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Timestamp: 2020-01-27 06:39:48
Document Index: 199064070

Matched Legal Cases: ['ART 1', 'ART 3', 'ART 4', 'ART 5', 'ART 6', 'ART 7', 'ART 8', 'ART 9', 'ART 10', 'ART 11', 'ART 12']

Gateway Certifications, Inc. (Form: 8-K, Received: 11/23/2009 06:03:14)
35 Meadow Street, Suite 308, Brooklyn, NY
This current report on Form 8-K (this Report) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the Securities Act) and Section 21E of the Securities Exchange Act of 1934 (Exchange Act). The forward-looking statements are only predictions and provide our current expectations or forecasts of future events and financial performance and may be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “will” or “should” or, in each case, their negative, or other variations or comparable terminology, though the absence of these words does not necessarily mean that a statement is not forward-looking. The forward-looking statements are based on current views with respect to future events and financial performance. Actual results may differ materially from those projected in the forward-looking statements. The forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things those:
associated with the relative success of sales, marketing and product development;
competition, including price competition; and
The disclosures set forth under Item 2 are incorporated by reference into this Item 1.
COMPLETION OF ACQUISITION OF DISPOSITION OF ASSETS.
1. CHANGES IN CONTROL OF REGISTRANT
The disclosures set forth under Item 2 are incorporated by reference into this Item 2.
2. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
Acquisition of Jianye Greentech Holdings Ltd.
On November 16, 2009, Gateway Certifications, Inc. (the “Company” or the “Registrant”) acquired Jianye Greentech Holdings Ltd., a privately held corporation organized under the laws of the British Virgin Islands (“JGH”), in accordance with an Agreement and Plan of Share Exchange (the “Exchange”). JGH was organized under the laws of the British Virgin Islands on April 17, 2008 and JGH is a holding company whose principal, operating companies develop, manufacture, and distribute alcohol-based automobile fuel products in the Peoples Republic of China. Upon consummation of the Exchange, the Registrant adopted the business plan of JGH.
Pursuant to the terms of the Exchange, Gateway Certifications, Inc. acquired JGH in exchange for an aggregate of 3,548,796 newly issued shares (the “Exchange Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”) issued to JGH Shareholders in accordance with their pro rata ownership of JGH equity. As a result of the Exchange, JGH became a wholly-owned subsidiary of the Company. In addition, our principal stockholders agreed to retire their 7,950,000 shares of Common Stock. The Registrant also issued 3,000,000 shares of Common Stock for services rendered to a finder in connection with the Exchange resulting in an aggregate of 34,400,000 shares of Common Stock issued and outstanding.
At the effective time of the Exchange, our Board of Directors was reconstituted by the resignation of Lawrence Williams, Jr. from his role as the Company’s sole officer and director, and the appointment of Haipeng Wang as the Company’s Chairman and President; Daliang Yan as a Director and Chief Executive Officer; and Yulin Yang as Chief Financial Officer. See “Directors and Executive Officers, Promoters and Control Persons.”
Also on November 16, 2009, immediately following the Exchange, the Board of Directors of the Registrant approved an amendment to the Registrant’s Articles of Incorporation increasing the number of authorized shares of Common Stock from 50,000,000 to 394,500,000 shares of Common Stock and concurrently effecting a forward stock split on the basis of 7.89 shares for each share of Common Stock (the “Split”)
Additionally on November 16, 2009, a majority of the Company’s Shareholders voted to amend the Company’s Articles of Incorporation to: (i) increase the number of Shares of the authorized capital stock to 400,000,000 shares of which 394,500,000 shall be Common Stock, par value $0.001 per share and 5,500,000 shall be preferred stock, par value $0.001 per share; (ii) authorizing the creation of a class of 5,500,000 shares of blank check preferred stock; and (iii) changing the name of the Registrant to American Jianye Greentech Holdings Ltd. Upon the filing of a Definitive Information Statement and effectiveness of the name change, the Company intends to apply to change its stock symbol on the Over the Counter Bulletin Board.
On November 17, 2009, the Company and Gateway Certifications, LLC, a New York limited liability company formed by the former controlling shareholders of the Company (“GCL”) entered into an Asset Divestiture Agreement whereby the Company assigned all of the pervious operating assets of the Company to GCL in exchange for the assumption of all of the Company’s liabilities to the members of GCL, who, as the former principal shareholders of the Company, agreed to return and cancel their 7,950,000 shares of Common Stock of the Company.
Following the issuance of the Exchange Shares and the retirement of our principal shareholder shares, the former members of JGH now beneficially own approximately 89% of the outstanding shares of our Common Stock.
Accordingly, the Exchange represents a change in control. As of the date of this report, there are 8,343,000 shares of Common Stock issued and outstanding. For financial accounting purposes, the acquisition was a reverse acquisition of Gateway Certifications, Inc. by JGH, under the purchase method of accounting, and was treated as a recapitalization with JGH as the acquirer. Upon consummation of the Exchange, Gateway Certifications, Inc. adopted the business plan of JGH.
Gateway Certifications, Inc. (“Gateway Certifications,” “the Company”, “us”, “our” or “we,”) was incorporated in the State of Nevada as a for-profit company on August 30, 2006 and established a fiscal year end of December 31. We were formed to assist women-owned, minority-owned and other qualifying businesses (collectively referred to as “Minority Businesses”) apply for and successfully complete and receive various federal, state, city, and private sector certifications so that these businesses may develop with the goal that they will successfully compete in the marketplace without the need for government assistance. As a result of the Exchange with JGH and the divestiture of these operations to Gateway Certifications, LLC, we have adopted the business plan of JGH, and now develop, manufacture, and distribute alcohol-based automobile fuel products in the Peoples of Republic of China.
The Company, through its wholly-owned subsidiaries, Jianye Greentech Holding Ltd. (BVI) and Hong Kong Jianye Greentech Holding Limited owns all of the registered capital of Heilongjian Jianye New Clean Fuel Marketing Co. Ltd. (“Heilongjian Jianye”), a limited liability company organized on September 8, 2009 under the laws of the People’s Republic of China company law. Heilongjian Jianye is engaged in the business of developing, manufacturing and distributing alcohol-based automobile fuel products in the People’s Republic of China.
Heilongjian Jianye Co., Ltd. was founded in April 2004 under the laws of the People’s Republic of China with registered capital of RMB 9 million Yuan (US$1.3 million). The offices and manufacturing facility operated by Heilongjian Jianye are located at Daoli District, Harbin City, Heilongjiang Province Hegu Street, 68 in northeastern China. Heilongjian Jianye engages in the development, manufacture, and distribution of alcohol based automobile fuel. The Company’s products are designed to function as a lower-cost, more environmentally friendly alternative to conventional gasoline-based auto fuel. In November 2007, Jianye Greentech Holdings Ltd. acquired 100% of the net assets of Heilongjian Jianye in exchange for debt and equity in Jianye Greentech Holdings Ltd.
Heilongjian Jianye was among the first China-based fuel manufacturers to bring to market alcohol-based automobile fuel. Alcohol fuel is an attractive alternative to gasoline for several reasons, in addition to its environmental benefits. Alcohol-based fuel burns with higher efficiency and significantly lower toxic waste emissions than any lead-free gasoline that meets China’s national GB17930-1999 fuel quality standards. With its average total toxic waste emission level being only 1% of the maximum toxic emission level mandated by the Chinese industry regulators, the quality of alcohol fuel is on par with or exceeds the international fuel quality standards for Type IV lead-free gasoline. In addition, due to the lower costs of the raw materials used in the manufacturing process, the average integrated cost of such fuels is only about 4,000-4,150 Renminbi (“RMB”) (US $590-610) per ton, lower than the prevailing wholesale price of #93 lead-free gasoline in China by as much as 1,000 RMB (US$147) per ton.
Heilongjian Jianye has, since its formation, been engaged in developing its products and its refinery and now has a facility capable of producing 300,000 tons of fuel annually, and has developed the core staff needed for full production operations. In the Spring of 2008, Heilongjian Jianye began to ship commercial quantities of fuel to customers, however, the facility continues to operate at only a fraction of its capacity due to a need for working capital to fund the launch of full-scale operations.
Heilongjian Jianye is currently capable of producing alcohol-based fuels comparable to lead-free gasoline with octane ratings ranging from #90 to #98. Heilongjian Jianye’s products include both ethanol-based fuels (E10, E30, E50, E60, E70, E80 and E85), and methanol-based fuels (M10, M30, M50, M60, M70, M80 and M85). However, the primary focus of its business plan is to produce methanol-based fuels due to their environmental and economic advantages. Heilongjian Jianye is also engaged in the research and development of methanol/ethanol blended fuels, including ME80 and ME85.
Alcohol fuel is an attractive alternative to gasoline for several reasons, such as its environmental benefits. Alcohol-based fuels burn with higher efficiency and significantly lower toxic waste emissions than any lead-free gasoline that meets China’s national GB17930-1999 fuel quality standards. With its average total toxic waste emission level being only 1% of the maximum toxic emission level mandated by the Chinese industry regulators, the quality of alcohol fuel is on par with or exceeds the international fuel quality standards for Type IV lead-free gasoline. In addition, due to the lower costs of the raw materials used in the manufacture process, the average integrated cost of such fuels is only about 4,000-4,150 Renminbi (“RMB”) ($590-610) per ton, lower than the prevailing wholesale price of #93 lead-free gasoline in China by as much as 1,000 RMB (US $147) per ton.
China encourages the use of alcohol fuel as a substitute for gasoline due to economic and environmental reasons, which provides a strong impetus for the development of alcohol fuel industry in the country. It is estimated that by 2010, the annual production capacity of domestic alcohol-based automobile fuel in China will reach 2 million tons. Meanwhile, worldwide demand for alcohol fuel is also gradually increasing, due to the limited supply and high cost of gasoline and for environmental reasons. The increased demand has caused an increase in both the price and the profit margin for alcohol-based fuel.
Heilongjian Jianye is currently capable of producing alcohol-based fuels comparable to lead-free gasoline with octane ratings ranging from #90 to #98. The Company’s products include both ethanol-based fuels (E10, E30, E50, E60, E70, E80 and E85), and methanol-based fuels (M10, M30, M50, M60, M70, M80 and M85), although the primary focus of its business plan is on methanol-based fuels due to their environmental and economic advantages. Recently, Heilongjian Jianye has also been engaged in the research and development of methanol/ethanol blended fuels, including ME80 and ME85.
Heilongjian Jianye licenses a portfolio of patents to Hong Kong Jianye Greentech Holding Ltd., including technologies to manufacture:
M80-M90 alcohol-based automobile fuels (No. 2006100105225);
E80-E90 Alcohol-based automobile fuel (No. 200610010523X);
an ethanol-based clean automobile fuel (No. 2004100480448);
an ethyl/methyl alcohol based fuels manufacturing method (No. 2006100105244);
an M80-M90/E80-E90 alcohol-based automobile fuel catalyst manufacturing method (No. 2006100105102);
an ethanol/methanol degeneration method (No. 20061009907X); and
a manufacturing method of high-efficiency alcohol-gasoline blended fuel catalyst (No. 2006100099050).
The company also owns 2 international patents:
Cellulosic ethanol-based vehicles with clean fuels, (No. PCT/CN20081139)
Methanol, cellulosic ethanol, ethanol-based vehicles with clean fuel additives,(No. PCT/CN20081138)
We believe the following strengths provide the Company with a competitive advantages in the marketplace:
The licenses are indefinite and royalty-free . As a forerunner in the alcohol-based fuels industry, we have set the leading enterprise standards in China, and have been actively engaged in the development of national as well as provincial industry standards. During 2008, China’s National Standardization Committee formulated the first set of
national standards for alcohol-based fuels. These will standardize the manufacturing practice and quality control of alcohol-based automobile fuel. Because of our involvement in the development of the standards, we are in full compliance with the new standards.
Efficient fuels . The efficacy of our M85 and E85 fuels in conventional automobiles was tested positively in April 2007 by the Heilongjiang Provincial Control & Test Institute. The efficacy of its ME60, M30, M50, M85 and E85 fuels in conventional automobiles was tested with positive results in January 2007 by the Heilongjiang Automobile Products Quality Control Center. We have also been granted High-tech Product and Environmentally Friendly Product certifications by the Heilongjiang Provincial Government and the Zhao Dong Municipal Government.
The alternative energy industry is widespread and highly competitive. Numerous entities in China and around the world compete with our efforts to produce process and distribute energy from renewable resources, including ethanol, biodiesel and biomass. We face, and expect to continue to face, competition from entities to the extent that they develop products similar or identical to ours. We also face, and expect to continue to face, competition from entities that provide alternative energy solutions from renewable resources other than biomass, such as solar, hydro and wind energy producers.
Because many of our competitors have substantially greater capital resources and more experience in research and development, manufacturing and marketing than we do, we may face strong competition in bringing them to market in a cost-effective and timely manner.
Until this year, our sales had consisted of samples of our alcohol-based fuels, and occasional resale of fuel additives. In the September of 2009, however, Heilongjian Jianye commenced shipments of alcohol-based fuels in commercial quantities. Our revenue for the year ended Sept 30, 2009, therefore, includes the following:
$2,246,892
These contracts do not qualify as backlog, because neither customer has a binding purchase obligation – the customers have the option to place monthly orders accompanied by payment of a deposit. Nevertheless, the contracts are indicative of the kind of production agreements that we are pursuing and gradually obtaining.
Heilongjian Jianye has, since its formation, been engaged in developing its products and its refinery. The Company now has a facility capable of producing 300,000 tons of fuel annually, and has developed the core staff needed for full production operations.
The Company has developed a patented method for blending the raw materials in its manufacture process. This processing technique enables production of Methanol automobile fuel under normal atmospheric conditions and temperatures, as well as at temperatures as low as -30 degrees Celsius (-22 degrees Fahrenheit). The Company’s refining process produces no significant amount of hazardous waste or pollution. These qualities, which are superior to those of lead-free gasoline fuel, have been certified by a team of experts organized by the Heilongjiang Province Science & Technology Department.
