaries:   SHAANXI  TAI  PING YANG  XIN  NENG  YUAN  DEVELOPMENT  COMPANY LIMITED ("Tai Ping Yang "); SHAANXI CHANG JIANG SI YOU NENG YUAN FA ZHANG  GU  FENG  YOU  XIANG  GONG  SI   ("Chang Jiang")  and DONGFANG MINING COMPANY LIMITED ("Dongfang Mining".) Wah Bon  owns 100% of Tai Ping Yang. Tai Ping Yang owns 97.2% of Chang Jiang; and Chang Jiang owns 60% of  Dongfang  Mining.  The  minority  interests represent the minority shareholders' 2.8% and 41.68% share of the results  of Chang Jiang and Dongfang Mining respectively.  18|Page     Goodwill  is  not  amortized  but  is  supposed to be tested  for impairment. The  Company is going to perform an assessment on goodwill arising from  the  acquisition  of Dongfang Mining as the price of non-ferrous metals are going down and the whole industry are stagnant. We cannot conclude that there was no impairment to the carrying value of the goodwill in this reporting period.   We have exploration rights for a 61.27 sq.km parcel in the  Jiao  Shan Zhai Mining Area, located in Xunyang County in the Shaanxi Province of China.  Our land use rights  are  amortized  over  fifty years of the term of the leases.   We  have performed  tests  on the site but  we  have  not  begun  mining  activity. Weoriginally planned  to  participating in constructing  a theme park business on the parcel but have delayed those plans while we direct  our resources on the mining opportunities. Nowaday, we decided to lease out our Land use right to Huanghe wet land park Co.Ltd.Therefore we can focue our management in the mining segment.  The following is a summary of land use rights at December 31, 2009:   Cost $        19,146,841 Less: accumulated amortization (2,049,710) ------------------- Land use rights, net $        17,115,077 ===================     The  land use rights are amortized over fifty years of the term of leases. The amortization expense for the year ended December 31, 2009 and December 31,2008 was $409,750 and 395,944, respectively.  From 2003  until  the  present,  Dongfang  Mining  has  held  licenses  for  the exploration  of  minerals  and  precious  metals in the Shaanxi Province of the People's Republic of China.  Dongfang Mining  was  granted an exploration right to the lead, zinc and gold mines located at Gan Gou  and  Guan  Zi Gou, Xunyang County,  Shaanxi  Province,  PRC,  on  December 31, 2006.  The Company  engaged Geology and Mineral Bureau of Shaanxi to  conduct  a  preliminary  survey which reported preliminary positive findings for gold, lead and zinc deposits  in the mines.  As reflected in the accompanying consolidated financial statements, the Company has  an  accumulated  deficit  during  the  exploration stage of $13,366,785 at December 31, 2009, which includes a net loss of  $104,557  for  the year ended December 31, 2009. The Company's current liabilities exceed its current  assets by  $7,787,760  and  the  Company  used  cash of $531,480 in operations. These factors  raise  substantial doubt about its ability  to  continue  as  a  going concern.  In view  of  the  matters  described above, recoverability of a major portion of the recorded asset amounts  shown  in  the accompanying consolidated balance sheet is dependent upon continued operations  of  the company, which in turn  is  dependent  upon  the  Company's ability to raise additional  capital, obtain  financing  and  succeed  in  its   future  operations.   The  financial statements do not include any adjustments relating  to  the  recoverability and classification  of  recorded  asset  amounts  or amounts and classification  of liabilities that might be necessary should the Company be unable to continue as a going concern.   PLAN OF OPERATIONS  Our efforts over the next twelve months will be directed towards completing the licensure  process  to  begin  the  extraction operations from the mines and to acquire the equipment and personnel necessary to commence mining operations. We have applied for, but not yet obtained,  an additional license that will permit the excavation and extraction of the parcel.  We  expect to obtain that license before the end of 2010 and expect to commence extraction operations shortly thereafter.  To  date  we  have  financed our activities from loans  received  from  related parties. Until we begin  to  generate revenues we expect to continue to rely on loans from our directors and related parties. Our directors have indicated that they will continue to make loans  for  the next twelve (12) months, although we have made revenue of $1,097,872 in 2009.other than the oral assurances given by the directors, we have no other sources of capital and there can be no guarantee that the Company will be able to meet its obligations or  obtain sufficient capital to complete its plan of operations for  the  next twelve (12) months.  Our  plan  for  2010  is  to finish reconnaissance  and  evaluation  and  begin prospecting the known ore bodies  and  controlling  the  trench exploration, in addition, enter in to new energy industry by acquisition ,such as electric power. We intend to stress deep drilling and tunnel exploration validation. We hope this will allow us to enlarge the ore body scale and prove up the anomalous regions. We expect to accomplish this primarily with drilling and tunnel exploration.  Specific implementation methods are as follows:  -   Enhance  the  validation  of  geophysical  prospecting  abnormities, especially of the I and II class abnormities, make a conclusion  on them as soon as possible to provide basis for next work;  -   Carry   out  geological  investigation  in  adjacent  regions,  with attention to the lead & zinc ore bodies;  -   Investigate  other  metallogenic areas, mainly through surface work, which may be combined with limited tunnel exploration and drilling;  -   Finish the rough survey of lead and zinc over the 6.8 square meter area;  - Complete the particular survey of gold and obtain the exploitation licence Before year end.  Enter into electric power industry by controlling the Changjiang electric Power & new emerge Co., ltd.   We believe we can find adequate skilled mining personnel  in the region. We are also exploring possible joint venture or similar arrangements  with  one of the existing, competitive mining companies that are already operating in the mining area  near  our  parcel.   If  so,  we  would  reduce  our need for the initial expenditures and the delay in commencing mining operations may be shortened.   RESULTS OF OPERATIONS  COMPARISON OF THE YEARS ENDED DECEMBER 31, 2009 AND DECEMBER 31, 2008  The Company is an exploration stage company and  has  not yet generated mining revenue. As the Land use right was substantively occupied by the Huanghe wet land park Co. Ltd for 2009. The rental income of $1,097,872 (rmb 7,500,000) was produced for 2009 compairing zero for 2008.  The amortization of the land use right was $409,750, compairing $395,944 of 2008, both of which have been showed in the operating expense. The business tax and addition of $57,089 was also calculated in 2009 compairing zero for 2008.  OPERATING EXPENSES. Total operating expenses for the year ended December 31, 2009 decreased to $842,909 from $1,141,537 for the year ended  December  31, 2008. Overall expenses ,before taxes and non-controlling interests for the year ended December 31, 2009 was $1,277,371 as compared to the year ended December 31, 2008, of $1,526,199.  The  difference of $248,828 or approximately 16% under the prior period, the overall decrease in expenses is due to the $353,629 decrease of legal and professional for 2009 comparing with that of 2008.   NET LOSS. Our net loss for the year ended December 31, 2009 decreased to $104,557 from $1,467,426 for  the  year ended December 31, 2008. The overall decrease in net loss of $1,362,869,over the prior  year  period, is primarily due to $1,097,872 rental income from the Land use right.  COMPREHENSIVE GAIN. Our  comprehensive loss for the year ended December 31, 2009 was $38,951 from  comparing with comprehensive gain of $1,064,912 in 2008. The reason for great decrease of comprehensive gain/loss came to that the exchange rate of rmb to usd rised from  7.3 to 6.8346 in 2008, but kept stable during 2009.  STOCKHOLDERS'  EQUITY.  Stockholders'  equity increased by $171,681 to $14,570,192 as of December 31, 2009, or approximately  1.2 %  from $14,398,511 as of  December  31,  2008.  The  increase  was  primarily  due to the rental income of the year.   LIQUIDITY AND CAPITAL RESOURCES  GENERAL.   Overall, we had an decrease in net loss of $104,557 for the year ended December  31, 2009. Net cash used in operating activities of $531,480, net  used in investing activities  of  $19,096  and  net  cash  provided  by financing  activities of $566,703. At December 31, 2009, our cash balance was $27,279 as  compared to $23,961 for the prior year, in almost the same level.  CASH FLOWS  FROM  OPERATING  ACTIVITIES. Net  cash  used  in  operating activities  of  $531,480 for  the  year  ended December 31, 2009 was primarily attributable to the rental income of $1,097,872 without cashflow. The  adjustments to reconcile the  net  loss  to net cash, including the said rental income without cash flow, depreciation  expense of $36,755, amortization  of  land  use  rights of  $409,750, imputed interest  expense of $346,453, deferred tax benefit of $3,652, adjustment for non-controlling interests of $71,290, a decrease in operating assets of $122,722 and a decrease in operating liability of $242,981.  CASH  FLOWS FROM  INVESTING  ACTIVITIES.  Net  cash  used  in  investing activities of  $19,096  for  the  year ended December 31, 2009 was primarily attributable to:  -   $17,044 due from related parties; and -   Purchase of furniture and equipment of $2,052.  CASH FLOWS FROM FINANCING ACTIVITIES. Net cash of $566,703 provided by financing activities in the year ended December 31, 2009 was primarily due to $19,980 and $546,723 advances from shareholders and related parties, respectively.  FINANCING.  Though we have generated the rental revenues of $1,097,872 as of  December 31, 2009, we are still considered an exploration stage company. We ended 2009 with $27,279 of  cash  and  equivalents on our balance sheet. Given our current  cash  usage rate, a risk exists  that our available cash on hand and the cash we anticipate generating  from operating  activities  will  be  insufficient  to  sustain  our operations.   Our auditors have expressed substantial concern as to our ability to continue as a going concern.  We have historically been able to issue shares, preferred stock or stock options to pay  for  certain  operating expenses. We believe that our pro-forma working capital on hand as of the  date  of this report, along with our rental income and ability to raise capital and meet certain operating  expense  obligations  through  the issuance  of  stock  or  stock equivalents, will provide us with the capital we need  through year end 2010.  In  addition,  our  directors  have  indicated  a willingness  to  make loans to the Company to cover expenses, although there is no assurance that  they  will  do  so.  However, we believe that our ability to operate beyond the end of 2010 will require  us to raise additional capital, of which there can be no assurance.  INTERNAL SOURCES OF LIQUIDITY. There is no assurance that funds from our operations, such as the rental income, will meet  the requirements of our daily operations  in  the  future. In the event that funds from  our  operations  are insufficient to meet our  operating  requirements,  we  will need to seek other sources of financing to maintain liquidity.    19|Page     EXTERNAL  SOURCES  OF  LIQUIDITY.  We  intend  to pursue  all  potential financing  options  in  2010  as  we look to secure additional  funds  to  both stabilize and grow our business operations and begin extraction. Our management will  review  any financing options at  their  disposal  and  will  judge  each potential source  of  funds on its individual merits. We cannot assure you that we will be able to secure  additional  funds  from debt or equity financing, as and when we need to or if we can, that the terms  of  such  financing  will  be favorable to us or our existing shareholders.  