China Electronics Hldgs Inc (OTC:CEHD)

Item 8.01  Other Events.

On June 26, 2015, Lu'An Guoying Electronic Sales Co., Ltd. (“Guoying”), a wholly-owned subsidiary of China Electronics Holdings, Inc. (the “Company” or "CEHD"), terminated a non-binding Letter of Intent (the “LOI”) with An Hui Da Yun Heng Tong E-Commerce Company, Ltd.("Anhui Glory E-Commerce") which was originally entered into on December 18, 2014 and filed with the U.S Securities and Exchange Commission (the "Commission") on December 18, 2014.

Pursuant to the non-binding LOI signed on December 18, 2014, the Company was planning to raise capital to consummate an acquisition of Anhui Glory E-Commerce by March 31, 2015. The CEO of Guoying and the general manager of Anhui Glory E-Commerce entered into an extension agreement to extend the closing date to June 30, 2015, due to failure to obtain financing by March 31, 2015. On June 26, 2015, the management of Guoying decided to terminate the LOI with Anhui Glory E-Commerce due to failure to reach an agreement on valuation of Anhui Glory E-Commerce with certain potential investors and failure to obtain financing by June 26, 2015 . The management of Anhui Glory E-Commerce also believed that the company needs more time to develop and grown its e-commerce business.

NEW YORK, April 2, 2015 /PRNewswire/ -- China Electronics Holdings, Inc. (PINK: CEHD) (the "Company" or "We" or the "Purchaser") announced today that it has signed an agreement with Anhui Glory E-Commerce Company ("Anhui Glory E-Commerce" or the "Seller") to extend the closing date of the proposed acquisition from March 31, 2015 to June 30, 2015 due to failure to obtain a financing to consummate the acquisition. Anhui Glory E-Commerce, founded in January 2014, is the owner of China Crazy Buy, the first and largest proprietary technology platform that provides online direct sales and marketplace focused on sale of locally produced and national known agricultural food and by products, supermarket and grocery products, and electronic appliances in the Anhui Province of China.

The Company entered into a business cooperation agreement with Anhui Glory E-Commerce in July 2014 to start its sales of consumer electronics appliances on China Crazy Buy trading platform. As the customer behavior in China shifting from in store purchase to online shopping, and fast growth of online users in third tier cities, towns, counties and rural areas in China, we believe our business with China Crazy Buy will accelerate and broaden our exposure to larger and rapidly growing online customers.

"We see explosive growth of population and online users in small cities, towns, counties and rural areas because of the return of young generation from large cities to small towns and counties, from eastern China to inland, along with the urbanization process of rural areas of China," said Mr. Hailong Liu, the CEO and Chairman of China Electronics Holdings. "We believe the acquisition of China Crazy Buy by China Electronics Holdings will greatly improve our business model to meet the market trends of customer behavior shifting from offline transaction to online e-commerce. With this acquisition, China Electronics Holdings is leveraging an opportunity to increase its profit margin and sales by accessing to larger online consumers, obtaining control of pricing strategy, offering value added fast logistics and delivery services by using of scalable distribution network of China Crazy Buy."

We previously announced a possible acquisition of Anhui Gory E-Commerce and while we continue to be in discussions with this company, a transaction is not imminent as we failed to consummate a financing to close the acquisition by March 31, 2015 and therefore we have extended the closing date to June 30, 2015. We are in continuing discussions with funds based in China and the U.S. to raise financing in order to consummate the acquisition. We plan to close acquisitions at attractive and accretive prices.  We may also plan to finance the acquisition target directly through private equity financing in China. We truly believe expanding our presence in e-commerce business."

China Electronics will host a conference call on Friday, April 10, 2015 at 10:00 a.m. Shareholders and other interested parties can participate by dialing in to the following numbers:

Item 8.01 Other Events

 
The operating entity of China Electronics, Lu'AnGuoying Electronic Sales Co., Ltd. ("Guoying Electronics Sales") entered into a Business Cooperation Agreement with AnHuiDayunHengtong E-Commerce Company ("Anhui Glory E-commerce"),an affiliated business under common control of the CEO of China Electronics Holdings, Inc. (the "Company")in July 2014.Anhui Glory E-Commerce was founded in January 2014 and is the owner of China Crazy Buy (www.fkgou.com), a platform provider of online direct sales and online business marketplace. China Crazy Buy is the first and largest online to offline and business to customer online sales platform focused on the sale of locally produced and nationally known agricultural food and products (such as raw, packaged and cooked food, meat, beverage, fresh fruits and vegetables), supermarket and grocery products, and electronic appliances in the Anhui Province of China.

