UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2014

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission file number: 000-53490

GRAND CHINA ENERGY GROUP LIMITED

(Exact name of registrant as specified in its charter)

British Columbia		N/A
State or other jurisdiction of incorporation or organization		(I.R.S. Employer Identification No.)

Room 1601, 16/F, China Taiping Tower Phase II,

8 Sunning Road, Causeway Bay

Hong Kong

(Address of principal executive offices and Zip Code)

Registrant's telephone number, including area code: 852.3691.8831

N/A

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act

Title of Each Class		Name of each Exchange on which registered
N/A		N/A

Securities registered pursuant to Section 12(g) of the Act

Common Stock, no par value

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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 ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
(Do not check if a smaller reporting company)

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

173,118,558 shares of common stock at a price of $0.01 per share for an aggregate market value of approximately $1,731,186.

The aggregate market value of the voting stock held by non-affiliates is computed by reference to the $0.01 closing price of registrant’s common stock on June 30, 2014.

APPLICABLE ONLY TO CORPORATE REGISTRANTS

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 373,793,578 shares of common stock are issued and outstanding as of June 30, 2015.

TABLE OF CONTENTS

PART I	3
ITEM 1. BUSINESS	3
ITEM 1A. RISK FACTORS	15
ITEM 1B. UNRESOLVED STAFF COMMENTS	19
ITEM 2. PROPERTIES	20
ITEM 3. LEGAL PROCEEDINGS	20
ITEM 4. MINE SAFETY DISCLOSURES	20
PART II	20
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	20
ITEM 6. SELECTED FINANCIAL DATA	22
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	22
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	24
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	F-1
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL MATTERS	25
ITEM 9A. CONTROLS AND PROCEDURES	25
ITEM 9B. OTHER INFORMATION	26
PART III	26
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	26
ITEM 11. EXECUTIVE COMPENSATION	31
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.	32
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	34
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.	35
PART IV	36
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.	36

PART I

ITEM 1. BUSINESS

Forward-Looking Statements

This report contains forward-looking statements. Forward-looking statements are statements that relate to future events or future financial performance. In some cases, you can identify forward-looking statements by the use of terminology such as “may”, “should”, “intend”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “project”, “predict”, “potential”, or “continue” or the negative of these terms or other comparable terminology. These statements speak only as of the date of this report. Examples of forward-looking statements made in this annual report include statements pertaining to, among other things:

	●	our future development programs and results;
	●	our future capital expenditures;
	●	our financial and operating performance;
	●	operating expenditures; and
	●	governmental regulation of mining operations.

The material assumptions supporting these forward-looking statements include, among other things:

	●	our ability to obtain any necessary financing on acceptable terms, if and when needed;
	●	retention of skilled personnel;
	●	current exchange rate and interest rates; and
	●	general economic and financial market conditions.

Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

These forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors, including:

	●	statements respecting anticipated business activities;
	●	corporate strategies;
	●	political and regulatory risks associated with mining development and exploration; and
	●	the risks in the section entitled “Risk Factors”.

These risks, as well as risks that we cannot currently anticipate, could cause our company’s or our industry’s actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. Except as required by applicable law, including the securities laws of the United States and Canada, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

In this report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock. “RMB” or “Renminbi” refers to the legal currency of China and “$” or “US$” refers to the legal currency of the United States. “China” or “PRC” refers to the People’s Republic of China.

As used in this report, the terms “we”, “us”, and “ our” refer to Grand China Energy Group Limited.

Foreign Private Issuer Status

We are a foreign private issuer as defined under Rule 3b-4 promulgated under the Securities Exchange Act of 1934, but voluntarily file our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K.

We have elected to voluntarily file our annual, quarterly, and current reports on U.S. domestic forms because we have used such forms ever since we began filing the reports under the Securities Exchange Act of 1934. Going forward, we intend to continue to comply with our reporting requirements under Section 13 of the Securities Exchange Act of 1934 using the Forms 10-K, 10-Q, and 8-K.

As a foreign private issuer, we are not required to use the U.S. domestic forms to comply with our reporting requirements under Section 13 of the Securities Exchange Act of 1934. Instead, we can file an annual report on Form 20-F each year with the Securities and Exchange Commission and file our interim financial statements and management’s discussion and analysis and reports about material changes to our company, in the forms required by Canadian securities legislation, with the Securities and Exchange Commission on Form 6-K.

Corporate History

We were incorporated on November 6, 1997 in the province of British Columbia, Canada under the name “Slocan Valley Minerals Ltd.” with an authorized share capital of 10,000,000 common shares without par value. Following our incorporation we were not actively engaged in any business activities. On June 1, 2004 we increased our authorized share capital from 10,000,000 common shares without par value to an unlimited number of common shares without par value. On June 11, 2004 we changed our name to “Orca International Language Schools Inc.”

Effective March 3, 2009, we changed our name from “Orca International Language Schools Inc.” to “SGB International Holdings Inc.” and we created a new class of preferred shares. As a result, our authorized capital consists of an unlimited number of common shares without par value and an unlimited number of preferred shares without par value. We have not issued any preferred shares. Effective March 4, 2009, we effected a 4.5 for one forward split of our issued and outstanding common shares.

Our goal originally was to provide management services to schools in the international education industry based on the principles of improving their administrative, operational, marketing, sales and human resources functions; building links with other schools worldwide to foster student exchange; and repositioning the schools to concentrate their curriculum to prepare students for one of the three major English proficiency tests. We searched for a school as the initial client but were not successful in finding any such school. Since we had incurred losses since November 6, 1997, in March 2009, our board of directors decided to explore the possibility of adopting a different business plan to protect our shareholders’ value.

On April 12, 2011, we entered into a share exchange agreement (the “Share Exchange Agreement”) with Dragon International Resources Group Co., Limited, its shareholders and Fujian Huilong Coal Mine Co., Ltd. (formerly known as YongdingShangzhai Coal Mine Co., Ltd.) and as a result of the closing of this agreement on May 11, 2011, we adopted the business of Fujian Huilong Coal Mine Co., Ltd. and abandoned our prior business. Pursuant to the Share Exchange Agreement, we acquired 100% of the issued and outstanding capital stock of Dragon International Resources Group Co. in exchange for an aggregate of 220,522,000 shares of our common stock, which constituted 90% of our issued and outstanding common stock on a fully-diluted basis as of and immediately after the consummation of the Share Exchange Agreement. On December 19, 2013, we sold our 100% equity interest in Dragon International Resources Group Co and its wholly owned subsidiary Fujian Huilong Coal Mine Co., Ltd to an independent third party for cash consideration of HKD 1,000,000 (approximately USD $129,000) because we believed that the existing mine plant, property, and equipment had deteriorated and the mine was not providing coal of required quantity or quality.

On October 3, 2013, we incorporated, SGB Investment Limited, which is a wholly owned subsidiary. The principal business of SGB Investment Limited is providing mining related consulting work for coal mines in Fujian Province, People’s Republic of China. The areas of business SGB Investment Limited also include assisting other mining operations to set up sales chain management systems as well as providing advisory services for mining exploration management.

During 2014, we conducted no consulting activities related to the mines in Fujian Province, choosing instead to devote our resources to engaging in extensive due diligence on coal mining properties elsewhere in China and in Uzbekistan and Kyrgyzstan. Such diligence included numerous site visits and meetings with mine owners. We continue to search for potential coal mining entities, properties and assets for acquisition.

Effective August 6, 2014, we changed our name from “SGB International Holdings Inc.” to “Grand China Energy Group Limited.”

Our Business

Since December 19, 2013, our principal business has been to provide mining related consulting work for coal mines in Fujian Province, assist other mining operations to set up sales chain management systems to provide mining exploration advisory services and to search for potential acquisition candidates involving mining entities and properties.

We are targeting acquisition candidates both in China and internationally. The Chinese government has set a firm target to develop western China’s economy as a large number of roads and railways have been built to increase the infrastructure for the region. We see this as a huge potential for us. All infrastructure works require large amounts of electricity and steel, and steam coal and coking coal demand for the region will be significantly increased. Due to the low coal price since 2014, several quality coal mine opportunities from the west side of China and central Asia Region have become available.

Due to the low coal market price, the Fujian coal markets have suffered. A large number of local mining sites have laid off mining contractors and reduced their daily hours of operation. SGB Investment Limited reduced its consulting activates due to that fact, and has principally devoted its resources to spending more time on studying, developing and planning for other mining deposits which are near Shanxi Province, Xinjiang Province and in central Asian countries such as Kyrgyzstan and Uzbekistan.

Together with external advisors, we have engaged in geological data and mining site visits and have performed feasibility studies on four potential acquisition targets, two of which are located in China, one from Shanxi Province, and the other in the Xinjiang Province. Two potential foreign projects are located in Kyrgyzstan and Uzbekistan. No assurance can be given that we will successfully complete an acquisition or that we will be able to do so on beneficial terms.

Our mining team has finished its Xinjiang coal market study with the assistance of independent mining consultants. The study analyzed in excess of 20 coal customers in the Xinjiang province. The study confirms our belief that a significant supply gap for premium coal exists in the Xinjiang region, leading to the potential for a far more positive market dynamic in Xinjiang than the current outlook for seaborne coking coals.

We did not engage in any direct mining or coal trading activities during 2014.

Research and Development

We had no research and development expenses in 2013 and in 2014. We currently have no plans for any research and development activities and do not anticipate any material research and development costs.

Intellectual Properties and Licenses

We have no material patents, licenses or other intellectual property.

Regulatory Overview

Coal Law

On August 29, 1996, the PRC Government promulgated the People’s Republic of China Coal Law (the “Coal Law”), which became effective on December 1, 1996. The Coal Law sets forth requirements for all coal mines, including state-owned mines and privately owned mines, mainly providing for resource exploitation planning, approval of new mines, the issuance of mining and safety production permits, implementation of safety standards, processing of coal, business management, protection of mine areas from destructive exploitation, and safety protection for miners and administrative supervision.