The key to the efficacy of the Company’s fuels is the unique combination of catalysts with methanol to raise the oxygen content and increase the octane rating of the fuels. Prior to September 2006, the Company used methyl tertiary-butyl ether (MTBE) as the primary catalyst in its alcohol fuels, following the then-standard international manufacturing practice. As information became available regarding the risk to the environment of MTBE run-off,
the Company had ceased using MTBE as an oxygenate, switching to different less, environmentally harmful and non-toxic high-carbon derivatives to fulfill the same functions.
To date, the Company has developed six different types of catalysts, which are added into different types of alcohol–based fuels. These catalysts have proven to enhance fuel octane rating and engine power, inhibit the premature oxidation of the fuel, help remove sediment in the carburetor, and prevent the erosion of the engine’s cylinder surface. Whereas conventional alcohol-based automobile fuels can be used only in specially designed automobile engines due to corrosion and engine wear, the Company’s fuels can be readily used in most standard motor vehicle engines, either independently or in combination with gasoline of comparable octane rating. The Company manufactures all six types of catalysts in its factory in Zhao Dong City, Heilongjiang Province.
Currently Heilongjian Jianye’s sales network have several sales companies in the major cities of China’s four provinces, including Harbin, Liaoning, Guangdong, and Guangxi. Each of these five sales companies has six full-time sales persons. The Beijing-based sales company coordinates the Company’s overall sales efforts.
The Company plans to sell its fuel products primarily through three channels:
1. Direct to private gas stations;
2. Direct to state-owned refined fuel storage and retail facilities; and
3. Distribution through China National Petroleum Corporation (“CNPC”) and PetroChina Company Limited nationwide network.
We expect the largest channel for distribution will be through the regional branches of CNPC and PetroChina, which have indicated a willingness to distribute our fuels to their affiliated gas stations. However, we have no written agreements with either of these companies nor can any assurance be given that an agreement will be reached or if reached that it will be on terms favorable to the Company.
The raw materials we use to make our products come from a number of suppliers. Currently, the Company has no written agreement to ensure the delivery of these materials.
The Company consists of six operational departments: technologies, sales, supply, planning, finance and general administration. There are currently 32 full-time employees, including 6 in management and administration, and 8 in R&D.
The Company’s corporate headquarters and refinery is located on Bin Xi, Harbin Development Zone, with a total usable area of 30,000 square meters. The Company’s production facilities cover a total area of 5,000 square meters plus 2,000 square meters of office building.
PART 1A. RISK FACTORS
Investing in the Company's common stock involves a high degree of risk. Prospective investors should carefully consider the risks described below, together with all of the other information included or referred to in this Current Report on Form 8-K, before purchasing shares of the Company's common stock. There are numerous and varied risks, known and unknown, that may prevent the Company from achieving its goals. The risks described below are not the only ones the Company will face. If any of these risks actually occur, the Company's business, financial condition or results of operation may be materially adversely affected. In such case, the trading price of the Company's common stock could decline and investors in the Company's common stock could lose all or part of their investment.
Our business plan contemplates that we will invest approximately $4 million in the start-up of our full-scale operations. We intend to raise a large portion of the necessary funds by selling equity in our company. At present we have no commitment from any source for those funds. We cannot determine, therefore, the terms on which we will be able to raise the necessary funds. It is possible that we will be required to dilute the value of our current shareholders’ equity in order to obtain such funds. If, however, we are unable to raise the necessary funds, our growth will be limited, as will our ability to compete effectively.
A general economic downturn or sudden disruption in business conditions may affect consumer purchases of discretionary items, which could adversely affect our financial results.
The general level of consumer spending is affected by a number of factors, including general economic conditions, inflation, interest rates, energy costs, and consumer confidence generally, all of which are beyond our control. Consumer purchases of discretionary items tend to decline during recessionary periods, when disposable income is lower, and may impact sales of our products. Some commentators believe that the global economy currently is in a recessionary period. In addition, sudden disruptions in business conditions, for example, as a consequence of the recent decline in financial institutions and capital markets can have a short and, sometimes, long-term impact on consumer spending.
A downturn in the economies in which we sell our products or a sudden disruption of business conditions in those economies could adversely affect our sales.
Heilongjian Jianye currently maintains property damage, liability and products liability insurance Nevertheless, material damage to, or the loss of, Heilongjian Jianye's facilities or equipment due to fire, severe weather, flood or other catastrophe, even if insured against, could result in significant losses to the Company .
Our products may cause harmful effects to the environment.
Heilongjian Jianye creates products that may have harmful effects on the environment if not stored and handled properly prior to use, which could result in significant liability and compliance expense. The distribution of alcohol-based fuel involves the controlled use of materials that are hazardous to the environment. Heilongjian Jianye cannot eliminate the risk of accidental contamination or discharge and any resulting problems that occur. Government regulations govern the use, manufacture, storage, handling and disposal of these materials. Heilongjian Jianye may be named a defendant in any suit that arises from the improper handling, storage or disposal of these products. Heilongjian Jianye could also be subject to civil damages in the event of an improper or unauthorized release of, or exposure of individuals to, hazardous materials. Compliance with environmental laws and regulations may be expensive, and current or future environmental regulations may impair Heilongjian Jianye’s research, development and production efforts.
Our success depends, in part, on the quality and safety of our products. If our products are found to be unsafe, or if they otherwise fail to meet our consumers’ standards, our relationships with customers or consumers could suffer, the appeal of our brand could be diminished, and we could lose sales and/or become subject to liability claims, any of which could result in a material adverse effect on our business, results of operations and financial condition.
Our success depends, in part, on our maintaining satisfactory relationships with our distribution channels. We do not have long term supply or distribution contracts. The vast majority of our sales are effected on a purchase order basis which requires us to meet expectations of delivery, quality and pricing of our products, at both the distribution channel level and at the level of the ultimate consumer who uses our products. If we fail to meet expected standards, our revenues would decline and this could result in a material adverse effect on our business, results of operations and financial condition
An increase in raw material prices could increase Heilongjian Jianye’s costs and decrease its profits.
Changes in the cost of raw materials could significantly affect Heilongjian Jianye’s business. Although the cost of ethanol has traditionally been relatively stable, increased use of ethanol for fuel would create increased demand and could introduce volatility into the market for methanol. Our other two primary raw materials, gasoline distillate and ethanol, already trade in volatile markets. The market price for gasoline distillate is a function of the market price of oil, which has been highly volatile in recent years. The market price of ethanol depends primarily on the availability of feedstocks, which again has become volatile in recent years due to the heightened demand caused by the widespread acceptance of ethanol as a fuel supplement. Increased prices in any of these markets could decrease Heilongjian Jianye’s profitability. Heilongjian Jianye does not expect to enter into hedging contracts with respect to raw material prices, but will rely on its Chairman’s network of industry relationships to obtain the best available prices.
Reliance on third party suppliers for raw materials may affect Heilongjian Jianye’s production and profitability.
To date, Heilongjian Jianye has no binding commitments for the supply of raw materials, although it has established a favourable relationship with its primary distillate supplier by making a large advance payment. Even as it develops supply arrangements, Heilongjian Jianye’s suppliers could terminate the contracts and sell to other buyers, or enter into the methanol-based fuel production business in direct competition with Heilongjian Jianye. If Heilongjian Jianye ’s suppliers do not perform their obligations as agreed, Heilongjian Jianye will not be able to maintain its refinery operations at an efficient level, and may itself default in satisfying deliver orders, all of which would adversely affect Heilongjian Jianye ’ profitability.
Heilongjian Jianye generates revenues and incurs expenses and liabilities in Renminbi, the currency of the People’s Republic of China. However, as a subsidiary of China Jianye Fuel, it will report its financial results in the United States in U.S. Dollars. As a result, our financial results will be subject to the effects of exchange rate fluctuations between these currencies. From time to time, the government of China may take action to stimulate the Chinese economy that will have the effect of reducing the value of Renminbi. In addition, international currency markets may cause significant adjustments to occur in the value of the Renminbi. Any such events that result in a devaluation of the Renminbi versus the U.S. Dollar will have an adverse effect on our reported results. We have not entered into agreements or purchased instruments to hedge our exchange rate risks.
Management does not expect to hold annual meetings of shareholders in the next few year, due to the expenses involved. The current members of the Board of Directors were appointed to that position by the previous directors. If other directors are added to the Board in the future, it is likely that the current directors will appoint them. As a result, the shareholders of the Company will have no effective means of exercising control over the operations of the Company.
We face intense competition from other alternative fuel producers, some of which have significantly distribution and financial resources than we do.
The alternative fuels industry is extremely competitive and will continue to be in the future as more production facilities are built and the industry expands. Our business may face competitive challenges from other or larger facilities that can produce a wider range and larger quantity of products than we can. In addition, we compete directly with traditional petroleum-based fuel and major integrated oil companies, which are among the largest and most successful companies in the world. Producers of petroleum-based diesel have substantially greater financial and other resources than we do and could offer biofuels directly to distributors and users, which may be a significant competitive advantage.
As of November 16, 2009, there has been only limited trading activities in the Company’s common stock. There can be no assurance that a market will ever develop in the Company’s common stock in the future. If a market does not develop then investors would be unable to sell any of the Company’s common stock likely resulting in a complete loss of any funds therein invested .
• acceptance of our products in the industry;
• economic conditions in China and or abroad;
At November 16, 2009 , shareholders of the Company had approximately 31,400,000 post-split adjusted shares of restricted stock, or 62% of the outstanding common stock. If we were to file a registration statement including all of these shares, and the registration is allowed by the SEC, these shares would be freely tradable upon the effectiveness of the planned registration statement. If investors holding a significant number of freely tradable shares decide to sell them in a short period of time following the effectiveness of a registration statement, such sales could contribute to significant downward pressure on the price of our stock.
The Company's continued viability depends on its ability to raise capital. Changes in economic, regulatory or competitive conditions may lead to cost increases. Management may also determine that it is in the best interest of the Company to develop new services or products. In any such case additional financing is required for the Company to meet its operational requirements. There can be no assurances that the Company will be able to obtain
such financing on terms acceptable to the Company and at times required by the Company, if at all. In such event, the Company may be required to materially alter its business plan or curtail all or a part of its operational plans as detailed further in Management's Discussion and Analysis in this Form 8-K. While the Company currently has no offers to sell it securities to obtain financing, sale or the proposed sale of substantial amounts of our common stock in the public markets may adversely affect the market price of our common stock and our stock price may decline substantially. In the event that the Company is unable to raise or borrow additional funds, the Company may be required to curtail significantly its operational plans as further detailed in Requirements for Additional Capital in the Management Discussion and Analysis of this Form 8-K.
The Company’s proposed Amended Articles of Incorporation authorize the issuance of up to 394,500,000 total shares of Common Stock without additional approval by shareholders. As of November 16, 2009, we had 31,400,000 post-split adjusted shares of common stock outstanding,
Because our common stock is quoted only on the Over the Counter Bulletin Board, your ability to sell your shares in the secondary trading market may be limited.
Our common stock is quoted only on the Over the Counter Bulletin Board. Consequently, the liquidity of our common stock is impaired, not only in the number of shares that are bought and sold, but also through delays in the timing of transactions, and coverage by security analysts and the news media, if any, of our company. As a result, prices for shares of our common stock may be different than might otherwise prevail if our common stock was quoted or traded on a national securities exchange such as the New York Stock Exchange.
As of November 16, 2009, approximately 28,000,000 of the 31,400,000 issued and outstanding post-split shares of the Company's common stock are restricted securities as defined under Rule 144 of the Securities Act of 1933, as amended (the “Act”) and under certain circumstances may be resold without registration pursuant to Rule 144.
Approximately 3,400,000 shares of our post-split adjusted restricted shares of common stock are held by non-affiliates who may avail themselves of the public information requirements and sell their shares in accordance with Rule 144. As a result, some or all of these shares may be sold in accordance with Rule 144 potentially causing the price of the Company's shares to decline.
In general, under Rule 144, a person (or persons whose shares are aggregated) who has satisfied a six month holding period may, under certain circumstances, sell within any three-month period a number of securities which does not exceed the greater of 1% of the then outstanding shares of common stock or the average weekly trading volume of the class during the four calendar weeks prior to such sale. Rule 144 also permits, under certain circumstances, the sale of securities, without any limitation, by a person who is not an Affiliate, as such term is defined in Rule 144(a)(1), of the Company and who has satisfied a one year holding period. Any substantial sale of the Company's common stock pursuant to Rule 144 may have an adverse effect on the market price of the Company's shares. This filing will satisfy certain public information requirements necessary for such shares to be sold under Rule 144.
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Sarbanes-Oxley Act of 2002. The costs associated with these requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. Historically, as a private company we have maintained a small accounting staff, but in order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, significant additional resources and management oversight will be required. This includes, among other things, retaining independent public accountants. This effort may divert management's attention from other business concerns, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, we may need to hire additional accounting and
financial persons with appropriate public company experience and technical accounting knowledge, and we cannot assure you that we will be able to do so in a timely fashion.
Our executive officers, directors and principal stockholders control our business and may make decisions that are not in our stockholders' best interests.
As of November 16, 2009 our officers, directors, and principal stockholders, and their affiliates, in the aggregate, beneficially owned approximately 80% of the outstanding shares of our common stock on a fully diluted basis. As a result, such persons, acting together, have the ability to substantially influence all matters submitted to our stockholders for approval, including the election and removal of directors and any merger, consolidation or sale of all or substantially all of our assets, and to control our management and affairs. Accordingly, such concentration of ownership may have the effect of delaying, deferring or preventing a change in discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our business, even if such a transaction would be beneficial to other stockholders.
We expect to continue to incur drug development and selling, general and administrative costs, and in order to satisfy our funding requirements, we may need to sell additional equity securities. Our stockholders may experience substantial dilution and a reduction in the price that they are able to obtain upon sale of their shares. Also, any new securities issued may have greater rights, preferences or privileges than our existing common stock which may adversely affect the market price of our common stock and our stock price may decline substantially.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS
The following discussion and plan of operations should read in conjunction with the financial statements and the notes to those statements included in this 8-K. This discussion includes forward-looking statements that involve risk and uncertainties. As a result of many factors, such as those set forth under “ Risk Factors ,” actual results may differ materially from those anticipated in these forward-looking statements.
