Annual Statements Open main menu

Tengjun Biotechnology Corp. - Quarter Report: 2013 June (Form 10-Q)

UNITED STATES

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: June 30, 2013


or

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________


China Herb Group Holdings Corporation

(Exact name of small business issuer as specified in its charter)

 

 

 

                          Nevada                           

(State or other jurisdiction

of incorporation)

           333-169397     

(Commission

File Number)

            27-3042462

(I.R.S. Employer

Identification Number)


4th Floor, Airport Industrial Park Business Center,

No.35 Changjiang South Road, New District,

Wuxi City, Jiangsu Province, China

 (Address of principal executive offices and zip code)


Phone: +86 13909840703

 (Registrant’s telephone number, including area code)


Copy of Communications To:

Bernard & Yam, LLP

401 Broadway, Suite 1708

New York, NY 10013

Phone: 212-219-7783

Facsimile: 212-219-3604


Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 last 90 days.  YES [X] NO [  ]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   YES [X] 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,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer 

[  ] 

Accelerated filer 

[  ]

Non-accelerated filer 

[  ] 

Smaller reporting company 

[X]


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

YES [X]  NO [  ]


State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 4,300,000 Shares of Common Stock, as of August 1, 2013.


 

1



INDEX

 

 

PART I - FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Item 4. Controls and Procedures

 

 

 

PART II - OTHER INFORMATION

 

 

 

Item 1. Legal Proceedings

 

Item 1A. Risk Factors

 

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

 

Item 3. Defaults Upon Senior Securities

 

Item 4. Mine Safety Disclosures

 

Item 5. Other Information

 

Item 6. Exhibits

 

 SIGNATURE

 




















2





ITEM 1.  FINANCIAL STATEMENTS


CHINA HERB GROUP HOLDINGS CORPORATION

FORMERLY KNOWN AS “ISLAND RADIO, INC.”

 (A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

(unaudited)


  

 

June  30,

 

 

December 31,

  

 

2013

 

 

2012

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL  ASSETS

 

$

               -   

 

 

$

              -   

  

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

               -   

 

 

 

              -   

  

 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued and outstanding

 

 

 

 

 

 

 

Common stock, $.001 par value, 25,000,000 shares authorized, 4,300,000 shares issued and outstanding June 30, 2013 and December 31, 2012, respectively

 

 

         4,300

 

 

 

4,300

Additional paid in capital

 

 

102,619

 

 

 

98,619

Deficit accumulated during the development stage

 

 

  (106,919)

 

 

 

 (102,919)

  

 

 

 

 

 

 

 

TOTAL STOCKHOLDERS'S DEFICIT

 

 

               -   

 

 

 

              -   

  

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS'S DEFICIT

 

$

               -   

 

 

$

              -   

  

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements



3





CHINA HERB GROUP HOLDINGS CORPORATION

FORMERLY KNOWN AS “ISLAND RADIO, INC.”

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

(unaudited)


 

 

The three months ended June 30,

The six months ended June 30,

June 28,2010(Inception) to

 

 

2013

 

2012

2013

 

2012

June 30, 2013

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

-

 

 

9

 

-

 

 

143

 

2,328

Legal consulting fees

 

 

-

 

 

7,500

 

-

 

 

22,500

 

82,180

Accounting fees

 

 

1,000

 

 

1,000

 

4,000

 

 

3,000

 

14,000

Transfer agent fees

 

 

-

 

 

450

 

-

 

 

1,100

 

7,852

Total expenses

 

 

1,000

 

 

8,959

 

4,000

 

 

26,743

 

106,360

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING LOSS

 

 

(1,000)

 

 

(8,959)

 

(4,000)

 

 

(26,743)

 

(106,360)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

-

 

-

 

 

272

 

559

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

 

(1,000)

 

 

(8,959)

 

(4,000)

 

 

(27,015)

 

(106,919)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, Basic and diluted

 

 

(0.00)

 

 

(0.00)

 

(0.00)

 

 

(0.01)

 

 

Weighted average shares outstanding, Basic and diluted

 

4,300,000

 

 

4,300,000

 

4,300,000

 

 

4,300,000

 

 



The accompanying notes to the financial statements are an integral part of these statements.




4





CHINA HERB GROUP HOLDINGS CORPORATION

FORMERLY KNOWN AS “ISLAND RADIO, INC.”