According to the Coal Law, entities seeking to establish mining enterprises must apply to the relevant government office and obtain all necessary approvals. Upon obtaining such approvals, the entities concerned will be granted a mining permit from the Ministry of Land and Resources. Thereafter, an entity must obtain a coal production permit and a coal operation permit and other related quality permits in order to commence coal production and sell coal products in the PRC. We have applied for and received a mining permit valid until 2016 and a coal production permit valid until 2031. The PRC Government is in the process of amending the Coal Law, in response to concerns over the lack of a well-coordinated development plan for mining, which contributed to a significant amount of waste of valuable coal resources. The lack of effective penalty provisions or the lenient enforcement of existing provisions in the Coal Law has been cited as another important reason for the current rulemaking effort.

Mining activities in the PRC are also subject to the People’s Republic of China Mineral Resources Law (“Mineral Resources Law”), promulgated by the PRC Government on March 19, 1986 and amended on August 29, 1996. The Mineral Resources Law regulates matters relating to the planning or engaging in the exploration, exploitation and mining of mineral resources. According to the Mineral Resources Law all mineral resources, including coal, are owned by the state. Except under limited circumstances, any enterprise planning to engage in the exploration, exploitation and mining of mineral resources must first apply for and obtain exploration rights and mining rights before commencing the relevant activities. The Mineral Resources Law prohibits the transfer of exploration and exploitation rights in general unless the transfer falls within certain specified circumstances. Our management believes that we are in compliance with the Mineral Resources Law in this respect because we have applied for and obtained the requisite mining and coal production permits.

We are principally subject to governmental supervision and regulation by the following agencies of the PRC Government:

	●	the State Council, which is the highest level of the executive branch, is responsible for the examination and approval of major investment projects specified in the 2004 Catalogue of Investment Projects released by the PRC Government;
	●	the National Development and Reform Commission, which formulates and implements major policies concerning China’s economic and social development, examines and approves investment projects exceeding certain capital expenditure amounts or in specified industry sectors, including examination and approval of foreign investment projects, oversees reform of state-owned enterprises and formulates industrial policies and investment guidelines for the natural resource industries, such as coal production. In addition, the NDRC administers coal export activities and export quotas jointly with the Ministry of Commerce. The NDRC is also responsible for the evaluation and implementation of the price-linking mechanism between the prices of coal and power;
	●	the Ministry of Commerce of China (“MOFCOM”) and/or its local counterpart, which regulates foreign investment in China, such as review and approval of foreign invested companies in China and mergers and acquisitions of Chinese domestic enterprises by foreign investors;
	●	the Ministry of Land and Resources of China (“MLR”) and/or its local counterpart, which has the authority to grant land use licenses and mining right permits, approves transfer and lease of mining rights, and reviews mining rights premium and reserve valuation;
	●	the State Administration of Coal Mine Safety (“SACMS”) and/or its local counterpart, which is responsible for the implementation and supervision of the relevant safety laws and regulations applicable to coal mines and coal mining operations;
	●	the Ministry of Environmental Protection of China (“MEP”) and/or its local counterpart, which supervises and controls environmental protection and monitors China’s environmental system;
	●	the Ministry of Construction of China (“MOC”) and/or its local counterpart, which is responsible for the management of survey and design of construction projects, including but not limited to the survey and design of coal mines;
	●	the National and State Tax Bureaus and/or their local counterparts, which are responsible for the federal and local income, VAT and other taxes;
	●	the State Administration of Foreign Exchange of China (“SAFE”) and/or its local counterpart, which is responsible for the convertibility of RMB into foreign currencies, registration of foreign debt or loans of Chinese companies and, in certain cases, the remittance of currency out of the PRC, such as repayment of bank loans or dividends denominated in foreign currencies; and
	●	the State Administration for Industry and Commerce of China (“SAIC”) and/or its local counterpart, which is responsible for review and approval of establishment of domestic and foreign invested companies in China and issuance of their business licenses.

The following is a brief summary of the principal laws, regulations, policies and administrative directives to which we are subject with respect to our existing and proposed operations in China.

Pricing

Until 2002, the production and pricing of coal was largely subject to close control and supervision by the PRC Government, which centrally manages the production and pricing of coal. Previously, the price of coal was determined based on a government-devised pricing guideline which set out the suggested prices for coal. However, to effectuate the transformation from planned economy to market economy practices, from January 1, 2002 China eliminated the state guidance price for coal and allowed prices for all types of coal to be determined in accordance with market demand. However, as the PRC Government continues to maintain control over the national railway system, which is the primary means for coal transportation in China, the PRC Government still may exert influence over the pricing of coal through its allocation of railway transportation capacity for coal.

In addition, under the Price Law of the PRC, promulgated December 29, 1997, effective May 1, 1998, in the event of an actual increase or potential increase in the prices of important products such as coal, the State Council and the provincial governments, autonomous regions and municipalities directly under the PRC Government may adopt intervention measures, such as restricting the ratio of price differentials or of profits, and imposing price limits, etc. In August 2004, the NDRC issued a notice setting forth temporary measures to be imposed on thermal coal prices for certain regions. In December 2004, the NDRC issued a notice setting forth guidelines for pricing of thermal coal sales in 2005. Under these guidelines, the coal suppliers and their customers may not negotiate for the sale of coal at prices exceeding the government suggested price range.

Similar to coal pricing, the production and supply of coal, which is dictated by the PRC Government’s annual state coal allocation plan, has been gradually liberalized and largely subject to market forces. Major domestic coal suppliers and coal purchasers attend the Annual National Coal Trading Convention to negotiate and discuss the price and quantity of coal to be supplied and purchased for the coming year through the signing of letters of intent and short and long-term supply contracts.

On December 18, 2006, the National Development and Reform Committee issued the Notice Relating to the Good Preparation for Inter Provincial Coal Production Transportation Works (Fa Gai Yun Xing [2006] No. 2867). According to the notice, in 2007, policies were to be implemented to encourage the reform of the market system for determining coal prices by allowing parties to determine prices through discussions in accordance with market demand, and to encourage price determination based on quality. On December 27, 2006, the relevant government departments and units, such as the National Development and Reform Committee for railway operations, and the Transportation Department, convened a 2007 coal industry video and telephone conference. This symbolized the end of the Annual National Coal Trading Convention that has been in place for over 50 years. Under the State’s macroeconomic controls, the new mechanism for enterprises to freely determine prices through negotiations was put in place.

Domestic Trading of Coal

Pursuant to the Measures for the Regulation of Coal Operations promulgated by the NDRC on December 27, 2004, the state implemented a system to examine coal operation qualifications in respect of coal operations, including the wholesale and retail of raw coal and processed coal products, and the processing and distribution of coal for civilian use. Before an enterprise can engage in coal operations, it must obtain a coal operation qualification certificate. A coal production enterprise that deals in coal products which it did not itself produce and process is required to obtain coal operation qualifications. The enterprise is also prohibited from dealing in coal products produced and/or processed by a coal mine enterprise that does not have a coal production permit. An enterprise is also prohibited from selling coal products to a coal operation enterprise that does not have coal operation qualifications. Our company has applied for and obtained a coal production permit and this permit is valid until December of 2031.

Although the PRC Government indirectly influences coal prices through its broad regulation of electricity prices and control over the allocation of national railway capacity, domestic coal prices have mainly been market-driven since 2002, when the PRC Government eliminated the price control measures for coal used in electric power generation.

Prior to 2006, however, the PRC Government continued to implement temporary measures to prevent and control any unusual fluctuations in thermal coal prices. This, among other reasons, has caused thermal coal contract prices for major users to be generally lower than spot market prices during this period. On January 1, 2006, the NDRC announced the elimination of such temporary intervention practices on thermal coal price, thus completely removing control over thermal coal prices, including contract prices for major users.

Environmental Protection Laws and Regulations

Pursuant to the Environmental Protection Law, MEP is empowered to formulate national environmental quality and discharge standards and to monitor China’s environmental system at the national level for the purpose of preventing and eliminating environmental pollution and damage to ecosystems. Environmental protection bureaus at the county level and above are responsible for environmental protection within their areas of jurisdiction.

Environmental regulations require companies to file an environmental impact report with the relevant environmental authority for approval before undertaking the construction of a new production facility or any major expansion or renovation of an existing production facility. New facilities built pursuant to this approval are not permitted to operate until the relevant environmental authority has performed an inspection and has found that the facilities are in compliance with environmental standards. Our current facilities are in compliance with environmental standards.

Mining operations, including both open pit mines and underground mines, may result in disturbances of surface and underground land and cause water pollution, landslides and other types of environmental damage. To manage the adverse effects that the coal industry has on the environment, China promulgated a series of laws and regulations. Through these laws and regulations, China established national and local environmental protection legal frameworks and issued standards applicable to emission controls, discharges of wastes and pollutants to the environment, generation, handling, storage, transportation, treatment and disposal of waste materials by production facilities, land rehabilitation and reforestation.

The Environmental Protection Law, promulgated by the National People’s Congress December 26, 1989, is the cardinal law for environmental protection in China. The law establishes the basic principle for coordinated advancement of economic growth, social progress and environmental protection, and defines the rights and duties of governments at all levels. Local environmental protection bureaus may set stricter local standards than the national standards and enterprises are required to comply with the stricter of the two sets of standards. The Environmental Protection Law requires any entity operating a facility that produces pollutants or other hazards to incorporate environmental protection measures into its operations and to establish an environmental protection responsibility system, which must adopt effective measures to control and properly dispose of waste gases, waste water, waste residue, dust or other waste materials.

