WEB NEWS Auditor trail
Item 4.01 Changes in Registrant’s Certifying Accountant
Since the commencement of WWC’s engagement on November 12, 2014 through WWC’s resignation on May 8, 2015 (the “Engagement Period”), WWC did not issue an audit report on our financial statements containing an adverse opinion or disclaimer of opinion, nor did WWC issue a report that was qualified or modified as to uncertainty, audit scope or accounting principles, except in its report dated April 15, 2015 for the fiscal year ended December 31, 2014 with respect to the Company’s ability to continue as a going concern. During the Engagement Period, there were no disagreements between the Company and WWC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to WWC’s satisfaction, would have caused WWC to make reference in connection with WWC’s opinion to the subject matter of the disagreement; and there were no “reportable events” as the term is described in Item 304(a)(1)(v) of Regulation S-K, except certain material weaknesses in the internal controls over financial reporting as disclosed in the Form 10-K for the fiscal year ended December 31, 2014.
The Company provided WWC with a copy of this Form 8-K prior to its filing with the SEC and requested that WWC furnish the Company with a letter addressed to the SEC that provides that WWC agrees with the statements made above. A copy of WWC’s letter dated May 14, 2015 is attached as Exhibit 16.1 to this Form 8-K.
Investor Alert
Item 1.01 Entry into a Material Definitive Agreement.
Reference is made to Item 2.01 for a description of the Share Exchange Agreement and the transactions contemplated thereunder. The descriptions of the Share Exchange Agreement are qualified in their entirety by reference to the complete text of the Share Exchange Agreement, which are attached hereto as Exhibit 2.1, and are incorporated by reference herein. You are urged to read the entire Share Exchange Agreement and the other exhibits attached hereto.
The preceding summaries of the Share Exchange Agreement are qualified in their entirety by reference to the complete text of the Share Exchange Agreement, which is attached hereto as Exhibit 2.1 and incorporated by reference herein. You are urged to read the entire Share Exchange Agreement attached hereto.
Comments & Business Outlook
AUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
(Stated in US Dollars)
12/31/2014
12/31/2013
Sales
$
4,296,084
$
5,036,674
Cost of sales
4,178,726
4,511,450
Gross profit
117,358
525,224
Selling, general and administrative expenses
806,907
695,104
Loss from operations
(689,549
)
(169,880
)
Other income and (expenses)
Interest income
931
25,174
Other expense
(165,228
)
-
Interest expense
(53,628
)
(150,348
)
Other income and (expense), net
(217,925
)
(125,174
)
Income (loss) before income taxes
(907,474
)
(295,054
)
Income taxes
-
224
Net loss
$
(907,474
)
$
(295,278
)
less: Loss attributable to Non-controlling interest
(357,945
)
(147,325
)
Net loss attributable to China Teletech Holding, Inc.
$
(549,529
)
$
(147,953
)
Basic and diluted income (loss) per common share
Basic
$
-
$
-
Diluted
$
-
$
-
Weighted average common shares outstanding:
Basic
124,360,023
105,197,283
Diluted
124,360,023
105,197,283
Management Discussion and Analysis
Total Revenue
During the year ended December 31, 2014, we generated $4,296,084 in revenue, as compared to $5,036,674 for the year ended December 31, 2013, representing a decrease of $740,590 or approximately 14.7%. The lower sales amount for the year ended December 31, 2014 was mainly due to the performing of customer screening process. As a result, the number of customers decreased.
Net loss of $867,474 was recorded during the year ended December 31, 2014 as compared to net loss of $295,070 during the year ended December 31, 2013. The increase of net loss was mainly due to investment in R&D and building the Company’s sales & marketing network.
Investor Alert
CFO Trail
Item 4.01 Changes in Registrant’s Certifying Accountant
AWC was engaged as the independent registered public accounting firm on July 31, 2014, (such period from July 31, 2014 to AWC’s dismissal, the “Engagement Period”). During the Engagement Period, AWC did not issue any reports on the Company’s financial statements and did not connect with any reports that contained an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended December 31, 2012 and December 31, 2013 and through the Engagement Period, there were (i) no reports had ever been issued by AWC for these periods; (ii) the Company did not have disagreements with AWC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of AWC would have caused them to make reference to the subject matter of the disagreement(s) in connection with reports for these periods; (iii) no "reportable events" as such term is defined in Item 304(a)(1)(v) of Regulation S-K.