INFLATION. Our management believes that inflation has not had a material effect on our results of operations, and does not expect that it will in fiscal year  2010.  OFF-BALANCE  SHEET  ARRANGEMENTS.  We  do not have any off-balance sheet arrangements.  RECENT DEVELOPMENTS  On February 4, 2008, we closed an acquisition of  Hongkong  Wah  Bon Enterprise Limited ("Wah Bon"). On September 2, 2007, Wah Bon had acquired 100%  ownership of  Tai  Ping  Yang  at  a consideration of $128,205 in cash. We issued 500,000 shares of series C convertible  preferred  stock  in  exchange  for  all of the outstanding  shares  of  Wah  Bon.   This  transaction was treated as a reverse merger for accounting purposes and we have therefore  presented  all  financial data in consolidated form, except where otherwise noted.  On March 18, 2010 we filed a Form 8-K and an amended Form 10-K for the period ending December 31, 2008. In consultation with Brock, Schechter and Polakoff  LLP (Brock), our independent registered public accounting firm, we concluded on February 22, 2010 that the financial statements for the fiscal year ended December 31, 2008, as presented in our Annual Report on Form 10-K, should no longer be relied upon due to the accounting issues set forth below.  The accounting issues relate to:  1.The report of the prior auditor (Jimmy Cheung) was not included with the first 10k.  2.Our report did not have the dates filled in properly.  3.The amounts in the going concern paragraph were changed to tie to the F/S.  4.The cash flow statement properly included the non-cash increase in additional paid in capital.  5. Various amounts in MD&A section of the 10k were changed to agree to the issued F/S.   Accordingly, the Company restated its financial statements for the fiscal year ended December 31, 2008 by disclosing the effect of these accounting issues in an amended Form 10-K for the fiscal year ended December 31, 2008.  On September 19, 2008, the Company reincorporated to the state of Nevada under the name China Changjiang Mining and New Energy Company, Ltd. The Company authorized 100,000,000 shares at a par value of $0.001 in anticipation of the 10 for 1 reverse split following the conversion of its Series C Preferred stock, which shall yield a net fully diluted amount of 60,900,000 new common shares. In December, 2009 an application was made on behalf of the Company to FINRA for approval of corporate changes, including the corporate name, the symbol, the recapitalization of the reverse split and the conversion of the Series C Preferred Shares. The Company has received two letters of comment from FINRA, to which it has responded, but the corporate changes have not yet been approved as of this filing.   Financial Condition  We had total assets of $ 23,517,387 and $22,799,417 as of December 31, 2009 and December  31, 2008, respectively.   The largest part of our assets is the Land Use Rights  we  hold.  Net land use rights were $17,115,077 as of December 31, 2009, decreased from $17,508,609 for the year  ended  December 31, 2008.  The reason for this decrease was amortization of 2009.  In order to carry out the Corporate  Strategy  of developing the Petroleuem and New  Energy, the Company invested RMB 2,000,000($293,328)  to  establish  a new company   named  Shaanxi  Changjiang  power  and  New  Energy  Co.,  Ltd  in September,  2008, with  Shaanxi Changfa Industry Stock Co.,Ltd  (the "Changfa"), The registered  capital  totals    RMB  10,000,000(USD  293,328),  in which the Company   owns  20%, and   Changfa  the  other  80%   share when all the capital Was contributed. According to the contract The changfa shall contribute its last capital till the end of 2011, at the end of current year, the net asset was rmb 6,586,417 ($964,591), which means the company held 31% shares of the changjiang electricity. Practically, The  Company  has significant  influence  on  the  new Company as it assigned finance and  Other directors in the new Company, and has recorded  the investment under the  equity method. The new Company had no income for the  year ended December 31,2009  and as the expense of rmb41,000 was immaterial, no adjustment has been made .  Our current liability was $8,947,195 as of December 31, 2009. $3,996,369 and $434,137 are due to related companies and notes payable, respectively, along with $2,418,796 due to stockholders. Our other payables and accrued expenses were $1,882,945.   Tax Liabilities  Neither North American nor Wah Bon had income for income tax purposes in the years ended December 31, 2009 and 2008. Wah Bon is a Hong Kong corporation and  therefore  is subject to Hong  Kong profits tax. All of the subsidiaries of Wah Bon are incorporated  in the PRC  and  therefore  are  subject  to  income  tax law in  China.   The Company has deferred tax assets at  December  31, 2009 which consist of net operating loss carry forwards calculated using statutory  effective  tax rates. As the rental income has been recognized and it is expected to generate rental income in the future which may recover the loss carryforwards. The  Company recorded the deferred tax asset at the year ended December 31, 2009 in the balance sheet. According to the China Tax Regulations. The operating loss carryforwards can be deducted in the taxable profit within 5 years.   The reconciliation  of  income taxes computed at the statutory income tax rates to total income taxes for the year ended December 31, 2009 is as follows:   North American Income tax computed at the federal statutory rate 34% State income taxes, net of federal tax benefit 0% --- Valuation allowance (34%) === Wah Bon Profits tax computed at the applicable tax rate 17% --- Valuation allowance (17%) === Tai Ping Yang, Chang Jiang and Dongfang Mining Income tax computed at the applicable tax rate 25% --- Valuation allowance (25%) ===  ===    Other  payables and accrued liabilities at December 31, 2009 consist of the following:   Other payables $ 6,126 Consideration payable to a former owner of Dongfang Mining 1,829,611 Accrued wages 1,674 Statutory staff welfare 506 Other tax payable 28 Accrued expense 45,000 --------------- $      1,882,945 ===============   20|Page    Lease  The Company  moved to a new office located in Floor 17,Block B, Xinhui Building, #33 Gaoxin Road, Gaoxin District, Xian in Feb, 2009. The new office consists of  554 square  meters, bears RMB75,000($11,029) per year from Feb 1,2009 to Jan 31,2011  By December 31,2010, the Company had outstanding commitments of $11,029, with respect to above operating leases.   OFF BALANCE SHEET ARRANGEMENTS   None.    Item 7A  We do not employ derivative financial instruments and have no foreign exchange contracts. Our financial instruments are primarily cash and cash equivalents, but also include receivables, payables, long term debts, and short term notes. We do not try to manage risk of foreign exchange rates or engage in hedging activities.  Foreign Exchange Rates  All of our sales are in the Chinese currency, Remnimbi (RMB) but our financial reporting is in U. S. dollars. We are therefore subject to the fluctuations in foreign exchange rates in our reporting requirements. While exchange rates between RMB and USD have been relatively stable, there can be no assurance that changes in foreign exchange rates will not have a material adverse impact on our financial reporting. The impact could express itself in reduced revenues and reduced or eliminated earnings, which could have a negative effect on the prices for our securities.  At December 31, 2009, the new RMB rate against the US$ was approximately 6.8282. The foreign currency translation gain or loss resulting from translation of the consolidated financial statements expressed in RMB to US$ is reported as other comprehensive income in  the consolidated statements of operations and comprehensive loss and stockholders equity. The translation  gain (loss) recorded for the years ended December 31, 2009 and 2008 was ($ 38,951) and $1,064,912 respectively. The equity accounts were stated at their historical rate.   21|Page   ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA     FINANCIAL STATEMENTS  Reports of Independent Registered Public Accounting Firms Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Stockholders' Deficit Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements             NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION AND SUBSIDIARIES (An Exploration Stage Company)  CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2009 and 2008       22|Page    NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION AND SUBSIDIARIES (An Exploration Stage Company)   CONTENTS   PAGES _____________________________________________________________________________  Report of the Independent Registered Public Accounting Firm 1 _____________________________________________________________________________  Consolidated Balance Sheets as of December 31, 2009 and 2008 2 _____________________________________________________________________________  Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2009 and 2008 3 _____________________________________________________________________________  Consolidated Statements of Stockholders' Equity for the years ended December 31, 2009 and 2008 4-5 _____________________________________________________________________________  Consolidated Statements of Cash Flows for the years ended December 31, 2009 and 2008 6 _____________________________________________________________________________  Notes to Consolidated Financial Statements 7 - 16 _____________________________________________________________________________     Brock, Schechter & Polakoff, LLP Certified Public Accountants   Registered with the Public Company Accounting Oversight Board   23|Page    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  To the Board of Directors of: North American Gaming and Entertainment Corporation (An Exploration Stage Company)  We have audited the accompanying consolidated balance sheets of North American Gaming and Entertainment Corporation (an exploration stage company) and subsidiaries as of December 31, 2009 and December 31, 2008 and the related consolidated statements of operations and comprehensive loss, stockholders' equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.  Except as discussed in the following paragraph, we conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation.  We believe that our audits of the consolidated financial statements provide a reasonable basis for our opinion.  We were unable to obtain sufficient evidential matter in connection with the balances of the Companys goodwill as of December 31, 2009 and December 31, 2008, and we were unable to satisfy ourselves of the balances by performing other audit procedures.  Any impairment of these balances would affect the results of operations for the years ended December 31, 2009 and December 31, 2008.  We were unable to obtain sufficient evidential matter in connection with the Companys common stock as of December 31, 2009 and December 31, 2008, and we were unable to satisfy ourselves as to the balances or amounts of shares authorized, issued,and outstanding by performing other audit procedures.  In our opinion, except for the effects of any adjustments and additional disclosures that might have resulted had we been able to obtain sufficient audit evidence in connection with the Companys goodwill and common stock, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of North American Gaming and Entertainment Corporation (an exploration stage company) and subsidiaries as of December 31, 2009 and December 31, 2008, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.  The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 16 to the consolidated financial statements, the Company had a net loss of $104,557 for the year ended December 31, 2009, an accumulated deficit during the exploration stage and a working capital deficiency of $13,366,785 and $7,787,760, respectively, at December 31, 2009, and used cash in operations of $531,480 during the year ended December 31, 2009. These factors raise substantial doubt about its ability to continue as a going concern.  