New construction, expansion or reconstruction projects and other installations that directly or indirectly discharge pollutants to the environment shall be subject to relevant state regulations governing environmental protection for such projects. Entities undertaking such projects must submit a pollutant discharge declaration statement detailing the amount, type, location and method of treatment to the competent authorities for examination. The authorities will allow the construction project operator to release a certain amount of pollutants into the environment and will issue a pollutant discharge license for that amount of discharge subject to the payment of discharge fees. The release of pollutants is subject to monitoring by the competent environmental protection authorities. If an entity discharges more than the amount permitted by the pollutant discharge license, the local environmental protection bureau can fine the entity up to several times the discharge fees payable by the offending entity for its allowable discharge, require the offending entity to close its operations, or take other measures to remedy the problem. We have not received any notices from the relevant government authorities demanding us to pay any fines or threatening to close our operations.

In the environmental impact statement of a construction project, the project operator shall make an assessment regarding the pollution and environmental hazards the project is likely to produce and its impact on the ecosystem, and measures for their prevention and control. The operator shall submit the statement according to the specified procedure to the competent environmental protection authority for examination and approval. The building of sewage outlets within any water conservancy projects, such as canals, irrigation channels and reservoirs, shall be subject to the consent of the competent authority in charge of water conservancy projects.

The rehabilitation of mining sites is another important issue the PRC Government has sought to address. Under the Law of Land Administration of the People’s Republic of China, promulgated June 15, 1986, and amended on August 28, 2004, and the Land Rehabilitation Regulations, issued by the State Council in 1988 and effective January 1, 1989, coal producers must undertake measures to restore the mining site to its original state within a prescribed time frame if mining activities result in damage to arable land, grassland or forest. The rehabilitated land must meet rehabilitation standards, as required by law from time to time, and may only be subsequently used upon examination and approval by the land authorities. A coal producers’ failure to comply with this requirement or its failure to return the mining site to its original state will result in the imposition of fines, rehabilitation fees and/or rejection of applications for land use rights by the local bureau of land and resources.

Emissions of waste water by coal mines and coking plants are regulated by the Law on Prevention and Control of Water Pollution of the PRC, promulgated by the Standing Committee of National People’s Congress in May 1984 and as amended in May 1996 and February 2008, which became effective in June 2008, and the Administrative Regulations on the Levy and Use of Discharge Fees, issued by the State Council in January 2003 and effective in July 2003. Any new construction projects, such as coal mines and coking plants, must submit an environmental impact statement, which shall include an assessment of the water pollution hazards the project is likely to produce and its impact on the ecosystem. The environmental impact statement must also contain measures to prevent and control the water pollution hazards. Every new production facility must be equipped with waste water processing facilities which must be put in use together with the production facilities. Construction projects that discharge pollutants into water shall pay a pollutant discharge fee in accordance with state regulations.

Violators of the Environmental Protection Law and various environmental regulations may be subject to warnings, payment of damages and fines. Any entity undertaking construction work or manufacturing activities before the pollution and waste control and processing facilities are inspected and approved by the environmental protection department may be ordered to suspend production or operations and may be fined. The violators of relevant environmental protection laws and regulations may be exposed to criminal liability if violations result in severe loss of property, personal injuries or death. Our management is of the view that we are in compliance with the Environmental Protection Law and various environmental regulations. We have not received any notice from the relevant government authorities advising us that we are in violation of the Environmental Protection Law or various environmental regulations.

In addition to the PRC environmental laws and regulations, China is a signatory to the 1992 United Nations Framework Convention on Climate Change and the 1998 Kyoto Protocol, which propose emission targets to reduce greenhouse gas emissions. The Kyoto Protocol came into force on February 16, 2005. At present, the Kyoto Protocol has not set any specific emission targets for certain countries, including China.

Mineral Resources Laws and Regulations

Exploration, exploitation and mining operations must comply with the relevant provisions of the Mineral Resources Law and other relevant regulations, and are under the supervision of the Ministry of Land and Resources. Exploration and exploitation of mineral resources are also subject to examination and approval by the Ministry of Land and Resources and relevant local authorities. We have applied for and received our mining permit (*3500000620055) valid until April of 2016. Upon approval, a mining permit is issued by the relevant administrative authorities, which are responsible for supervision and inspection of mining exploitation in their jurisdictions. The holders of mining rights are required to file annual reports with the relevant administrative authorities. We have filed our annual reports with the relevant administrative authorities to maintain the validity of our mining permit.

The Mineral Resources Law governs, among other things, the assignment of mining rights. If the entity holding the mining rights is to be changed due to a sale of enterprise assets or other circumstances that may cause a change in the property rights to the assets of the enterprise, the enterprise may assign its mining rights, subject to approval according to the Coal Law, the Mineral Resources Law and other laws and regulations.

The PRC Government permits mine operators of collectively owned mines to exploit mineral resources in designated areas and individuals to mine scattered mineral resources. Such mine operators and individuals are subject to government regulation. Mining activities by individuals are restricted. Individuals are not permitted to exploit mineral reserves allocated for exploitation by a mining enterprise or company or protected reserves. Indiscriminate mining that damages mineral resources is prohibited.

It is unlawful for an entity or individual to conduct mining operations in areas designated for other legal mining operators. A mining operator whose exploitation causes harm to others in terms of production or in terms of living standards is liable for compensation and is required to take necessary remedial measures. When a mine is closed, a mine closure report and information concerning the mining facilities, hidden dangers, remediation and environmental protection must be submitted for examination and approval in accordance with the relevant law.

Mineral products illegally extracted and incomes derived from such activities may be confiscated and may result in fines, revocation of the mining permit and, in serious circumstances, criminal liability. Because we have mined and produced coal from an area beyond the area covered by our valid mining permit, we may be subject to fine or revocation of our mining permit. However, our management believes that the likelihood of any enforcement action is low as we have applied for and obtained in May of 2011 another mining permit covering an additional 6.8 km2 of mining area.

Mining safety

On June 7, 2005, the State Council promulgated Several Opinions on Promoting the Healthy Development of the Coal Industry (the “Opinions”), announcing the PRC Government’s policies with respect to the development and restructuring of the coal industry. The Opinions are consistent with the NDRC’s announcement on the revision of the Coal Law and reiterated the PRC Government’s policies with respect to the administration of coal reserves, enhancement of coal mine safety, encouragement of industry consolidation among coal producers, acceleration of the construction of large coal production bases, improvement of mining techniques and equipment for coal production and the organization and regulation of small coal mines.

Special Regulations by the State Council on Preventing Work Safety Related Accidents in Coal Mines and Five Sets of Supplemental Rules and Regulations

The Special Regulations by the State Council on Preventing Work Safety Related Accidents in Coal Mines were promulgated and entered into effect on September 3, 2005. This regulation specifies that coal mine enterprises are responsible for preventing coal mine work safety-related accidents. If a coal mine has not obtained, in accordance with the law, a mining right permit, work safety permit, coal production permit or business license and if the mine manager has not obtained, in accordance with the law, a mine manager qualification certificate and a mine manager safety qualification certificate, the coal mine may not engage in production. A coal mine should have adequate safety equipment, facilities and resources and should have in place measures to guard against the occurrence of work safety related accidents, as well as a sound contingency plan to deal with emergencies. Coal mining enterprises should establish a sound system for the detection, elimination, treatment and reporting of latent work safety-related dangers. If a major latent work safety-related danger as specified exists in a coal mine, the enterprise should immediately suspend production and eliminate the latent danger. Coal mining enterprises should provide their personnel working underground and their special operation personnel with safety education and training in accordance with relevant state regulations. The person in charge of a coal mine and the production and operation management personnel should go into mines and act as foremen on a rotating basis in accordance with state regulations, while a file recording their entry into the mine should be maintained. In addition, the State Administration of Work Safety issued five sets of supplemental measures:

The Measures for Determining Major Latent Work Safety Related Dangers in Coal Mines (for Trial Implementation) stipulates the specific criteria for determining major latent work safety-related dangers. It further defines each of the latent safety related dangers specified in the Special Regulations of the State Council on Preventing Work Safety Related Accidents in Coal Mines, and lists more than 60 major latent safety related dangers.

	2.	The Implementing Measures for the Detection and Elimination of Latent Dangers in Coal Mines and the Rectification and Closure of Such Mines (for Trial Implementation) specifies that coal mining enterprises are responsible for the detection and elimination of latent work safety-related dangers and that the main persons in charge of coal mining enterprises are fully responsible for the detection, elimination and treatment of latent work safety-related dangers in their enterprises.

	3.	The Measures for the Supervision and Inspection of Coal Mine Safety Training (for Trial Implementation) specifies that coal mining enterprises must arrange and provide safety education and training to all of their mining personnel in accordance with relevant regulations; select and send their principal persons in charge, work safety management personnel and special operations personnel to qualified coal mine safety training institutions for training in a timely manner; and obtain the corresponding qualification certificates.

	4.	The Guiding Opinions on Persons in Charge of Coal Mines and Production and Operation Management Personnel Going into Mines as Foremen requires the various types of coal mines to arrange for their persons in charge and production and operation management personnel to go into the mines to act as foremen and to ensure that each shift has at least one such person on site directing the operations. Coal mining enterprises are required to establish such procedures, clarify foremen’s duties and responsibilities and strictly implement internal management and performance appraisal.

	5.	The Measures for Rewarding the Reporting of Major Latent Work Safety Related Dangers in, and Violations of the Law by, Coal Mines (for Trial Implementation) specifies that all units or individuals have the right to report major latent work safety-related dangers in, and violations of law by, coal mines.