The Company has provided AWC with a copy of the above disclosures prior to its filing with the Securities and Exchange Commission (the “SEC”), and has requested that AWC furnish a letter addressed to the SEC stating whether or not it agrees with the above statements and, if not, stating the respects in which it does not agree. A copy of AWC’s response letter dated November 18, 2014 is filed as Exhibit 16.1 to this Form 8-K.
Comments & Business Outlook
CHINA TELETECH HOLDING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
SEPTEMBER 30,
2014
2013
2014
2013
Net revenues
$
1,217,939
$
888,754
$
3,275,153
$
3,595,616
Cost of sales
1,198,648
827,019
3,146,108
3,247,886
Gross profit
19,291
61,735
129,045
347,730
Selling, general, and administrative expenses
276,011
117,828
559,316
398,262
Loss from operations
(256,720
)
(56,093
)
(430,271
)
(50,532
)
Other income and (expenses)
Losses on disposal and restructuring
(52,000
)
Interest income
-
-
6,117
-
Interest expense
(50,779
)
(47,923
)
(128,263
)
(86,731
)
Other income (expense), net
(50,779
)
(47,923
)
(174,146
)
(86,731
)
Income (loss) before income taxes
(307,499
)
(104,016
)
(604,417
)
(137,263
)
Income taxes
-
-
-
-
Net income (loss)
$
(307,499
)
$
(104,016
)
$
(604,417
)
$
(137,263
)
less: Income (loss) attributable to noncontrolling interest
(150,674
)
(50,968
)
(256,965
)
(67,259
)
Net income (loss) attributable to China Teletech
$
(156,825
)
$
(53,048
)
$
(347,452
)
$
(70,004
)
Basic and diluted income (loss) per common share
Basic
$
(0.00
)
$
(0.00
)
$
(0.00
)
$
(0.00
)
Diluted
$
(0.00
)
$
(0.00
)
$
(0.00
)
$
(0.00
)
Weighted average common shares outstanding:
Basic
121,534,218
99,235,999
121,534,218
99,235,999
Diluted
125,213,776
99,235,999
125,213,776
99,235,999
Management Discussion and Analysis
Total Revenue
During the three months ended September 30, 2014, our revenue was $1,217,939, as compared to $888,754 during the same period in 2013, representing an increase of $329,185. The increase in revenue during the three months ended September 30, 2014 was mainly due to increases in sales volume for our battery products.
Net loss was $156,825 during the three months ended September 30, 2014 as compared to a net loss of $53,048 during the three months ended September 30, 2013. The net loss increased by $103,777 as a result of increased SG&A expenses related to our efforts to increase sales volume.
Comments & Business Outlook
China Teletech Holding, Inc.
Consolidated Statements of Income
For the six month period ended June 30, 2014 and 2013
(Stated in US Dollars)
Note
6/30/2014
6/30/2013
Sales
$
-
$
19,072,469
Cost of sales
-
(18,664,594
)
Gross profit
-
407,875
Operating expenses
Administrative and general expenses
38,102
643,619
Total operating expense
38,102
643,619
Income (Loss) from Operations
(38,102
)
(235,744
)
Loss on disposal of a subsidiary
-
(382,217
)
Interest income
-
9
Interest expense
(116
)
-
Gain on Cancellation of Debt, Net of Tax
1,202,160
-
Income before taxation
1,163,942
(617,952
)
Income tax
-
(46,058
)
Net Income (Loss)
$
1,163,942
$
(664,010
)
Net Earnings After Tax
1,163,942
(664,010
)
Other comprehensive income:
Foreign currency translation change
(808
)
22,298
Comprehensive income (loss):
1,163,134
(641,712
)
Net income attributable to:
- Non controlling interest
$
-
$
(507,212
)
-the Company
1,163,942
(156,798
)
$
1,163,942
$
(664,010
)
Earnings (Loss) Per Share
Basic
$
0.01
$
(0.01
)
Diluted
$
0.01
$
(0.01
)
Weighted Average Shares Outstanding
-Basic
101,534,218
79,235,999
-Diluted
105,213,776
79,235,999
Management Discussion and Analysis
Total Revenue
During the three months ended June 30, 2014, we revenue was Nil as compared to $9,971,517 during the same period in 2013, representing a decrease of $9,971,517. The decrease of revenue during the three months ended June 30, 2014, was mainly due to the disposal of all operating subsidiaries.