Pursuant to the Cooperation Agreement, while maintained its offline distributions through exclusive franchise stores, non-exclusive franchise stores and company owned stores, Guoying Electronics Sales started sales of large consumer electronics and appliances, such as solar heaters, refrigerators, air conditioners, and televisions that are also available for sale in Guoying's exclusive and non-exclusive franchise stores, from suppliers and manufacturers to retail consumers through China Crazy Buy under online marketplace business model. China Crazy Buy charges 2% to 5% of sales price for providing online services. Guoying stores are in charge of sales, delivery, logistics and maintenance services In addition, Guoying Electronics started sales of small consumer electronic appliances on China Crazy Buy directly without selling through its offline Guoying stores under joint sales business model. Guoying Electronics is obligated to offer China Crazy Buy the lowest price to sell its selection of small electronic appliances under Guoying distribution on China Crazy Buy. China Crazy Buy has the right to decide pricing strategy,final online sales price, and arrange delivery and logistics through Little Bee, its logistics delivery system.

On August 8, August 21, August 22, and September 5, 2014, Anhui Glory E-Commerce borrowed three loans from Guoying in amount of $325,622 (RMB 2,000,000), $455,382 (RMB 2,797,000), and $214,910 (RMB 1,320,000) respectively. Pursuant to the loan agreements, these loans are due on September 7, 2014, August 20, 2015, and August 21, 2015 respectively. As of September 30, 2014, Anhui Glory E-Commerce has repaid Guoying $325,622. Pursuant to the loan agreement on August 21, 2014, the company is obligated to pay the monthly interest rate at 2%. Pursuant to the agreements on August 8, 2014 and August 22, 2014, the company is obligated to pay monthly interest rates the same as the bank rate at the given time period.
 
China Electronics Holdings, Inc., through its subsidiaries, is engaged in the retail and wholesale of consumer electronics and appliances to rural areas in Anhui Province in the People's Republic of China. The Company was founded in 2002 and is based in Lu'an City, Anhui Province of China.The Company primarily offers solar heaters, refrigerators, air conditioners, and brand name televisions including Sony, LG, Samsung, Shanghai Shangling, Tsinghua Tongfang, Chigao, Huayang, Huangming and Oulin. As of December 31, 2014, the Company operated 1 company-owned store, 141 exclusive franchise stores under the Guoying brand name and 16 non-exclusive franchise stores in rural markets in Anhui Province. The Company currently targets customers in county, township and villages (the third, fourth and fifth tiers of markets) in rural areas in Anhui Province of China. The Company’sdistribution and sales network currently covers twelve districts and counties in Anhui province, namely Shou County, Shu City, Jin An, Yu An, Huo Shan, Jinn Sai, HuoQiu, Gu Shi, Ye Ji, Fei West, Fei East, and Huai Nan Districts.
 
The Company conducted its offline sales mainly by selling consumer electronics and appliances to a) exclusive franchise stores, b) non-exclusive franchise stores, and c) company-owned stores.

  a) Exclusive Franchise Stores: The Companyentered into exclusive franchise agreements with 141 exclusive franchise stores that operated under theGuoying brand name merchandise was providedon exclusive wholesale basis;

  b) Non-Exclusive Franchise Stores: The Companyentered into non-exclusive franchise agreements with 16 stores (the “Non-Exclusive Franchise Stores”) to which merchandise was provided on a non-exclusive wholesale basis; and

  c) Company Owned Stores: The Company operated one company-owned store that was directly operated under Guoying brand name and provided merchandise on an exclusive wholesale basis.