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS (unaudited)


  

The six months ended June 30,

 

June 28,2010(Inception) to

  

2013

 

2012

 

 June 30, 2013

OPERATING ACTIVITIES:

 

 

 

 

 

Net loss

$

            (4,000)

 

$

          (27,015)

 

$

                                    (106,919)

Adjustments to reconcile net loss to net cash useed in operating activities:

 

 

 

 

 

 

 

 

    Common stock issued in connection with services provided by consultants

 

                       -

 

 

                       -

 

 

20,000

    Imputed interest on related party loan

 

                      -   

 

 

                  272

 

 

                                              559

    Expenses paid with capital contribution

 

                 4,000

 

 

                       -

 

 

                                           4,000

 

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

    Increase (decrease) in accounts payable

 

                       -

 

 

            26,743

 

 

                                        54,215

NET CASH USED IN OPERATING ACTIVITIES

 

                       -

 

 

                       -

 

 

                                      (28,145)

  

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

    Proceeds from sale of asset (Blue Water common stock)

 

                       -

 

 

                       -

 

 

                                        13,000

NET CASH PROVIDED BY INVESTING ACTIVITIES

 

                       -

 

 

                       -

 

 

                                        13,000

  

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

    Proceeds from common stock subscribed

 

 

 

 

 

 

 

  5,600

    Proceeds from loan from officer

 

 

 

 

 

 

 

12,250

    Repayment of loan from officer

 

                       -

 

 

                       -

 

 

                                            (105)

    Repurchase of common stock

 

                       -

 

 

                       -

 

 

                                      (10,750)

    Proceeds from issuance of common stock

 

 

 

 

 

 

 

8,150

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

                       -

 

 

                       -

 

 

                                        15,145

 

 

 

 

 

 

 

 

 

NET CHANGE IN CASH

 

                       -

 

 

                       -

 

 

                                                   -

  

 

 

 

 

 

 

 

 

    Cash, beginning of period

 

                       -

 

 

                       -

 

 

                                                   -

  

 

 

 

 

 

 

 

 

    Cash, end of period

$

                       -

 

$

                       -

 

$

                                                   -

  

 

 

 

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

    Issuance of common shares to directors

 

                       -

 

 

                       -

 

 

4,000

    Issuance of common shares for common stock subscribed

                       -

 

 

                       -

 

 

5,600

    Restricted securities exchanged for accounts payable

 

                       -

 

 

                       -

 

 

7,000

    Forgiveness of loan from officer

 

                       -

 

 

12,145

 

 

12,145

    Forgiveness of accounts payable

 

                       -

 

 

                       40,060

 

 

40,060

    Forgiveness of loan from shareholder

 

                       -

 

 

                       -

 

 

7,155

    Issuance of common shares for restricted securities received

                       -

 

 

                       -

 

 

20,000

 

$

                       -

 

$

            52,205

 

$

                                        95,960

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES:

 

 

 

 

 

 

 

 

    Interest paid

$

                     -   

 

$

                     -   

 

$

                                                 -   

    Income taxes paid

 

                     -   

 

 

                     -   

 

 

                                                 -   

 

 

 

 

 

 

 

 

 





The accompanying notes to the financial statements are an integral part of these statements.



5





 

6



 

 

CHINA HERB GROUP HOLDINGS CORPORATION

FORMERLY KNOWN AS “ISLAND RADIO, INC.”

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2013

(unaudited)



NOTE 1 – Organization


China Herb Group Holdings Corporation (“Company”) is a development stage company with minimal operations.  The Company was incorporated under the name “Island Radio, Inc” under the laws of the State of Nevada on June 28, 2010.  The Company’s business plan calls for the development of a 24-hour radio program that will be transmitted over commercial FM radio spectrum from radio broadcast towers strategically located throughout the Caribbean region and simulcast worldwide over the Internet. The Company’s broadcasting studio will be based in St. Maarten, Dutch West Indies. On July 17, 2012, the Company changed its name to China Herb Group Holdings Corporation.