Net income of $1,173,202 was recorded during the three months ended June 30, 2014 as compared to a net loss of $725,876 during the three months ended June 30, 2013. The increase was mainly due to the gain on cancellation of debts in the three months ended June 30, 2014.
Acquisition Activity
Item 1.01 Entry into a Material Definitive Agreement
Auditor trail
Item 4.01 Changes in Registrant’s Certifying Accountant
WWC was engaged as the independent registered public accounting firm on May 9, 2007, (such period from May 9, 2007 through WWC’s dismissal, the “Engagement Period”). During the Engagement Period, WWC did not issue any reports on the Company’s financial statements that contained an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended December 31, 2012 and December 31, 2013 and through the Engagement Period, there were (i) no disagreements with WWC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of WWC would have caused them to make reference to the subject matter of the disagreement(s) in connection with their report; (2) no "reportable events" as such term is defined in Item 304(a)(1)(v) of Regulation S-K.
The Company has provided WWC with a copy of the above disclosures prior to its filing with the Securities and Exchange Commission (the “SEC”), and has requested that WWC furnish a letter addressed to the SEC stating whether or not it agrees with the above statements and, if not, stating the respects in which it does not agree. A copy of WWC’s response letter dated July 31, 2014 is filed as Exhibit 16.1 to this Form 8-K.
Effective July 31, 2014, the Company engaged Albert Wong & Co. LLP (“AWC”) as the Company’s independent registered public accountant. The engagement was approved by the Board. During the years ended December 31, 2012 and December 31, 2013 and through the date hereof, the Company did not consult with AWC regarding (1) the application of accounting principles to a specified transaction, (2) the type of audit opinion that might be rendered on the Company’s financial statements, (3) written or oral advice provided that would be an important factor considered by the Company in reaching a decision as to an accounting, auditing or financial reporting issue, or (4) any matter that was the subject of a disagreement between the Company and its predecessor auditor as described in Item 304(a)(1)(iv) or a reportable event as described in Item 304(a)(1)(v) of Regulation S-K.
Comments & Business Outlook
China Teletech Holding, Inc.
Consolidated Statements of Income
For the three-month periods ended March 31, 2014 and 2013
(Stated in US Dollars)
3/31/2014
3/31/2013
USD
USD
Sales
$
-
$
9,100,952
Cost of sales
-
8,879,086
Gross profit
-
221,866
Operating expenses
Administrative and general expenses
14,802
119,475
Total operating expense
14,802
119,475
Operating Income / (Loss)
(14,802
)
102,391
Gain on forgiveness of long term debt
-
-
Other income
4,929
-
Interest income
-
2
Other Expenses
-
-
Interest expenses
(195
)
-
Total other income / (expense)
4,734
2
Income/(Loss) before taxation
(10,068
)
102,393
Income tax
-
(40,527
)
Loss from Continuing Operations
(10,068
)
61,866
Net Income (Loss)
$
(10,068
)
$
61,866
Other comprehensive income:
Foreign currency translation change
-
8,334
Comprehensive income:
$
-
$
70,200
Attributable to:
-minority interest
$
-
$
18,160
-the Company
-
43,706
$
-
$
61,866
Earnings Per Share
Basic
$
-
$
0.00
Diluted
$
-
$
0.00
Weighted Average Shares Outstanding
-Basic
-
66,375,574
-Diluted
-
66,375,574
Management Discussion and Analysis
Total Revenue
During the three months ended March 31, 2014, we revenue is Nil as compared to $9,100,952 during the same period in 2013, representing an decrease of $9,100,952. The decrease of revenue during the three months ended March 31, 2014, was mainly due to the disposal of all operating subsidiaries.
Net loss of $10,068 was recorded during the three months ended March 31, 2014 as compared to a net income of $61,866 during the three months ended March 31, 2013. The decrease was mainly due to disposal of all operating subsidiaries at the end of year 2013.
Comments & Business Outlook
China Teletech Holding, Inc.