Special Regulation by the State Council on Shutting Down Small Coal Mines

The Special Regulation by the State Council on Shutting Down Small Coal Mines went into effect on September 28, 2006. The passage of regulation is the launch of a national campaign to close down small coal mines defined as having annual coal production capacity of 30,000 tons or less, as well as coal mines without proper licenses or permits. The intent of the regulation is to reduce both the high rate of accidents and pollution in the PRC coal mining industry. Under this regulation, 9,887 small and/or illegal coal mines were to have been shut down by the end of 2009. The regulation specifies that the Central Government will support the development of big coal mining operations, defined as having annual coal production capacity of 300,000 tons or more. However, the regulation is silent as to the PRC government’s position on coal mine operations having annual production capacity of more than 30,000 tons but less than 300,000 tons.

Laws and Regulations Applicable to Foreign Invested Enterprises (FIEs)

Under Chinese law, foreign invested enterprises refer to the enterprises jointly invested by Chinese investors and foreign investors or solely invested by foreign investors in China. Sino-foreign equity joint venture, Sino-foreign contractual joint venture and wholly foreign owned enterprise are the three types of foreign invested enterprises.

The following is a brief summary of the principal law and regulations that apply to FIEs.

Corporate Laws and Industry Catalogue Relating to Foreign Investment

The establishment, operation and management of corporate entities in China generally are governed by the Company Law of the PRC, or the Company Law, effective in 1994, as amended in 1999, 2004, 2005, respectively. The investment activities in the PRC by foreign investors are principally governed by the Guidance Catalogue of Industries for Foreign Investment, or the Catalogue, which was promulgated and is amended from time to time by MOFOM and the National Development and Reform Commission, or the NDRC. The Catalogue divides industries into three categories: encouraged, restricted and prohibited. Industries not listed in the Catalogue are generally open to foreign investment unless specifically restricted by other PRC regulations.

Regulations of Taxation

On March 16, 2007, the Chinese government enacted the new Enterprise Income Tax Law, or the New EIT Law, and promulgated the New EIT Law Implementation Regulations. Both the New EIT Law and the New EIT Law Implementation Regulations became effective on January 1, 2008. Under the New EIT Law and the New EIT Law Implementation Regulations, foreign invested enterprises incorporated in the PRC, a uniform income tax rate of 25%.

Pursuant to the Provisional Regulations on Value-Added Tax of the PRC, promulgated by the State Council on December 13, 1993, as amended on November 5, 2008 (effective on January 1, 2009), and the Rules for Implementation of Provisional Regulations on Value-Added Tax of the PRC, promulgated on December 25, 1993 and amended on December 15, 2008 (effective on January 1, 2009), all entities and individuals engaged in selling goods, providing repair and placement services or importing goods into the PRC are generally subject to a value-added tax, or VAT, at a rate of 17% of the gross sales proceeds received (with the exception of certain goods which are subject to a rate of 13% or lower), less any VAT already paid or borne by the taxpayer on goods or services purchased and utilized in the production of goods or provision of services that have generated the gross sales proceeds.

Regulations on Dividend Distribution

The principal regulations governing dividend distributions of WFOEs include:

1.	Company Law (2005)

2.	Wholly Foreign-Owned Enterprise Law (2000); and

3.	Wholly Foreign-Owned Enterprise Law Implementing Rules (2001).

Under these regulations, WFOEs in the PRC may pay dividends only out of their accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, WFOEs are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds, until the aggregate amount of such fund reaches 50% of its registered capital. At the discretion of the WFOEs, they may allocate a portion of their after-tax profits based on PRC accounting standards to staff welfare and bonus funds. These reserve funds and staff welfare and bonus funds are not distributable as cash dividends.

Labor Laws and Social Insurance

Pursuant to the PRC Labor Law and the PRC Labor Contract Law, employers must execute written labor contracts with full-time employees. All employers must compensate their employees with wages equal to at least the local minimum wage standards. All employers are required to establish a system for labor safety and sanitation, strictly abide by state rules and standards and provide employees with workplace safety training. Violations of the PRC Labor Contract Law and the PRC Labor Law may result in the imposition of fines and other administrative liabilities. Criminal liability may arise for serious violations.

Notice Concerning Foreign Exchange Controls on Domestic Residents’ Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles

SAFE issued on October 21, 2005 the Notice Concerning Foreign Exchange Controls on Domestic Residents’ Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles, or Circular75, which became effective on November 1, 2005. Circular 75 requires PRC resident legal persons or individual residents to register with the competent local SAFE branches before establishing or controlling any company outside of the PRC (offshore special purpose vehicles or offshore SPV) for the purpose of offshore capital financing by using assets or equities held by such PRC resident legal persons or individual residents in a PRC domestic enterprise.

Article 3 of Mineral Resources Law of the People’s Republic of China provides that mineral resources belong to the State. The right of State ownership in mineral resources is exercised by the State Council. State ownership of mineral resources, either near the earth's surface or underground, shall not change with the alteration of ownership or right to the use of the land which the mineral resources are attached to.

The State safeguards the reasonable development and utilization of mineral resources. Seizing or damaging of mineral resources by any means and by any organization or individual shall be prohibited. People's governments at various levels must make serious efforts to protect mineral resources.

Anyone who wishes to explore or mine mineral resources shall separately make an application according to law and shall register after obtaining the right of exploration or mining upon approval, with the exception of the mining enterprises that have, in accordance with law, applied for and obtained the right of mining and are conducting exploration within the designated mining area for the purpose of their own production. The State protects the right of exploration and of mining from encroachment and protects the order of production and other work in the mining and exploration areas from interference and disruption. Anyone engaged in exploring and mining of mineral resources shall meet the prescribed qualifications.

Article 5 of Mineral Resources Law of the People’s Republic of China provides that the State practices a system wherein the exploration right and mining right shall be obtained with compensation; however, the State may, in light of specific conditions, prescribe reduction of or exemption from the compensation for acquiring the exploration right and mining right. Specific measures and implementation procedures shall be formulated by the State Council.

Anyone who mines mineral resources must pay resource tax and resource compensation in accordance with relevant regulations of the State.

Article 15 of Mineral Resources Law of the People’s Republic of China provides that anyone who wishes to establish a mining enterprise must meet the qualifications prescribed by the State, and the department in charge of examination and approval shall, in accordance with law and relevant State regulations examine the enterprise's mining area, its mining design or mining plan, production and technological conditions and safety and environmental protection measures. Only those that pass the examination shall be granted approval.

Article 4 of Regulations for Implementation of the Mineral Resources Law of the People’s Republic of China provides that the exploration and exploitation of the mineral resources within the territory of the People's Republic of China and other sea areas under its jurisdiction must abide by the Mineral Resources Law of the People's Republic of China (hereinafter referred to as the Mineral Resources Law) and these Regulations.

Article 7 of Regulations for Implementation of the Mineral Resources Law of the People’s Republic of China provides that the state allows foreign companies, enterprises and other economic organizations as well as individuals to invest in exploration and exploitation of the mineral resources within the territory of the People's Republic of China and other sea areas under its jurisdiction pursuant to the relevant laws and regulations of the People's Republic of China.

In accordance with the Provisions on M&A of a Domestic Enterprise by Foreign Investors, which was initially promulgated by MOFCOM and SAIC, on August 8, 2006 and became effective on September 8, 2006, as amended on June 22, 2009, which is commonly known as Decree No. 10, acquisition by foreign investors of share capital of a domestic enterprise shall be approved by MOFCOM and registered with SAIC.

Employees

As of December 31, 2014, we had approximately 20 employees including our President, Chief Executive Officer and Chief Financial Officer and mining support team. We have not experienced a work stoppage. Management believes that our relations with our employees are good. We do not have insurance for industry-related accidents.

ITEM 1A. RISK FACTORS

Risks Related to Doing Business in China

Our operations are primarily located in China and may be adversely affected by changes in the policies of the Chinese government.

The political environment in the PRC may adversely affect our business operations. The PRC has operated as a socialist state since 1949 and is controlled by the Communist Party of China. In recent years, however, the government has introduced reforms aimed at creating a “socialist market economy” and policies have been implemented to allow business enterprises greater autonomy in their operations. Changes in the political leadership of the PRC may have a significant effect on laws and policies related to the current economic reforms program, other policies affecting business and the general political, economic and social environment in the PRC, including the introduction of measures to control inflation, changes in the rate or method of taxation, the imposition of additional restrictions on currency conversion and remittances abroad, and foreign investment. These effects could substantially impair our business, profits or prospects in China. Moreover, economic reforms and growth in the PRC have been more successful in certain provinces than in others, and the continuation or increases of such disparities could affect the political or social stability of the PRC.

The Chinese government exerts substantial influence over the manner in which companies in China must conduct their business activities.

The PRC only recently has permitted greater provincial and local economic autonomy and private economic activities. The government of the PRC has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in the PRC or particular regions thereof, and could require us to divest the interests we then hold in Chinese properties or joint ventures. Any such developments could have a material adverse effect on the business, operations, financial condition and prospects of our company.

Future inflation in China may inhibit economic activity and adversely affect our operations.

In recent years, the Chinese economy has experienced periods of rapid expansion within which there have been some years with high rates of inflation and deflation, which have led to the adoption by the PRC government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. While inflation has moderated since 1995, high inflation may in the future cause the PRC government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby adversely affect our business operations and prospects in the PRC.

We may be restricted from freely converting the Renminbi to other currencies in a timely manner.