On November 16, 2009, the Acquisition of JGH was completed, and the business of JGH was adopted as our business. As such, the following Management Discussion is focused on the current and historical operations of JGH, and excludes the prior operations of the Registrant.
The following is a summary of our operating results for the periods indicated:
The following tables set forth key components of results of our operations for the periods indicated..
$2,241,779
Basic & diluted net income per share
Shares used in computing basic and diluted net income per share
Revenues. Revenues increased to $2,241,779 for the year ended September 30, 2009 from none for the fiscal year of 2008. This increase was because we are newly incorporated in September 2009, and did not have any operations in 2008. During this time period, we had only one customer, Gangan Petro Chemical Limited, located in Maoming City, Guangdong Province. The sole product we sold to Gangan Petro Chemical Limited was Fuel #93.
Cost of Sales . Our cost of sales increased to $1,961,557 for the year ended September 30, 2009 compared to none in the year ended September 30, 2008. This increase was because we did not have operating activities for the fiscal year of 2008.
Gross Profit . Our gross profit for the year ended September 30, 2009 was $280,222 compared to none for the year ended September 30, 2008.
Other Selling, General and Administrative Expenses . Other selling, general and administrative expenses for the year ended September 30, 2009 was $3,183 compared to none for the year ended September 30, 2008. Other selling, general and administrative expenses mainly include salary expenses for 3 employees.
Income (loss) from operations . Income from operations was $277,039 for the year ended September 30, 2009, compared to none for the year ended September 30, 2008.
Income Taxes . Since the company is a wholly-owned foreign entity, income taxes is exempted according to the local and state tax policies.
Net Income . Net income was $277,039 for the year ended September 30, 2009, compared to none for the year ended September 30, 2008.
Our operations to date have been funded primarily by capital contributions and short-term loans from our Chairman, HaiPeng Wang, which have been adequate to bring us to the point where we are prepared to commence full scale production.
Our working capital at September 30, 2009 totaled $277,278. Included in our working capital, however, was $2,625,141in accounts receivables, almost all of which are owed by one customer that was the only source of revenue for our revenues generated in the year ended September 30, 2009. We are not certain when those receivables will be paid. We have, therefore, only a small amount of liquid assets.
In order to commence full scale operations, we will need approximately US$5,000,000 to purchase raw materials and fund our initial receivables. We expect that some amount of the funds that we require can be obtained from the sale of equity. To date we have no commitment from any source for either debt or equity financing.
In preparing our financial statements we are required to formulate working policies regarding valuation of our assets and liabilities and to develop estimates of those values. In our preparation of the financial statements for fiscal year 2009, there were two estimates made which were (a) subject to a high degree of uncertainty and (b) material to our results. These estimates were:
Our decision, described in Note 2 to the Consolidated Financial Statements, to record a provision of only $[31,227.04] for uncollectible accounts, against total related accounts receivable of $[624,540.78 ]. This decision was based on our relationship with the debtors and our knowledge of their capacity to repay the debts.
Our decision, described in Note 2 to the Consolidated Financial Statements, to record no provision for obsolete inventories. This decision was based on fact that our inventory at June 30, 2009 amounted to less than two months’ sales and was primarily usable raw materials.
We have made no material changes to our critical accounting policies in connection with the preparation of financial statements for fiscal year 2009.
The financial statements are prepared in conformity with U.S. generally accepted accounting principles. Major
The carrying amounts of the Company’s assets, liabilities, equity and results of operations have been translated from the Yuan dollar, which is the Company’s functional currency, into the U.S. dollar using the current rate method.
For the purpose of the statement of cash flows, the Company considers all highly liquid investments to be cash equivalents.
Accounts receivable are carried at their estimated collectible amounts. Trade credit is generally extended on a short-term basis, thus accounts receivable do not bear interest, although a finance charge may be applied to such receivables that are past due. Bad debts are provided on the allowance method based on historical experience and management’s evaluation of outstanding accounts receivable.
Inventory of finished goods is stated at the lower of cost (weighted average method) or market.
All fixed assets are stated at cost. Significant renewals and improvements are treated as capital expenditures and maintenance and repairs are charged to expense as incurred.
Depreciation is provided on straight-line method based on the estimated useful lives and salvage values of the assets, ranging from 2 to 5 years.
Revenues are recognized when the earning process is substantially completed and they are realized or realizable. Costs and expenses are recognized as incurred.
The Company presents revenue net of sales, use, and excise taxes collected from customers.
The Company’s policy is to classify shipping and handling costs as part of operating expenses in the statements of income.
Current - The Company follows the practice of providing for income taxes based on amounts reportable for income tax purposes.
Deferred - The recognition of income and expenses in different periods for financial accounting and tax purposes gives rise to timing difference that result in deferred taxes.
Management has elected to defer the application of FAS FIN 48, Accounting for Uncertain Tax Positions, in accordance with FSP FIN 48-3. The Company will continue to follow FAS 5, Accounting for Contingencies, until it adopts FIN 48.
In April 2009, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) Financial Accounting Standard (FAS) 157-4 “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”. Based on the guidance, if an entity determines that the level of activity for an asset or liability has significantly decreased and that a transaction is not orderly, further analysis of transactions or quoted prices is needed, and a significant adjustment to the transaction or quoted prices may be necessary to estimate fair value in accordance with Statement of Financial Accounting Standards (SFAS) No. 157 “Fair Value Measurements”. This FSP is to be applied prospectively and is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009. The adoption of this FSP did not have an impact on the financial statements.
In April 2009, the FASB issued FSP FAS 107-1 and Accounting Principles Board (APB) 28-1 “Interim Disclosures about Fair Value of Financial Instruments”. The FSP amends SFAS No. 107 “Disclosures about Fair Value of Financial Instruments” to require an entity to provide disclosures about fair value of financial instruments in interim financial information. This FSP is to be applied prospectively and is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009. The adoption of this FSP did not have an impact on the financial statements.
In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”), which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 also requires entities to disclose the date through which subsequent events were evaluated as well as the rationale for why that date was selected. This disclosure should alert all users of financial statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented. SFAS 165 is effective for interim and annual periods ending after June 15, 2009. Since FAS 165 at most requires additional disclosures, the adoption does not have a material impact on the Company’s financial position, results of operations or cash flows.
In June 2009, the FASB approved the “FASB Accounting Standards Codification” (the “Codification”) as the single source of authoritative nongovernmental U.S. GAAP to be launched on July 1, 2009. The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be considered non-authoritative. The Codification is effective for interim and annual periods ending after September 15, 2009. The Codification is effective for the Company in the interim period ending November 30, 2009 and the Company does not expect the adoption to have a material impact on its financial position, results of operations or cash flows.
PART 3. DESCRIPTION OF PROPERTY
The Company’s headquarters and refinery are located on Bin Xi, Harbin Development Zone, with a total usable area of 30,000 square meters. The Company’s production facilities cover a total area of 5,000 m2 plus 2,000 m2 of office building. The alcohol-base clean fuel plan has production capability of 200,000 tons per year.
PART 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table summarizes certain information regarding the beneficial ownership (as such term is defined in Rule 13d-3 under the Securities Exchange Act of 1934) of outstanding Registrant Common Stock as of November 16, 2009 (after giving effect to the Exchange) by (i) each person known by us to be the beneficial owner of more than 5% of the outstanding Common Stock, (ii) each of our directors, (iii) each of our named executive officers, and (iv) all executive officers and directors as a group. Except as indicated in the footnotes below, the security and stockholders listed below possess sole voting and investment power with respect to their shares.
3,168,365
(1) "Beneficial Owner" means having or sharing, directly or indirectly (i) voting power, which includes the power to vote or to direct the voting, or (ii) investment power, which includes the power to dispose or to direct the disposition, of shares of the common stock of an issuer. The definition of beneficial ownership includes shares,
underlying options or warrants to purchase common stock, or other securities convertible into common stock, that currently are exercisable or convertible or that will become exercisable or convertible within 60 days. Unless otherwise indicated, the beneficial owner has sole voting and investment power.
(2) For each shareholder, the calculation of percentage of beneficial ownership is based upon 3,941,796 shares of Common Stock outstanding as of November 16, 2009, and shares of Common Stock subject to options, warrants and/or conversion rights held by the shareholder that are currently exercisable or exercisable within 60 days, which are deemed to be outstanding and to be beneficially owned by the shareholder holding such options, warrants, or conversion rights. The percentage ownership of any shareholder is determined by assuming that the shareholder has exercised all options, warrants and conversion rights to obtain additional securities and that no other shareholder has exercised such rights.
PART 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The following table sets forth information regarding the members of the Company’s board of directors and its executive officers. All of the Company’s executive officers and directors were appointed on __________, the effective date of the Acquisition. All directors hold office until the first annual meeting of the stockholders of the Company and until the election and qualification of their successors or their earlier removal or retirement.
HaiPeng Wang. Ms. Wang has served as a Director of Heilongjiang Jianye New Clean Fuel Marketing Co., Ltd. since September of 2009. In that capacity he serves as its highest decision and is responsible for making the operating policies and developing plans, regulating and supervising the business activities, review and approval of its financial budget and accounts. Prior thereto and since 2002, Mr. Wang the General Manager of Heilongjiang Jianye, in charge of the Company’s real property. Mr. Wang holds a bachelor’s degree from Harbin Shifan University.
Daliang Yang.
Yulin Yang . Ms. Yang has served as Chief Financial Officer of Heilongjiang Jianye New Clean Fuel Marketing Co., Ltd. since September of 2009. From September 2005 until 2009, Ms. Yang served as an accountant at Heilongjiang Hongguang Vehicle Marketing Co. From 2002 to 2005, Ms. Yang was an accountant at Harbin Zhanpeng Accounting Firm. Ms. Yang graduated with a B.A. in accounting.
AUDIT COMMITTEE. The Company intends to establish an audit committee, which will consist of independent directors. The audit committee's duties would be to recommend to the Company's board of directors the engagement of independent auditors to audit the Company's financial statements and to review its accounting and auditing principles. The audit committee would review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent public accountants, including their recommendations to improve the system of accounting and internal controls. The audit committee would at all times be composed exclusively of directors who are, in the opinion of the Company's board of directors, free from any relationship which would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles.
COMPENSATION COMMITTEE. Our board of directors does not have a standing compensation committee responsible for determining executive and director compensation. Instead, the entire board of directors fulfills this function, and each member of the Board participates in the determination. Given the small size of the Company and its Board and the Company's limited resources, locating, obtaining and retaining additional independent directors is extremely difficult. In the absence of independent directors, the Board does not believe that creating a separate compensation committee would result in any improvement in the compensation determination process. Accordingly, the board of directors has concluded that the Company and its stockholders would be best served by having the entire board of directors act in place of a compensation committee. When acting in this capacity, the Board does not have a charter.
In considering and determining executive and director compensation, our board of directors reviews compensation that is paid by other similar public companies to its officers and takes that into consideration in determining the compensation to be paid to the Company’s officers. The board of directors also determines and approves any non-cash compensation to any employee. The Company does not engage any compensation consultants to assist in determining or recommending the compensation to the Company’s officers or employees.
PART 6. EXECUTIVE COMPENSATION
(1) HaiPeng Wang
(2) Daliang Wang
(3) Yulin Wang
(4) Lawrence Williams
Compensation Policy . Our Company’s executive compensation plan is based on attracting and retaining qualified professionals who possess the skills and leadership necessary to enable our Company to achieve earnings and profitability growth to satisfy our stockholders. We must, therefore, create incentives for these executives to achieve both Company and individual performance objectives through the use of performance-based compensation programs. No one component is considered by itself, but all forms of the compensation package are considered in total. Wherever possible, objective measurements will be utilized to quantify performance, but many subjective factors still come into play when determining performance.
Compensation Components . As an early-stage development company, the main elements of our compensation package consist of base salary, stock options and bonus.
Base Salary . As we continue to grow and financial conditions improve, these base salaries, bonuses and incentive compensation will be reviewed for possible adjustments. Base salary adjustments will be based on both individual and Company performance and will include both objective and subjective criteria specific to each executive’s role and responsibility with the Company.
COMP E NSATION OF DIRECTORS
At this time, directors receive no remuneration for their services as directors of the Company, nor does the Company reimburse directors for expenses incurred in their service to the Board of Directors. The Company does not expect to pay any fees to its directors for the 2008 fiscal year.
We do not have employment agreements with any of our officers, directors or key personnel. The Company’s principal operating subsidiary, Heilong Jianye New Clean Fuel Marketing Co., Ltd. has employment agreements with the following persons: HaiPeng Wang, to serve as Chairman of the Board and President, executed on April 22, 2009 for a one year term, subject to automatic renewals of one year at the rate of $30,000 per year; and Dailang Yang, as Chief Executive Officer, executed on April 22, 2009 for a one year term, subject to automatic renewals of one year at the rate of $30,000 per year.
PART 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PART 8. LEGAL PROCEEDINGS
PART 9. MARKET PRICE OF AND DIVIDEND ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Currently the Company’s common shares are listed on the Over-the-Counter Bulletin Board (OTCBB) under the ticker symbol “GWYC”. However, as of the date of this report there have been no trading activities in the Company’s common stock. There can be no assurance that a market will ever develop in the Company’s common stock in the future. If a market does not develop then investors would be unable to sell any of the Company’s common stock likely resulting in a complete loss of any funds therein invested .
Since our inception, we have not paid any dividends on our Common Stock, and we do not anticipate that we will pay any dividends in the foreseeable future. We intend to retain any future earnings for use in our business. At November16, 2009, we had approximately 43 shareholders of record.
PART 10. RECENT SALES OF UNREGISTERED SECURITIES.
Since inception of the Company on August 30, 2006, we have sold unregistered securities to the following
From December 1, 2006 to March 31, 2007, the Company sold 367,000 shares of its common stock, par value $.001, at a price of $0.10 per share to thirty (30) investors in consideration for $36,700 contributed capital to the Company. We claim an exemption from registration afforded by Rule 506 of Regulation D and section 4(2) of the Securities Act of 1933, as amended. In particular, our Company confirmed that with respect to the exemption claimed under Rule 506 D and section 4(2) of the Securities Act of 1933, that :
i. Each purchaser referred to gave written assurance of investment intent without a view for resale and certificates for shares sold to each purchaser bear a legend consistent with such investment intent and restricting transfer:
ii. Sales were made to a limited number of persons. No general solicitation to the public was made in connection with such sales;
iii. Each purchaser represented in writing that they had sufficient sophistication to evaluate the investment and could afford to lose their entire investment without adversely affecting their lifestyle;
v. The purchasers represented in writing that they acquired the shares for their own accounts.
vi. Shareholders have been placed on notice that their securities will need to be sold in compliance with Rule 144 of the Act, and may not be transferred otherwise.
