Qiansui International Group Co. Ltd. - Quarter Report: 2015 September (Form 10-Q)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2015

OR

 

For the transition period from to

COMMISSION FILE NUMBER: 000-54159

(Exact name of registrant as specified in its charter)

 

 

 (Registrant’s telephone number, including area code)

 

Z Holdings Group, Inc.

25 Broadway – 9th Floor

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X ]Yes [ ] No

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

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

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

As of November 2, 2015, there were 99,750,097 shares of the Issuer’s common stock, par value $0.000006 outstanding.

TABLE OF CONTENTS 

ARIEL CLEAN ENERGY, INC.

f/k/a Z HOLDINGS GROUP, INC. 

 

TABLE OF CONTENTS

 

		Page
PART I-FINANCIAL INFORMATION
ITEM 1	CONDENSED FINANCIAL STATEMENTS	3
	Condensed Balance Sheets	3
	Condensed Statements of Operations	4
	Condensed Statements of Cash Flows	5
	Notes to Unaudited Condensed Financial Statements	6
ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS	12
ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	14
ITEM 4	CONTROLS AND PROCEDURES	15
PART II-OTHER INFORMATION
ITEM 1	LEGAL PROCEEDINGS	15
ITEM 1A	RISK FACTORS	15
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	15
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	15
ITEM 4	MINE SAFETY DISCLOSURES	15
ITEM 5	OTHER INFORMATION	15
ITEM 6	EXHIBITS	16
SIGNATURES		17

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Part I

 

ARIEL CLEAN ENERGY, INC.

(Formerly Z Holdings Group, Inc.) 

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ARIEL CLEAN ENERGY, INC.

(Formerly Z Holdings Group, Inc.)

Condensed Statements of Operations

(Unaudited)

 

4

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ARIEL CLEAN ENERGY, INC.

(Formerly Z Holdings Group, Inc.)

Condensed Statements of Cash Flows

(Unaudited)

 

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ARIEL CLEAN ENERGY, INC.

(Formerly Z Holdings Group, Inc.)

 

NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

 

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Ariel Clean Energy Inc. (“Ariel” or “the Company”) began its existence as the Pacific Development Corporation which was incorporated under the laws of the State of Colorado on September 21, 1992. On March 23, 2000, Pacific and Cheshire Holdings, Inc. were merged into a single corporation existing under the laws of the State of Delaware, with Cheshire Holdings, Inc. being the surviving corporation. The name of the surviving corporation was changed to Cheshire Distributors, Inc. On July 17, 2003, Cheshire Distributors, Inc. changed its name to LMIC, Inc. and on October 31, 2012 changed its name to Z Holdings, Inc.  Ariel Clean Energy, Inc. adopted fresh start accounting on May 6, 2005 with an objective to acquire or merge with an operating business.

 

Ariel Clean Energy, Inc. has a December 31 year end.

We are considered a shell company as defined in Rule 12b-2 of the Exchange Act. Rule 12b-2 of the Exchange Act defines a "shell company" as a registrant that has "no or nominal operations" and, either "no or nominal assets, assets consisting solely of cash and cash equivalents; or, assets consisting of any amount of cash and cash equivalents and nominal other assets." Our shell company status prevents investors from reselling our shares under Rule 144(i) unless and until 12 months after we are no longer considered a shell company. We caution investors as to the highly illiquid nature of an investment in our shares.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X.

Accordingly, these condensed financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2014 and notes thereto and other pertinent information contained in our Form 10-K the Company has filed with the Securities and Exchange Commission (the “SEC”).

 

The results of operations for the period ended September 30, 2015 are not necessarily indicative of the results for the full fiscal year ending December 31, 2015. 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 

Cash Flow Reporting

The Company follows ASC 230, "Statement of Cash Flows," for cash flow reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category. The company uses the indirect or reconciliation method ("Indirect method") as defined by ASC 230, "Statement of Cash Flows," to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.

Cash and Cash Equivalents

 

The Company follows ASC 305, “Cash and Cash Equivalents”. For the purpose of the financial statements cash equivalents include all highly liquid investments with an original maturity of three months or less. Cash and cash equivalents at September 30, 2015 and December 31, 2014 were $0.

Fair Value of Financial Instruments

 

Commitment and Contingencies

 

 

There were no share-based expenses for the periods ended September 30, 2015 and 2014.

Income Taxes

 

The Company accounts for income taxes under ASC 740, "Income Taxes."  Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs.  

 

A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.  No deferred tax assets or liabilities were recognized as at September 30, 2015 and December 31, 2014.