NOTE 2 – Summary of Significant Accounting Policies


Unaudited Interim Financial Information


The accompanying Balance Sheet as of June 30, 2013, Statements of Operations for the three months and six months ended June 30, 2013 and June 30, 2012, and cumulative from June 28, 2010 (Inception) to June 30, 2013, and the Statements of Cash Flows for the six months ended June 30, 2013 and June 30, 2012, and cumulative from June 28, 2010 (Inception) to June 30, 2013, are unaudited.  These unaudited interim financial statements have been prepared in accordance with accounting principles accepted in the United States of America (“GAAP”).  In the opinion of the company’s management, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and included all adjustments necessary for the fair presentation of the Company’s statement of financial position at June 30, 2013 and its results of operations and its cash flows for the period ended June 30, 2013 and cumulative from June 28, 2010 (inception) to June 30, 2013.  The results for the period ended June 30, 2013 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2013.


Basis of Presentation

 

The accompanying financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (US GAAP) for financial information and in accordance with the Securities and Exchange Commission’s (SEC) Regulation S-X.  They reflect all adjustments which are, in the opinion of the Company’s management, necessary for a fair presentation of the financial position and operating results as of and for the six months ended June 30, 2013 and June 30, 2012, and cumulative from June 28, 2010 (inception) to June 30, 2013.


Use of Estimates


The accompanying financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America.  Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment.  Actual results may vary from these estimates.


Cash and Cash Equivalents


For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.  As of June 30, 2013, the Company had no cash or cash equivalents.


Investments


The Company accounts for its marketable securities, which are classified as trading securities, in accordance with generally accepted accounting principles for certain investments in debt and equity securities, which requires that trading securities be carried at fair value.  Unrealized gains and losses due to changes in fair value as well as realized gains and losses resulting from sales of securities are reported as Other Income/Expenses in the statement of operations.  Fair value of the securities is based upon quoted market prices in active markets or estimated fair value when quoted market prices are not available.  The cost basis for realized gains and losses is determined on a specific identification basis.  As of June 30, 2013, the Company had no investments.




7





Fair Value of Financial Instruments


ASC 820, “Fair Value Measurements” and ASC 825, Financial Instruments, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value.  A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  It prioritizes the inputs into three levels that may be used to measure fair value:


Level 1


Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.


Level 2


Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.


Level 3


Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.


As of June 30, 2013 we believe that the recorded values of all of our financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.


Net Loss per Share Calculation


Basic net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period.   Diluted earnings per shares is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.  During the three months and six months ended June 30, 2013 and June 30, 2012, and cumulative from June 28, 2010 (inception) to June 30, 2013 the Company had no dilutive financial instruments issued or outstanding.


Income Taxes


The Company accounts for income taxes pursuant to FASB ASC 740, Income Taxes.  Under FASB ASC 740-10-25, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes.  The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

 

The Company maintains a valuation allowance with respect to deferred tax assets.  Island Radio establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period.  Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.


Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about its ability to realize the related deferred tax asset.  Any change in the valuation allowance will be included in income in the year of the change in estimate.


Fiscal Year


The Company elected December 31st for its fiscal year end.





8





NOTE 3 – Development Stage Activities and Going Concern


The Company is in the development stage and has minimal operations, and as such has devoted most of its efforts since its inception to developing its business plan, issuing common stock, attempting to raise capital, establishing its accounting systems and other administrative functions.  The Company’s business plan calls for the development of a 24-hour radio program that will be transmitted over commercial FM radio spectrum from radio broadcast towers strategically located throughout the Caribbean region and simulcast worldwide over the Internet with its broadcasting studio to be based in St. Maarten, Dutch West Indies.  The Company intends to conduct additional capital formation activities through the issuance of its common stock and to achieve these long-term business growth strategies.

 

While management of the Company believes that Company will be successful in its planned operating activities under its business plan and capital formation activities, there can be no assurance that it will be able to successfully execute on either of these or that it will be able to generate adequate revenues to earn a profit or sustain its operations.

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United State of America, which contemplate continuation of the Company as a going concern.  The Company has not established a source of revenues sufficient to cover its operating costs, and as such, has incurred an operating loss since its inception.  Further, as of June 30, 2013, the Company had an accumulated deficit during development stage of ($106,919).  These and other factors raise substantial doubt about the Company’s ability to continue as a going concern.  The accompanying financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern.


NOTE 4 – Share Exchange and Subsequent Sale of Blue Water Restaurant Group, Inc. Common Stock Holdings


On March 29, 2011 we entered into a Share Exchange Agreement with Blue Water Restaurant Group, Inc. (“Blue Water”), a Nevada corporation planning a going public initiative and starting a chain of restaurants in St. Maarten, Dutch West Indies.  Under the terms of the agreement we issued Blue Water 2,000,000 shares of our restricted common stock in exchange for 2,000,000 restricted shares of Blue Water common stock, $0.001 par value.  These shares were valued at $20,000, or $0.01 a share.