The Renminbi is not a freely convertible currency at present. We receive all of our revenue in Renminbi, which may need to be converted to other currencies, primarily U.S. dollars, and remitted outside of the PRC. Effective July 1, 1996, foreign currency “current account” transactions by foreign investment enterprises, including sino-foreign joint ventures, are no longer subject to the approval of SAFE, but need only a ministerial review, according to the Administration of the Settlement, Sale and Payment of Foreign Exchange Provisions promulgated in 1996 (the “FX regulations”). “Current account” items include international commercial transactions, which occur on a regular basis, such as those relating to trade and provision of services. Distributions to joint venture parties also are considered a “current account transaction.” Other non-current account items, known as “capital account” items, remain subject to SAFE approval. Under current regulations, we can obtain foreign currency in exchange for Renminbi from swap centers authorized by the government. We do not anticipate problems in obtaining foreign currency to satisfy our requirements; however, there is no assurance that foreign currency shortages or changes in currency exchange laws and regulations by the Chinese government will not restrict us from freely converting Renminbi in a timely manner. If such shortages or change in laws and regulations occur, we may accept Renminbi, which can be held or re-invested in other projects.

Future fluctuation in the value of the Renminbi may negatively affect our sales globally and our ability to convert our return on operations to U.S. dollars in a profitable manner.

Until 1994, the Renminbi experienced a gradual but significant devaluation against most major currencies, including U.S. dollars, and there was a significant devaluation of the Renminbi on January 1, 1994 in connection with the replacement of the dual exchange rate system with a unified managed floating rate foreign exchange system. Since 1994, the value of the Renminbi relative to the U.S. Dollar has appreciated approximately 15%. Countries, including the U.S., have argued that the Renminbi is artificially undervalued due to China’s current monetary policies and have pressured China to allow the Renminbi to float freely in world markets.

The PRC legal system embodies uncertainties that could limit the legal protection available to our shareholders.

The PRC’s legal system is a civil law system based on written statutes in which decided legal cases have little value as precedents, unlike the common law system prevalent in the United States. The PRC does not have a well-developed, consolidated body of laws governing foreign investment enterprises. As a result, the administration of laws and regulations by government agencies may be subject to considerable discretion and variation, and may be subject to influence by external forces unrelated to the legal merits of a particular matter. China’s regulations and policies with respect to foreign investments are evolving. Definitive regulations and policies with respect to such matters as the permissible percentage of foreign investment and permissible rates of equity returns have not yet been published. Statements regarding these evolving policies have been conflicting and any such policies, as administered, are likely to be subject to broad interpretation and discretion and to be modified, perhaps on a case-by-case basis. The uncertainties regarding such regulations and policies present risks that we will not be able to achieve our business objectives.

Risks Related to Our Company

Our management team does not have U.S. public company experience and it could adversely impact our ability to comply with the reporting requirements of the securities laws.

Our management team has no U.S. public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by the Sarbanes-Oxley Act of 2002. Currently, all of our directors do not have experience with public companies. Accordingly, our senior management collectively has limited experience with the responsibilities related to managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately respond to such legal, regulatory compliance and reporting requirements, including establishing and maintaining internal controls over financial reporting. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934, which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a public company would be in jeopardy in which event you could lose your entire investment in our company.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.

We are subject to reporting obligations under the U.S. securities laws. The Securities and Exchange Commission, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company to include a management report on such company’s internal controls over financial reporting in its annual report, which contains management’s assessment of the effectiveness of our internal controls over financial reporting. Our management may conclude that our internal control over our financial reporting is not effective. Our reporting obligations as a public company will place a significant strain on our management, operational and financial resources and systems for the foreseeable future. Effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent fraud. As a result, our failure to achieve and maintain effective internal control over financial reporting could result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business and negatively impact the trading price of our stock. Furthermore, we anticipate that we will incur considerable costs and use significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act.

Our accounting staff lacks experience with U.S. GAAP and we may not be able to accurately report our financial results or report them on time.

We have limited ability to prepare financial statements and maintain our books and records in U.S. GAAP. Our books and records are maintained and prepared in PRC GAAP and our employees who have primary responsibilities of preparing and supervising the preparation of the financial statements under U.S. GAAP do not have extensive knowledge of and professional experience with U.S. GAAP and SEC rules and regulations. Accordingly, we may not be able to report our financial results accurately as required by SEC rules and regulations and we may report our financial results late. Furthermore, we confirm that we will evaluate these factors in the future in concluding on the effectiveness of disclosure controls and procedures under Item 307 of Regulation S-K and internal control over financial reporting under Item 308 of Regulation S-K.

All of our assets and our directors and officers are outside the United States, with the result that it may be difficult for investors to enforce within the United States any judgments obtained against us or our directors and officers.

All of our assets are located outside the United States. In addition, our directors and officers are a national and/or resident of a country other than the United States, and all or a substantial portion of their respective assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against us or our directors and officers, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Consequently, you may be effectively prevented from pursuing remedies under United States federal and state securities laws against us or our directors and officers.

Because Wei Gu, Quan Gu and Chang Gu, control a large percentage of our common shares, they have the ability to influence matters affecting our shareholders.

Mr. Wei Gu, Quan Gu and Chang Gu each beneficially own approximately 21.22% of our issued and outstanding common shares. As a result, they have the ability to influence matters affecting our shareholders, including the election of our directors and the acquisition or disposition of our assets. Because they control such shares, our shareholders will find it difficult to replace our management if they disagree with the way our business is being operated.

Risks Related to Our Common Shares

If we issue additional shares in the future, it will result in the dilution of our existing shareholders.

Our authorized capital consists of an unlimited number of common shares without par value and an unlimited number of preferred shares without par value. We have not issued any preferred shares. Our board of directors may choose to issue some or all of such shares to acquire one or more companies or properties and to fund our overhead and general operating requirements. The issuance of any such shares will reduce the book value per share and may contribute to a reduction in the market price of the outstanding common shares of our company. If we issue any such additional shares, such issuance will reduce the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation.

Our common shares are illiquid and the price of our common shares may be negatively impacted by factors which are unrelated to our operations.

Although our common shares are currently available for quotation on the OTCQB Market, relatively few of our shares have been purchased or sold on that market. Even when a more active market is established, trading through the OTCQB Market is frequently thin and highly volatile. There is no assurance that a sufficient market will develop in our stock, in which case it could be difficult for shareholders to sell their stock. The market price of our common shares could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of our competitors, trading volume in our common shares, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us. In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common shares.

We do not intend to pay cash dividends on any investment in the shares of stock of our company.

We have never paid any cash dividends and currently do not intend to pay any cash dividends for the foreseeable future. Because we do not intend to declare cash dividends, any gain on an investment in our company will need to come through an increase in the stock’s price. This may never happen and investors may lose all of their investment in our company.

Trading of our stock is restricted by the Securities Exchange Commission’s penny stock regulations, which may limit a stockholder’s ability to buy and sell our common shares.

The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common shares.

FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (known as “FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common shares, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

Executive Offices

Our principal place of business is located at Room 1601, 16/F, China Taiping Tower Phase II, 8 Sunning Road, Causeway Bay, Hong Kong. We pay a monthly rent of RMB20,000 for office space of approximately 400 square feet. The lease which lasts for one year, expires on July 2015.

ITEM 3. LEGAL PROCEEDINGS

We know of no material pending legal proceedings to which our company is a party or of which any of our property is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.

We know of no material proceedings in which any director, officer or affiliate of our company, or any registered or beneficial stockholder of our company, or any associate of any such director, officer, affiliate, or stockholder is a party adverse to our company or has a material interest adverse to our company.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market information

Our common shares are quoted on the OTCQB Venture Marketplace of the OTC Markets Group Inc. Our symbol is “SGBHF” and our CUSIP number is 78417V 104.

Set forth below are the range of high and low bid quotations for the period indicated as reported by the OTCQB Market. The market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.

Quarter End	Bid High		Bid Low
03/31/2015	$	0.01	$	0.00
12/31/2014	$	0.01	$	0.00
09/30/2014	$	0.01	$	0.00
06/30/2014	$	0.01	$	0.00
03/31/2014	$	0.00	$	0.00
12/31/2013	$	0.00	$	0.00
09/30/2013	$	0.00	$	0.00
06/30/2013	$	0.00	$	0.00
03/31/2013	$	0.00	$	0.00
12/31/2012	$	0.00	$	0.00
09/30/2012	$	0.00	$	0.00
06/30/2012	$	0.00	$	0.00
03/31/2012	$	0.00	$	0.00

Transfer Agent

The transfer agent and registrar for our common stock is Pacific Stock Transfer Company 500 E. Warm Springs Road, Suite 240, Las Vegas NV 89119 (702) 361-3033.

Holders of Common Stock

As of June 30, 2015, there were 102 holders of record of our common stock. As of such date, 373,793,578 shares were issued and outstanding.

Dividends

We have not declared any dividends on our common stock since the inception of our company. There is no restriction in our articles of incorporation and bylaws that will limit our ability to pay dividends on our common stock. However, we do not anticipate declaring and paying dividends to our shareholders in the near future.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

During our fiscal year ended December 31, 2014, we did not sell any equity securities.

Securities authorized for issuance under equity compensation plans.

The following table summarizes certain information regarding our equity compensation plans as at December 31, 2014.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)
Equity compensation plans approved by security holders	Nil	N/A	Nil
Equity compensation plans not approved by security holders	Nil	N/A	Nil
Total	Nil	N/A	Nil

2010 Equity Compensation Plan

On October 27, 2010, our board of directors approved and adopted our 2010 equity compensation plan and on November 30, 2010, our shareholders approve the plan. Pursuant to the plan, our board of directors may grant stock options or stock awards to employees, directors, officers or consultants of our company or subsidiary. A maximum of 10% of the total issued and outstanding common shares of our company at the time of grant may be issued upon exercise of stock options granted under the plan or as stock awards granted under the plan.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

We did not purchase any of our shares of common stock or other securities during our fiscal year ended December 31, 2014.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Results of Operations

For the years ended December 31, 2014 and 2013

The following table sets forth the consolidated financial statements of the Company for the years ended December 31, 2014 and 2013.