On November 16, 2009, the Registrant authorized the issuance of 3,548,796 shares in connection with the execution of a Share Exchange Agreement with the equity-holders of JGH. (the “Exchange”)and the issuance of 3,000,000 shares of Common Stock for services rendered to a finder in connection with the Exchange
Except as noted above, the sales of the securities identified above were made pursuant to privately negotiated transactions that did not involve a public offering of securities and, accordingly, we believe that these transactions were exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof and rules promulgated thereunder. Each of the above-referenced investors in our stock represented to us in connection with their investment that they were “accredited investors” (as defined by Rule 501 under the Securities Act) and were acquiring the shares for investment and not distribution, that they could bear the risks of the investment and could hold the securities for an indefinite period of time. The investors received written disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to a registration or an available exemption from such registration. All of the foregoing securities are deemed restricted securities for purposes of the Securities Act.
PART 11. DESCRIPTION OF SECURITIES
Number of Authorized and Outstanding Shares . The Company's Articles of Incorporation authorizes the issuance of 50,000,000 shares of Common Stock, $.001 par value per share, of which [31,400,000] post-split adjusted shares were outstanding on November 16, 2009. On November 16, 2009 the Company’s Board of Directors have authorized an amendment to the Articles of Incorporation to increase the number of authorized shares of common stock from 50,000,000 to 394,500,000 and concurrently affecting a 7.89 for one forward-split of the Registrant’s issued and outstanding shares of Common Stock.
Voting Rights . Holders of shares of Common Stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of Common Stock have no cumulative voting rights. Accordingly, the holders of in excess of 50% of the aggregate number of shares of Common Stock outstanding will be able to elect all of the directors of the Company and to approve or disapprove any other matter submitted to a vote of all stockholders.
Other . No shareholder has any preemptive right or other similar right to purchase or subscribe for any additional securities issued by the Company, and no shareholder has any right to convert the common stock into other securities. No shares of common stock are subject to redemption or any sinking fund provisions. All the outstanding shares of the Company's common stock are fully paid and non-assessable. Subject to the rights of the holders of the preferred stock, if any, the Company's shareholders of common stock are entitled to dividends when, as and if declared by the Board from funds legally available therefore and, upon liquidation, to a pro-rata share in any distribution to shareholders. The Company does not anticipate declaring or paying any cash dividends on the common stock in the foreseeable future.
The proposed amendment to the Company's Articles of Incorporation authorizes the issuance of 5,500,000 shares of Preferred Stock, par value $0.001 per share, subject to any limitations prescribed by law, without further vote or action by the stockholders, to issue from time to time shares of preferred stock in one or more series. Each such series of Preferred Stock shall have such number of shares, designations, preferences, voting powers, qualifications, and special or relative rights or privileges as shall be determined by the Company's board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.
Shares of Common Stock are registered at the transfer agent and are transferable at such office by the registered holder (or duly authorized attorney) upon surrender of the Common Stock certificate, properly endorsed. No transfer shall be registered unless the Company is satisfied that such transfer will not result in a violation of any applicable federal or state securities laws. The Company's transfer agent for its Common Stock is Pacific Stock Transfer Company located at 4045 South Spencer Street, Suite 403, Las Vegas, Nevada 89119, Telephone (702) 361-3033.
The Commission has adopted rules that define a “penny stock” as equity securities under $5.00 per share which are not listed for trading on Nasdaq (unless the issuer (i) has a net worth of $2,000,000 if in business for more than three years or $5,000,000 if in business for less than three years or (ii) has had average annual revenue of $6,000,000 for the prior three years). The Company's securities are characterized as penny stock, and therefore broker-dealers dealings in the securities are subject to the disclosure rules of transactions involving penny stock which require the broker-dealer, among other things, to (i) determine the suitability of purchasers of the securities and obtain the written consent of purchasers to purchase such securities and (ii) disclose the best (inside) bid and offer prices for such securities and the price at which the broker-dealer last purchased or sold the securities. The additional
requirements imposed upon broker-dealers discourage them from engaging in transactions in penny stocks, which reduces the liquidity of the Company's securities. The Company's common stock is currently quoted on the OTC Bulletin Board under the symbol GWYC.OB.
PART 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to our articles of incorporation and bylaws, we may indemnify an officer or director who is made a party to any proceeding, because of his position as such, to the fullest extent authorized by Nevada Revised Statutes, as the same exists or may hereafter be amended. In certain cases, we may advance expenses incurred in defending any such proceeding.
The Company's bylaws provide that our officers and directors will have no personal liability to us or our stockholders for monetary damages incurred as the result of the breach or alleged breach by a director of his "duty of care." This provision does not apply to the directors' (i) acts or omissions that involve intentional misconduct or a knowing and culpable violation of law, (ii) acts or omissions that a director believes to be contrary to the best interests of the corporation or its stockholders or that involve the absence of good faith on the part of the director, (iii) approval of any transaction from which a director derives an improper personal benefit, (iv) acts or omissions that show a reckless disregard for the director's duty to the corporation or its stockholders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing a director's duties, of a risk of serious injury to the corporation or its stockholders, (v) acts or omissions that constituted an unexcused pattern of inattention that amounts to an abdication of the director's duty to the corporation or its stockholders, or (vi) approval of an unlawful dividend, distribution, stock repurchase or redemption. This provision would generally absolve directors of personal liability for negligence in the performance of duties, including gross negligence.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to its directors, officers and controlling persons pursuant to the foregoing provisions or otherwise, the Company has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Please see the discussion of “ Closing of Exchange ” and “ Recent Financings ” in Item 2.01, which discussion is
On November 16, 2009, Lawrence Williams, Jr. resigned from his role as the Registrant’s Chief Executive Officer, President, Chief Financial Officer, Principal Financial and Accounting Officer. HaiPeng Wang was elected as the Registrant’s Chairman and President, Daliang Yang was elected as Chief Executive Officer and Director, and Yunil Yang was elected as Chief Financial Officer.
On November 16, 2009, the Registrant’s Board of Directors approved an amendment Articles of Incorporation increasing the number of authorized shares of common stock from 50,000,000 to 394,500,000 and concurrently effecting a 7.89 for 1 forward split of the Company's issued and outstanding shares of common stock. Approval of the Company's stockholders was not required to be obtained, as authorized by Section 78.207, et seq. of the Nevada Revised Statues. As a result of the forward stock split, each share of the Company's common stock issued and outstanding on such date was split into 7.89 shares of the Company's common stock.
Also on November 16, 2009, the shareholders of the Company authorized an amendment to the Registrant’s Articles of Incorporation (i) increasing the number of authorized shares of capital stock from 394,500,000 to 400,000,000, of which 394,500,000 shares will be common stock par value $0.001 per share and 5,500,000 shares will be preferred stock par value $0.001 per share (ii) authorizing the creation of a class of blank check preferred stock and (iii) changing the name of the Registrant to American Jianye Greentech Holdings Ltd.
(a) Financial statements: As a result of the Exchange described in Item 2.01, the registrant is filing the audited financial statement information of JGH’s principal operating subsidiaries, Hong Kong Jianye Greentech Holding Limited and Heilongjiam Jianye New Clean Fuel Marketing Ltd. as Exhibits 99.1, 99.2 and 99.3 to this current report.
(b) Pro forma financial information: The unaudited pro forma consolidated financial information regarding the registrant and JGH is attached to this current report as Exhibit 99.4.
Asset Divestiture Agreement between Gateway Certifications, Inc. and Gateway Certifications, LLC
Certificate of Incorporation of Jianye Greentech Holdings Ltd.
Memorandum and Articles of Association of Jianye Greentech Holdings Ltd.
Certificate of Incorporation of Hong Kong Greentech Holdings Limited.
Memorandum and Articles of Association of Hong Kong Greentech Holdings Limited.
Articles of Association of Heilongjiang New Clean Fuel Marketing Co.
Employment Agreement between Heilongjiang New Clean Fuel Marketing Co. and Haipeng Wang, dated September 22, 2009.
Sample Materials Purchase Agreement
Audited financial statements Jianye Greentech Holdings Ltd. for the period ended December 31, 2008.
Audited financial statements of Hong Kong Jianye Greentech Holding Limited for the period ended December 31, 2008.
Audited financial statements of Heilongjian Jianye Clean Fuel Marketing Ltd. for the period ended December 31, 2008.
By: HaiPeng Wang, President
AMERICAN JIANYE GREENTECH HOLDINGS INC.
American Jianye Greentech Holdings Inc..
We have audited the accompanying consolidated balance sheets of American Jianye Greentech Holdings Inc.. and subsidiaries (the “Company”) as of June 30, 2009 and 2008, and the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of American Jianye Greentech Holdings Inc.. and subsidiaries as of June 30, 2009 and 2008, and the consolidated results of their operations and their consolidated cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
2,625,141
2,631,785
$ 2,296,998
Common Stock, ??? par value, ??? shares
Authorized, ??? shares issued and outstanding at
$ 2,631,785
$ 2,241,779
$ 277,039
$ 277,278
recapitalization of American Jianye
Write down of fixed assets due to business combination
(2,625,141)
2,296,998
AGREEMENT ("Agreement") made this 22th day of September, 2009, by and between Heilongjiang Jianye New Clean Fuel Marketing Co., Ltd. (the "Company") and HaiPeng Wang ("Employee").
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the Company and Employee agree as follows:
Employment/Duties: The Company hereby agrees to employ Employee, and Employee hereby agrees to continue to serve, subject to the provisions of this Agreement, as CFO of the Company. Employee shall continue to perform such duties and responsibilities as are from time to time assigned to Employee by the Board of Directors and shall report directly to the Board of Directors. Such duties and responsibilities shall include the oversight to: (i) to shape and implement the strategic business plan of the Company; (ii) to direct the development and monitoring of operating goals and objectives; (iii) to oversee financial operations and (iv) to provide leadership, direction and administration of all aspects of Company activities, in all cases subject to the supervision and authority of the Company's Board of Directors. Employee agrees to continue to devote sufficient attention and energies to the performance of the duties assigned to him hereunder, and to perform such duties faithfully and to the best of his abilities and subject to such laws, rules, regulations and policies from time to time applicable to the Company's employees to the best of his knowledge.
Term: The term of this Agreement shall be for a period of one (1) year commencing on the date set forth above (“Effective Date”) and ending on the first anniversary thereof (the "Initial Term"), unless terminated sooner pursuant to Section 7 of this Agreement. Thereafter the Agreement is subject to automatic renewals of one year period (each a "Renewal Term" and collectively with the Initial Term, the "Term") unless Employee or Company notifies the other in writing of its election not to renew, such notice to be provided not less than ninety (90) days prior to the end of the Initial Term or the end of any Renewal Term.
Base Compensation: For the services to be rendered by the Employee under this Agreement the Company shall pay Employee a base salary ("Base Compensation") of Thirty Thousand Dollars ($30,000.00) on a pro-rated basis according to the Company's payroll schedule, exclusive of any dividend payments and subject to applicable withholdings and other payroll deductions.
Bonus Compensation: Upon each anniversary of this Agreement, the Company’s Board of Directors shall determine whether a bonus for the Employee is appropriate.
Other Benefits. Subject to the terms of the plans, Employee shall be entitled to receive such other benefits or rights as may be provided under any employee benefit
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plans provided by the Company to its executives that are now or hereafter adopted, including participation in life, medical, disability and dental insurance plans, vacation and sick leave, expense reimbursement and long-term incentive plans. Notwithstanding anything to the contrary set forth in this Agreement, any restricted stock awards, stock options or other equity incentives of the Company (including, without limitation, those outstanding at the time of termination of employment with the Company) shall be subject to the terms set forth in such long-term incentive plans, as such plan may be in effect from time to time, and in any restricted stock award, stock option or other agreements (including, without limitation, those provisions relating to vesting, exercisability, forefeitability), as may be entered into between Employee and the Company pursuant to such long-term incentive plans. Employee shall continue to be entitled to such paid holidays as are provided to the Company's employees generally.
Vacation: Employee shall be entitled to receive three (3) weeks paid vacation time for each year of employment under this Agreement. Any vacation time which remains unused at the end of a year of employment may be carried over to a succeeding year.
Business Expenses: The Company will reimburse or advance Employee promptly (but not later than thirty (30) days after submittal of appropriate vouchers or receipts) for his reasonable and documented out-of-pocket business expenses for travel, meals and similar items incurred in connection with the performance of Employee's duties (“Business Expenses”), and which are consistent with the Company's general policies in effect regarding the reimbursement of Business Expenses as the Company may from time to time establish. All payments for reimbursement of such expenses shall be made to the Employee only upon the presentation to the Company of appropriate vouchers or receipts. All outstanding Employee requests for reimbursement of Business Expenses shall be paid in full not later than the date of execution of this Agreement.
Confidentiality: Employee agrees to refrain from making any disparaging or unfavorable comments, in writing or orally, about the Company, including but not limited to press releases, communication with employees, vendors, customers, professional references, and others.
Termination of Employment With Cause: In addition to any other remedies available to the Company at law, in equity or as set forth in this Agreement, the Company shall have the right, upon written notice to Employee, to terminate his employment hereunder without any further liability or obligation to him in respect of his employment (other than its obligation to pay Base Compensation, Bonus and vacation time accrued but unpaid as of the date of termination and reimbursement of expenses incurred prior to the date of termination in accordance with Section 3 and 5 above) if Employee: (i) breaches any material provision of this Agreement; or (ii) has committed an act of gross misconduct in connection with the performance of his duties hereunder, as reasonably determined in good faith by the Board of Directors of the Company; or (iii) demonstrates habitual negligence in the performance of his duties, as reasonably determined by the Board of Directors of the Company; or (iv) is convicted of or pleads nolo contendere to any felony; or (v) is convicted of or pleads nolo contendere to any misdemeanor involving moral turpitude and the conduct underlying such misdemeanor has materially adverse or detrimental effect on the Company, its reputation,
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or its business, as reasonably determined by the Board of Directors of the Company; or (vi) has committed any act of fraud, misappropriation of funds or embezzlement in connection with his employment hereunder (a "Termination With Cause").