Earnings (Loss) Per Share

Related Parties

NOTE 3 - GOING CONCERN

There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. Management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.

The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

NOTE 4. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

 

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption. At this time we have no plans to early adopt any of the recently issued accounting pronouncements.

 

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company's present or future financial statements

NOTE 5 – PREPAID EXPENSE

 

Prepaid expense totaled $5,000 at September 30, 2015, and consisted solely of the OTC Market annual fee. Prepaid expense totaled $795 at December 31, 2014 and consisted solely of a prepaid software maintenance contract.

 

NOTE 6 – STOCKHOLDERS’ EQUITY

 

Preferred Stock 

The authorized preferred stock consists of 50,000,000 shares with a per share par value of $0.000006.

There were no shares of preferred stock issued and outstanding at September 30, 2015, and December 31, 2014.

Any series of new preferred stock may be designated, fixed, and determined as provided by the board of directors by the affirmative vote of a majority of the voting power of all the then outstanding shares of Class B Common Stock. 

Common Stock 

Class A 

The authorized common stock consists of 1,000,000,000 shares of Class A Common Stock at a par value of $0.000006 per share. There were 99,750,097 shares of class A common stock issued and outstanding at September 30, 2015, and December 31, 2014. Each share of Class A common stock is entitled to one vote.  The number of authorized shares of Class A common stock may be increased or decreased (but not below the number of shares outstanding) by the affirmative vote of the holders of capital stock representing a majority of the voting power of the outstanding shares of capital stock of the company entitled to vote.

Class B

The authorized common stock consists of 200,000,000 shares of Class B Common Stock, $0.000006 par value per share. There are no shares of class B Common Stock issued and outstanding at September 30, 2015 and December 31, 2014. Each share of Class B of Common Stock is entitled to 10 votes. The number of authorized shares of Class B common stock may be increased or decreased (but not below the number of shares outstanding) by the affirmative vote of the holders of capital stock representing a majority of the voting power of the outstanding shares of capital stock of the company entitled to vote.

Additional Paid in Capital

Related parties prior to the September 2014, change in control funded operating expenses of $18,579 and forgave their related party debt of $22,360 for a total contribution to capital of $41,209.  Current related parties fund operating expenses with loans to the company (Note 8).  These loans accrue interest at an annual rate of 12%.

NOTE 7 - INCOME TAXES

 

The Company has not recognized an income tax benefit for its operating losses generated based on uncertainties concerning its ability to generate taxable income in future periods.  The tax benefit for the periods presented is offset by a valuation allowance established against deferred tax assets arising from the net operating losses (NOL) and other temporary differences, the realization of which could not be considered more likely than not.  In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not.  As at September 30, 2015 and December 31, 2014, the Company has net operating loss carry forwards of approximately $103,000 and $53,400, respectively. The NOLs begin expiring in 2030. The loss results in deferred tax assets of approximately $35,000 and $18,100 at September 30, 2015 and December 31, 2014, respectively, at effective statutory rates totaling 34%.  The deferred tax asset has been off-set by an equal valuation allowance.

The reconciliation of the effective income tax rate to the federal statutory rate is as follows:

Income taxes for the years 2011 through 2014 remain subject to examination.

 

NOTE 8 - RELATED PARTY TRANSACTIONS 

Note Payable

During the period ended September 30, 2015, a corporation controlled by the company's officers paid operating expenses totaling $53,400.  Unpaid balances are due on demand and accrue an annual interest rate of 12%.

The Company plans to pay the note payable and accrued interest as cash flows become available.

The controlling shareholder has pledged their support to fund continuing operations. However, there is no written commitment to this effect. 

The Company does not own or lease property or lease office space. The office space used by the Company was arranged by management of the Company to use at no charge.

The Company does not have any employment contracts with any of its related parties.

NOTE 9 – COMMITMENTS AND CONTINGENCIES

The Company has no commitments or contingencies as at September 30, 2015 and December 31, 2014.

Litigation

From time to time the Company may become a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.

NOTE 10 - SUBSEQUENT EVENTS

Management has evaluated subsequent events through the date the financial statements were issued. Based on our evaluation no events have occurred requiring adjustment or disclosure.

 

 

 

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

 

Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

Current Business

We may seek a business opportunity with entities who have recently commenced operations, or entities who wish to utilize the public marketplace in order to raise additional capital in order to expand business development activities, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.