Consolidated Statements of Income
For The Years Ended December 31, 2013 and 2012
(Stated in US Dollars)
Note
12/31/2013
12/31/2012
Sales
$
30,879,609
$
26,620,278
Cost of sales
30,417,071
25,889,207
Gross profit
462,538
731,071
Operating expenses
-
4,646
Administrative and general expenses
1,677,090
1,273,089
Total operating expense
1,677,090
1,277,735
Income (Loss) from Operations
(1,214,552
)
(546,664
)
Gain on disposal of a subsidiary
52,292
466,555
Other income
-
152,293
Interest income
14
65
Other expenses
10
(800,000
)
(533
)
Interest expense
(16
)
(327
)
Income before taxation
(1,962,262
)
71,389
Income tax
84
17,847
Net Income (Loss)
$
(1,962,346
)
$
53,542
Extra-Ordinary Gain on Forgiveness of Debt, Net of Tax
7
-
1,487,083
Net Earnings After Tax
(1,962,346
)
1,540,625
Other comprehensive income:
Foreign currency translation change
(58,374
)
(375,429
)
Comprehensive income (loss):
(2,020,720
)
1,165,196
Net income attributable to:
- Non controlling interest
$
(156,798
)
$
38,456
-the Company
(1,805,548
)
1,502,169
$
(1,962,346
)
$
1,540,625
Earnings (Loss) Per Share
Basic
$
(0.02
)
$
0.02
Diluted
$
(0.02
)
$
0.02
Weighted Average Shares Outstanding
-Basic (adjusted for 1 for 10 reverse stock split)
97,813,776
72,571,557
-Diluted (adjusted for 1 for 10 reverse stock split)
97,813,776
72,571,557
Management Discussion and Analysis
Results of Operations
Results of Operation for the year ended December 31, 2013 compared with the year ended December 31, 2012
Total Revenue
During the year ended December 31, 2013, we generated $30,879,609 in revenue, as compared to $26,620,278 for the year ended December 31, 2012, representing an increase of $4,259,331 or approximately 16.0%. The higher sales amount for the year ended December 31, 2013 was mainly because a major supplier of store-value cards temporarily ceased its business with us in the first quarter of 2012 for its internal system upgrade in order to serve a greater customer base from the Guangzhou City extended to the Guangdong Province. The supplier re-started its business with us in 2013 and our sales increase for the year ended December 31, 2013.
Net loss of $1,498,888 was recorded during the year ended December 31, 2013 as compared to net income of $1,540,625 during the year ended December 31, 2012. The decrease was mainly due to the gain from disposal of a subsidiary and the gain on forgiveness of long term debt in nine months ended September 30, 2012 and loss from disposal of a subsidiary and provision of subscription receivable for the year ended December 31, 2013.
Deal Flow
Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed on a Current Report on Form 8-K by China Teletech Holding, Inc. (the “Company”) with the Securities and Exchange Commission (the “SEC”) on December 1, 2011, on November 28, 2011, the Company entered into a settlement and amendment agreement (the “Settlement Agreement”) with Enable Growth Partners, LP, Enable Opportunity Partners, LP and Pierce Diversified Strategy Master Fund LLC (collectively, the “Enable Funds”), to settle the Debenture, Warrants and Judgment (as defined in the Settlement Agreement) arising from that certain securities purchase agreement dated July 31, 2007 and amended on November 3, 2008 by and among the Company and the Enable Funds (the “Purchase Agreement”). This report should be read in conjunction with the December 1, 2011 Current Report on Form 8-K.
The Company has not paid any settlement payment as required by the Settlement Agreement. On January 7, 2014, in lieu of the cash satisfaction of the settlement payment, the Company entered into a letter agreement (the “Letter Agreement”) with Enable Funds pursuant to which the Company agreed to pay the sum of $50,000 within 3 business day upon execution of the Letter Agreement and issue to Enable Funds an aggregate of 4,600,000 shares of common stock of the Company, which such shares shall be evidenced by a certificate bearing a customary securities act legend.
As of January 15, 2014, the sum of $50,000 was paid to the Enable Funds. The Company intends to issue the 4,600,000 shares of the Company’s common stock to the Enable Funds as soon as practical. The Purchase Agreement, Debentures and Warrants shall be deemed null and void and of no further force or effect upon satisfaction of the obligations of the Company under the Letter Agreement.