Notwithstanding the foregoing, no purported Termination With Cause pursuant to (i), (ii) or (iii) of this Section 7(a) shall be effective unless all of the following provisions shall have been complied with: (x) Employee shall be given written notice by the Board of Directors of the Company of the intention to effect a Termination With Cause, such notice to state in detail the particular circumstances that constitute the grounds on which the proposed Termination With Cause is based; and (y) Employee shall have ten (10) business days after receiving such notice in which to cure such grounds, to the extent such cure is possible, as determined in the sole reasonable discretion of the Board of Directors of the Company.
Death; Disability: In the event that Employee dies or becomes Disabled (as defined herein) during the Term, Employee's employment shall terminate when such death or Disability occurs and the Company shall pay Employee (or his legal representative, as the case may be) as follows:
any Base Compensation, Bonus and vacation time accrued but unpaid as of the date of death or termination for Disability; and
any reimbursement for expenses incurred in accordance with Sections 3 and 5;.
For the purposes of this Agreement, Employee shall be deemed to be "Disabled" or have a "Disability" if, because of Employee's personal injury, disability or illness, he has been substantially unable to perform his duties hereunder for sixty (60) days in any one hundred eighty (180) day period. Employee shall be considered to have been substantially unable to perform his duties hereunder only if he is either (i) unable to reasonably and effectively carry out his duties with reasonable accommodations by the Company or (ii) unable to reasonably and effectively carry out his duties because any reasonable accommodation which may be required would cause the Company undue hardship.
Notwithstanding the foregoing, to the extent and for the period required by any state or federal family and medical leave law, upon Employee's request (i) he shall be considered to be on unpaid leave of absence and not terminated, (ii) his group health benefits shall remain in full force and effect, and (iii) if Employee recovers from any such Disability, at that time, to the extent required by any state or federal family and medical leave law, upon Employee's request, he shall be restored to his position hereunder or to an equivalent position, as the Company may reasonably determine, and the Term of Employee's employment hereunder shall be reinstated effective upon such restoration. The Term shall not be extended by reason of such intervening leave of absence or termination, nor shall any compensation or benefits accrue in excess of those required by law during such intervening leave of absence or termination. Upon the expiration of any such rights, unless Employee has been restored to a position with the Company, he shall thereupon be considered terminated.
Employee acknowledges that the payments referred to in both Sections 3 and 5 and this Section 7(b) together with any rights or benefits under any written plan or agreement which have
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vested on or prior to the termination date of Employee's employment under this Section 7(b), constitute the only payments which Employee (or his legal representative, as the case may be) shall be entitled to receive from the Company hereunder in the event of a termination of his employment for death or Disability, and the Company shall have no further liability or obligation to him (or his legal representatives, as the case may be) hereunder or otherwise in respect of his employment.
No Mitigation by Employee. Except as otherwise expressly provided herein, Employee shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for herein be reduced by any compensation earned by Employee as the result of employment by another employer.
Intellectual Property Rights: The Company shall be the owner of all inventions, improvements, designs, methods, plans, computer programs, products, services and other materials (collectively, “Developments”) created by Employee under this Agreement or in which Employee assisted in the creation for the benefit of the Company during the course of employment with the Company under this Agreement. All intellectual property rights in such Developments of the Company, including all patents, trademarks, copyrights, trade secrets and industrial designs, shall be the exclusive property of the Company. In the event that Employee acquires any rights or interests in such Developments of the Company as a result of his work under this Agreement, Employee agrees to assign and by executing this Agreement does assign all such rights and interests to the Company. The Company shall have the exclusive rights to obtain copyright registrations, letters patent, industrial designs, trademark registrations or any other protection in respect of the work products and the intellectual property rights in the Company’s Developments anywhere in the world. At the expense and request of the Company, Employee shall both during and after his employment with the Company, execute all documents and do all other acts necessary in order to enable the Company to protect its rights in the Company’s Developments; provided, however, that Employee shall be entitled to reasonable compensation if he provides such assistance after the term if this Agreement is ended.
Return of Company Property: Employee agrees that following the termination of his employment for any reason, he shall return all property of the Company, its subsidiaries, affiliates and any divisions thereof he may have managed which is then in or thereafter comes into his possession, including, but not limited to, documents, contracts, agreements, plans, photographs, books, notes, electronically stored data and all copies of the foregoing as well as any automobile or other materials or equipment supplied by the Company to Employee.
Each Party, the Drafter: This Agreement and the provisions contained in it shall not be construed or interpreted for or against any party to this Agreement because that party drafted or caused that party's legal representative to draft any of its provisions.
Waiver: The failure of either party to this Agreement to enforce any of its terms, provisions or covenants shall not be construed as a waiver of the same or of the right of such party to enforce the same. Waiver by either party hereto of any breach or default by the other party of any term or provision of this Agreement shall not operate as a waiver of any other breach or default.
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Severability: In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of the Agreement shall not in any way be affected or impaired thereby. Moreover, if any one or more of the provisions contained in this Agreement shall be held to be excessively broad as to duration, activity or subject, such provisions shall be construed by limiting and reducing them so as to be enforceable to the maximum extent allowed by applicable law.
Entire Agreement: The provisions contained herein (including any schedules, exhibits and documents delivered herewith or attached hereto) constitute the entire agreement between the parties hereto with respect to the subject matter hereof.
Independent Counsel: Employee and the Company each acknowledge that each of them has had the opportunity to seek independent legal counsel in connection with entering into this Agreement, and has either done so or has voluntarily chosen not to.
Governing Law: This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to its conflict of law rules.
Descriptive Headings: The paragraph headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
Counterparts: This Agreement may be executed in one or more counterparts, which, together, shall constitute one and the same agreement.
Heilongjiang Jianye New Clean Fuel Marketing Co., Ltd.
By: /s/ Daliang Yang
Name: Dalaing Yang
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Party A: (Supplier) Heilongjiang Jianye New Energy Clean Fuel Marketing Co., Ltd
Party B: (Receiver) Maoming Gangan Petrochemical Co., Ltd
With the principle of equity and honesy, the two parties entered into the contract according to the contract law of People’s Republic of China and ralevant terms.
Name of the product and plant, quantity, amount, delivery time (Note: Payment will be settled by the actual delivery amount):
Vehicle Ethanol Fuel
Receiver’s Shuidong Oil Depot
Before Oct 30, 2009
Total amount in writing
Seventeen Million Nine Hundred and Twenty Thousand (The price are all before the tax)
Delivery time and address: Receiver’s Shuidong Oil Depot.
Means of Transportation: Receiver’s duty
Quality of the goods: According to the national standards
Receipt: Supplier will issue the receipt to the receiver within a month after supplier got the payment.
Inspection standard and inspection method: Inspect based on the national standards.
Payment: Within 3 days after receive the goods
term of validity: From Oct 5 2009 to Oct 30
Breach and dispute settlement: after the contract entered into effect, any party should not cancel or change the contract on the own will. If any dispute exists, should be negociated first, and then be suited to court according to the contract law.
Others: Two copies of the contract, either party holds one. The contract will come into effect after sealed. The copy version will have the same legal effect.
Supplier: Heilongjiang Jianye New Energy Clean Fuel Marketing Co., Ltd
Address: No. 68, Hegu Sreet, Daoli District, Harbin
Tel: 0451-82658227
Receiver: Maoming Gangan Petrochemical Co., Ltd
Address: Fl 7, No. 8, Wenguanger Street, Guanghua South Road, Maoming
Tel: 0668-2830858
Bank: Guangdong Development Bank Maoming Branch Zhaoyang subbranch
Account No.:124202518010000793
Postal Code:525000
It was signed on Oct 5, 2009 in Maoming
THIS AGREEMENT AND PLAN OF SHARE EXCHANGE (hereinafter referred to as the “Agreement”), is entered into as of this 12th day of November, 2009, by and among, GATEWAY CERTIFICATIONS, INC. , a publicly-owned Nevada corporation (“Gateway”), JIANYE GREENTECH HOLDINGS LTD , a corporation organized under the laws of the British Virgin Islands (“JGH”) and the Shareholders of JGH on the signature page hereof (the “JGH Holders”). (Gateway, JGH, and the JGH Holders are sometimes hereinafter collectively referred to as the “Parties” and individually as a “Party.”)
WHEREAS , Gateway is a publicly-owned Nevada corporation with 8,343,000 shares of common stock, par value $0.001 per share (the “Gateway Common Stock”), issued and outstanding is quoted on the Over the Counter Bulletin Board under the symbol “ GWYC ”.
WHEREAS , JGH is a corporation organized under the laws of the British Virgin Islands, the shares of which (the “JGH Shares”), are owned as of the date hereof by all the JGH Holders on the signature page hereto.
WHEREAS , the Parties desire that Gateway acquire all of the JGH Shares from the JGH Holders solely in exchange for an aggregate of 3,548,796 newly issued shares of Gateway Common Stock (the “Exchange Shares”) pursuant to the terms and conditions set forth in this Agreement.
WHEREAS , immediately upon consummation of the Closing (as hereinafter defined), the Exchange Shares will be issued to the JGH Holders on a pro rata basis, in proportion to the ratio that the number JGH Shares held by such JGH Holder bears to the pro rata portion of JGH Shares held by all the JGH Holders as of the date of the Closing as set forth on Schedule I.
WHEREAS , following the Closing, JGH will become a wholly-owned subsidiary of Gateway, and the Exchange Shares will represent approximately eighty-nine percent (89 %) of the total outstanding shares of Common Stock of Gateway on a fully-diluted basis following a forward-split of the Gateway Common Stock on a 7.89 for 1 basis (the “Split”).
WHEREAS , the Parties intend that the transaction contemplated herein (the “Transaction”) qualify as a reorganization and tax-free exchange under Section 368(a) of the Internal Revenue Code of 1986, as amended.
NOW THEREFORE , on the stated premises and for and in consideration of the
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foregoing recitals which are hereby incorporated by reference, the mutual covenants and agreements hereinafter set forth and the mutual benefits to the Parties to be derived herefrom and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Parties hereto agree as follows:
The Exchange. At the Closing (as hereinafter defined), all of the JGH Shares issued and outstanding immediately prior to the Closing Date shall be exchanged for Three Million Five Hundred Forty Eight Thousand Seven Hundred Ninety-Six (3,548,796) shares of Gateway Common Stock. From and after the Closing Date, the JGH Holders shall no longer own any JGH Shares and the former JGH Shares shall represent the pro rata portion of the Exchange Shares issuable in exchange therefor pursuant to this Agreement. Any fractional shares that would result from such exchange will be rounded up to the next highest whole number.
No Dilution. Except as set forth herein, Gateway shall neither effect, nor fix any record date with respect to, any stock split, stock dividend, reverse stock split, recapitalization, or similar change in the Gateway Common Stock between the date of this Agreement and the Effective Time.
Closing. The closing (“Closing”) of the transactions contemplated by this Agreement shall occur immediately following the execution of this Agreement providing the closing conditions set forth in Articles V and VI have been satisfied or waived (the “Closing Date”).
Closing Events. At the Closing, each of the respective parties hereto shall execute, acknowledge, and deliver (or shall cause to be executed, acknowledged, and delivered) any and all stock certificates, officers’ certificates, opinions, financial statements, schedules, agreements, resolutions, rulings, or other instruments required by this Agreement to be so delivered at or prior to the Closing, and the documents and certificates provided in Sections 5.2, 5.4, 6.2, 6.4 and 6.5, together with such other items as may be reasonably requested by the parties hereto and their respective legal counsel in order to effectuate or evidence the transactions contemplated hereby. If agreed to by the parties, the Closing may take place through the exchange of documents (other than the exchange of stock certificates) by fax, email and/or express courier. At the Closing, the Exchange Shares shall be issued in the names and denominations provided by JGH.
Until the earlier of the Closing or December 31, 2009 (the “No Shop Period”), neither JGH nor the JGH Holders will (i) solicit or encourage any offer or enter into any agreement or other understanding, whether written or oral, for the sale, transfer or other disposition of any capital stock or assets of JGH to or with any other entity or person, except as contemplated by the Transaction, other than sales of goods and services by JGH in the ordinary course of its business; (ii) entertain or pursue any unsolicited communication, offer or proposal for any such sale, transfer or other disposition; or (iii) furnish to any person or entity (other than Gateway, and its authorized agents and representatives) any nonpublic information concerning JGH or its business, financial affairs or prospects for the purpose or with the intent of permitting such person or entity to evaluate a possible acquisition of any capital stock or assets of JGH. If either JGH or any of the JGH Holders shall receive any unsolicited communication or offer, JGH or the JGH Holders, as applicable, shall immediately notify Gateway of the receipt of such communication or offer.
During the No-Shop Period, Gateway will not (i) solicit or encourage any offer or enter into any agreement or other understanding, whether written or oral, for the sale, transfer or other disposition of any capital stock or assets of Gateway to or with any other entity or person, except as contemplated herein, other than sales of goods and services by Gateway in the ordinary course of its business; (ii) entertain or pursue any unsolicited communication, offer or proposal for any such sale, transfer or other disposition; or (iii) furnish to any person or entity (other than JGH, and its authorized agents and representatives) any nonpublic information concerning Gateway or its business, financial affairs or prospects for the purpose or with the intent of permitting such person or entity to evaluate a possible acquisition of any capital stock or assets of Gateway. If either Gateway or any of Gateway’s stockholders shall receive any unsolicited communication or offer, Gateway or such Gateway stockholder, as applicable, shall immediately notify JGH of the receipt of such communication or offer.