Managements plans concerning this matter are also described in Note 16.  The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.   /s/Brock, Schechter & Polakoff, LLP Certified Public Accountants    Buffalo, New York  Date: April 16, 2010   726 Exchange Street, Suite 822, Buffalo, New York 14210 Tel: (716) 854-5034   Fax: (716) 854-7195 Email:  JRW@bspcpa.com Website:  www.bspcpa.com                            NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION AND SUBSIDIARIES (An Exploration Stage Company) CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2009 AND 2008  ASSETS 2009 2008  CURRENT ASSETS Cash and cash equivalents 27,279 23,961 Note receivable 1,098,386 - Other current assets and prepayments 33,770 229,560 --------------------- Total Current Assets 1,159,435 253,521  PROPERTY AND EQUIPMENT, NET 200,690 235,800 LONG TERM INVESTMENTS 292,903 292,629 LAND USE RIGHTS, NET 17,115,077 17,508,609 GOODWILL 3,337,249 3,334,124 LONG TERM RECEIVABLE 1,193,431 1,174,734 DEFERRED TAX ASSET 218,602 - ----------------------------- TOTAL ASSETS 23,517,387 22,799,417 ============================== LIABILITIES AND STOCKHOLDERS' EQUITY  CURRENT LIABILITIES Other payables and accrued expenses 1,882,945 2,124,049 Notes payable  related party 434,137 434,137 Due to related Parties 3,996,369 3,446,160 Due to stockholders 2,418,796 2,396,560 Deferred tax liability 214,948 - ----------------------------- Total Current Liabilities 8,947,195 8,400,906 -----------------------------  COMMITMENTS AND CONTINGENCIES - - ---------------------------  STOCKHOLDERS' EQUITY Series C convertible preferred stock ($0.01 par value, 10,000,000 shares authorized, 500,000 shares issued and outstanding as of December 31, 2008)5,000 5,000 Common stock ($0.01 par value, 200,000,000 shares authorized, 41,788,552 shares issued, 24,216,058 shares outstanding as of both December 31, 2009 and December 31, 2008)      417,886 417,886 Additional paid-in capital 23,974,728 23,628,275 Treasury stock, 17,572,494 shares, at cost (489,258) (489,258) Non-controlling interests 531,674 562,938 Accumulated deficits during the exploration stage (13,366,785) (13,262,228)  Accumulated other comprehensive income 3,496,947 3,535,898  ---------------------------- Total Stockholders' Equity 14,570,192 14,398,511 ---------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 23,517,387 22,799,417 ============================  The accompanying notes are an integral part of these financial statements      24|Page         NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION AND SUBSIDIARIES (An Exploration Stage Company) CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008  2009 2008 Accumulated ------------ ------------ ------------ REVENUE 1,097,872 - 1,097,872 ------------ ------------ ------------ OPERATING EXPENSES General and administrative expenses 300,809 260,590 910,668 Legal and professional fees 95,595 449,224 544,819 Depreciation 36,755 35,779 102,246 Amortization of land use rights 409,750 395,944 1,173,174 ------------ ------------ ------------ Total Operating Expenses 842,909 1,141,537 2,730,907 ------------ ------------ ------------ INCOME (LOSS) FROM OPERATIONS 254,963 (1,141,537) (1,633,035)  OTHER INCOME (EXPENSES) Interest income 152 2,229 5,073 Interest expenses (12,028) (1,357) (13,385) Imputed interest expenses (346,453) (353,951) (943,741) Bad debt expense (73,192) - (73,192) Other expenses (2,942) (31,583) (36,092) ------------ ------------ ------------ Total Other Expenses (434,462) (384,662) (1,061,336) ------------ ------------ ------------ LOSS BEFORE INCOME TAX AND NON-CONTROLLING INTERESTS (179,499) (1,526,199) (2,694,371)  DEFERRED INCOME TAX BENEFIT 3,652 - 3,652  NON-CONTROLLING INTERESTS 71,290 58,773 186,498 ------------ ------------ ------------ LOSS FROM CONTINUING OPERATIONS (104,557) (1,467,426) (2,504,221)  DISCONTINUED OPERATIONS  Loss on disposal of subsidiary - - (8,027,234) ------------ ------------ ------------ NET LOSS (104,557) (1,467,426) (10,531,455)  OTHER COMPREHENSIVE INCOME Foreign currency translation gain (loss) (38,951) 1,064,912 3,496,947 ------------ ------------ ------------ COMPREHENSIVE LOSS $(143,508) $ (402,514) (7,034,508) ============ ============ ============   Net loss per share-basic $  (0.0043) $(0.0606) ============ ============ Net loss per share-diluted $  (0.0002) $ (0.0024) ============ ============ Weighted average number of shares outstanding during the year-basic 24,216,058 24,216,058 ============ ============ Weighted average number of shares outstanding during the year-diluted 609,000,000 609,000,000 ============ ============  The accompanying notes are an integral part of these financial statements    25|Page        NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION AND SUBSIDIARIES (An Exploration Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008   Treasury stock Series C Convertible Preferred Stock Common Stock Shares Amount Shares Amount Shares Amount ------- ------- ------- ------ ---------- -------- Balance at January 1, 2008 17,572,494 $(489,258) 500,000 $5,000 41,788,552 $417,886  Imputed interest expenses on due to stockholders and related companies - - - - - -  Net loss for year - - - - - -  Foreign currency translation gain - - - - - -  Comprehensive income ---------- ---------- ---------- -------- ----------- --------- Balance at December 31, 2007 17,572,494 (489,258) 500,000 5,000 41,788,552 417,886  Imputed interest expenses on due to stockholders and related companies - - - - - -  Net loss for the year - - - - - -  Foreign currency translation gain - - - - - - ---------- ------- ---------- -------- ----------- --------- Balance at December 31, 2008 17,572,494 $(489,258) 500,000 $5,000 41,788,552 417,886 ======= ======= ======= ====== ========== ========     During the year ended December 31, 2007, the Company recapitalized its equity.  During the recapitalization process, 41,788,552 common shares were issued for $417,886 and 17,572,494 shares were repurchased into treasury at a cost of $489,258.          The accompanying notes are an integral part of these financial statements    26|Page    NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION AND SUBSIDIARIES (An Exploration Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (CONTINUED)  Accumulated Additional Non- other paid-in Controlling Accumulated comprehensive capital Interests deficits income Total ----------- -------- ------------ ------------- ----------- Balance at January 1, 2008 $23,274,324 $619,747 $(11,794,802) $2,470,986 $14,503,883  Imputed interest expenses on due to stockholders and related companies 353,951 - - - 353,951  Net loss for the year - (58,773) (1,467,426) - (1,526,199)  Foreign currency translation gain - 1,964 - 1,064,912 1,066,876  ----------- ----------- ------------ ------------- ----------- Balance at December 31, 2008 23,628,275 562,938 (13,262,228) 3,535,898 14,398,511  Imputed interest expenses on due to stockholders and related companies 346,453 - - - 346,453  Net loss for the year - (71,290) (104,557) - (175,847)  Foreign currency translation gain (loss) - 40,026 - (38,951) 1,075  ----------- ------------ ------------ ------------- ----------- Balance at December 31, 2009 $23,974,728 $531,674 $(13,366,785) $3,496,947 $14,570,192 =========== ============ ============ ============= ===========                The accompanying notes are an integral part of these financial statements    27|Page    NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION AND SUBSIDIARIES (An Exploration Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008  2009 2008 Accumulated ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss from continuing operations $(104,557) $(1,467,426) (2,504,221) Net loss from discontinued operations - - (8,027,234) ----------- ----------- ----------- Total net loss (104,557) (1,467,426) (10,531,455)  Adjusted to reconcile net loss to cash used in operating activities: Loss on disposal of subsidiary - - 8,027,234 Depreciation 36,755 35,779 102,246 Amortization of land use rights 409,750 395,944 1,173,174 Imputed interest expense 346,453 353,951 943,740 Bad debt provision 73,192 - 73,192 Deferred tax benefit (3,652) - (3,652) Non-controlling interests (71,290) (58,773) (186,498) Changes in operating assets and liabilities (Increase) decrease in: Accounts receivable (1,097,872) - (1,097,872) Other current assets and prepayments 122,722 303,024 171,648 Increase (decrease) in: Other payables and accrued expenses (242,981) 49,488 (33,978) ----------- ----------- ----------- Net cash used in operating activities (531,480) (388,013) (1,362,221)  ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Issuance of note receivable - - (133,000) Purchases of property and equipment (2,052) (6,145) (51,151) Due from stockholder - - 25,584 Due from related parties (17,044) (883,124) (1,437,294) Payment for acquisition of long-term investment - (292,629) (1,310,532) Net cash outflow from disposal of discontinued Operations - - (1,406,430) ----------- ----------- ----------- Net cash used in investing activities (19,096) (1,181,898) (4,312,823) ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Capital contribution by stockholders - - 128,205 Proceeds from notes payable - - 573,146 Repayments of preferred stock debenture - (12,700) - Repayments of preferred stock dividends payable - (15,003) - Payments for recapitalization - - (71,372) Additional paid-in capital - - (481,477) Advances from stockholders 19,980 538,343 309,134 Advances from related parties 546,723 935,268 3,628,699 Investment from minority stockholders - - (619,747) ----------- ----------- ----------- Net cash provided by financing activities 566,703 1,445,908 3,466,588 ----------- ----------- ----------- EFFECT OF EXCHANGE RATES ON CASH (12,809) (331,277) 169,757 ----------- ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,318 (455,280) (2,038,699)  CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 23,961 479,241 2,065,978 ----------- ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF YEAR $  27,279 $  23,961 $ 27,279                                                                =                ===========  ==========  =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for: Interest $ 12,028 $   1,357 $ 13,385 =========== =========== ===========  SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:  In 2009, the Company increased additional paid-in capital by $346,453 with non-cash interest. In 2008,  the Company increased additional paid-in capital by $353,951 with non-cash interest.  The accompanying notes are an integral part of these financial statements     1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION  (A) Organization  North American Gaming and Entertainment Corporation ("North American") was incorporated under the laws of the State of Delaware in 1969. North American has had no operations or significant assets since incorporation to the year ended December 31, 2006.  Hongkong Wah Bon Enterprise Limited ("Wah Bon") was incorporated in Hong Kong on July 7, 2006 as an investment holding company.  Shaanxi Tai Ping Yang Xin Neng Yuan Development Company Limited ("Tai Ping Yang") was incorporated as a limited liability company in the People's Republic of China ("PRC") on July 20, 2007 as an investment holding company.  Chang Jiang Si You Neng Yuan Fa Zhang Gu Feng You Xiang Gong Si ("Chang Jiang") (formerly Weinan Industrial and Commercial Company Limited) was incorporated as a limited liability company in the PRC on March 19, 1999. Chang Jiang became a joint stock company in January 2006 with its business activities in mining and new energy development in Shaanxi PRC. In July, 2008, Chang Jiang change its name to Shaanxi Chang Jiang Mining & New Energy Stock Company Ltd.  In August 2005, Chang Jiang contributed a piece of land valued at $7,928,532 in lieu of cash to the registered capital of Shaanxi Huanghe Wetland Park Company Limited ("Huanghe"), representing 92.93% of the equity of Huanghe.  