Comments & Business Outlook
China Teletech Holding, Inc.
Consolidated Statements of Income and Comprehensive Income
For the three and six month periods ended June 30, 2013 and 2012
(Stated in US Dollars)
Three months ended
Six months ended
6/30/2013
6/30/2012
6/30/2013
6/30/2012
Sales
$
9,971,517
$
8,041,796
$
19,072,469
$
11,078,580
Cost of sales
9,785,508
7,752,868
18,664,594
10,713,546
Gross profit
186,009
288,928
407,875
365,034
Operating expenses
Administrative and general expenses
524,144
641,552
643,619
751,882
Total operating expense
524,144
641,552
643,619
751,882
(Loss) Income from Operations
(338,135
)
(352,624
)
(235,744
)
(386,848
)
Gain on forgiveness of long term debt
-
-
-
1,566,323
Gain/(Loss) on disposal of a subsidiary
(382,217
)
1,371,596
(382,217
)
1,371,596
Other income
-
-
-
119,323
Interest income
7
14
9
20
Other expenses
-
(172
)
-
(616
)
Interest expense
-
(5
)
-
(5
)
Income before taxation
(720,345
)
1,018,809
(617,952
)
2,669,793
Income tax
(5,531
)
(47,139
)
(46,058
)
(63,273
)
Net Income/(Loss)
$
(725,876
)
$
971,670
$
(664,010
)
$
2,606,520
Other Comprehensive Income:
Foreign currency translation gain
13,964
8,425
22,298
4,543
Comprehensive Income/(Loss)
$
(711,912
)
$
980,095
$
(641,712
)
$
2,611,063
Net income/(loss) attributable to:
-Common stockholders
$
(550,918
)
$
958,438
$
(507,212
)
$
2,569,570
-Non-controlling interest
(174,958
)
13,232
(156,798
)
36,950
$
(725,876
)
$
971,670
$
(664,010
)
$
2,606,520
Earnings Per Share
Basic
$
(0.01
)
$
0.02
$
(0.01
)
$
0.03
Diluted
(0.01
)
0.02
(0.01
)
0.03
Weighted Average Shares Outstanding
-Basic (adjusted for 1 for 10 reverse stock split)
91,813,776
60,993,943
79,235,999
82,465,693
-Diluted (adjusted for 1 for 10 reverse stock split)
91,813,776
60,993,943
79,235,999
82,465,693
Comments & Business Outlook
China Teletech Holding, Inc. Consolidated Statements of Operations
Note
12/31/2012
12/31/2011
Sales
$
26,620,278
$
18,847,061
Cost of sales
25,889,207
18,426,846
Gross profit
731,071
420,215
Operating expenses
4,646
-
Administrative and general expenses
1,273,089
806,388
Total operating expense
1,277,735
806,388
Income (Loss) from Operations
(546,664)
(386,173)
Gain on disposal of a subsidiary
466,555
-
Other income
152,293
201,151
Interest income
65
15,461
Other expenses
(533)
(120,850)
Interest expense
(327)
-
Income before taxation
71,389
(290,411)
Income tax
17,847
(57,713)
Net Income (Loss)
$
53,542
$
(348,124)
Extra-Ordinary Gain on Forgiveness of Debt, Net of Tax
8
1,487,083
-
Net Earning After Tax
1,540,625
(348,124)
Other comprehensive income:
Foreign currency translation change
(375,429)
21,356
Comprehensive income:
1,165,196
(326,768)
Net income attributable to:
-minority interest
$
38,456
$
61,161
-the Company
1,502,169
(409,285)
$
1,540,625
$
(348,124)
Earnings Per Share
Basic
$
0.02
$
(0.02)
Diluted
$
0.02
$
(0.02)
Weighted Average Shares Outstanding
-Basic (adjusted for 1 for 10 reverse stock split)
72,571,557
15,351,147
-Diluted (adjusted for 1 for 10 reverse stock split)
72,571,557
15,351,147
Resolution of Legal Issues
On November 28, 2011, Guangzhou Global Telecom, Inc. (the “Company”) entered into a
settlement and amendment agreement (the “Settlement Agreement”) with Enable Growth Partners, LP, Enable Opportunity Partners, LP and Pierce Diversified Strategy Master Fund LLC (collectively, the “Holders”), to settle certain matters.