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF JGH
As an inducement to, and to obtain the reliance of Gateway, JGH represents and warrants as follows:
Organization. JGH is a corporation duly organized, validly existing, and in good standing under the laws of the British Virgin Islands. JGH has the power and is duly authorized, qualified, franchised, and licensed under all applicable laws, regulations, ordinances, and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is
now being conducted, including qualification to do business as a foreign corporation in jurisdictions in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement in accordance with the terms hereof will not, violate any provision of JGH’s organizational documents. JGH has taken all action required by laws, its Articles of Association, certificate of business registration, or otherwise to authorize the execution and delivery of this Agreement. JGH has full power, authority, and legal right and has taken or will take all action required by law, its Articles of Association, and otherwise to consummate the transactions herein contemplated.
Capitalization. All issued and outstanding shares of JGH are legally issued, fully paid, and non-assessable and were not issued in violation of the pre-emptive or other rights of any person. JGH has no outstanding options, warrants, or other convertible securities.
Financial Statements. Except as set forth herein or in the JGH Schedules:
JGH has filed all local income tax returns required to be filed by it from its inception to the date hereof. All such returns are complete and accurate in all material respects.
JGH has no liabilities with respect to the payment of federal, county, local, or other taxes (including any deficiencies, interest, or penalties), except for taxes accrued but not yet due and payable, for which JGH may be liable in its own right or as a transferee of the assets of, or as a successor to, any other corporation or entity.
No deficiency for any taxes has been proposed, asserted or assessed against JGH. There has been no tax audit, nor has there been any notice to JGH by any taxing authority regarding any such tax audit, or, to the knowledge of JGH, is any such tax audit threatened with regard to any taxes or JGH tax returns. JGH does not expect the assessment of any additional taxes of JGH for any period prior to the date hereof and has no knowledge of any unresolved questions concerning the liability for taxes of JGH.
JGH shall have provided to Gateway the audited balance sheet of JGH as of, and the audited statements of income, stockholders’ equity and cash flows of JGH for the period ended September 30, 2009, and the unaudited balance sheet statements of income, stockholders’ equity and cash flows of JGH for the nine months ended September 30, 2009 (collectively “JGH Financial Statements”). The JGH Financial Statements have been prepared from the books and records of JGH in accordance with U.S.
Generally Accepted Accounting Principals. Except as set forth in the JGH Schedules (as that term is defined herein), JGH does not have any liabilities
The books and records, financial and otherwise, of JGH are in all material respects complete and correct and have been maintained in accordance with good business and accounting practices.
Information. The information concerning JGH set forth in this Agreement and the JGH Schedules (as that term is defined herein) are and will be complete and accurate in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading as of the date hereof and as of the Closing Date.
Common Stock Equivalents. There are no existing options, warrants, calls, commitments of any character or other common stock equivalents relating to the authorized and unissued JGH Shares.
Absence of Certain Changes or Events. Except as set forth in this Agreement or the JGH Schedules:
except in the normal course of business, there has not been (i) any material adverse change in the business, operations, properties, assets, or condition of JGH; or (ii) any damage, destruction, or loss to JGH (whether or not covered by insurance) materially and adversely affecting the business, operations, properties, assets, or condition of JGH;
JGH has not (i) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) not otherwise in the ordinary course of business, ; (ii) paid any material obligation or liability not otherwise in the ordinary course of business (absolute or contingent) other than current liabilities reflected in or shown on the most recent JGH consolidated balance sheet, and current liabilities incurred since that date in the ordinary course of business; (iii) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights not otherwise in the ordinary course of business; (iv) made or permitted any amendment or termination of any contract, agreement, or license to which they are a party not otherwise in the ordinary course of business if such amendment or termination is material, considering the business of JGH; or (v) issued, delivered, or agreed to issue or deliver any stock, bonds or other corporate securities including debentures (whether authorized and unissued or held as treasury stock).
Litigation and Proceedings. There are no actions, suits, proceedings, or investigations pending or, to the knowledge of JGH, threatened by or against JGH, or affecting JGH, or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind.
No Conflict With Other Instruments. The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, or constitute an event of default under, any material indenture, mortgage, deed of trust, or other material contract, agreement, or instrument to which JGH is a party or to which any of its properties or operations are subject.
Contracts. JGH has provided, or will provide Gateway, copies of all material contracts, agreements, franchises, license agreements, or other commitments to which JGH is a party or by which it or any of its assets, products, technology, or properties are bound.
Compliance With Laws and Regulations. JGH has complied with all applicable statutes and regulations of any national, county, or other governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets, or condition of JGH.
Approval of Agreement. The board of directors of JGH (the “JGH Board”) and the JGH Holders have authorized the execution and delivery of this Agreement by JGH and have approved the transactions contemplated hereby.
Title and Related Matters. JGH has good and marketable title to all of its properties, interest in properties, and assets, real and personal, which are reflected in the JGH balance sheet or acquired after that date (except properties, interest in properties, and assets sold or otherwise disposed of since such date in the ordinary course of business), free and clear of all liens, pledges, charges, or encumbrances except: statutory liens or claims not yet delinquent; and as described in the JGH Schedules.
Governmental Authorizations. JGH has all licenses, franchises, permits, and other government authorizations, that are legally required to enable it to conduct its business operations in all material respects as conducted on the date hereof. Except for compliance with federal and state securities or corporation laws, as hereinafter provided, no authorization, approval, consent, or order of, or registration, declaration, or filing with, any court or other governmental body is required in connection with the execution and delivery by JGH of this Agreement and the consummation by JGH of the
Continuity of Business Enterprises. JGH has no commitment or present intention to liquidate JGH or sell or otherwise dispose of a material portion of its business or assets following the consummation of the transactions contemplated hereby.
Ownership of JGH Membership Interests. The JGH Holders are the legal and beneficial owners of 100% of the JGH Shares as set forth on Schedule I, free and clear of any claims, charges, equities, liens, security interests, and encumbrances whatsoever, and the JGH Holders have full right, power, and authority to transfer, assign, convey, and deliver their respective JGH Shares; and delivery of such common stock at the Closing will convey to Gateway good and marketable title to such shares free and clear of any claims, charges, equities, liens, security interests, and encumbrances except for any such claims, charges, equities, liens, security interests, and encumbrances arising out of such shares being held by Gateway.
Brokers. JGH has not entered into any contract with any person, firm or other entity that would obligate JGH or Gateway to pay any commission, brokerage or finders’ fee in connection with the transactions contemplated herein.
Subsidiaries and Predecessor Corporations. Except as set forth in Schedule 2.17 hereof, JGH does not have any subsidiaries and does not own, beneficially or of record, any shares or other equity interests of any other corporation or entity.
REPRESENTATIONS , COVENANTS, AND WARRANTIES OF GATEWAY
As an inducement to, and to obtain the reliance of JGH, Gateway represents and warrants as follows:
Organization. Gateway is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada, and has the corporate power and is duly authorized, qualified, franchised, and licensed under all applicable laws, regulations, ordinances, and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, and there is no jurisdiction in which it is not qualified in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification. Included in the Gateway Schedules (as hereinafter defined) are complete and correct
copies of the Articles of Incorporation and bylaws of Gateway, and all amendments thereto, as in effect on the date hereof. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of Gateway’s Articles of Incorporation or bylaws. Gateway has taken all action required by law, its Articles of Incorporation, its bylaws, or otherwise to authorize the execution and delivery of this Agreement, and Gateway has full power, authority, and legal right and has taken all action required by law, its Articles of Incorporation, bylaws, or otherwise to consummate the transactions herein contemplated.
Capitalization. Gateway’s authorized capitalization consists of 50,000,000 shares of Common Stock, of which no more than 8,343,000 shares will be issued and outstanding at Closing. All presently issued and outstanding shares are legally issued, fully paid, and non-assessable and not issued in violation of the pre-emptive or other rights of any person. The Exchange Shares will be legally issued, fully paid and non-assessable and shall not be issued in violation of the pre-emptive or other rights of any other person.
Financial Statements. Except as described herein or in the Gateway Schedules:
Gateway has no liabilities with respect to the payment of any federal, state, county, local, or other taxes (including any deficiencies, interest, or penalties), except for taxes accrued but not yet due and payable, for which Gateway may be liable in its own right, or as a transferee of the assets of, or as a successor to, any other corporation or entity.
Gateway has filed all federal, state, or local income tax returns required to be filed by it from inception.
The books and records, financial and otherwise, of Gateway are in all material respects complete and correct and have been maintained in accordance with good business and accounting practices.
No deficiency for any taxes has been proposed, asserted or assessed against Gateway. There has been no tax audit, nor has there been any notice to Gateway by any taxing authority regarding any such tax audit, or, to the knowledge of Gateway, is any such tax audit threatened with regard to any taxes or Gateway tax returns. Gateway does not expect the assessment of any additional taxes of Gateway for any period prior to the date hereof and has no knowledge of any unresolved questions concerning the liability for taxes of Gateway.
Gateway has good and marketable title to its assets and, except as set forth in the Gateway Schedules, has no material contingent liabilities, direct or indirect, matured or unmatured.
Information. The information concerning Gateway set forth in this Agreement and the Gateway Schedules are and will be complete and accurate in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading as of the date hereof and as of the Closing Date.
Common Stock Equivalents. Except as set forth herein, there are no existing options, warrants, calls, and commitments of any character or other common stock equivalents relating to authorized and unissued stock of Gateway.
Absence of Certain Changes or Events. Except as described herein or in the Gateway Schedules:
There has not been (i) any material adverse change, financial or otherwise, in the business, operations, properties, assets, or condition of Gateway (whether or not covered by insurance) materially and adversely affecting the business, operations, properties, assets, or condition of Gateway;
Gateway has not (i) amended its Articles of Incorporation or By-Laws; (ii) declared or made, or agreed to declare or make any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii) waived any rights of value which in the aggregate are extraordinary or material considering the business of Gateway; (iv) made any material change in its method of management, operation, or accounting; (v) entered into any other material transactions; (vi) made any accrual or arrangement for or payment of bonuses or special compensation of any kind or any severance or termination pay to any present or former officer or employee; (vii) increased the rate of compensation payable or to become payable by it to any of its officers or directors or any of its employees; or (viii) made any increase in any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement, made to, for, or with its officers, directors, or employees;
Gateway has not (i) granted or agreed to grant any options, warrants, or other rights for its stocks, bonds, or other corporate securities calling for the issuance thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability
(absolute or contingent) except liabilities incurred in the ordinary course of business; (iii) paid or agreed to pay any material obligation or liability (absolute or contingent) other than current liabilities reflected in or shown on the most recent Gateway balance sheet and current liabilities incurred since that date in the ordinary course of business and professional and other fees and expenses incurred in connection with the preparation of this Agreement and the consummation of the transactions contemplated hereby; (iv) sold or transferred, or agreed to sell or transfer, any of its assets, property, or rights (except assets, property, or rights not used or useful in its business which, in the aggregate have a value of less than $50,000), or canceled, or agreed to cancel, any debts or claims (except debts or claims which in the aggregate are of a value of less than $5,000); (v) made or permitted any amendment or termination of any contract, agreement, or license to which it is a party if such amendment or termination is material, considering the business of Gateway; or (vi) issued, delivered, or agreed to issue or deliver any stock, bonds, or other corporate securities including debentures (whether authorized and unissued or held as treasury stock), except in connection with this Agreement;
Gateway has no assets, liabilities or accounts payable of any kind or nature, actual or contingent, in excess of $5,000 in the aggregate as of the Closing Date; and
To the best knowledge of Gateway, it has not become subject to any law or regulation which materially and adversely affects, or in the future may adversely affect, the business, operations, properties, assets, or condition of Gateway.
Title and Related Matters. Gateway has good and marketable title to all of its properties, interest in properties, and assets, real and personal, which are reflected in the Gateway balance sheet or acquired after that date (except properties, interest in properties, and assets sold or otherwise disposed of since such date in the ordinary course of business), free and clear of all liens, pledges, charges, or encumbrances except:
statutory liens or claims not yet delinquent;
such imperfections of title and easements as do not and will not materially detract from or interfere with the present or proposed use of the properties subject thereto or affected thereby or otherwise materially impair present business operations on such properties; and
as described in the Gateway Schedules.
Litigation and Proceedings. There are no actions, suits, or proceedings pending or, to the knowledge of Gateway, threatened by or against or affecting Gateway, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind.
Contracts. Gateway is not a party to any material contract, agreement, or other commitment, except as specifically disclosed in its schedules to this Agreement.
No Conflict With Other Instruments. The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, or constitute a default under, any indenture, mortgage, deed of trust, or other material agreement or instrument to which Gateway is a party or to which it or any of its assets or operations are subject.
Governmental Authorizations. Gateway is not required to have any licenses, franchises, permits, and other government authorizations, that are legally required to enable it to conduct its business operations in all material respects as conducted on the date hereof. Except for compliance with federal and state securities or corporation laws, as hereinafter provided, no authorization, approval, consent, or order of, or registration, declaration, or filing with, any court or other governmental body is required in connection with the execution and delivery by Gateway of this Agreement and the consummation by Gateway of the transactions contemplated hereby.
Compliance With Laws and Regulations. To the best of its knowledge, Gateway has complied with all applicable statutes and regulations of any federal, state, or other applicable governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets, or conditions of Gateway or except to the extent that noncompliance would not result in the incurrence of any material liability.
Insurance. Gateway owns no insurable properties and carries no casualty or liability insurance.
Approval of Agreement. The board of directors of Gateway (the “Gateway Board”) has authorized the execution and delivery of this Agreement by Gateway and has approved this Agreement and the transactions contemplated hereby.
Material Transactions of Affiliations. Except as disclosed herein and in the Gateway Schedules, there exists no material contract, agreement, or arrangement between Gateway and any
person who was at the time of such contract, agreement, or arrangement an officer, director, or person owning of record or known by Gateway to own beneficially, 10% or more of the issued and outstanding common stock of Gateway and which is to be performed in whole or in part after the date hereof or was entered into not more than three years prior to the date hereof. Neither any officer, director, nor 10% stockholder of Gateway has, or has had during the last preceding full fiscal year, any known interest in any material transaction with Gateway which was material to the business of Gateway. Gateway has no commitment, whether written or oral, to lend any funds to, borrow any money from, or enter into any other material transaction with any such affiliated person.
Employment Matters. Gateway has no employees other than its executive officers.