Blue Water registered 1,300,000 of our total holdings of 2,000,000 shares of their common stock in a SEC Registration Statement on Form S-1 that was declared effective on September 8, 2011.  Subsequently, we sold these 1,300,000 registered shares without restrictions to 36 different individuals at a price of $0.01 per share, or $13,000 in total.  Our remaining 700,000 shares were transferred to Taurus Financial Partners, LLC (“Taurus”) in exchange for a $7,000 reduction in our outstanding accounts payable.  All of the cash proceeds from the sale of our Blue Water shares were paid to Taurus to reduce our outstanding accounts payable to them.  As of June 30, 2013 we had no remaining accounts payable and had no remaining holdings in Blue Water.


NOTE 5 – Notes Payable to Officer and Shareholders


As of December 31, 2011 we had notes payable to our former officer and director, Nina Edstrom, aggregating $12,145, which includes $10,750 she loaned the Company to repurchase and cancel 1,075,000 shares of its common stock.  


Ms. Edstrom voluntarily forgave these outstanding debts on March 1, 2012 which was recorded in the financial statements as additional paid-in capital.  Additionally, during the year ended December 31, 2012 these debts had accrued $272 in imputed interest that was recorded in the financial statements as additional paid-in capital.


On June 27, 2012, Taurus Financial Partners, LLC, as a shareholder of the Company, forgave $40,060 of outstanding accounts payable that the Company owed, which was recorded as contributed capital.


During six months ended June 30, 2013, Chin Yung Kong, the director and shareholder of the Company, paid $4,000 for the Company’s accounting fee. These payments were classified as contributed capital.


NOTE 6 – Common Stock


The total number of common shares authorized that may be issued by the Company is 25,000,000 shares with a par value of $0.001 per share.


During the period June 28, 2010 (inception) to June 30, 2013 the Company issued an aggregate of 9,375,000 shares as follows:


·4,000,000 shares to its directors as Founders Shares;

 



9





·2,000,000 shares to a consultant for total consideration of $20,000, or $0.01 per share, based on the value of the services performed;


·1,375,000 shares in exchange for aggregate cash consideration of $13,750, or $0.01 per share;


·2,000,000 shares in exchange for 2,000,000 shares of restricted common stock in Blue Water Restaurant Group, Inc. (“Blue

Water”), a Nevada corporation, presently undertaking a going public initiative.  This investment was valued at $20,000, or $0.01

per share, based on the most recent private transaction price of Blue Water common stock, which was $0.01 per share.  In

addition, Blue Water registered 1,300,000 of our shares of its common stock for unrestricted resale in a SEC Registration

Statement on Form S-1 which was declared “effective” on September 8, 2011.


On September 19, 2011 the Company repurchased 1,075,000 shares of its common stock, which were subsequently cancelled.  These shares were purchased for $10,750, or $0.01 a share.  This purchase was financed by a non-interest bearing demand loan from our sole officer and director, Nina Edstrom.  During the three months ended March 31, 2013 this note had accrued $272 in imputed interest that was recorded in the financial statements as additional paid-in capital.


On October 13, 2011, two shareholders returned to the Company an aggregate of 4,000,000 shares of restricted common stock.  These shares were subsequently cancelled.


As of June 30, 2013, the Company had 4,300,000 shares of its common stock issued and outstanding.


NOTE 7– Preferred Stock


The total number of preferred shares authorized that may be issued by the Company is 5,000,000 shares with a par value of $0.001 per share.


As of June 30, 2013, the Company had no shares of its preferred stock issued and outstanding.


NOTE 8 – Income Taxes


The provision (benefit) for income taxes for the period from June 28, 2010 (inception) to June 30, 2013 was as follows, assuming a 35 percent effective tax rate:

 

 

 

 

 

 

 

 

 


For the six months ended

June, 2013

 

For the period

June 28, 2010

(inception) to

June 30, 2013

Current tax provision:

 

 

 

 

 

Federal

 

 

 

 

 

Taxable income

$

-

$

 

 

 

 

 

 

 

 

Total current tax provision

$

-

$

 

 

 

 

 

 

Deferred tax provision:

 

 

 

 

 

Federal

 

 

 

 

 

Loss carryforwards

$

106,919

$

106,919

 

Change in valuation allowance

 

(106,919)

 

(106,919)

 

 

 

 

 

 

 

Total deferred tax provision

$

-

$

-


As of June 30, 2013, the Company had approximately $106,919 in tax loss carryforwards that can be utilized in future periods to reduce taxable income through 2013.