	Year Ended			Year Ended
	December 31, 2014			December 31, 2013
	$			$
Net sales		---			189,000
Cost of sales		---			100.000
Gross profit		---			89,000
Operating expenses		220,436			189,157
Net (loss) from continuing operations		(216,817	)		(121,901	)
Net (loss) from discontinued operations		(16,753,104	)		---
Net (loss)		(16,875,005	)		(216,817	)

Net Sales

We had no revenues in 2014 compared to revenues from continuing operations of $189,000 in 2013, all of which were derived from consulting services for the coal mine operations in Fujian Province, China. Our services include sales chain management system advisory as well as advisory works for mining exploration management on other coal mines in Fujian Province.

SGB Investment Limited have reduced its trading and consulting activates due to that fact, and spending more time on studying, developing and planning for other mining deposits which are near Shanxi Province, Xinjiang Province and in central Asian countries such as Kyrgyzstan and Uzbekistan.

Cost of Sales

The cost of sales decreased from $100,000 in 2013 to $0 in 2014, principally due to the discontinued operations of Dragon international.

Gross Profit

In line with the discontinued operation, our gross profit decreased by $89,000 or 100% from $89,000 in 2013 to $0 in 2014.

Operating Expenses

Operating expenses increased by $31,279 or 16.5% from $189,157 in 2013 to $220,436 in 2014, due principally to the business trips on studying, developing and planning for other mining deposits which are near Shanxi Province, Xinjiang Province and in central Asian countries such as Kyrgyzstan, and Uzbekistan.

Net Income/Loss

We recorded a net loss from continuing operations for the year ended December 31, 2014, of $216,817 as compared to a net loss from continuing operations for the year ended December 31, 2013, of $121,901. The increase was attributable to the geological research and due diligence conducted by us in 2014. We recorded a net loss from discontinued operations involving Dragon International Resources Group Co., Limited and Fujian Huilong Coal Mine Co. Ltd. for the year ended December 31, 2013 of $16,753,104. As those operations were discontinued in December 2013, we recorded no losses from discontinued operations for the year ended December 31, 2014.

Impact of Inflation

Inflation had a minimal impact on our results of operations in 2014. The average inflation rate in China was at 2.06% in 2014 compared to an average inflation rate in China during of 2.51% in 2013. The Chinese government has carried out a series of financial and monetary policies to control the increasing inflation.

Liquidity and Capital Resources

Working Capital at December 31, 2014 and 2013

	2014			2013
Current Assets	$	330,560		$	332,592
Non-Current Assets		230,746			---
Total Assets	$	561,306		$	332,592

Current Liabilities	$	802,261		$	374,924
Non-Current Liabilities		---			---
Total Liabilities	$	802,261		$	374,924

Working Capital (Deficit)	$	(471,701	)	$	(42,332	)

Current assets decreased by $2,032 or 0.61% from $332,592 as at December 31, 2013 to $330,560 as at December 31, 2014, principally due to a decrease in cash and cash equivalents.

Current liabilities increased by $427,337 or 114,00% from $374,924 as at December 31, 2013 to $802,261 as at December 31, 2014, principally due to increases in accounts payable and accrued liabilities of $109,295 and amounts due to related parties of $316,199.

Taken as a whole, we experienced an increase in our working capital deficit of $429,369.

Cash Flows

For the years ended December 31, 2014 and 2013

	2013			2013
Net cash provided by operating activities	$	(55,573	)	$	796,399
Net cash used in investing activities	$	(260,626	)	$	(792,608	)
Net cash provided by financing activities	$	316,199		$	(430,756	)
Cash and cash equivalents at end of year	$	1,646		$	1,793

The net cash provided by operating activities decreased by $824,972 or 103.59% from $796,399 in 2013 to $(55,573) in 2014, due principally to a reduction in consulting activities.

Net cash used in investing activities increased by $531,982 or 67.12% from $(792,608) in 2013 to $(260,626) in 2014 due to the December 2013 sale of Dragon International.

Net cash generated by financing activities was $316,199 in 2014 as compared to net cash used in financing activities of $430,756 in 2013.

Our cash and cash equivalents as at December 31, 2014 decreased slightly by $147 from December 31, 2013 to December 31, 2014.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our audited consolidated financial statements are stated in United States dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

	PAGE

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheets as of December 31, 2014 and 2013	F-3

Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2014 and 2013	F-4

Consolidated Statements of Cash Flows for the Years Ended December 31, 2014 and 2013	F-6

Consolidated Statements of Stockholders’ Equity (Deficiency) for the Years Ended December 31, 2014 and 2013	F-5

Notes to Consolidated Financial Statements	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of
GRAND CHINA ENERGY GROUP LTD.

We have audited the accompanying consolidated balance sheets of Grand China Energy Group Ltd. (formerly known as “SGB International Holdings Inc.”) and subsidiaries (the “Company”) as of December 31, 2014 and 2013 and the related consolidated statements of operations and comprehensive loss, stockholders’ equity (deficiency) and cash flows for the years ended December 31, 2014 and 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2014 and 2013 and the results of its operations and its cash flows for the year ended December 31, 2014 and 2013, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As of December 31, 2014, the Company had negative working capital and stockholders’ deficit of US$471,701 and US$240,955, respectively, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Parker Randall CF (H.K.) CPA Limited

PARKER RANDALL CF (H.K.) CPA LIMITED
Certified Public Accountants
Hong Kong
March 30, 2015

F-2

GRAND CHINA ENERGY GROUP LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS AT DECEMBER 31, 2014 AND 2013

(STATED IN US DOLLARS)

			December 31			December 31
			2014			2013
	Note		$			$
ASSETS
Current Assets
Cash and cash equivalents		4		1,646			1,793
Receivables		5		328,914			330,799
Total Current Assets				330,560			332,592

Non-current Assets
Property, plant and equipment		6		230,746			-
Total Non-current Assets				230,746			-

Total Assets				561,306			332,592

LIABILITIES AND STOCKHOLDERS DEFICIENCY
Current Liabilities
Account payable and accrued liabilities		7		395,667			286,372
Amounts due to related parties		8		328,411			12,212
Income tax payable		12		20,000			20,000
Loan payable – current		9		58,183			56,340
Total Current Liabilities and Total Liabilities				802,261			374,924

Stockholders Deficiency
Common stocks		10		9,138,544			9,138,544
Contributed surplus				100,000			100,000

Additional paid-in capital				100,000			100,000
Accumulated deficit				(9,563,913	)		(9,347,096	)
Accumulated other comprehensive loss				(15,586	)		(33,780	)
Total Stockholders Deficiency				(240,955	)		(42,332	)

Total Liabilities and Stockholders Deficiency				561,306			332,592

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

F-3

GRAND CHINA ENERGY GROUP LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(STATED IN US DOLLARS)

	Year ended 31 December
	2014			2013
	$			$
Revenue, net of sales tax		-			189,000
Cost of revenue		-			(100,000	)
Gross profit		-			89,000
Depreciation & amortization		(29,880	)		-
General and administrative		(190,556	)		(189,157	)

Total operating expenses		(220,436	)		(189,157	)
Net loss from operations		(220,436	)		(100,157	)
Other items:
Exchange gain		10,374			-
Interest expense		(6,755	)		(1,744	)
Loss before tax		(216,817	)		(101,901	)

Income tax expense		-			(20,000	)

Net loss from continuing operations;		(216,817	)		(121,901	)
Net (loss)/income from discontinued operations		-			(16,753,104	)
Net loss for the period		(216,817	)		(16,875,005	)
Foreign currency translation adjustment		18,194			(599,762	)
Comprehensive (loss)/income		(198,623	)		(17,474,767	)
(Loss)/earnings Per Share (cents) – Basic and diluted		(0.00	)		(0.05	)

Weighted Average Shares Outstanding – Basic and diluted		373,793,578			373,793,578

The accompanying notes are an integral part of these consolidated financial statements

F-4

GRAND CHINA ENERGY GROUP LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(STATED IN US DOLLARS)

	Year Ended 31 December
	2014			2013
Cash flows from operating activities	$			$
Net loss for the period – continuing and discontinued operations:		(216,817	)		(16,875,005	)
Items not involving cash:
Depreciation & amortization		29,880			1,084,022
Impairment loss on fixed assets		-			12,496,003
Loss on retirement of fixed assets		-			1,821,097
Imputed cost		-			100,000
Interest accretion		-			16,297
Interest expense		6,755			63,977
Other non-cash item from discontinued operations		-			(223,635	)
Gain on disposal of subsidiaries		-			(321,695	)
Changes in non-cash working capital:
Receivables		(10,478	)		(8,053	)
Prepaid expenses, deposit and other receivables		-			84,877
Accounts payable , accrued liabilities and income tax payables		135,087			2,558,514
Deferred revenue		-			-
Net cash (used in) provided by operating activities		(55,573	)		796,399
Cash flows from investing activities

Net cash outflow from disposal of subsidiaries		-			(63,756	)
Purchase of property, equipment and mine development costs		(260,626	)		(728,852	)
Net cash used in investing activities		(260,626	)		(792,608	)
Cash flows from financing activities
Increase (decrease) of term loan		-			(430,756	)

Amounts due to a related party		316,199			-
Net cash (used in) provided by financing activities		316,199			(430,756	)
Increase/(decrease) in cash and cash equivalents		-			(426,965	)
Effect of exchange rate changes on cash		(147	)		(11,550	)
Cash and cash equivalents – beginning of year		1,793			440,308
Cash and cash equivalents – end of year		1,646			1,793
Supplemental disclosure of cash flow information:
Income taxes paid		-			60,169
Interest expense paid		-			1,744

The accompanying notes are an integral part of these consolidated financial statements

F-5

GRAND CHINA ENERGY GROUP LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(DEFICIENCY)

AS AT DECEMBER 31, 2014

(STATED IN US DOLLARS)