For the online purchase of Guoying's distribution of products that are sold in the exclusive and non-exclusive stores, mainly larger consumer electronic appliances such as solar heaters and refrigerators, under Online Marketplace business model, Guoying's exclusive and non-exclusive franchise stores are in charge of selling such products to online customers and provide delivery and maintenance services and China Crazy Buy charges a sales commission for online transactions. For the online purchase of Guoying's distribution of products, mainly a selection of small consumer electronic appliances such as television and air conditioners that are not sold in the exclusive and non-exclusive stores, , under Joint Sales business model, Guoying is obligated to offer the lowest price to China Crazy Buy and China Crazy Buy has right to decide the pricing strategy and final listing price. Guoying is obligated to deliver such products to the warehouse of China Crazy Buy directly. Little Bee, the delivery and logistic department of China Crazy Buy, is in charge of delivering Guoying products to retail customers directly from the China Crazy Buy warehouse.Guoying exclusive and non-exclusive stores have option to serve as self-pick up stations when the customers were not at home upon delivery and served as marketing agency that allowed customers to place online orders by scanning the product bar code printed on the advertisement picture board. Guoying exclusive and non-exclusive franchise stores charged a management fee as self-pick up station and marketing agency. In addition to sale of electronic appliances distributed by Guoying, China Crazy Buy also serves as an online marketplace for consumer electronic appliances distributed by other wholesalers, The Company anticipates increasing sales of consumer electronic appliances under distribution of wholesalers other than Guoying and the China Crazy Buy e-commerce market place.

LU'AN CITY, China, Dec. 18, 2014 /PRNewswire/ -- China Electronics Holdings, Inc. (CEHD) today announced that on December 18, 2014, through its wholly-owned subsidiary, Lu'An Guoying Electronic Sales Co., Ltd. (Guoying), entered into a Letter of Intent (LOI) with An Hui Da Yun Heng Tong E-Commerce Company, Ltd. ("Da Yun Heng Tong" or "China Crazy Buy"), to acquire its O2O (online to offline) and B2C (business to customer) e-commerce business focused on sale of locally produced, national branded and well-known agricultural products such as raw, packaged and cooked food, meat, beverage, fresh fruits and vegetables in the Anhui Province of China. 

China Crazy Buy developed technologies and infrastructure in order to support and help local businesses, consisting of buyers, sellers, third-party service providers, small retail sellers and larger wholesale sellers, and to leverage the power of internet to establish an online presence and conduct commerce with both consumers and businesses. Mr. Hailong Liu, who is the CEO and Chairman of the Company and Guoying, is majority shareholder and Chairman of Board of China Crazy Buy.

Mr. Hailong Liu, Chairman of China Electronics Holdings, Inc., commented, "We're thrilled to enter into this LOI to purchase China Crazy Buy's growing Anhui-based e-commerce business. As mentioned in our previous release, the e-commerce market in China is huge. The cities, counties, towns and rural regions we are focused on servicing in Anhui are largely underserved and comprised of high young adult populations - leaving significant opportunity for growth. We look forward to completing this acquisition in 2015, and to generating greater return for the Company and our shareholders moving ahead."

Pursuant to the LOI, at closing, Guoying plans to acquire 100% of the issued and outstanding capital stock of China Crazy Buy in consideration for the issuance of capital stock of the Company. The LOI has non-binding obligations. The transaction is subject to various conditions to closing, including satisfactory completion of due diligence, approval of the Company's shareholders and definitive documentation. The Parties are entitled to terminate the LOI at any time by either mutual agreement of both parties, or at any Party's discretion if the contemplated transaction failed to close before March 30, 2015.  Upon completion, the Company will seek to engage in e-commerce business, although there can be no assurance that such efforts would be successful.

There can be no assurance that the transactions contemplated by the LOI will be consummated.  The LOI and this Current Report on Form 8-K do not constitute an offer to buy, or solicitation of an offer to sell, any securities of the Company and no offer or sale of such securities will be made in any jurisdiction where it would be unlawful to do so.

LU'AN CITY, China, Dec. 16, 2014 /PRNewswire/ -- China Electronics Holdings, Inc. (OTCQB: CEHD) today announced that onDecember 9, 2014 and December 15, 2014 the Company filed a PRE Schedule 14C and DEF Schedule 14C  with the Securities and Exchange Commission with the decision to amend its Articles of Incorporation to change its name to China Crazy Buy Holdings.

The proposed name change, integral to the Company's strategy to expand into the e-commerce business in China, received consent from the Board of Directors and the holder of 11,556,288 of the issued and outstanding shares of common stock, representing 68.9% of the issued and outstanding shares, on December 2, 2014. The Consents adopted resolutions which authorized the Company to act on a proposal to amend its Articles of Incorporation to change the name of the Company from "China Electronics Holdings, Inc." to "China Crazy Buy Holdings, Inc." The Company anticipates the name change will be effective at and around January 6, 2015.

The Company's future business plan is to identify and invest in early-stage O2O (online to offline) and B2C (business to customers) e-commerce companies, focusing on sale of locally produced raw and packaged cooked food, beverage, fresh fruits and vegetables to domestic consumers in counties, towns and rural markets in Anhui Province. The Company plans to acquire or invest in companies that either at early stage or whose existing businesses require capital investment in order to achieve scale.