The Company provided a valuation allowance equal to the deferred income tax assets for the period from June 28, 2010 (inception) to June 30, 2013 because it is not presently known whether future taxable income will be sufficient to utilize the tax loss carryforwards.


The Company has no uncertain tax positions.


NOTE 9 – Related Party Transactions




10





From June 28, 2010 (inception) through June 27, 2012, the Company operated out of office space that was provided to us by our former president and chief executive officer, Eric Boyer, free of charge.


For the six months ended June 30, 2013 and cumulative from June 28, 2010 (inception) to June 30, 2013 the Company’s rent expense was zero.  This is because of the minimal level of operating activities that have transpired during this period of time.


As of December 31, 2011 we had notes payable to our sole officer and director, Nina Edstrom, aggregating $12,145, which includes $10,750 she loaned the Company to repurchase and cancel 1,075,000 shares of its common stock.  


Ms. Edstrom voluntarily forgave these outstanding debts on March 1, 2012 which was recorded in the financial statements as additional paid-in capital.  Additionally, during the six months ended June 30, 2013 these debts had accrued $272 in imputed interest that was recorded in the financial statements as additional paid-in capital.


On June 27, 2012, Taurus Financial Partners, LLC, as a shareholder of the Company, forgave the $40,060’s total outstanding account payables that the Company owed to it. As of June 30, 2013, there is no note payable to any shareholders.


During the six months ended June 30, 2013, Chin Yung Kong, the director and shareholder of the Company, paid $4,000 for the Company’s accounting fee. These payments were classified as contributed capital.


NOTE 9 – Recent Accounting Pronouncements


In February 2013, the FASB issued ASU 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” This ASU does not change the current requirements for reporting net income or other comprehensive income in financial statements. However, this guidance requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. For public entities, the guidance is effective prospectively for reporting periods beginning after December 15, 2012. For nonpublic entities, the guidance is effective prospectively for reporting periods beginning after December 15, 2013. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.


In July 2012, the FASB issued ASU 2012-02, “Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment.” This ASU simplifies how entities test indefinite-lived intangible assets for impairment, which improves consistency in impairment testing requirements among long-lived asset categories. These amended standards permit an assessment of qualitative factors to determine whether it is more likely than not that the fair value of indefinite-lived intangible assets is less than their carrying value. For assets in which this assessment concludes it is more likely than not that the fair value is more than its carrying value, these amended standards eliminate the requirement to perform quantitative impairment testing as outlined in the previously issued standards. The guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.  Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.


NOTE 10 – Subsequent Events


None through the date the financial statements were issued.





11





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


We are a development stage corporation with limited operations and are not currently generating any revenues from our business operations.  Our independent registered public accounting firm has issued a going concern opinion in their audit report dated May 1, 2013, which can be found in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on May 1, 2013.  This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next 12 months.  


The following discussion should be read in conjunction with our Financial Statements and the notes thereto and the other information included in this Quarterly Report as filed with the SEC on Form 10-Q.


Limited Operating History; Need for Additional Capital

 

There is limited historical financial information about us upon which to base an evaluation of our performance.  We are in the start-up stage of operations and have yet to generate any revenues.  We cannot guarantee that we will be successful in our business operations.  Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns, such as increases in marketing costs, increases in administration expenditures associated with daily operations, increases in accounting and audit fees, and increases in legal fees related to filings and regulatory compliance.


Currently, we do not have any arrangements for additional financing.  We have no assurance that future financing will be available to us on acceptable terms.  If financing is not available on satisfactory terms, we may be unable to continue, develop, or expand our operations.  Equity financing could result in additional dilution to existing shareholders.


Status as a Shell Company


As of June 30, 2013, because we have nominal operations and minimal assets, we are considered to be a shell company under the Securities Exchange Act of 1934, as amended.  Because we are considered a shell company, the securities sold in previous offerings can only be resold through (i) registration under the Securities Act of 1933, as amended (“Securities Act”), (ii) Section 4(1) of the Securities Act, if available, for non-affiliates, or (iii) by meeting the conditions of Rule 144(i) of the Securities Act.