Gateway Schedules. Prior to the Closing, Gateway shall have delivered to JGH the following schedules, which are collectively referred to as the “Gateway Schedules,” which are dated the date of this Agreement, all certified by an officer to be complete, true, and accurate:
a schedule containing complete and accurate copies of the Articles of Incorporation and by-laws, as amended, of Gateway as in effect as of the date of this Agreement;
a schedule containing a copy of the federal income tax returns of Gateway identified in Section 3.3(b); and
a schedule setting forth any other information, together with any required copies of documents, required to be disclosed in the Gateway Schedules.
Brokers. Gateway has not entered into any contract with any person, firm or other entity that would obligate JGH or Gateway to pay any commission, brokerage or finders’ fee in connection with the transactions contemplated herein.
Subsidiaries. Gateway does not have any subsidiaries and does not own, beneficially or of record, any shares or other equity interests of any other corporation or other entity.
Name Change / Forward-Split. As soon as practicable following the Closing, Gateway shall effectuate a forward-slit of its Common Stock on a 7.89 -for-1 basis (the “Split”) and file an
amendment to its Articles of Incorporation to change the name of Gateway to “American Jianye Greentech Holdings Ltd.” or such similar name as is available.
Retirement Condition. As soon as practicable following the Closing, Gateway shall have retired and canceled on the books and records of Gateway 7,950,000 shares of Gateway Common Stock.
Actions of Gateway Shareholders. Prior to the Closing, Gateway shall cause the following actions to be taken by the written consent of the holders of a majority of the outstanding shares of common stock of Gateway:
the approval of this Agreement and the transactions contemplated hereby and thereby; and
such other actions as the directors may determine are necessary or appropriate.
Actions of JGH. Prior to the Closing, JGH shall cause the following actions to be taken by the written consent of the holders of a majority of the outstanding shares of common stock of JGH:
Access to Properties and Records. Gateway and JGH will each afford to the officers and authorized representatives of the other reasonable access to the properties, books, and records of Gateway or JGH in order that each may have full opportunity to make such reasonable investigation as it shall desire to make of the affairs of the other, and each will furnish the other with such additional financial and operating data and other information as to the business and properties of Gateway or JGH as the other shall from time to time reasonably request.
Delivery of Books and Records. At the Closing, Gateway shall deliver to JGH, the originals of the corporate minute books, books of account, contracts, records, and all other books or documents of Gateway now in the possession or control of Gateway or its representatives and agents.
Actions Prior to Closing by both Parties.
From and after the date of this Agreement until the Closing Date and except as set forth in the Gateway or JGH Schedules or as permitted or contemplated by this Agreement, Gateway
and JGH will each: (i) carry on its business in substantially the same manner as it has heretofore; (ii) maintain and keep its properties in states of good repair and condition as at present, except for depreciation due to ordinary wear and tear and damage due to casualty; (iii) maintain in full force and effect insurance comparable in amount and in scope of coverage to that now maintained by it; (iv) perform in all material respects all of its obligation under material contracts, leases, and instruments relating to or affecting its assets, properties, and business; (v) use its best efforts to maintain and preserve its business organization intact, to retain its key employees, and to maintain its relationship with its material suppliers and customers; and (vi) fully comply with and perform in all material respects all obligations and duties imposed on it by all federal and state laws and all rules, regulations, and orders imposed by federal or state governmental authorities.
Except as set forth herein, from and after the date of this Agreement until the Closing Date, neither Gateway nor JGH will: (i) make any change in their organizational documents, charter documents or bylaws; (ii) take any action described in Section 2.6 in the case of JGH, or in Section 3.6, in the case of Gateway (all except as permitted therein or as disclosed in the applicable party’s schedules); (iii) enter into or amend any contract, agreement, or other instrument of any of the types described in such party’s schedules, except that a party may enter into or amend any contract, agreement, or other instrument in the ordinary course of business involving the sale of goods or services, or (iv) make or change any material tax election, settle or compromise any material tax liability or file any amended tax return.
JGH hereby agrees to indemnify Gateway and each of the officers, agents and directors of Gateway as of the date of execution of this Agreement against any loss, liability, claim, damage, or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever), to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentation made in Article II. The indemnification provided for in this paragraph shall not survive the Closing and consummation of the transactions contemplated hereby but shall survive the termination of this Agreement pursuant to Section 7.1(b) of this Agreement.
Gateway hereby agrees to indemnify JGH and each of the officers, agents and directors of JGH as of the date of execution of this Agreement against any loss, liability, claim, damage, or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in
investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever), to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentation made under Article III. The indemnification provided for in this paragraph shall not survive the Closing and consummation of the transactions contemplated hereby but shall survive the termination of this Agreement pursuant to Section 7.1(c) of this Agreement.
CONDITIONS PRECEDENT TO OBLIGATIONS OF GATEWAY
The obligations of Gateway under this Agreement are subject to the satisfaction, at or before the Closing, of the following conditions:
Accuracy of Representations; Performance. The representations and warranties made by JGH in this Agreement were true when made and shall be true at the Closing Date with the same force and effect as if such representations and warranties were made at and as of the Closing Date (except for changes therein permitted by this Agreement), and JGH shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied with by JGH prior to or at the Closing. Gateway may request to be furnished with a certificate, signed by a duly authorized officer of JGH and dated the Closing Date, to the foregoing effect.
Officer’s Certificates. Gateway shall have been furnished with a certificate dated the Closing Date and signed by a duly authorized officer of JGH to the effect that no litigation, proceeding, investigation, or inquiry is pending or, to the best knowledge of JGH threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement, or, to the extent not disclosed in the JGH Schedules, by or against JGH which might result in any material adverse change in any of the assets, properties, business, or operations of JGH.
No Material Adverse Change. Prior to the Closing Date, there shall not have occurred any material adverse change in the financial condition, business, or operations of JGH, nor shall any event have occurred which, with the lapse of time or the giving of notice, may cause or create any material adverse change in the financial condition, business, or operations.
Gateway shall have received such further documents, certificates, or instruments relating to the transactions contemplated hereby as Gateway may reasonably request.
Complete and satisfactory due diligence review of JGH by Gateway.
Approval of the Transaction by the JGH Board and the JGH Holders.
Any necessary third-party consents shall be obtained prior to Closing, including but not limited to consents necessary from JGH’s lenders, creditors, vendors and lessors.
CONDITIONS PRECEDENT TO OBLIGATIONS OF JGH
The obligations of JGH under this Agreement are subject to the satisfaction, at or before the Closing, of the following conditions:
Accuracy of Representations; Performance. The representations and warranties made by Gateway in this Agreement were true when made and shall be true as of the Closing Date (except for changes therein permitted by this Agreement) with the same force and effect as if such representations and warranties were made at and as of the Closing Date, and Gateway shall have performed and complied with all covenants and conditions required by this Agreement to be performed or complied with by Gateway prior to or at the Closing. JGH shall have been furnished with a certificate, signed by a duly authorized executive officer of Gateway and dated the Closing Date, to the foregoing effect.
Officer’s Certificate. JGH shall have been furnished with a certificate dated the Closing Date and signed by a duly authorized executive officer of Gateway to the effect that no litigation, proceeding, investigation, or inquiry is pending or, to the best knowledge of Gateway threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement.
No Material Adverse Change. Prior to the Closing Date, there shall not have occurred any material adverse change in the financial condition, business, or operations of Gateway nor shall any event have occurred which, with the lapse of time or the giving of notice, may cause or create any material adverse change in the financial condition, business, or operations of Gateway.
Good Standing. JGH shall have received a certificate of good standing from the Secretary of State of the State of Nevada or other appropriate office, dated as of a date within ten days prior to the Closing Date certifying that Gateway is in good standing as a corporation in the State of Nevada and has filed all tax returns required to have been filed by it to date and has paid all taxes reported as due thereon.
JGH shall have received a stockholder list of Gateway containing the name, address, and number of shares held by each Gateway stockholder as of the date of Closing certified by an executive officer of Gateway as being true, complete, and accurate by Gateway transfer agent.
JGH shall have received such further documents, certificates, or instruments relating to the transactions contemplated hereby as JGH may reasonably request.
Complete and satisfactory due diligence review of Gateway by JGH.
Approval of the Transaction by the Gateway Board and the stockholders of Gateway.
There shall have been no material adverse changes in Gateway, financial or otherwise.
There shall be no Gateway Common Stock Equivalents outstanding as of immediately prior to the Closing. For purposes of the foregoing, “Gateway Common Stock Equivalents” shall mean any subscriptions, warrants, options or other rights or commitments of any character to subscribe for or purchase from Gateway, or obligating Gateway to issue, any shares of any class of the capital stock of Gateway or any securities convertible into or exchangeable for such shares.
Any necessary third-party consents shall be obtained prior to Closing, including but not limited to consents necessary from Gateway’s lenders, creditors; vendors, and lessors.
This Agreement may be terminated by either the JGH Board or the Gateway Board at any time prior to the Closing Date if: (i) there shall be any actual or threatened action or proceeding before any court or any governmental body which shall seek to restrain, prohibit, or invalidate the transactions contemplated by this Agreement and which, in the judgment of such board of directors, made in good faith and based on the advice of its legal counsel, makes it inadvisable to proceed with the exchange contemplated by this Agreement; (ii) any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is required to consummate such transactions or in the judgment of such board of directors, made in good faith and based on the advice of counsel, there is substantial likelihood that any such approval will not be obtained or will be obtained only on a condition or conditions which would be unduly burdensome, making it inadvisable to proceed with the exchange; (iii) there shall have been any change after the date of the latest balance sheets of JGH and Gateway, respectively, in the assets, properties, business, or financial condition of JGH and Gateway, which could have a materially adverse affect on the value of the business of JGH and Gateway respectively, except any changes disclosed in the JGH and Gateway Schedules, as the case may be, dated as of the date of execution of this Agreement. In the event of termination pursuant to this paragraph (a) of Section 7.1, no obligation, right, or liability shall arise hereunder, and each party shall bear all of the expenses incurred by it in connection with the negotiation, drafting, and execution of this Agreement and the transactions herein contemplated; (iv) the Closing Date shall not have occurred by December 31, 2009; or (v) if Gateway shall not have provided responses satisfactory in JGH’s reasonable judgment to JGH’s request for due diligence materials.
This Agreement may be terminated at any time prior to the Closing by action of the Gateway Board if JGH shall fail to comply in any material respect with any of its covenants or agreements contained in this Agreement or if any of the representations or warranties of JGH contained herein shall be inaccurate in any material respect, and, in either case if such failure is reasonably subject to cure, it remains uncured for seven days after notice of such failure is provided to JGH. If this Agreement is terminated pursuant to this paragraph (b) of Section 7.1, this Agreement shall be of no further force or effect, and no obligation, right, or liability shall arise hereunder, except that JGH shall bear its own costs as well as the costs incurred by Gateway in connection with the negotiation, preparation, and execution of this Agreement and qualifying the offer and sale of securities contemplated hereby for exemption from the registration requirements of state and federal securities laws.
This Agreement may be terminated at any time prior to the Closing by action of the JGH Board if Gateway shall fail to comply in any material respect with any of its covenants or agreements contained in this Agreement or if any of the representations or warranties of Gateway contained herein shall be inaccurate in any material respect, and, in either case if such failure is reasonably subject to cure, it remains uncured for seven days after notice of such failure is provided to Gateway. If this Agreement is terminated pursuant to this paragraph (c) of Section 7.1, this Agreement shall be of no further force or effect, and no obligation, right, or liability shall arise hereunder, except that Gateway shall bear its own costs as well as the costs of JGH incurred in connection with the negotiation, preparation, and execution of this Agreement.
Governing Law. This Agreement shall be governed by, enforced, and construed under and in accordance with the laws of the United States of America and, with respect to matters of state law, with the laws of Nevada. Any dispute arising under or in any way related to this Agreement will be submitted to binding arbitration before a single arbitrator by the American Arbitration Association in accordance with the Association’s commercial rules then in effect. The arbitration will be conducted in New York, New York. The decision of the arbitrator will set forth in reasonable detail the basis for the decision and will be binding on the parties. The arbitration award may be confirmed by any court of competent jurisdiction.
Notices. Any notices or other communications required or permitted hereunder shall be sufficiently given if personally delivered to it or sent by registered mail or certified mail, postage prepaid, or by prepaid telegram and any such notice or communication shall be deemed to have been given as of the date so delivered, mailed, or telegraphed.
Attorney’s Fees. In the event that any party institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the breaching party or parties shall reimburse the non-breaching party or parties for all costs, including reasonable attorneys’ fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein.
Confidentiality. Gateway, on the one hand, and JGH and the JGH Holders, on the other hand, will keep confidential all information and materials regarding the other Party designated by such Party as confidential. The provisions of this Section 8.4 shall not apply to any information which is or shall become part of the public domain through no fault of the Party subject to the obligation from a third party with a right to disclose such information free of obligation of confidentiality. Gateway and JGH agree that no public disclosure will be made by either Party of the existence of the Transaction or the letter of intent or any of its terms without first advising the other Party and obtaining its prior written consent to the proposed disclosure, unless such disclosure is required by law, regulation or stock exchange rule.
Expenses. Except as otherwise set forth herein, each party shall bear its own costs and expenses associated with the transactions contemplated by this Agreement. Without limiting the generality of the foregoing, all costs and expenses incurred by JGH and Gateway after the Closing shall
be borne by the surviving entity. After the Closing, the costs and expenses of the JGH Holders shall be borne by the JGH Holders.
Schedules; Knowledge. Each party is presumed to have full knowledge of all information set forth in the other party’s schedules delivered pursuant to this Agreement.
Third Party Beneficiaries. This contract is solely between Gateway, JGH and the JGH Holders, and, except as specifically provided, no director, officer, stockholder, employee, agent, independent contractor, or any other person or entity shall be deemed to be a third party beneficiary of this Agreement.
Entire Agreement. This Agreement represents the entire agreement between the parties relating to the transaction. There are no other courses of dealing, understandings, agreements, representations, or warranties, written or oral, except as set forth herein.
Survival. The representations and warranties of the respective parties shall survive the Closing Date and the consummation of the transactions herein contemplated.
Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument.