	Common shares				Stocks to be		Contributed		Additional Paid-in					Retained earnings (Accumulated			Accumulated other comprehensive			Total Stockholders’ equity
	Shares		Amount		issued		surplus		capital		Reserve			Deficit)			income			(deficiency)
			$		$		$		$		$			$			$			$
Balance at December 31, 2012		373,793,578		9,138,544		-		100,000		-		650,182			7,527,909			565,982			17,982,617
Net loss for the period		-		-		-		-		-		-			(16,875,005	)		-			(16,875,005	)
Disposal of subsidiaries		-		-		-		-		-		(650,182	)		-			-			(650,182	)
Imputed cost		-		-		-		-		100,000		-			-			-			100,000
Currency translation		-		-		-		-		-		-			-			(599,762	)		(599,762	)
Balance at December 31, 2013		373,793,578		9,138,544		-		100,000		100,000		-			(9,347,096	)		(33,780	)		(42,332	)

Loss for the year		-		-		-		-				-			(216,817	)		-			(216,817	)
Other comprehensive income for the year		-		-		-		-				-			-			18,194			18,194
Balance at December 31, 2014		373,793,578		9,138,544		-		100,000		100,000		-			(9,563,913	)		(15,586	)		(240,955	)

The accompanying notes are an integral part of these consolidated financial statements

F-6

1 ORGANIZATION AND PRINCIPAL ACTIVITIES

Grand China Energy Group Ltd. (formerly known as “SGB International Holdings Inc.”) (“Grand China”,“SGB” or the “Company”) was incorporated in British Columbia, Canada on November 6, 1997. Through its subsidiary, the Company is engaged in coal business.

On May 11, 2011, the Company completed the acquisition of Dragon International Resources Group Co., Limited (“Dragon International”), a Hong Kong corporation incorporated on October 5, 2010, and its wholly-owned subsidiary through a share exchange which resulted in the former shareholders of Dragon International acquiring the control of SGB. This transaction was accounted for as a reverse takeover transaction (“RTO”) for accounting purpose, as Dragon International was deemed to be the acquirer, and these consolidated financial statements are a continuation of the consolidated financial statements of Dragon International. The carrying amounts of SGB’s assets and liabilities are included in these consolidated financial statements.

Prior to the above noted RTO, and on February 21, 2011, pursuant to a share transfer agreement, Dragon International completed the acquisition of Fujian Huilong Coal Mine Co., Ltd. (“Fujian Huilong”) (formerly known as Yongding Shangzhai Coal Mine Co., Ltd.), a People’s Republic of China corporation and was incorporated on August 4, 2005. Upon the completion of the acquisition, Fujian Huilong became the wholly-owned subsidiary of Dragon International and the control in substance was not changed. For accounting purposes, the acquisition has been accounted for using the continuity of interest method, which recognizes Fujian Huilong as the successor. The net assets of Dragon International prior to the acquisition has been accounted as recapitalization as at the date of acquisition.

On October 3, 2013, we incorporated, SGB Investment Limited, which is a wholly owned subsidiary. The principal business of SGB Investment Limited is providing mining related consulting work for the coalmine in Fujian Province as well as engaging in coal trading activities in Fujian Province, People’s Republic of China. The areas of business including assist other mining operation setting up sales chain management system as well as advisory works for mining exploration management.

On December 19, 2013, the Company disposed Dragon International and Fujian Huilong.(See note 3)

On August 12, 2014, the Company changed its name from SGB International Holdings Inc. to Grand China Energy Group Ltd.

The Company and its subsidiaries are considered to be operating in one segment based on its organizational structure and strategic decision making method.

These financial statements have been prepared in accordance with U.S. generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As at December 31, 2014 and December 31, 2013, the Company had working capital deficiency of $471,701 and $42,332, respectively, and requires additional funds to maintain its operations. In view of the working capital deficiency, the management has reviewed the cash position as at the balance sheet date and the cash flow forecast for the next twelve months and taken into factors that (i) to raise equity financing as required; and (ii) to obtain the principle shareholder’s support in funding the required working capital.

F-7

1 ORGANIZATION AND PRINCIPAL ACTIVITIES (Continued)

After taking the above circumstances and facts into consideration, the management of the Company is satisfied that the Company will have sufficient funds to complete the current development and to meet in full its financial obligation and operations or capital expenditure as they fall due for the foreseeable future.

2 SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The Company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The preparation of the Company's consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include inventories; asset impairments; environmental and reclamation obligations; acquisition accounting; other employee benefit obligations; useful lives for depreciation, depletion, and amortization; current and deferred income taxes; and fair value of financial instruments. Estimates are based on facts and circumstances believed to be reasonable at the time; however, actual results could differ from those estimates.

Principles of consolidation

These consolidated financial statements included the accounts of the Company and its wholly-owned subsidiaries as follows:

SGB Investment Limited, a British Virgin Islands Corporation incorporated on October 3, 2013.

Dragon International, a Hong Kong corporation incorporated on October 5, 2010 which was disposed on December 19, 2013.(See note3).

Fujian Huilong, a People’s Republic of China corporation incorporated on August 4, 2005 which was disposed on December 19, 2013(See note3).

All significant intercompany accounts and transactions have been eliminated upon consolidation.

Foreign currency translation

The Company’s functional currency and presentation currency is Canadian dollars (“CAD”) and U.S. dollars, respectively. The Company’s subsidiaries’ functional currencies are Hong Kong dollars (“HKD”) and Chinese RMB (“RMB”) for SGB Investment Limited.

F-8

2 SIGNIFICANT ACCOUNTING POLICIES (Continued)

Foreign currency translation( Continued)

Transactions in a currency other than the functional currency (“foreign currency”) are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Exchange gains and losses are recorded in the statements of operations and comprehensive loss.

Assets and liabilities of the Company and its subsidiaries are translated into the U.S. dollars at exchange rates at the balance sheet date, equity accounts are translated at historical exchange rate and revenues and expenses are translated by using the average exchange rates. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive income loss in the statements of stockholders deficiency.

Cash and cash equivalents

Cash and cash equivalents include those short-term money market instruments which are highly-liquid investments and readily convertible into cash with a term to maturity of 90 days or less when acquired.

Inventories

Coal inventories are stated at the lower of average cost or market. The cost of coal inventories is determined based on average cost of production, which includes all costs incurred to extract, transport and process the coal. Market represents the estimated replacement cost, subject to a floor and ceiling, which considers the future sales price of the product as well as remaining estimated preparation and selling costs. Coal is reported as inventory at the point in time the coal is extracted from the mine and weighed at a loading facility.

As at December 31, 2014 and 2013, the Company carried no inventories.

Property, equipment and mine development costs

Property, plant and equipment, are stated at cost less depreciation and amortization and accumulated impairment loss. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. Depreciation of property, plant and equipment is calculated to write off the cost, less their estimated residual value, if any, using the straight-line method over their estimated useful lives. The estimated useful lives are as follows:

Machinery / Mobile mining equipment	10 years
Motor vehicles	5 years
Office equipment	5 years
Leasehold improvement	Lease term

F-9

2 SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property, equipment and mine development costs (Continued)

Costs for mineral properties and mine development incurred to expand capacity of operating mines or to develop new mines are capitalized and charged to operations using the units-of-production method over the estimated proven and probable reserve tons directly benefiting from the capital expenditures but up to the Company’s allowable quotas set by the local government. Mine development costs include costs incurred for site preparation and development of the mines during the development stage.

Major repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the period benefitted. Maintenance and repairs are expensed as incurred. When equipment is retired or disposed, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposal is recognized in cost of coal sales.

Intangible asset

Intangible asset represents the coal mining right and is recorded at cost less accumulated amortization. Amortization is provided using the units-of-production method over the estimated proven and probable reserve tons directly benefiting from the capital expenditures but up to the Company’s allowable quotas set by the local government.

Asset impairment and disposal of long-lived assets

Long-lived assets, such as property, equipment and mine development costs, owned and leased mineral rights and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized equal to the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed would separately be presented in the consolidated balance sheets and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated. The assets and liabilities of a disposal group classified as held for sale would be presented separately in the consolidated balance sheets.

Asset Retirement Obligation

Minimum standards for mine reclamation have been established by various regulatory agencies and dictate the reclamation requirements at the Company's operations. The Company's asset retirement obligations consist principally of costs to reclaim acreage disturbed at surface operations and estimated costs to reclaim support acreage and perform other related functions at underground mines. The Company records these reclamation obligations at fair value in the period in which the legal obligation

F-10

2 SIGNIFICANT ACCOUNTING POLICIES (Continued)

Asset Retirement Obligation (Continued)

associated with the retirement of the long-lived asset is incurred. When the liability is initially recorded, the offset is capitalized by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset using the units-of-production method over the estimated proven and probable reserve tons directly benefiting from the capital expenditures but up to the Company’s allowable quotas set by the local government. To settle the liability, the obligation is paid, and to the extent there is a difference between the liability and the amount of cash paid, a gain or loss upon settlement is recorded. The Company annually reviews its estimated future cash flows for its asset retirement obligations.

Borrowing costs

Borrowing costs are capitalized as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalization of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalized until the assets are substantially completed for their intended use or sale. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Income tax

The Company accounts for income taxes under the provisions of ASC Topic 740-10, Income Taxes, which requires the Company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The effect on deferred income tax assets and liabilities of a change in income tax rates is included in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.

Other comprehensive income

The Company accounts for comprehensive income under the provisions of ASC Topic 220-10, Comprehensive Income - Overall, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statements of operations and comprehensive income(loss). The Company’s comprehensive income(loss) consists of net earnings(loss) for the period and currency translation adjustments.