Results of Operations


Three and Six Months Ended June 30, 2013 and June 30, 2012


Revenues.  As of June 30, 2013, we have not generated any revenues and remain a development stage company.


Net Loss.  We had a net loss of ($1,000) for the three months ended June 30, 2013 compared to a net loss of ($8,959) for the same period a year ago.  This represents a decrease in net loss of $7,959. We had a net loss of ($4,000) for the six months ended June 30, 2013 compared to a net loss of ($27,015) for the same period a year ago.  This represents a decrease in net loss of $23,015. Our net loss was attributable to complying with our ongoing SEC reporting requirements, which have consisted primarily of legal and accounting fees.


Operating Expenses.  Our total operating expenses for the three months ended June 30, 2013 were $1,000 compared to $8,959 for the same period a year ago.  This represents a decrease in operating expenses of $7,959.  We incurred total operating expenses of $4,000 for the six months ended June 30, 2013 compared to $26,743 for the same period a year ago.  This represents a decrease in operating expenses of $22,743. Our operating expenses were entirely related to complying with our ongoing SEC reporting requirements, which have consisted primarily of legal and accounting fees.


Other income (expenses).  During the three months and six months ended June 30, 2013 we recorded $0 and $0 in imputed interest expenses related to a note outstanding payable to our sole officer and director.  This note was formally forgiven on March 1, 2012.  Both the accrued imputed interest and forgiven balance of the note outstanding were recorded in Company’s financial statements under additional paid-in capital.


Cumulative During the Development Stage – June 28, 2010 (inception) through June 30, 2013


For ease of reading we refer to the period of June 28, 2010 (inception) through June 30, 2013 as the “Developmental Period”.


Revenues.  We have not generated any revenues during the Developmental Period.



12





 

Net Loss.  We have incurred a net loss of ($106,919) during the Developmental Period.  This net loss was primarily attributable to organizational costs related to our formation, an offering of our common stock, and complying with our ongoing SEC reporting requirements.  These expenses have consisted primarily of legal, accounting, and outside consulting fees.


Operating Expenses.  Our total operating expenses for the Developmental Period were $106,360.  These operating expenses were primarily attributable to organizational costs related to our formation, an early offering of our common stock, and complying with our ongoing SEC reporting requirements.  These expenses have consisted primarily of legal, accounting, and outside consulting fees.


Other income (expenses).  During the Development Period we recorded $559 in imputed interest expenses related to a note outstanding payable to our sole officer and director.  This note was formally forgiven on March 1, 2012.  Both the accrued imputed interest and forgiven balance of the note outstanding were recorded in Company’s financial statements under additional paid-in capital.


Total Stockholders’ Deficit.  Our stockholders’ deficit was NIL as of June 30, 2013.


Accounts Payable and Accrued Expenses.  On June 27, 2012, and in conjunction with a Share Purchase Agreement executed on the same date, Taurus Financial Partners, LLC, an independent service provider, voluntarily forgave $40,060 in accrued accounts payable.  The forgiven accounts payable were recorded in Company’s financial statements under additional paid-in capital.  As of June 30, 2013, Company had no accounts payable or other outstanding liabilities.


Liquidity and Capital Resources


On June 27, 2012, in connection with the share purchase transaction in which Eric R. Boyer and Nina Edstrom sold to Chin Yung Kong, Qiuping Lu and Fumin Feng 4,000,000 shares of common stock of the Company (2,000,000 shares to Chin Yung Kong, 1,000,000 shares to Qiuping Lu and 1,000,000 shares to Fumin Feng), Taurus Financial Partners, LLC forgave the $40,060’s total outstanding account payables that the Company owed to it, which represented all the outstanding liabilities of the Company as of June 27, 2012.  As the result of such transaction, as of June 30, 2013, we had no assets and no liabilities.  


We expect to incur continued losses over the remainder of the fiscal year ending December 31, 2013, possibly even longer.  As of June 30, 2013, we have no assets or cash on hand.  


We presently are exploring other such sources of funding.  Without limiting our available options, future equity financings will most likely be through the sale of additional shares of our common stock.  It is possible that we could also offer warrants, options and/or rights in conjunction with any future issuances of our common stock.  However, we can give no assurance that financing will be available to us, and if available to us, in amounts or on terms acceptable to us.  If we cannot secure adequate financing, we may be forced to cease operations and you will lose your entire investment.