Huanghe was incorporated as a limited liability company in the PRC on August 9, 2005 as Shaanxi Chang Jiang Mining and New Energy Co., Limited and is engaged in the development of a theme park in Xian, PRC.  On February 5, 2007, Chang Jiang entered into an agreement with a third party to acquire 40% of the equity interest in Dongfang Mining Company Limited ("Dongfang Mining") at a consideration of $3,117,267 payable in cash. Dongfang Mining is engaged in the exploration of lead, zinc and gold for mining in Xian, PRC.  On March 22, 2007, Chang Jiang entered into an agreement with the majority stockholder of Chang Jiang to exchange its 92.93% interest in Huanghe for 20% equity interest in Dongfang Mining, which is owned by this Related party.  On August 15, 2007, 97.2% of the stockholders of Chang Jiang entered into a definitive agreement with Tai Ping Yang and the stockholders of Tai Ping Yang in which they disposed of their ownership in Chang Jiang to Tai Ping Yang for 98% of the ownership in Tai Ping Yang and cash of $1,328, 940, payable on or before December 31, 2007.  On September 2, 2007, Wah Bon acquired 100% ownership of Tai Ping Yang for a cash consideration of $128,205.  The acquisitions of Tai Ping Yang and Chang Jiang were accounted for as a reorganization of entities under common control.  Accordingly, the operations of Wah Bon, Tai Ping Yang and Chang Jiang for the year ended December 31, 2007 were included in the consolidated financial statements as if the transactions had occurred retroactively.  On May 30, 2007, amended to July 5, 2007, North American entered into a Material Definitive Agreement, pursuant to which the shareholders of Chang Jiang exchanged all their shares in Chang Jiang for 500,000 shares of series C convertible preferred stock ("series C shares") in North American, which carries the right of 1,218 votes per share and is convertible to 609,000,000 (pre a one for ten reverse split) common shares. North American will affect a one for ten reverse stock splits after the closing of this transaction and upon obtaining regulatory approval and approval of the North American shareholders. The holders will not convert its series C convertible preferred stock until after the completion of the reverse stock split. In connection with the exchange, Chang Jiang will also deliver $370,000 to North American and certain non-affiliates of North American will transfer to North American or its designee a total of 3,800,000 shares of common stock with a par value of $0.01 per share, of North American which had been held for longer than 2 years by such non-affiliates, in exchange for the issuance by North American to each of such non-affiliates of 2,250,000 shares of common stock of North American. Issued and outstanding shares of series C preferred stock shall automatically be converted into that number of fully paid and non-assessable shares of common stock based upon the conversion rate upon the filing by the Company of an amendment to its Certificate of Incorporation, increasing the number of authorized shares of common stock to 800,000,000 shares, changing the Company's name to China Changjiang Mining and New Energy Company Limited and implementing a one for ten reverse stock split.  The transaction was closed on February 4, 2008 and Wah Bon became a wholly owned subsidiary of North American.  The members have limited liability for the obligations or debts of the entity.  The merger of North American and Wah Bon was treated for accounting purposes as a capital transaction and recapitalization by Wah Bon ("the accounting acquirer") and re-organization by North American ("the accounting acquiree"). The consolidated financial statements have been prepared as if the reorganization had occurred retroactively.  Accordingly, the consolidated financial statements include the following:  (1) The balance sheets consisting of the net assets of the acquirer at historical cost and the net assets of the acquiree at historical cost.  (2)  The statements of operations including the operations of the acquirer for the periods presented and the operations of the acquiree from the date of the merger.  North American, Wah Bon, Tai Ping Yang, Chang Jiang and Dongfang Mining are hereafter referred to as (the "Company").  The Company has operations in the real estate and mining segments.  All revenues have been generated from the Companys real estate operations in the Peoples Republic of China (PRC).  The Company is considered to be an exploration stage company.  This requires that information is presented to show the cumulative results of the Company since its inception as an exploration stage company.  Even though members of the Company have been in existence prior to 2007, the Company considers itself to have become an exploration stage company when it acquired Dongfang Mining on March 22, 2007. The accumulated columns shown on the consolidated statements of operations and comprehensive loss and the consolidated statements cash flows have been provided to show cumulative balances from March 22, 2007 through December 31, 2009.  The sharelders of NAGM set up a new Company, name China Changjiang Mining & New Energy Co.Ltd (China Chiangjiang),in the State of Nevada on September 19, 2008.China Changjiang shall be merged with NAGM,and replace the name of NAGM in the future. There is no asset or liability for China Changjiang so far.   (B)Use of estimates  The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affects the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.  Actual results could differ from those estimates.  (C)Principles of consolidation  The accompanying consolidated financial statements as of December 31, 2009 and 2008 consolidate the financial statements of North American and its 100% owned subsidiary Wah Bon, 100% owned subsidiary Tai Ping Yang, 97.2% owned subsidiary Chang Jiang and 60% owned subsidiary Dongfang Mining. The minority interests represent the minority shareholders' 2.8% and 40% shares of the results of Chang Jiang and Dongfang Mining, respectively.  All significant inter-company balances and transactions have been eliminated in consolidation.   (D)Cash and cash equivalents  For purpose of the consolidated statements of cash flows, cash and cash equivalents include cash on hand and demand deposits with a bank with a maturity of less than three months.  28|Page    (E)Property and equipment  Property   and   equipment   are   stated at cost, less accumulated depreciation.  Ex-penditures for additions, major renewals and betterments are capitalized and expenditures for maintenance and repairs are charged to expense as incurred.  Depreciation is provided on a straight-line basis,  less  estimated residual value, over the assets' estimated  useful  lives.  The estimated useful lives are as follows:  Buildings 10 Years Motor vehicles 10 Years Furniture and office equipment 5 Years  Land use rights are stated at cost less accumulated  amortization and are amortized  over the term of the relevant land-use rights.  (F)Long-lived assets  Long-lived assets, goodwill and certain identifiable intangible assets  held  and  used  by  the  Company  are  reviewed  for impairment  annually  or  whenever  events  or  changes in circumstances indicate that the carrying amount of an asset may  not  be  recoverable. For purposes of evaluating the recoverability of long-lived assets, when undiscounted  future  cash  flows  will not be sufficient to recover  an asset's carrying amount, the asset is  written  down  to its fair value. The Company believes that no impairment of property and equipment or land use rights existed at December 31, 2009 and 2008.  (G) Receivables Accounts receivable are carried at their estimated collectible amounts.  Trade credit is generally extended on a short-term absis, thus accounts receivable do not bear interest, though a finance charge may be applied to such receivables that are past due.  The long term receivable refers to the receivable from customers or other parties that is not expected to be coolected within the next year. If the receivable bears interest according to the agreement, the long term receivable shall be stated in present value.  An allowance for doubtful accounts is established and determined based on managements assessment of known requirements, aging of receivables, payment history, the customers current credit worthiness and the economic environment.   (H)Fair value of financial instruments   The fair value  of financial  instruments  is  made  at  a specific point in time, based on relevant  information  about financial markets  and  specific  financial instruments. As these estimates  are  subjective  in  nature,  involving uncertainties  and  matters  of  significant  judgment,  they  cannot be determined  with  precision.  Changes  in  assumptions can significantly affect estimated fair values.  The carrying value of other current assets and  prepaid  expenses, other payables and accrued liabilities approximate their fair value because of the short-term nature of these instruments.  The  Company's  major  operation is in the PRC, which may give  rise  to significant foreign currency  risks  from fluctuations and the degree of volatility of foreign exchange rates between  the  United States dollars ("US$") and the Chinese Renminbi ("RMB"). At December 31, 2009, the new RMB rate against the US$ was approximately 6.8282. Historically, the PRC government has  benchmarked the  RMB  exchange  ratio  against  the  US$, thereby mitigating  the associated foreign  currency exchange rate fluctuation risk. The Company does not believe that  its  foreign  currency  exchange rate fluctuation risk is  significant,  especially  if the PRC government continues  to benchmark the RMB against the US$.    29|Page   (I) Revenue Recognition Revenue from mining operations is recognized when all of the following criteria are met: - Persuasive evidence of an arrangement exists; - Delivery has occurred; - The seller's price to the buyer is fixed or determinable; and - Collectability is reasonably assured. Payments have been established. As the Company is still in the exploration stage, no mining revenue has been generated.  Our present revenues for year ended December 31, 2009 were generated from the rental of the land use right. We recognize rental revenues because the land was occupied during the year ended December 31, 2009, the fees we charged were fixed or determinable, we and our customers understand the specific nature and terms of the agreed-upon transactions and collectability is reasonably assured.  The revenue recognized only related to the rental of the land use rights in the year ended December 31, 2009.  (J) Mining Costs The costs of mining consists of power expense, salary and welfare of the workers, carring expense within the mining area, the depreciation of equimpment,and the expense for disposal of waste ore.  These costs are charged to expense as they are incurred.  (K)Taxes Assessed by Governmental Units The Company presents revenue and taxes assessed by governmental units on revenue producing transactions on a gross basis in the consolidated statements of operations and comprehensive loss.   (L)Income taxes  Deferred tax assets and liabilities  are recognized for the future tax  consequences attributable to differences between the financial statement carrying  amounts of existing assets and liabilities and their respective tax bases.   Deferred  tax  assets  and liabilities  are  measured  using enacted tax rates expected to apply to taxable income in the years in  which  those  temporary  differences are expected to be recovered or settled.  The effect on deferred  tax  assets  and  liabilities  of  a  change  in tax rates  is recognized in income in the period that included the enactment date.  In addition, we account for uncertain tax positions using a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also provides guidance on various related matters such as de-recognition, interest, penalties and disclosures required. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.  (M)Foreign currency translation  North American maintaine its according records in its functional curreny of US.dollars, Wah Bon, Tai Ping Yang, Chang Jiang and Dongfang  Mining maintain their accounting records in their functional currency of Chinese reminbi (rmb).  Foreign  currency  transactions  during  the year are translated to the functional currency at the approximate rates of exchange on the dates of transactions.  Monetary assets and liabilities  denominated  in  foreign currencies  at  the balance sheet date are translated at the approximate rates of exchange at that date.  Non-monetary assets and liabilities are translated at the  rates of exchange prevailing at the time the asset or liability was acquired.  Exchange  gains  or  losses are recorded in the statement operations. The consolidated financial statements of Wah Bon, Tai  Ping  Yang,  Chang Jiang  and  Dongfang  Mining  (whose functional currency is RMB) are translated into US$ using the closing  rate method. The balance sheet items are translated into US$ using the exchange rates at the respective balance sheet dates.  The capital and various reserves are  translated at historical exchange rates prevailing at the  time  of the transactions while  income and expenses items are translated at the average  exchange rate for  the  year.   All  exchange  differences  are recorded within equity.  The translation  gain (loss) recorded for the years ended December 31, 2009 and 2008 was $38,951 and $1,064,912 respectively.  (N)Comprehensive loss  The foreign currency translation gain or loss resulting from translation of the consolidated financial statements expressed in RMB to US$ is reported as other comprehensive income in  the consolidated statements of operations and comprehensive loss and stockholders equity.  The foreign currency translation  gain (loss)  for  the  years ended December 31, 2009 and 2008 was $38,951 and $1,064,912 respectively.    30|Page   (O)Subsequent events  The Company has evaluated for subsequent events through April 15, 2010, the date the financial statements were made available to be issued.   (P)Loss per share  Basic loss  per  share  is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding during the period.  Diluted  loss per share is computed similar to basic loss per share except that the  denominator  is increased to include the number of additional common shares that would  have  been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.  (Q)Segments  As of December 31, 2009, the Company operates in two reportable segment, mining for mineral ores, which is still at an exploration stage, and the real estate.  All of the assets and business is located in China, and all of the operating losses have come from the foreign operations(outside United States).  (R) Recent Accounting Pronouncements  In 2007, the Financial Accounting Standards Board (“FASB”) released revised guidance surrounding the accounting for business combinations. This revised guidance requires an acquiror to recognize the assets acquired, the liabilities assumed, and any noncontrolling interests in the acquiree at acquisition date, measured at their fair values as of that date, with limited exceptions. The revised guidance also requires that certain acquisition related costs and restructuring costs be expensed as incurred, and eliminates the recognition of a separate valuation allowance, such as an allowance for credit losses, as of the acquisition date for assets acquired in a business combination that are measured at their acquisition date fair values because the effects of uncertainty about future cash flows are included in the fair value measurement of those assets. This guidance was effective for business combinations consummated in fiscal years beginning on or after December 15, 2008, and therefore we are required to apply this guidance for any business combinations entered into during 2009 and beyond.  In May 2009, the FASB issued guidance related to subsequent events. This guidance establishes general standards for accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued and was effective for interim and annual periods ending after June 15, 2009.  The Company has implemented this guidance in the December 31, 2009 consolidated financial statements.   In June 2009, the FASB released new guidance which addresses the effects on certain provisions of current accounting guidance relating to the consolidation of variable interest entities, as a result of the elimination of the qualifying special-purpose entity concept. It addresses concerns about the application of certain key provisions of current accounting guidance, including those in which the accounting and disclosures do not always provide timely and useful information about a companys involvement in a variable interest entity. This guidance requires us to perform an analysis to determine whether any of our variable interests give us a controlling financial interest in a variable interest entity. In addition, this guidance requires ongoing assessments of whether we are the primary beneficiary of a variable interest entity. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after November 15, 2009. This guidance is not expected to have a material impact on our Consolidated Financial Statements   In January 2010, the FASB released new guidance requiring entities to make new disclosures about recurring and nonrecurring fair value measurements, including significant transfers into and out of Level 1 and Level 2 fair value measurements. This guidance also requires information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2009, except for the detailed Level 3 rollforward disclosures, which is effective for fiscal years, and interim periods within those fiscal years, beginning on after December 15, 2010. Early adoption is permitted. We intend to comply with the disclosure provisions of this new guidance.   (S)Reclassifications Reclassifications have been made to the 2008 comparative financial statements in order to conform to the 2009 presenation.   2.  Goodwill  Goodwill is  not  amortized  but  is  tested  for  impairment on at least an annual basis. The  Company did not perform an assessment on goodwill arising from  the  acquisition  of Dongfang Mining as of December 31, 2009 or December 31, 2008.  We cannot concluded that there was no impairment to the carrying value of the goodwill in as of December 31, 2009 and December 31, 2008.  There was no change in the balance of the goodwill as ofDecember 31, 2009, as compared with the balance at December 31, 2008.  The $3,125 increase is due to the exchange gain when translating the financial report from RMB to USD.    3.  OTHER CURRENT ASSETS AND PREPAID EXPENSES  Other current assets and prepaid expenses consisted of the following:  December 31, 2009 2008 Rental and other deposits $ 13,23 $11,756 Short-term advances to third parties - 82,697 Prepaid expense - 115,800 Advances to staff 20,474 19,307 Other receivable 64 - -------- -------- $   33,770 $229,560 ======== ========  4.  PROPERTY & EQUIPMENT, NET  The following is a summary of property and equipment:   December 31, 2009 2008 Motor vehicles $278,249 $277,988 Furniture and office equipment 52,579 55,066 Building 5,249 5,244 -------- -------- 336,077 338,298 Less: accumulated depreciation (135,387) (102,498) -------- -------- Property and equipment, net $200,690 235,800 ======== ========  Depreciation expense for the years ended December 31, 2009 and 2008 was $36,755  and  $35,779,  respectively .   5. LONG TERM INVESTMENT  In September 2008, the Company, along with Shaanxi Changfa Industry Stock Co.,Ltd. ("Changfa"),established a new company named  Shaanxi  Changjiang  Power & New Energy Co., Ltd.(Changjiang power).  The Company  owns  a 20% share of the registered capital of Changjiang power while Changfa owns the remaining 80% share, when all the capital was contributed. According to the contract, the Changfa shall contribute its last capital until the end of 2011. At December 31, 2009, the net asset was rmb 6,586,417 ($964,591), which means the Company held 31% share of the Changjiang Power. Practically, the  Company  has significant  influence  on  Changjiang Power as it has assigned finance and other directors in Changjiang Power.  The Company has recorded this investment under the equity method. Changjiang Power had no revenue for  the year ended December 31,2009 and since the expense of $6,004 was not material, no adjustment has been made.  As of December 31, 2009 and 2008, the balance of this investment was $292,903 and $292,629, respectively.  The information of Changjiang Power is showed as follows:  December 31, 2009 2008 Current assets 282,126 293,065 Non current assets 964,591 - Current liabilities - 5,524 Net assets 964,591 293,065   6.  LAND USE RIGHTS  The following is a summary  of land use rights:  December 31, 2009 2008 Cost $19,164,787 $19,146,841 Less: accumulated amortization (2,049,710) (1,638,232) ----------- ----------- Land use rights, net $17,115,077 $17,508,609 =========== ===========  The land use rights are being amortized over the lease term of fifty years. Amortization expense for the years ended December 31, 2009 and 2008 was $409,750 and $395,944, respectively.   Amortization expense for the next five years ending December 31 is as follows:  2010 $ 409,750 2011 409,750 2012 409,750 2013 409.750 2014 409,750   7. OTHER PAYABLES AND ACCRUED EXPENSES  Other payables and accrued liabilities consist of the following: December 31, 2009 2008 Other payables $ 6,126 $247,228 Consideration payable to a former owner of Dongfang Mining 1,829,611 1,827,898 Accrued wages 506 1,990 Statutory staff welfare 1,674 1,876 Other tax payable 28 57 Other accrued expenses 45,000 45,000 ------------- --------------- $   1,882,945 $2,124,049 ============= ===============   8.  NOTES PAYABLE  The balance of notes payable consisted of the following:  December 31, 2009             2008  Note payable to a related party, interest rate of 8% per annum, collateralized by note receivable from a third party.                                            434,137         434,137 =======        ========   9.   INCOME TAXES  a. North American  was  incorporated  in the United States and has incurred net operating losses as for income tax purposes for the years ended December 31, 2009 and 2008. Wah Bon was incorporated in  Hong Kong  and subject to Hong Kong profits tax. No provision for income tax expense was made for the years ended December 31, 2009 and 2008 as Wah Bon incurred net operating losses.  Tai Ping Yang , Chang Jiang  and Dongfang Mining  were  incorporated  in the PRC and subject to PRC income tax, which is computed according to the relevant  laws  and  regulations in the PRC. No provision for income tax expense for the years ended December 31, 2009 and  2008  was  made as Tai Ping Yang, Chang Jiang and Dongfang Mining incurred net operating losses during those years.  b. The Company's deferred tax asset at December  31, 2009 consisted of net operating loss carry forwards calculated using statutory effective tax rates.  Since the company began to generate rental revenue from 2009, the deferred tax asset of $218,600 from the loss carryforwards was recognized without allowance.  c. The rental income of $1,097,872 was recognized as revenue in 2009 without cash flow, which could not be confirmed as revenue by tax regulations in the current period. Thereforce,the Company had to bear the total business and EIT of $214,948, showed as current liability in B/S, in the next period.  d. Net operating loss carryfoward are $1,001,900 as of December 31,2009.  These consist of $844,431 from Chang Jiang and $ 157,469 from Dongfang.  Chang Jiangs loss carryfoward expires in 2012, while Dongfangs expires in 2013.  The allowance for the deferred tax asset is $221,009 at December 31, 2009. As of December 31,2008, the allowance for the deferred tax asset was $718,778.  