Mr. Hailong Liu, Chairman of China Electronics Holdings, Inc., commented, "While our current retail and wholesale business remains intact, we see significantly more opportunity in China's e-commerce business moving forward and are making inroads to strategically expand into this market. Our Company's name change to China Crazy Buy Holdings, Inc. is the first step of several in our initiative to bring greater revenue and opportunity to the Company, and value to shareholders."

Management Discussion and Analysis

Revenues
 
Our net revenue for the three months ended September 30, 2014 was $8,650,489, an increase of 3.5%, or $293,615, from $8,356,874 for the three months ended September 30, 2013.
 
For the three months ended September 30, 2014, net revenue from exclusive franchise stores was $7,327,816, an increase of 1.9%, or $139,824, from $7,187,992 for the three months ended September 30, 2013. There were 141 exclusive franchise stores as of September 30, 2014, compared to 136 exclusive franchise stores as of September 30, 2013. The increased revenue can be attributed to more number of exclusive stores and more attractive pricing strategies.
 
For the three months ended September 30, 2014, net revenue from non-exclusive stores was $705,171, an increase of 5.7%, or $38,239, from $666,932 for the three months ended September 30, 2013. There were 16 non-exclusive stores as of September 30, 2014, compared to the 18 non-exclusive stores as of September 30, 2013. The increased revenue can be attributed to increased sales from some product lines resulting from more successful marketing and sales effort such as more attractive pricing strategies. 
 
For the three months ended September 30, 2014, net revenue from company owned stores was $617,502, an increase of 23.0%, or $115,552, from $501,950 for the three months ended September 30, 2013. The increased revenue from company-owned stores was mainly because of increased sales from more successful marketing and sales effort such as more attractive pricing strategies. 

Net Income (Loss) Attributable to China Electronics Holdings, Inc.
 
Our net income attributable to China Electronics Holdings, Inc. for the three months ended September 30, 2014 was $2,085,200, an increase of $4,334,361, or 192.7%, from net loss attributable to China Electronics Holdings, Inc. of $2,249,161 for the same period in 2013.  The increase was mainlydue to increased sales and increased interest income, and decreased operating expenses during the three months ended September 30, 2014, compared to the same period 2013.

Management Discussion and Analysis

Revenues
 
Our net revenue for the three months ended June 30, 2014 was $3,846,288, a decrease of 44.2%, or $3,050,561, from $6,896,849 for the three months ended June 30, 2013.
 
For the three months ended June 30, 2014, net revenue from exclusive franchise stores was $3,214,377, a decrease of 41.4%, or $2,272,252, from $5,486,629 for the three months ended June 30, 2013. There were 140 exclusive franchise stores as of June 30, 2014, compared to 306 exclusive franchise stores as of June 30, 2013. The decreased revenue can be attributed to fewer number of exclusive stores and decreased sales from some product lines resulting from less demand and more competition.
 
For the three months ended June 30, 2014, net revenue from non-exclusive stores was $139,025, a decrease of 68.9%, or $307,960, from $446,985 for the three months ended June 30, 2013. There were 16 non-exclusive stores as of June 30, 2014, compared to the 177 non-exclusive stores as of June 30, 2013. The decreased revenue can be attributed to fewer number of non-exclusive stores and decreased sales from some product lines resulting from less demand and more competition. As noted above, the Company decided in 2013 to begin terminating its franchise arrangements based on certain enumerated criteria. The Company entered into no new non-exclusive franchise agreements in the first two quarters of 2014. The revenue remains stable without significant decline because the Company terminated contracts with non-exclusive franchise stores that generated little revenue and maintained contracts with stores that have business with the company’s top 20 largest customers.
 
For the three months ended June 30, 2014, net revenue from company owned stores was $492,887, a decrease of 48.8%, or $470,348, from $963,235 for the three months ended June 30, 2013. The decreased revenue from company-owned stores was mainly because of decreased sales from some product lines, less demand, less advertising efforts and more competition from e-commerce retail and wholesale business.

Net Income (Loss) Attributable to China Electronics Holdings, Inc.
 