Going Concern Consideration


Our independent registered public accounting firm has issued a going concern opinion in their audit report dated May 1, 2013, which can be found in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on May 1, 2013.  This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next 12 months.  Our financial statements found within this Quarterly Report on Form 10-Q and the aforementioned Annual Report on Form 10-K contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.


Off –Balance Sheet Operations


As of June 30, 2013, we had no off-balance sheet activities or operations.



CRITICAL ACCOUNTING POLICIES


Basis of Presentation

 

The accompanying financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (US GAAP) for financial information and in accordance with the Securities and Exchange Commission’s (SEC) Regulation S-X.  They reflect all adjustments which are, in the opinion of the Company’s management, necessary for a fair presentation of the



13





financial position and operating results as of and for the three months ended June 30, 2013 and June 30, 2012, and cumulative from June 28, 2010 (inception) to June 30, 2013.


Use of Estimates


The accompanying financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America.  Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment.  Actual results may vary from these estimates.


Cash and Cash Equivalents


For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.  As of June 30, 2013, the Company had no cash or other assets.


Investments


The Company accounts for its marketable securities, which are classified as trading securities, in accordance with generally accepted accounting principles for certain investments in debt and equity securities, which requires that trading securities be carried at fair value.  Unrealized gains and losses due to changes in fair value as well as realized gains and losses resulting from sales of securities are reported as Other Income/Expenses in the statement of operations.  Fair value of the securities is based upon quoted market prices in active markets or estimated fair value when quoted market prices are not available.  The cost basis for realized gains and losses is determined on a specific identification basis.  As of June 30, 2013, the Company had no investments.


Fair Value of Financial Instruments


ASC 820, “Fair Value Measurements” and ASC 825, Financial Instruments, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value.  A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  It prioritizes the inputs into three levels that may be used to measure fair value:


Level 1


Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.


Level 2


Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.


Level 3


Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.


As of June 30, 2013 we believe that the recorded values of all of our financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.


Net Loss per Share Calculation


Basic net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period.   Diluted earnings per shares is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.  During the three months ended June 30, 2013 and June 30, 2012, and cumulative from June 28, 2010 (inception) to June 30, 2013 the Company had no dilutive financial instruments issued or outstanding.



14






Income Taxes


The Company accounts for income taxes pursuant to FASB ASC 740, Income Taxes.  Under FASB ASC 740-10-25, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes.  The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

 

The Company maintains a valuation allowance with respect to deferred tax assets.  Island Radio establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period.  Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.

 

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about its ability to realize the related deferred tax asset.  Any change in the valuation allowance will be included in income in the year of the change in estimate.


Fiscal Year


The Company elected December 31st for its fiscal year end.


Recent Accounting Pronouncements


In February 2013, the FASB issued ASU 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” This ASU does not change the current requirements for reporting net income or other comprehensive income in financial statements. However, this guidance requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. For public entities, the guidance is effective prospectively for reporting periods beginning after December 15, 2012. For nonpublic entities, the guidance is effective prospectively for reporting periods beginning after December 15, 2013. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.


In July 2012, the FASB issued ASU 2012-02, “Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment.” This ASU simplifies how entities test indefinite-lived intangible assets for impairment, which improves consistency in impairment testing requirements among long-lived asset categories. These amended standards permit an assessment of qualitative factors to determine whether it is more likely than not that the fair value of indefinite-lived intangible assets is less than their carrying value. For assets in which this assessment concludes it is more likely than not that the fair value is more than its carrying value, these amended standards eliminate the requirement to perform quantitative impairment testing as outlined in the previously issued standards. The guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.  Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.


Contractual Obligations


As of June 30, 2013, the Company had no contractual obligations.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).



ITEM 4.  CONTROLS AND PROCEDURES




15





Evaluation of Disclosure Controls and Procedures


As of the end of the period covered by this report, we conducted an evaluation under the supervision and with the participation of our chief executive officer and principal accounting officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act.


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


Based on management’s assessment, we have concluded that, as of June 30, 2013, our disclosure controls and procedures were not effective in timely alerting management to the material information relating to us required to be included in our annual and interim filings with the SEC.