e. The reconciliation  of income taxes computed at the statutory income tax rates to total income  taxes for the years ended December 31 is as follows:      North American 2009 2008 Income tax computed at the federal statutory rate 34% 34% State income taxes, net of federal tax benefit 0% 0% ---- Valuation allowance (34%) (34%) ==== Wah Bon Profits tax computed at the applicable tax rate 17% 17% ---- Valuation allowance (17%) (17%) ==== Tai Ping Yang, Chang Jiang and Dongfang Mining Income tax computed at the applicable tax rate 25% 25% ---- Valuation allowance (25%) (25%) ====     10. NET LOSS PER SHARE  The following is net loss per share information at December 31:   2009 2008 ------------- ------------  Net loss - basic and diluted $ (104,557) $  (1,467,426) ------------- ------------ Basic weighted-average common stock outstanding 24,216,058 24,216,058 Effect of dilutive securities Series C convertible preferred stock 609,000,000 609,000,000 ------------- ------------ Diluted weighted-average common stock outstanding 609,000,000 609,000,000 ------------- ------------ Net loss per share  basic $   (0.0043) $ (0.0606) ------------- ------------ Net loss per share  diluted $   (.0002) $ (0.0024) -------------- ------------    11. COMMITMENTS AND CONTINGENCIES  (A)Capital commitments  The Companys cash balances with financial institutions in the U.S are insured up to FDIC limits.  In August 2008, The Company signed the Contract of Specific Survey of Gold with The First Geological Team, Bureau of Geology and Minerals Exploration & Exploitation of Shaanxi Province. The total amount of the project is $323,018, of which $142,480 was paid in 2009. The remaining $180,538 is expected to be paid in 2010.  (B)Operating lease commitments  The prior headquarters, formerly located in the 5th floor of High-Tech Mansion, Gaoxin Road,High-Tech Zone,XiAn, had a rental lease of approximately $3,500 (RMB25,000) per month, from June, 2006 to January, 2009. The new headquarters office is removed to the Xinhui Mansion, Gaoxin Road, High-Tech Zone, XiAn,PRC with the rental lease from February, 2009 to January, 2011 at a rental rate $11,029 per year.  The rental expense of headquarters for the years ended December 31,2009 and 2008 was $15,502 and $42,568, respectively.  Future lease commitments for the years ending December 31,are as follows:  2010 $ 11,029 2011 919   12.  STOCKHOLDERS' EQUITY  Stock issuances  On May 30, 2007, amended to July  5,  2007,  North  American entered into a Material  Definitive  Agreement  to  acquire  97.2% of Chang  Jiang  equity through the acquisition of Wah Bon. The Company  issued  500,000  shares of series  C  convertible  preferred stock which was convertible to 609,000,000 (prior to a one for ten reverse  stock split) common  shares, in exchange for 100% of Wah Bon's outstanding shares.  In order to complete the merger, the Company has authorized up to 10,000,000 shares of preferred stock with a par value of $0.01 per share.  The preferred stock can be issued from time to time in one or more series. As of  December  31, 2008, there are 500,000 shares of preferred stock issued and outstanding.  On February 4, 2008, the  Company  issued  500,000  shares  of  series  C convertible preferred stock to Wah Bon's shareholder.  Each  of  the  preferred  shares  is  entitled  to  receive preferential   treatment   in   connection   with  the  payment  of  dividends, distributions upon liquidation and voting rights.  Each preferred share carries the  right  to  vote  the  equivalent  of  1,218 votes of common  shares.  Each preferred share will be automatically converted  into  1,218 common shares upon approval and an amendment to the Certificate of Incorporation  to  increase the number  of authorized shares.  There are no preferred dividends in arrears at the year end of 2008.  No called or redeemed conditions prescribed for the preferred stock.  On Jan 10th and 21st, 2010, the CEO of NAGM signed the stock issuance resolutions to Mr. Donald R. Monroe and Mr. Stanley F. Wilson, exchanging the preferred stock for 4,500,000 shares of common stock according to the agreement.  The amount of common shares shown in the consolidated financial statements differs from the amount of common shares on record with our stock transfer agent.  The records of the stock transfer agent show 900,000,000 common shares authorized and 37,716,588 common shares issued and outstanding as of December 31, 2009.  As of April 15, 2010, we have been unable to determine the accurate number of common shares authorized, issued and outstanding.  However, we believe the common share information disclosed in the consolidated financial statements to be correct.   13. RELATED PARTY TRANSACTIONS   The  related  parties  owed  the Company $1,193,431 as  of  December  31,  2009 including five related companies  and  three  related  persons  owed  the Company amounts  totaling  $801,544 and $391,887, respectively, for advances made  on  an unsecured basis, repayable on demand and interest free.   The Company owed $2,418,796 to  two  former  stockholders of Chang Jiang as of December 31, 2009 for advances made on an unsecured  basis, repayable on demand and interest free. Imputed interest is charged at 5.94 % per  year  on the amounts due.   The  Company  owed $3,996,369 to seven related parties as of December  31,  2009 including six  related  companies  and  three  related  person  owed the Company amounts totaling $363,369 and $3,633,000, respectively, for advances  made  on an unsecured  basis,  repayable  on  demand and interest free. Imputed interest is charged at 5.94% per year on the amount due.  The related  parties  owed  the Company $1,174,734 as  of  December  31,  2008, which consisted of seven related companies  and  four  related  persons, each owing  the Company amounts  totaling  $775,842 and $398,892, respectively, for advances made  on  an unsecured basis, repayable on demand and interest free.  The Company owed $2,396,560 to  two former stockholders of Chang Jiang as of December 31, 2008, for advances made on an unsecured  basis, repayable on demand and interest free.  Interest was imputed at a rate of 7% per  annum  on the amounts due.  The  Company  owed a total of $3,446,160 to six related parties as of December  31, 2008.  This consisted of five related companies and one related person, each of whom owed the Company amounts totaling $2,086,486 and $1,359,674, respectively, for the advances that  were made on an unsecured  basis,  repayable  on  demand and interest free.   Interest was imputed at a rate of 7% per annum on the amount due.  Total  imputed interest recorded as  additional  paid-in  capital  amounted  to $346,453 and $353,951 for the years ended December 31, 2009 and 2008, respectively.  100% of the Companys accounts receivable balance of $1,098,386 and revenue earned during the year ended December 31, 2009 was from a related party.   14. SEGMENTS REPORTING   The  Company operated in two reportable segments (mining and real estate) in 2009. The   Company evaluates  segment performance based on income from operations. As a  result, the components of operating income for one segment may not be comparable to  another segment.  Segments key financial information for the years ended December 31,2009 and 2008 is as follows:  Real Estate Mining Total ----------- ---------- ----------- 2009 Revenue $1,097,872 $0 $1,097,872 Loss from continuing operations before income tax expense and minority interests 688,123 (867,622) (104,557) Depreciation of fixed assets 0 36,755 36,755 Amortization of intangible assets 409,750 0 409,750 Imputed interest expense 0 346,453 346,453 Interest income 0 152 152 Deferred income tax gain (expense) (214,948) 218,602 3,654 Additions to long-lived assets 0 0 0 Land use rights 17,115,077 0 17,115,077 Total identifiable assets $17,115,077 $6,402,310 $23,517,387  2008 Revenue $0 $0 $0 Loss from continuing operations before income tax expense and minority interests (395,944) (1,130,255) (1,526,199) Depreciation of fixed assets 0 35,779 35,779 Amortization of intangible assets 395,944 0 395,944 Imputed interest expense 0 2,229 2,229 Interest income 0 0 0 Deferred income tax gain (expense) 0 0 0 Additions to long-lived assets 0 6,145 6,145 Land use rights 17,508,609 0 17,508,609 Total identifiable assets $17,508,609 $5,290,808 $22,799,417     All  of the Company's long-lived assets are located in the PRC. Accordingly, no geographic information is presented.                           15. CONCENTRATIONS AND RISKS  As of December 31, 2009 and 2008, 100% of the Company's assets were located in the Peoples Republic of China.  100% of the Companys accounts receivable balance of $1,098,386 and revenues earned during the year ended December 31, 2009 were from one customer, a related party of the Company.   16. GOING CONCERN   As reflected in  the  accompanying  consolidated  financial statements, the Company  has  an  accumulated  deficit  during  the  exploration  stage  of $13,366,785 at December 31, 2009, which included a net  loss  of  $104,557 for  the  year  ended  December 31, 2009. The Company's current liabilities exceeded its current assets  by  $7,787,760  and  the  Company  used  cash in operations  of  $531,480.  These  factors raise  doubt about its ability to continue as a going concern.   In  view of the matters described above,  recoverability  of a major portion of the  recorded  asset  amounts shown in the accompanying  consolidated  balance  sheets  is  dependent upon continued  operations of the Company, which in turn is dependent  upon  the Company's ability to raise additional capital, obtain financing and succeed in its future  operations.   The  consolidated financial  statements  do not include any adjustments relating to the recoverability and classification  of recorded asset  amounts  or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.  Management  has  taken   steps   to  revise  its  operating  and  financial requirements, which it believes are  sufficient to provide the Company with the ability to continue as a going concern.  Though the Company began to generate revenue in 2009, the Company is actively pursuing additional funding and strategic partners,  which  would  enhance stockholders'  investments.  Management  believes that the above actions  will  allow  the  Company  to continue operations through the next fiscal year.      31|Page    Item 8.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS  ON  ACCOUNTING  AND FINANCIAL DISCLOSURE   Previous Principal Independent Accountants   Began from the second quarter of 2008, we dismissed Jimmy C.H. Cheung & Co. as our principal independent accountants,  and  engaged BROCK,SCHECHTER & POLAKOFF,LLP as our new  principal independent accountants to perform  procedures  related to  our financial  statements  for  the  fiscal  year  ended  December 31, 2009 and 2008, to be included on our Form 10-KSB under Section 13(a) or 15(d) under the Exchange Act of 1934, as amended, and for the fiscal quarterly reports. As  described  below, the change in our principal independent accountants was not the result of  any  disagreement with Jimmy C.H. Cheung & Co. In July 2008, pursuant to  approval  by management  and the Board  of  Directors, we  dismissed  Jimmy C.H. Cheung & Co.  as  our principal independent accounting firm. Management and the Board of Directors  at  that  time participated in and approved the decision to change principal independent accounts.  Our  financial statements  for  as  of December  31,  2007,were  prepared by Jimmy C.H. Cheung & Co. And that as of December 31,2006, 2005,  2004 and 2003 were prepared by Sartain Fischbein & Company, CPA.   Jimmy C.H. Cheung & Co.s reports on the financial statements did not contain an adverse opinion or disclaimer  of opinion and was not modified as to uncertainty, audit scope, or accounting principles,  except  that  the  reports contained  an  explanatory  paragraph  indicating that substantial doubt exists about our ability to continue as a going concern.   We have had no disagreements with Jimmy C.H. Cheung & Co. on  any matter  of  accounting principles or practices, financial statement disclosure, or auditing scope  or  procedure, which  disagreements  if not resolved to the satisfaction of Jimmy C.H. Cheung & Co.  would have  caused  it to make reference  to the subject matter of any such disagreements in their reports  on the financial statement for the periods ended December 31, 2007. We requested  that  Jimmy C.H. Cheung & Co. furnish a letter addressed to the Securities and Exchange Commission stating that it is not in a position to agree or disagree with the above statements.   