Amendment or Waiver. Every right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity, and may be enforced concurrently herewith, and no waiver by any party of the performance of any obligation by the other shall be construed as a waiver of the same or any other default then, theretofore, or thereafter occurring or existing. At any time prior to the Closing Date, this Agreement may be amended by a writing signed by all parties hereto, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance hereof may be extended by a writing signed by the party or parties for whose benefit the provision is intended.
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IN WITNESS WHEREOF , the corporate parties hereto have caused this Agreement to be executed by their respective officers, hereunto duly authorized, as of the date first above-written.
Name: Lawrence Williams, Jr.
JIANYE GREENTECH HOLDINGS LTD. SHAREHOLDERS:
JGH Shares
Number of Gateway
Mailing Address: 136-20 38th Ave. Unit 3G, Flushing, NY 11354
ID: 27-1162854
SCHEDULE 2.17
Heilongjiang Jianye New Clean Fuel Marketing Co., Ltd=
ASSET DIVESTITURE AGREEMENT
This Asset Divestiture Agreement (the "Agreement") is entered into as of November 6, 2009, between GATEWAY CERTIFICATIONS, INC., a Nevada corporation ("Gateway"), and [___________] (the “Acquirer”) (each a “Party”, collectively, the “Parties”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in Article III hereof.
WHEREAS , Gateway is a party to an Agreement and Plan of Exchange Agreement of even date herewith (the “Exchange Agreement”), with Jianye Greentech Holdings Ltd., a corporation organized under the laws of the British Virgin Islands (“Jianye”) and the shareholders of Jianye, pursuant to which all of the Jianye’s shares of common stock issued and outstanding shall be exchanged (the “Exchange”) for Three Million Two Hundred Thirty Six Thousand Nine Hundred Forty Four (3,236,944) shares of Gateway common stock, par value $0.001 per share (the “Common Stock”);
WHEREAS , it is further intended between the Parties that certain of the assets of Gateway (the “Acquirer Assets”) shall be transferred to the Acquirer in exchange for the assumption by the Acquirer of any and all liabilities associated therewith and the retirement and cancellation by Gateway of an aggregate of 7,950,000 shares of its Common Stock;
NOW, THEREFORE , in consideration of the mutual covenants and agreements set forth below, and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:
"Action". Action means any demand, action, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any federal, state, local, foreign or international governmental authority or any arbitration or mediation tribunal.
“Assets". Assets means assets, properties and rights (including goodwill), wherever located (including in the possession of vendors or other third parties or elsewhere), whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person, including the following:
(i) all accounting and other books, records and files whether in paper, microfilm, microfiche, computer tape or disc, magnetic tape or any other form;
{Client\002709\S165\00224108.DOC;3}
(ii) all apparatus, computers and other electronic data processing equipment, automobiles, trucks, aircraft, rolling stock, vessels, motor vehicles and other transportation equipment, special and general tools, test devices, prototypes and models and other tangible personal property, but excluding fixtures, machinery, equipment, furniture and office equipment;
(iii) all inventories of materials, parts, raw materials, supplies, work-in-process and finished goods and products;
(iv) all interests in real property of whatever nature, including easements, whether as owner, mortgagee or holder of a Security Interest, lessor, sublessor, lessee, sublessee or otherwise;
(vi) all interests in any capital stock or other equity interests of any Subsidiary or any other Person; all bonds, notes, debentures or other securities issued by any Subsidiary or any other Person; all loans, advances or other extensions of credit or capital contributions to any Subsidiary or any other Person; and all other investments in securities of any Person;
(vii) all license agreements, leases of personal property, open purchase orders for raw materials, supplies, parts or services, unfilled orders for the manufacture and sale of products and other contracts, agreements or commitments;
(vii) all deposits, letters of credit and performance and surety bonds;
(viii) all written technical information, data, specifications, research and development information, engineering drawings, operating and maintenance manuals, and materials and analyses prepared by consultants and other third parties;
(ix) all Intellectual Property and licenses from third Persons granting the right to use any Intellectual Property;
(x) all computer applications, programs and other software, including operating software, network software, firmware, middleware, design software, design tools, systems documentation and instructions;
(xi) all cost information, sales and pricing data, customer prospect lists, supplier records, customer and supplier lists, customer and vendor data, correspondence and lists, product literature, artwork, design, development and manufacturing files, vendor and customer drawings, formulations and specifications, quality records and reports and other books, records, studies, surveys, reports, plans and documents;
(xii) all prepaid expenses, trade accounts and other accounts and notes receivables;
(xiii) all rights under contracts or agreements, all claims or rights against any Person arising from the ownership of any Asset, all rights in connection with any bids or offers and all claims, choses in action or similar rights, whether accrued or contingent;
(xiv) all rights under insurance policies and all rights in the nature of insurance, indemnification or contribution;
(xv) all licenses (including radio and similar licenses), permits, approvals and authorizations which have been issued by any Governmental Authority;
(xvi) cash or cash equivalents, bank accounts, lock boxes and other deposit arrangements; and
(xvi) interest rate, currency, commodity or other swap, collar, cap or other hedging or similar agreements or arrangements.
Section 1.3 " Contracts ". Contracts means any contract, agreement, lease, license, sales order, purchase order, instrument or other commitment that is binding on any Person or any part of its property under applicable law.
Section 1.4 " Governmental Approvals ". Governmental Approvals means any notices, reports or other filings to be made, or any consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Authority.
Section 1.5 “ Governmental Authority” . Governmental Authority means any federal, state, local, foreign or international court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority.
Section 1.6 " Insurance Policies ". Insurance Policies means insurance policies pursuant to which a Person makes a true risk transfer to an insurer.
Section 1.7 " Intellectual Property ". Intellectual Property means all domestic and foreign patents and patent applications, together with any continuations, continuations-in-part or divisional applications thereof, and all patents issuing thereon (including reissues, renewals and re-examinations of the foregoing); design patents, invention disclosures; mask works; copyrights, and copyright applications and registrations; internet addresses, trademarks, service marks, trade names, and trade dress, in each case together with any applications and registrations therefor and all appurtenant goodwill relating thereto; trade secrets, commercial and technical information, know-how, proprietary or confidential information, including engineering, production and other designs, notebooks, processes, drawings, specifications, formulae, and technology; computer and electronic data processing programs and software (object and sourcecode), data bases and documentation thereof; inventions (whether patented or not); utility models; registered designs, certificates of invention and all other intellectual property under the laws of any country throughout the world.
Section 1.8 " Liabilities ". Liabilities means all debts, liabilities, guarantees, assurances, commitments and obligations, whether fixed, contingent or absolute, asserted or unasserted, matured or unmatured, liquidated or unliquidated, accrued or not accrued, known or unknown, due or to become due, whenever or however arising (including, without limitation, whether arising out of any Contract or tort based on negligence or strict liability) and whether or not the same would be required by generally accepted principles and accounting policies to be reflected in financial statements or disclosed in the notes thereto.
Section 1.9 " Person ". Person means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.
Section 1.10 " Security Interest ". Security Interest means any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever.
Section 1.11 " Separation ". Separation means the transfer and contribution from Gateway to Acquirer, and Acquirer’s receipt and assumption, directly or indirectly, of the Acquirer Assets and Liabilities.
Section 1.12 " Separation Date ". Separation Date means the effective date and time of each transfer of property, assumption of liability, license, undertaking, or agreement in connection with the Separation, which shall be 9:01 a.m., Pacific Time, November 5, 2009, or such date as may be fixed by the Board of Directors of Gateway.
Section 2.1 Contribution of Excluded Assets and Assumption of Liabilities.
Transfer of Assets. Effective on the Separation Date, Gateway hereby assigns, transfers, conveys and delivers to the Acquirer, and the Acquirer hereby accepts from Gateway, all of Gateway's right, title and interest in the Acquirer Assets, provided that Gateway shall have effectuated the Exchange prior to the Separation Date as defined in Section 1.2(a). Any Acquirer Assets that are specifically excluded from transfer pursuant to this Agreement shall not be assigned or transferred pursuant to this Section 1.1(a).
Assumption of Liabilities. Effective on the Separation Date, the Acquirer hereby assumes and agrees faithfully to perform and fulfill all the Acquirer Liabilities (as defined in Section 1.3(a)) owed by Gateway, associated with the Acquirer Assets, in accordance with their respective terms. Thereafter, the Acquirer shall be responsible for all the Acquirer Liabilities associated with the Acquirer Assets, regardless of when or where such Liabilities arose or arise,
or whether the facts on which they are based occurred prior to, on or after the date hereof, regardless of where or against whom such Liabilities are asserted or determined or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of law, fraud or misrepresentation by Gateway or the Acquirer or any of their respective directors, officers, employees or agent.
(c) Cancellation of Notes. Notwithstanding anything to the contrary contained herein, effective on the Separation Date, the Acquirer hereby agrees to cancel the outstanding notes owed by the Company to the Acquirer as further described in Schedule 1.1(c) attached hereto and made a part hereof.
Misallocated Assets. In the event that at any time or from time to time, whether prior to, on or after the Separation Date, any Party hereto shall receive or otherwise possess any Asset that is allocated to any other Person, such Party shall promptly transfer, or cause to be transferred, such Asset to the Person so entitled thereto. Prior to any such transfer, the Party receiving or possessing such Asset shall hold such Asset in trust for any such other Party.
Section 2.2 The Acquirer Assets.
(a) Included Assets. For purposes of this Agreement, "the Acquirer Assets" shall mean “without duplication” all of Gateway’s Assets that are operating in Gateway prior to the consummation of the Exchange as more fully set forth on Schedule 1.2(a) which is made a part hereof.
(b) Excluded Assets. For the purposes of this Agreement, "Excluded Assets" shall mean all of Gateway’s Assets not set forth in Section 1.2(a) herein.
Section 2.3 The Acquirer Liabilities.
For the purposes of this Agreement, the Acquirer Liabilities" shall mean all Liabilities associated with the Acquirer Assets whether by pledge, hypothecation, attachment, agreement, operation of law or otherwise.
Section 2.4 Governmental Approvals and Consents.
(a) Transfer In Violation of Laws. If and to the extent that the valid, complete and perfected transfer assignment or novation to the Acquirer of any of the Acquirer Assets and the Acquirer Liabilities would be a violation of applicable laws or require any Consent or Governmental Approval, then, unless Acquirer shall otherwise determine, the transfer, assignment or novation to or from the Acquirer, as the case may be, of such Acquirer Assets, shall be automatically deemed deferred and any such purported transfer, assignment or novation shall be null and void until such time as all legal impediments are removed and/or such Consents or Governmental Approvals have been obtained. Notwithstanding the foregoing, such Asset shall still be considered the Acquirer Asset for purposes of determining whether any Liability is the Acquirer Liability; provided, however, that if such covenants or Governmental Approvals have
not been obtained within six months of the Distribution Date, the Parties will use their reasonable commercial efforts to achieve an alternative solution in accordance with the parties' intentions.
(b) Expenses. The Party retaining an Asset due to the deferral of the transfer of such Asset shall not be obligated, in connection with the foregoing, to expend any money unless the necessary funds are advanced by the Person entitled to the Asset, other than reasonable out-of-pocket expenses, attorneys' fees and recording or similar fees, all of which shall be promptly reimbursed by the Person entitled to such Asset.
Section 2.7 Reasonable Commercial Efforts.
Each of Gateway and the Acquirer, at the request of the other, shall use its reasonable commercial efforts to obtain, or to cause to be obtained, any consent, substitution, approval or amendment required to novate (including with respect to any federal government contract) or assign all rights and obligations under agreements, leases, licenses and other obligations or Liabilities of any nature whatsoever that constitute the Acquirer Liabilities or to obtain in writing the unconditional release of all parties to such arrangements other than Acquirer, so that, in any such case, the Acquirer will be solely responsible for such Liabilities; provided, however, that neither Gateway, nor the Acquirer shall be obligated to pay any consideration therefor to any third party from whom such consents, approvals, substitutions and amendments are requested.
Section 3.1 Entire Agreement.
This Agreement, constitutes the entire agreement between the parties with respect to the subject matter hereof and shall supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof.
Section 3.2 Governing Law.
This Agreement shall be construed in accordance with and all Disputes hereunder shall be governed by the laws of the State of Nevada, the County Court of New York County and/or the United States District Court for the Southern District of New York shall have jurisdiction and venue over all Disputes between the parties that are permitted to be brought in a court of law pursuant to this Agreement.
Any notices or other communications required or permitted hereunder shall be sufficiently given if personally delivered to it or sent by registered mail or certified mail, postage prepaid, or by prepaid telegram and any such notice or communication shall be deemed to have been given as of the date so delivered, mailed, or telegraphed.
This Agreement, including the Exhibits and Schedules hereto, and the other documents referred to herein, shall be binding upon and inure solely to the benefit of each party hereto and their legal representatives and successors, and nothing in this Agreement, express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Agreement.
Section 3.5 Counterparts.
This Agreement, including the Exhibits and Schedules hereto, and the other documents referred to herein, may be executed in counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement.
Section 3.6 Assignment.
This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective legal representatives and successors. This Agreement may not be assigned by any party hereto, without the other party's express written consent.
Section 3.7 Severability.
If any term or other provision of this Agreement or the Exhibits or Schedules attached hereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible.
Section 3.8 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement or the Schedules or Exhibits attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available.
Section 3.9 Amendment.
No change or amendment will be made to this Agreement except by an instrument in writing signed on behalf of each of the parties to such agreement.
Section 3.10 Authority.
Each of the parties hereto represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and general equity principles.
Section 3.11 Interpretation.
The headings contained in this Agreement, in any Exhibit or Schedule hereto and in the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Any capitalized term used in any Schedule or Exhibit but not otherwise defined therein, shall have the meaning assigned to such term in this Agreement. When a reference is made in this Agreement to an Article or a Section, Exhibit or Schedule, such reference shall be to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated.
Section 3.12 Conflicting Agreements.
In the event of conflict between this Agreement and any other Ancillary Agreement or other agreement executed in connection herewith, the provisions of such other agreement shall prevail (other than (i) as otherwise provided herein and (ii) the Separation Agreement).
IN WITNESS WHEREOF , each of the parties has caused this General Assignment and Assumption Agreement to be executed on its behalf by its officers thereunto duly authorized on the day and year first above written.