Our chief executive officer and principal financial officer have concluded that our disclosure controls and procedures had the following material weaknesses:


We were unable to maintain any segregation of duties within our financial operations due to our reliance on limited personnel in the finance function.  While this control deficiency did not result in any audit adjustments to our interim or annual financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties;


We lack sufficient resources to perform the internal audit function and does not have an Audit Committee;


We do not have an independent Board of Directors, nor do we have a board member designated as an independent financial expert to Company.   As a result, there may be lack of independent oversight of the management team, lack of independent review of our operating and financial results, and lack of independent review of disclosures made by Company; and


Documentation of all proper accounting procedures is not yet complete.


These weaknesses were identified in our Annual Report filed with the SEC on Form 10-K and our quarterly report filed with SEC on Form 10-Q.  These weaknesses have existed since our inception on June 28, 2010 and, as of June 30, 2013, have not been remedied.


To the extent reasonably possible given our limited resources, we intend to take measures to cure the aforementioned material weaknesses, including, but not limited to, the following:


Considering the engagement of consultants to assist in ensuring that accounting policies and procedures are consistent across the organization and that we have adequate control over financial statement disclosures;

 

Hiring additional qualified financial personnel, including a Chief Financial Officer, on a full-time basis;


Expanding our current board of directors to include additional independent individuals willing to perform directorial functions; and


Increasing our workforce in preparation for exiting the development stage and commencing revenue producing operations.


Since the recited remedial actions will require that we hire or engage additional personnel, these material weaknesses may not be overcome in the near-term due to our limited financial resources.  Until such remedial actions can be realized, we will continue to rely on the limited advice of outside professionals and consultants.


Changes in Controls and Procedures


There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





16





PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS


Currently we are not aware of any litigation pending or threatened by or against the Company.


ITEM 1A.  RISK FACTORS


Not required for Smaller Reporting Company.



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


On June 27, 2012, Eric R. Boyer and Nina Edstrom (“Sellers”), who are the major shareholders of Island Radio, Inc. (“Company”), entered into a Share Purchase Agreement with Chin Yung Kong, Qiuping Lu and Fumin Feng (“Purchasers”), under which Sellers sold to Purchasers 4,000,000 shares of common stock of the Company (2,000,000 shares to Chin Yung Kong, 1,000,000 shares to Qiuping Lu and 1,000,000 shares to Fumin Feng), which represented approximately 93% of the total issued and outstanding stock of the Company, for a total purchase price of $159,970.00 (“Total Purchase Price”).  The sold shares are restricted stock that have not been registered with the Securities and Exchange Commission. As result of this share purchase transaction, Chin Yung Kong, Qiuping Lu and Fumin Feng became the controlling shareholders of the Company. In connection with this share purchase transaction, on June 27, 2012, the Company’s sole officer and director Nina Edstrom resigned from all positions that she held in the Company; Chin Yung Kong was appointed the Board Director, the Chairman and the President of the Company; Qiuping Lu was appointed the Board Director, the Vice President and the Treasurer of the Company; Fumin Feng was appointed the Board Director and the Secretary of the Company. The new Board of Directors also appointed Chin Yung Kong as the new Chief Executive Officer and Qiuping Lu as the new Chief Financial Officer. On July 24, 2012, Chin Yung Kong resigned from the position of President and Chief Executive Officer of the Company. He still remains a board director of the Company. On July 24, 2012, Yubo Zheng became a new board director and new Secretary of the Company. Qiuping Lu became the new President and new Chief Executive Officer of the Company. Fumin Feng became the new Vice President of the Company.



ITEM 3.  DEFAULTS UPON SENIOR SECURITIES


None


ITEM 4. MINE SAFETY DISCLOSURES

 

   None.


ITEM 5.  OTHER INFORMATION


None


ITEM 6.  EXHIBITS


(a)

Exhibits


31.1

 

Section 302 Certificate of Chief Executive Officer *

 

 

 

31.2

 

Section 302 Certificate of Chief Financial Officer *

 

 

 

32.1

 

Section 906 Certificate of Chief Executive Officer *

 

 

 

32.2

 

Section 906 Certificate of Chief Financial Officer *

 

* filed herewith





17





Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



SIGNATURES


 

 

 

China Herb Group Holdings Corporation

 

 

(Registrant)

 

 

 

By: 

/s/ Qiuping Lu 

       

                Qiuping Lu

President, Director, CEO, CFO


Date:

August 13, 2013







18