New Principal Independent Accountants   Effective as of the closing  date  of August 11, 2008, our Board of Directors engaged  BROCK,SCHECHTER & POLAKOFF,LLP as our new  independent  registered  public accounting firm. The Company had  not  consulted  with  BROCK,SCHECHTER & POLAKOFF,LLP prior to that time regarding (i) the application of accounting  principles to a specific completed or contemplated transaction, the type of audit  opinion that might  be  rendered on our financial statements, or any written or oral  advice that was an  important  factor considered by us in reaching a decision as to an accounting, auditing or financial  reporting issue; or (ii) any matter that was the subject of a disagreement.  32|Page         Item 9.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT  The  following table sets forth the existing  officers  and  directors  of  the Company.   DIRECTOR AGE POSITION AND OFFICE TO BE HELD WITH THE COMPANY NAME OF PERSON Chen Wei Dong 40 President, Chief Executive Officer and Chairman of the Board Xu Wei 34 Financial Supervisor Zhang Hong Jun 43 Director Wang Sheng Li 43 Director Li Pin 34 Director and Chief Financial Officer Tian Hai Long 37 Director   Each director  of  the  Company  will serve until its next annual shareholders' meeting and until his successor is appointed.  Subject to employment agreements that they may have, the officers serve  at  the  discretion  of  the  board  of directors of the respective companies.  BIOGRAPHICAL INFORMATION OF-OFFICERS AND DIRECTORS OF THE COMPANY  Listed  below  is biographical information for each of the foregoing designated new directors and  officers  of  the  Company following the Exchange, including their  principal  occupations  during  the   past  five  (5)  years  and  other affiliations:  CHEN WEI DONG - President and Chief Executive Officer  Mr. Chen serves as our President and Chief Executive Officer and as a Director. Mr. Chen was named as Chairman of Changjiang Mining & New Energy in March 2006. Prior to that, he was General Manager of Du Kang Trading  Company  from 2001 to 2006 and was a Bank Director of Branch Bank of China Agriculture Bank  from  May 1991 to January  2001.   He  served in the army of the People's Republic of China from October 1985 to March  1990.   Mr.  Chen  studied  in  Northern West University Management School, majoring in Enterprise Management.  GAO LILING - Financial Supervisor  Ms. Wei was named as CFO of Changjiang Mining & New Energy  Development Stock Co. Ltd.  in  March  2006.  From 1900 to 1998, she was deputy section chief of  the accounting department  of  Shaanxi Weinan Textile Factory.  In 1999, she worked in Shaanxi Hui Huang Construction  and  Building Material Company as manager of the accounting department.  She passed the  Adult  Self  Study  Examination  in Shaanxi Province in 1990 with a major in Accounting.    33|Page      ZHANG HONG JUN - Director  Mr. Zhang was named as a director of Changjiang Mining & New Energy in April 2006.  Prior to  that,  he  was  Chairman and CEO of Shaanxi Baishui Dukang Liquor Co. since 2002-2005.   He  is  the   Executive  Commissioner  of  Shaanxi  Federation  of Industry & Commerce, an academician  of  the  China  Academy  of  Management of Science,  the  Shaanxi  Deputy  of  the  National  People's  Congress,  Shaanxi Executive Commission of the Political Consultation Committee, the Vice Chairman of  Wei  Nan  Federation  of  Industry & Commerce, the Vice Chairman of Beijing Federation of Shaanxi Commerce  and the Chairman of Shaanxi Du Kang Alcohol Co. Ltd. Education.  On  April 2,  2007, Mr. Zhang was named  as  Executive  Commission  of  Shaanxi Federation of Industry &  Commerce,  academician of China Academy of Management of Science, Shaanxi Deputy of the NPC,  Shaanxi  Executive  Commission  of  the Political  Consultation  Committee,  Vice  Chairman  of  Wei  Nan Federation of Industry &  Commerce,  Vice Chairman of Beijing Federation of Shaanxi  Commerce and named as Chairman of Shaanxi Du Kang Alcohol Co. Ltd.  He received his MBA from the China Academy of Management of Science.  WANG SHENG LI - Director  Mr. Wang was named a director  of Changjiang mining & new energy in March 2006.  Prior to that, he was the manager of Xi Deng Hui Alcohol Co. Ltd. from 1998 to 2006.  He studied in Xi'an Petroleum University Electron Construction School from 1995 to 1998, majoring in computers.  LI PING - Director  Mr. Ping was named a director and Chief Financial Officer of Changjiang  Mining & New Energy  in  March 2006. He was an officer of Wei Nan branch company of China 2005. Life Insurance Company  from 2000 to Mr. Li studied in the Shaanxi Finance 2006. and Economics from 1994  to  1996, majoring in Finance and Economics Management.  TIAN HAI LONG - Director  Mr.  Tian  was named as director of Changjiang mining & new energy in March 2006.  He was the sales manager  of  Xi  Deng  Hui  Alcohol  Co.  Ltd. from 1998 to 2006.  He studied in the West Industry University Electronic Information School, majoring in e-commerce.  Audit Committee  We do not have a separately designated standing audit committee. Pursuant to Section 3(a)(58)(B) of the Exchange Act, the entire Board of Directors acts as an audit committee for the purpose of overseeing the accounting and financial reporting processes, and audits of our financial statements. The Commission recently adopted new regulations relating to audit committee composition and functions, including disclosure requirements relating to the presence of an "audit committee financial expert" serving on its audit committee. In connection with these new requirements, our Board of Directors examined the Commission's definition of "audit committee financial expert" and concluded that we do not currently have a person that qualifies as such an expert. We have had minimal operations for the past two (2) years. Presently, there are only four (4) directors serving on our Board, and us are not in a position at this time to attract, retain and compensate additional directors in order to acquire a director who qualifies as an "audit committee financial expert", but we intend to retain an additional director who will qualify as such an expert, as soon as reasonably practicable. While neither of our current directors meets the qualifications of an "audit committee financial expert", each of our directors, by virtue of his past employment experience, has considerable knowledge of financial statements, finance, and accounting, and has significant employment experience involving financial oversight responsibilities. Accordingly, we believe that our current directors capably fulfill the duties and responsibilities of an audit committee in the absence of such an expert.  Code of Ethics  We have adopted a code of ethic (the "Code of Ethics") that applies to our principal chief executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Ethics is being designed with the intent to deter wrongdoing, and to promote the following:  Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationshipsFull, fair, accurate, timely and understandable disclosure in reports and documents that a small business issuer files with, or submits to, the Commission and in other public communications made by the small business issuer Compliance with applicable governmental laws, rules and regulations  · The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code            Accountability for adherence to the code    Item 10.     EXECUTIVE COMPENSATION  No compensation was awarded to, earned by, or paid to any executive officer or director of the Company during the years 2009 or 2008..  The following table and the accompanying notes provide summary  information for each  of the last three fiscal years concerning cash and non-cash  compensation paid or accrued.    34|Page    SUMMARY COMPENSATION TABLE   Name and Year Salary Bonus Stock Option Non-Equity Nonqualified All Other Principal Position (5) Awards Awards Incentive Plan Deferred Compensation Compensation Compensation Total ($) ($) ($) ($) ($) ($) ($) ($) (a) (b) (c) (d) (e) (f) (g) (h) (i) (j)  Chen Wei Dong 2008 585 0 0 0 0 0 0 0 (Chariman of board & CEO) 2009 680 0 0 0 0 0 0 0  Gao Liling, 2008 298 0 0 0 0 0 0 0 Financial officer 2009 300 0 0 0 0 0 0 0  Yang Yi Jun 2008 439 0 0 0 0 0 0 0 2009 439 0 0 0 0 0 0 0    1.  Compensation  paid  in  RMB  has  been converted at the rate of $1 USD = 6.8282RMB.  2 Unless stated otherwise, the business address for each person named is c/o North American Gaming and Entertainment Company. (3)  Calculated pursuant to Rule 13d-3(d) (1) of the Securities Exchange Act of 1934 (4)  We believe that each individual or entity named has sole investment and voting power with respect to the shares of common stock indicated as beneficially owned by them (subject to community property laws where applicable) and except where otherwise noted.  We have not entered into any other employment agreements with our employees, Officers or Directors. We have no standard arrangements to compensate our directors for their services to us.  Stock Option Plan  We have not implemented a stock option plan at this time and since inception, have issued no stock options, SARs or other compensation. We may decide, at a later date, and reserve the right to, initiate such a plan as deemed necessary by the Board.  No cash compensation has been paid to any of our directors during  these  periods  other than the stock option grants which were commenced in 2000 and extended  in  2005. The compensation of the Board of Directors has not been established  by  any  policy  or  amount.  We  have no standard arrangements  under  which  we will compensate our directors  for  their services provided to us.  The  Company  reimburses  the  directors  for  their  expenses  (if any)incurred in connection with their duties as directors.  Tax and Accounting Considerations  Compliance with Internal Revenue Code Section 162(m).  Section 162(m) of the Internal Revenue Code of 1986, as amended, restricts deductibility of executive compensation paid to our Chief Executive Officer and each of the three other most highly compensated executive officers holding office at the end of any year (except for our Chief Financial Officer) to the extent such compensation exceeds $1,000,000 for any of such officers in any year and does not qualify for an exception under Section 162(m) or related regulations. The Compensation Committees policy is to qualify its executive compensation for deductibility under applicable tax laws to the extent practicable. In the future, the Compensation Committee will continue to evaluate the advisability of qualifying its executive compensation for full deductibility, in particular in light of the recent IRS Revenue Ruling 2008-13.    Item 11.         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS  The following table sets forth certain  information  regarding  the beneficial ownership  of  our  common  stock, as of the Closing Date, by (i) each  person, including  any "group," as that  term  is  used  in  Section  13(d)(3)  of  the Securities Exchange  Act  of 1934, who is known by us to own beneficially 5% or more of   our  preferred and common stock, (ii) each of our directors and named executive officers,  and  (iii)  all  of our directors and executive officers as a group. Unless otherwise indicated, all persons listed below have sole voting power and investment power with respect to the shares owned by them.         SERIES C PREFERRED STOCK OWNERSHIP   NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT AND NATURE PERCENTAGE OF BENEFICIAL OWNERSHIP (2)(3) CHEN WEI DONG 499,630 96%    VOTING POWER OF SERIES C PREFERRED  STOCK  OWNERSHIP  AND  BENEFICIAL OWNERSHIP ASSUMING FULL CONVERSION OF ALL PREFERRED SHARES AND GIVING EFFECT TO A ONE FOR TEN REVERSE STOCK SPLIT  NAME AND ADDRESS OF BENEFICIAL OWNER     AMOUNT AND NATURE          PERCENTAGE (1)                                      OF BENEFICIAL OWNERSHIP (2)(3)   (Class Series C Preferred Stock ) CHEN WEI DONG 608,549 1% ZHANG HONG JUN 35,174,152 57.8% WANG SHENG LI 7,442,558 12.23% LI PING 6,079,408 9.99% TIAN HAI LONG 6,079,408 9.99% GAO LILING 0 0 CHEN MIN 5,470,859 8.99% OFFICERS AND DIRECTORS AS A GROUP (6PERSONS) 60,854,934 100%      35|Page        (See Footnotes Below)     (1)   The address for each beneficial owner is stated below.  