In implementing a structure for a particular business acquisition or opportunity, we may become a party to a merger, consolidation, reorganization, joint venture or licensing agreement with another corporation or entity. We may also acquire stock or assets of an existing business. Upon the consummation of a transaction, it is likely that our present management will no longer retain a majority control of our company. In addition, it is likely that as part of the terms of the acquisition transaction, one or more new officers and directors would join the Company.

We anticipate that the selection of a business opportunity in which to participate will be complex and without certainty of success. We believe that there are numerous firms in various industries seeking the perceived benefits of being a publicly registered corporation. Business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Business opportunities that we believe are in the best interests of our company may be scarce, or we may be unable to obtain the ones that we want. We can provide no assurance that we will be able to locate compatible business opportunities.

We have not yet entered into any definitive agreements for potential new business opportunities. There can be no assurance that we will be able to identify an appropriate business opportunity or acquire the financing necessary to enable us to pursue a transaction if an appropriate opportunity is identified.

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Currently, we do not have a source of revenue. We are not able to fund our cash requirements through our current operations. Historically, we have been able to raise a limited amount of capital through loans from a company controlled by our management, but we are uncertain about our continued ability to raise additional funds privately. We believe that our company may have difficulties raising capital until we locate a prospective business opportunity through which we can pursue our plan of operation. Further, we expect that any new acquisition or business opportunities that may become available to our company will require additional financing. There can be no assurance that we will be able to acquire the financing necessary to enable us to pursue our plan of operation. If our company requires additional financing and we are unable to acquire such funds, our business may fail. If we are unable to secure adequate capital to continue our acquisition efforts, our shareholders may lose some or all of their investment and our business may fail.

RESULTS OF OPERATIONS 

Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

Three months ended September 30, 2015 and 2014 

 

Revenue

 

During the three months ended September 30, 2015 and 2014, we did not earn any revenue as the company has no revenue sources.

 

Expenses

 

During the three months ended September 30, 2015 we incurred $16,926 in operating expenses compared to $3,240 in the three months ended September 30, 2014. The increase is primarily attributable to professional fees for services not previously used: legal and accounting.  Additionally there were fee increases for audits and reviews, and  new public company filing expenses.

Nine months ended September 30, 2015 and 2014 

 

Revenue

 

During the nine months ended September 30, 2015 and 2014, we did not earn any revenue as the company has no revenue sources.

 

Expenses

 

During the nine months ended September 30, 2015 we incurred $46,894 in operating expenses compared to $8,048 in the nine months ended September 30, 2014. The increase is primarily attributable to professional fees for services not previously used: legal and accounting.  Additionally there were fee increases for audits and reviews, and new public company filing expenses.

Cash Flows

Liquidity

We have no known demands or commitments and are not aware of any events or uncertainties as of September 30, 2015 that will result in or that are reasonably likely to materially increase or decrease our current liquidity.

 

Capital Resources

 

We had no material commitments for capital expenditures as of September 30, 2015 and December 31, 2014.

Critical Accounting Policies

 

Use of Estimates

 

For a full description of our critical accounting policies, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2014 Annual Report on Form 10-K.

 

Off Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

ITEM 3   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not applicable to a smaller reporting company.

ITEM 4   CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures.

 

We carried out an evaluation, under the supervision and with the participation of our management, including our president and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.  Material weaknesses noted were: lack of a functioning audit committee due to a lack of a majority of independent members; lack of a majority of outside directors on the board of directors, inadequate segregation of duties consistent with control objectives and affecting the functions of authorization, recordkeeping, custody of assets, and reconciliation; ineffective oversight of the entity’s financial reporting and internal control by management and those charged with governance; and, management dominated by a single individual/small group without adequate compensating controls.

 

Limitations on Systems of Controls

 

Our management consisting of our chief executive officer and chief financial officer, who is the same individual, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses identified in our evaluation, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

 

Changes in Internal Control over Financial Reporting.

 

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Part II

 

ITEM 1   LEGAL PROCEEDINGS.

 

Presently, there are not any material pending legal proceedings to which the Registrant is a party or as to which any of its property is subject, and no such proceedings are known to the Registrant to be threatened or contemplated against it.

 

ITEM 1A   RISK FACTORS.

 

Not applicable to a smaller reporting company.

 

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

 

We did not sell any equity securities during the quarter ended September 30, 2015

 

ITEM 3   DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4   MINE SAFETY DISCLOSURES.

 

Not applicable.

 

 

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

Ariel Clean Energy, Inc.

(Registrant)

 

By: /s/ Robert Morrison                                 

Robert Morrison

President and Chief Financial Officer

(Principal Executive and Financial Officer)

Dated: November 13, 2015