Our net loss attributable to China Electronics Holdings, Inc. for the three months ended June 30, 2014 was $2,028,192, a decrease of $29,641,774, or 93.6%, from net loss attributable to China Electronics Holdings, Inc. of $31,669,966 for the same period in 2013. The decrease was mainly because the Company did not suffer any impairment loss for long-term assets held during the three months ended June 30, 2014, comparing $30.511,118 impairment loss recorded in the same period 2013.
 

Management Discussion and Analysis

Year ended December 31, 2013 Compared with Year ended December 31, 2012

Revenues

Our net revenue for the year ended December 31, 2013 was $26,211,901, a decrease of 54.9%, or $31,870,996, from $58,082,897 for the year ended December 31, 2012.

For the year ended December 31, 2013, net revenue from exclusive franchise stores was $20,968,736, a decrease of 38.8%, or $13,287,961, from $34,256,697 for the year ended December 31, 2012. There were 133 exclusive franchise stores as of December 31, 2013, compared to the 306 exclusive franchise stores as of December 31, 2012. The Company entered into franchise agreements with 25 exclusive stores and terminated its agreement with 198 exclusive stores in 2013. The decreased revenue is because of decreased number of exclusive stores and decreased sales from some product lines due to less demand and more competition.
 
For the year ended December 31, 2013, net revenue from non-exclusive stores was $1,917,498, a decrease of 88.1%, or $14,229,614, from $16,147,112 for the year ended December 31, 2012. There were 16 non-exclusive stores as of December 31, 2013, compared to the 176 non-exclusive stores as of December 31, 2012. The Company entered into a non-exclusive franchise agreement with 1 non-exclusive stores and terminated its agreement with 161 non-exclusive stores in 2013. The decreased revenue is because of decreased number of exclusive stores and decreased sales from some product lines due to less demand and more competition.
 
For the year ended December 31, 2013, net revenue from company owned stores was $3,325,667, a decrease of 56.7%, or $4,353,421, from $7,679,088  for the year ended December 31, 2012. The decreased revenue from company-owned stores was mainly because of decreased sales from some product lines due to less demand and more competition.

Net Income (Loss) Attributable to China Electronics Holdings, Inc.

Our net loss attributable to China Electronics Holdings, Inc. for the year ended December 31, 2013 was $36,378,221, an increase of $35,276,880, or 3203.1%, from net loss attributable to China Electronics Holdings, Inc. of $1,101,341 for the same period in 2012. The increase was mainly due to impairment loss for long-term assets held for sale during the year ended December 31, 2013.

Item 1.01 Entry into a Material Definitive Agreement
Item 2.01 Completion of Acquisition or Disposition of Assets

On June 29, 2013, China Electronics Holdings, Inc. (the “Company”), through its indirectly wholly owned subsidiary Lu’an Guoying Electronic Sales Co., Ltd., a wholly foreign enterprise under the laws of the People’s Republic of China (“Guoying”), executed a share transfer agreement (the “Transfer Agreement”) with Mr. Li Xiaoyu (“Buyer of Opto-Electronics”) to sell its 99% ownership interest in its subsidiary Lu’an Guoying Opto-Electronics Technology Co., Ltd. (“Opto-Electronics”) for a  total consideration of $962,224 (RMB 5,940,000). The Company has accounted for the disposition of the assets of discontinued operation in accordance with SFAS 144 (“FASB ASC 360”), “Accounting for the Impairment or Disposal of Long-Lived Assets”. No gain or loss was recognized for this disposal in the Company’s consolidated statements of operation and comprehensive income for the nine months ended September 30, 2013.

The reason for the decrease of revenue mainly includes $7 million decreased sales from television offset by the increased $3 million increased sales from air conditioner. . The increase of the air conditioner is due to the reason that there are more new constructions for residential buildings in urban area of Lu’An city and more immigrant populations moving into Lu’An City during the third quarter ended September 30, 2011 compared to the same period last year. Therefore there is increasing demand of air conditioners for this quarter and we have added a new brand Haier Tongshuai Air Conditioner to meet our customers need. The decrease of the sales from television is due to the reason that the Company had promotions for television sales to meet customers’ increasing demand during Chinese new year and Duan Wu festival within the first two quarters of the year. The third quarter is slow season for television sales and the Company has shifting its business development focus to LED manufacturing and promotions for air conditioners. Therefore the sales of televisions for the third quarter decreased. We plan to shift our business focus to LED manufacturing and solar power products in the future, and we plan to gradually terminate our franchise contracts with our non-exclusive franchise stores that are located in remote rural areas that have ordered few products from us and have been generating limited revenue in the past years.