Each of  these persons can also be reached through the Company's address which is listed c/o North American Gaming and Entertainment Company,  Fifth  Floor,  High-Tech Mansion, Gaoxin Road, Hi-tech Zone, Xi'an P.R. China.  Chen Wei Dong, Address: BeitangXi'Ang 11#, Linwei District, Weinan City, Shaanxi, China.  GAO LILING Address: Xi'An Zhao Yuan Dong Lu 31#, Xi'an, Shaanxi, China  Zhang Hong Jun, Address: Duqiao Paichusuo, Xiyi Road, Linwei District, Weinan City, Shaanxi, China.  Wang Sheng Li, Address: Yun Yang, Jin Yang Xi'An, Wei Nan City, Shaanxi, China.  Li Ping Address: Jie Fang Lu 132#, Wei Nan City, Shaanxi, China  Tian Hai Long, Address:, Sinancun Erzu, Jiaqv Xiang  Lin Wei District, Wei Nan City, Shaanxi, China.  (2)   As  used  herein,  a  person is deemed to be the "beneficial owner" of a security if he or  she  has  or  shares  voting  or investment power with respect  to  such security, or has the right to acquire such ownership within sixty (60) days. As used herein, "voting power" includes the  power  to  vote  or to direct the voting of shares, and "investment power" includes the power to dispose or to direct the disposition of shares, irrespective of any economic interest therein.  (3)   Except as otherwise indicated by footnote, the persons named in the table have sole voting and investment power with respect to all Common Stock beneficially owned by them.  The directors, executive officers, their affiliates, and related parties own, directly or indirectly, beneficially and in the aggregate, the majority of the voting power of the outstanding capital of the Company. Accordingly, directors, executive officers and their affiliates, if they voted their shares uniformly, would have the ability to control the approval of most corporate actions, including approving significant expenses, increasing the authorized capital and the dissolution, merger or sale of the Company's assets.    Item 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS  The  related  parties  owed  the Company $1,193,431 as  of  December  31,  2009 including five related companies  and  three  related  persons  owed  the Company amounts  totaling  $801,544 and $391,887, respectively, for advances made  on  an unsecured basis, repayable on demand and interest free.   The Company owed $2,418,796 to  two  former  stockholders of Chang Jiang as of December 31, 2009 for advances made on an unsecured  basis, repayable on demand and interest free. Imputed interest is charged at 5.94 % per  year  on the amounts due.    The  Company  owed $3,996,369 to seven related parties as of December  31,  2009 including six  related  companies  and  three  related  person  owed the Company amounts totaling $363,369 and $3,633,000, respectively, for advances  made  on an unsecured  basis,  repayable  on  demand and interest free. Imputed interest is charged at 5.94% per year on the amount due.   Total  imputed interest recorded as  additional  paid-in  capital  amounted  to $346,453 and $353,951 for the years ended December 31, 2009 and 2008, respectively.  100% of the Companys accounts receivable balance of $1,098,386 and revenue earned during the year ended December 31, 2009 was from a related party.   Consulting  Fees. E.H. Hawes, II is the former Chairman of the Board, President and Chief Executive  Officer of the Company. Mr.  Hawes has provided consulting services to the Company  and was paid $-0- in consulting fees during 2008,2007, 2006 and $-0- in 2005. He did not  receive  a  salary  from the Company and had been owed a maximum of $50,000 for consulting services and expense reimbursements.  At closing the sum of $170,000 was paid to eliminate  any  outstanding debts of the Company with the balance payable to Mr. Hawes in satisfaction  of  all sums due  him  as  well as any other claims. Mr. Hawes retained the assignment of a note payable from Daylighting, Inc.  At closing the  Company  paid  Capital Advisory Services, Inc. $200,000 and 370 shares of Series C Preferred Stock.  Stanley  F.  Wilson,  Esq.  is  the CEO of Capital  Advisory  Services  and  a  licensed attorney at law with 30 years  of experience.  From  2006  until  closing,  Capital  Advisory  Services  provided consultation to the Company in connection with its business plan, evaluation of companies for potential mergers, and assistance  to  management  in  completing required tasks necessary for securities law compliance.  On Jan 10th and 21st 2010, the CEO of NAGM signed the stock issurance resolutions to Mr Donald R.Monroe and Mr Stanley F. Wilson, exchanging preferred stock for 4,500,000 common stock according to the agreement.   All  shares  exchanged  are restricted securities and may not be resold without registration or an exemption from registration from the Securities Act of 1933.    ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES  (a)Financial Statements  1. The following financial statements of North American Gaming and Entertainment Company. are included in Part II, Item 7:  Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets at December 31, 2009 and 2008. Consolidated Statements of Operations and comprehensive loss - for the years ended December 31, 2009 and 2008 Consolidated Statements of Cash Flows - for the years ended December 31, 2009 and 2008 Consolidated Statements of Stockholders Equity - for the years ended December 31, 2009 and 2008 Notes to Consolidated Financial Statements  2. Exhibits  Exhibit   Number Exhibit Description Footnote Reference ------- ------------------- ------------------ 3.1.3 Articles of Amendment to Articles of Incorporation (1)  4.1 Certificate of Designation (1)  10.1 Plan of Exchange dated May 30, 2008 by and among North American Gaming and Entertainment Company, and SHAANXI CHAN JIANG SI YOU NENG YUAN FA ZHANG GUFENG  YOU XIAN GONG SI (1)  10.2 Lock Up Agreement among  North American Gaming and Entertainment Company,  Steven Case and James Bowyer (1)  10.3 Lock-up Agreement *  10.4 Mining Exploration Certificate (1)  10.5 Land Use Right (1)  10.6 Lease Agreement (1)  21 Subsidiaries *   31.1 Certification of Chief Executive  Officer under Section 302 of the Sarbanes-Oxley Act of 2002.  31.2 Certification of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.  32.1 Certification of Chief Executive Officer under 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  32.2 Certification  of Chief Financial  Officer under 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  o Filed herewith.    (1)       Incorporated by reference from the Information Statement on Form  8-K of North American Gaming and Entertainment Company filed  with  the  Securities and Exchange Commission on February 6, 2008.   39   ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES  Fees Billed For Audit and Non-Audit Services  The following table represents the aggregate fees billed for professional audit services rendered to the independent auditor, Brock, Schechter & Polakoff, LLP for our audit of the annual financial statements for the years ended December 31, 2009 and 2008. Audit fees and other fees of auditors are listed as follows:  Year Ended December 312009(2)2008(2)Audit Fees (1)$33,000$30,000Audit-Related Fees (4)--7,000-Tax Fees (5)----All Other Fees (6)----Total Accounting Fees and Services$33,000$37,000  (1)Audit Fees. These are fees for professional services for the audit of our annual financial statements, , and for services that are normally provided in connection with statutory and regulatory filings or engagements.  (2)The amounts shown in 2009 and 2008 relate to (i) the audit of our annual financial statements for the fiscal years ended December 31, 2009 and 2008.  (4)Audit-Related Fees. These are fees for the assurance and related services reasonably related to the performance of the audit or the review of our financial statements.  (5)Tax Fees. These are fees for professional services with respect to tax compliance, tax advice, and tax planning.  (6)All Other Fees. These are fees for permissible work that does not fall within any of the other fee categories, i.e., Audit Fees, Audit-Related Fees, or Tax Fees. Pre-Approval Policy for Audit and Non-Audit Services  We do not have a standing audit committee, and the full Board performs all functions of an audit committee, including the pre-approval of all audit and non-audit services before we engage an accountant. All of the services rendered to us by Brock, Schechter & Polakoff, LLP  were pre-approved by our Board of Directors.  The new policies and procedures will be detailed as to the particular service, will require that the Board or an audit committee thereof be informed of each service, and will prohibit the delegation of pre-approval responsibilities to management. It is currently anticipated that our new policy will provide (i) for an annual pre-approval, by the Board or audit committee, of all audit, audit-related and non-audit services proposed to be rendered by the independent auditor for the fiscal year, as specifically described in the auditor's engagement letter, and (ii) that additional engagements of the auditor, which were not approved in the annual pre-approval process, and engagements that are anticipated to exceed previously approved thresholds, will be presented on a case-by-case basis, by the President or Controller, for pre-approval by the Board or audit committee, before management engages the auditors for any such purposes. The new policy and procedures may authorize the Board or audit committee to delegate, to one or more of its members, the authority to pre-approve certain permitted services, provided that the estimated fee for any such service does not exceed a specified dollar amount (to be determined). All pre-approvals shall be contingent on a finding, by the Board, audit committee, or delegate, as the case may be, that the provision of the proposed services is compatible with the maintenance of the auditor's independence in the conduct of its auditing functions. In no event shall any non-audit related service be approved that would result in the independent auditor no longer being considered independent under the applicable rules and regulations of the Securities and Exchange Commission.  (a) On December 31, 2009, our Chief Executive Officer and Chief Financial Officer made an evaluation of our disclosure controls and procedures. In our opinion, the disclosure controls and procedures are adequate because the systems of controls and procedures are designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows for the respective periods being presented. Moreover, the evaluation did not reveal any significant deficiencies or material weaknesses in our disclosure controls and procedures.  (b) There have been no significant changes in our internal controls or in other factors that could significantly affect these controls since the last evaluation.      ITEM 14   SIGNATURES   Pursuant to the requirements of Section 13 or 15(d) of  the  Securities Exchange  Ac t of  1934, the  Registrant  has  duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.  Date: April 15, 2010  North American Gaming and Entertainment Company    By: /s/ Chen Weidong ---------------- Chen Weidong, President and Chief Executive Officer      Pursuant to the requirements of the Securities Exchange Act  of  1934, this report has been  signed  by  the  following  persons  on  behalf  of  the Registrant and in the following capacities on the dates indicated.  Name & Title Date  /s/  Chen Weidong ----------------- Chief Executive Officer (Principal Executive Officer), President, and Director April 16, 2010  /s/  Li Ping ----------- Chief Financial Officer (Principal Financial Officer) April  16, 2010                    36|Page