F-11

2 SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings per share

Basic earnings per share is calculated using the weighted average number of shares outstanding during the year. The Company has adopted ASC Topic 260-10, Earnings per Share - Overall, and uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method, the dilutive effect on earnings per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the period. As at December 31, 2014 and 2013, the basic earnings per share is equal to diluted earnings per share as there were no dilutive instruments outstanding as at December 31, 2014 and 2013.

Revenue recognition

The Company’s revenue recognition policies are in compliance with SEC Staff Accounting Bulletin (“SAB”) 104 (codified in FASB ASC Topic 480). Coal sales revenues represent sales to individual customers who sold the coal to coal processing companies, power stations and steel factories. Sales revenue is recognized when a formal arrangement exists, which is generally represented by a contract between the Company and the buyer; the price is fixed or determinable; title has passed to the buyer, which generally is at the time of delivery; no other significant obligations of the Company exist and collectability is reasonably assured.

Cost of revenue

Cost of revenue for the year ended December 31, 2013 consists primarily of the market price for the service rendered. There is no Cost of revenue for the year ended December 31, 2014.

Fair value of financial instruments

The estimated fair values for financial instruments under ASC Topic 825-10, Financial Instruments, are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair value of the Company’s financial instruments includes cash and cash equivalents, receivables, accounts payable and accrued liabilities, asset retirement obligation, due to a related party and term loan. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values, unless otherwise noted.

F-12

2 SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair value of financial instruments (Continued)

The Company adopted ASC Topic 820-10, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in US GAAP, and expands disclosures about fair value measurements.

ASC Topic 820-10 does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

Level one – Quoted market prices in active markets for identical assets or liabilities;

Level two – Inputs other than level one inputs that are either directly or indirectly observable; and

Level three – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

For the years ended December 31, 2014 and 2013, the fair value of cash and cash equivalents was measured using Level one inputs.

The book values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities and amounts due to a related party approximate their respective fair values due to the short-term nature of these instruments. Items identified are measured at fair value on a recurring basis.

There were no assets or liabilities measured at fair value on a non-recurring basis during the years ended December 31, 2014 and 2013.

Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker whose members are responsible for allocating resources and assessing performance of the operating segments.

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". The amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendments require 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

F-13

2 SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent accounting pronouncements (Continued)

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. The pronouncement is effective for fiscal years and interim periods ending after December 15, 2012.The adoption of this pronouncement doesn’t have a material effect on the Company's consolidated financial position or results of operations.

Other accounting pronouncements that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s financial statements upon adoption.

3 DISCONTINUED OPERATIONS

On December 19, 2013, the Company sold its 100% equity interest in Dragon International and its wholly owned subsidiary Fujian Huilong to an independent third party at a cash consideration of US$129,509 equal to HKD 1,000,000. The Company recognized a gain on the disposal of Dragon International and Fujian Huilong of US$321,695 which has been included in consolidated statement of operations as net loss from discontinued operations for the year ended December 31, 2013.

Results of the discontinued operations are summarized as follows:

	2013
	$
Revenue		7,038,626
Loss before tax		(17,014,630	)
Gain on disposal		321,695
Income tax		(60,169	)
Net loss from discontinued operations		(16,753,104	)

Assets and liabilities of the discontinued operation as of the disposal date were summarized as follows:

	$
Cash and cash equivalents		63,757
Receivables		1,424,383
Property, Plant, equipment and mining rights		1,201,195

Assets of discontinued operations		2,689,335

Payables		863,510
Asset retirement obligation		414,293

Liabilities of discontinued operations		1,277,803

Net assets of discontinued operations		1,411,532

F-14

3 DISCONTINUED OPERATIONS (Continued)

Reconciliation of gain on disposal is as follows:

	$
Fair value of consideration		129,509
Less: carry amount of net asset at date of disposal		1,411,532
Add: reclassification from reserve and other comprehensive income to profit and loss		1,603,718
Gain on disposal		321,695

4 RECEIVABLES

	December 31,		December 31,
	2014		2013
	$		$

Receivable from disposal of subsidiaries		128,914		129,509
Others ⁽ⁱⁱ⁾		200,000		201,290

		328,914		330,799

Notes:

(i)	The Company does not hold any collateral over these balances. The average age of these receivable are more than one year but less than two years.

(ii)	Unsecured, interest free and repayable on demand.

5 PROPERTY, EQUIPMENT AND MINE DEVELOPMENT COSTS

			Accumulated		Net book
	Cost		amortization		value
	$		$		$
December 31, 2014
Motor vehicles		260,626		29,880		230,746

Total		260,626		29,880		230,746

December 31, 2013
Motor vehicles		-		-		-

Total		-		-		-

During the year ended December 31, 2014 and 2013, the Company charged amortization and depreciation expenses of $29,880 and $nil to the general Administrative, respectively.

The property, equipment and mine development costs were the assets of Dragon International and Fujian Huilong. On December 19, 2013, the Company disposed its subsidiaries Dragon International and Fujian Huilong and no property, equipment and mine developments were included in the consolidated balance sheets as at December 31 2013.

F-15

6 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The following is a summary of accounts payable and accrued liabilities:

	December 31,		December 31,
	2014		2013
	$		$
Accounts payable		8,893		39,874
Staff costs / wage payable		27,196		29,626
Accrued liabilities		168,674		22,019
Advances		177,678		193,558
Other payable		13,226		1,295
		395,667		286,372

7 AMOUNTS DUE TO RELATED PARTIES

	December 31,		December 31,
	2014		2013
	$		$
Amounts due to SGB C&C Investment		11,210		12,212
Amounts due to a director - Gu Chang		317,201		-
		328,411		12,212

8 LOAN PAYABLE

The following is a summary of term loan:

	December 31, 2014		December 31, 2013
	$		$

Interest bearing loan at 15% per annum, unsecured and due on demand		58,183		56,340

Total		58,183		56,340

During the years ended December 31, 2014 and 2013, the Company accrued or paid interest expense of $6,755and $1,744 in connection with the term loan, respectively.

As of December 31, 2014, the weighted average interest rate on short-term obligations outstanding is 15% (2013: 15%)

9 STOCKHOLDERS’ EQUITY

Authorized:

Unlimited number of common shares without par value

Unlimited number of preferred shares without par value

Issued and outstanding

As at December 31, 2014 and 2013, 373,793,578 common stocks issued and outstanding which were derived from the following transactions:

Prior to the RTO with Dragon International and as at May 11, 2011, SGB had 24,502,446 common shares issued and outstanding.

F-16

On May 11, 2011, SGB completed a reverse acquisition transaction with the shareholders of Dragon International pursuant to which SGB acquired 100% of the issued and outstanding capital stock of Dragon International in exchange for an aggregate of 220,522,000 common shares of SGB, which constituted 90% of SGB’s issued and outstanding capital stock on a fully-diluted basis as of and immediately after the consummation of the reverse acquisition. Prior to the acquisition, SGB has no business with a minimal assets and liabilities which did not meet the definition of a business, therefore, the reverse take-over of SGB by Dragon International has been accounted for as a capital transaction which is deemed Dragon International acquired SGB by issuance of 24,502,446 common shares (issued and outstanding prior to the RTO) for its net assets of $10,789.

Prior to the RTO and on February 21, 2011, Dragon International completed the acquisition of Fujian Huilong and for accounting purpose, the acquisition has been accounted for using the continuity of interest method, which recognizes Fujian Huilong as the successor. The net assets of Dragon International totaling $1,277,694 as at the date of acquisition have been accounted as recapitalization into Fujian Huilong.

Fujian Huilong has a registered and paid-in capital of $123,913 (RMB 1,000,000) prior to being acquired by Dragon International.

As the consolidated financial statements is the continuation of Fujian Huilong, therefore, the share capital of Fujian Huilong has been restated to reflect the 220,522,000 common shares that effected the RTO for the purpose of financial statements presentation and earnings per share calculation.

On September 21, 2011, Fujian Huilong’s registered and paid-in capital was increased by $1,925,447 (RMB 12,278,945) to a total of $2,049,360 (RMB 13,278,945) as at December 31, 2012.

On December 29, 2011, the Company settled $7,726,148 by agreeing to issue 128,769,132 shares of the common stock of the Company at a deemed price of $0.06 per share. The Company has allotted and issued the shares in 2012.

10 RELATED PARTY TRANSACTIONS

During the year ended December 31, 2014 and 2013, the Company engaged following related party transactions:

●

Accrued or paid $ nil (December 31, 2013: $nil) in salaries and bonus to senior officers and directors of the Company;

As at December 31, 2014 and December 31, 2013, following receivable and payable were outstanding:

●

Included in accounts payable and accrued liabilities, $317,201 (December 31, 2013: $nil) were payable to the senior officers and directors of the Company

●

Included in receivable, $nil was receivable (December 31, 2013: $nil) from a senior officer and director of the Company.

Also see note 8.

11 INCOME TAX

Grand China and its subsidiaries are subject to income tax laws in their respective tax jurisdictions, which are the same as their respective place of incorporation.

Income tax expenses represents the current tax expenses.

A reconciliation of the income tax expenses is as follows:

	2014			2013
	$			$
(Loss)/income before income taxes		(216,817	)		(101,901	)
Expected income tax (credits)expenses		(56,372	)		(26,494	)

Adjustments resulting from:
Non-deductible items		-			125,018
Change in estimates		-			-
Rate differences in other jurisdictions		38,969			(12,640	)
Changes in enacted rates		-			-
Other		4,674			-
Change in valuation allowance		12,729			(65,884	)
		-			20,000

F-17

Deferred taxes arise from temporary differences in the recognition of income and expenses for financial reporting and tax purposes. The significant components of deferred tax assets (liabilities) are as follows:

	2014			2013
	$			$
Deferred tax assets(liabilities):
Operating tax losses carried forward		345,445			358,171
Equipment		-			-
		345,445			358,171
Valuation allowance		(345,445	)		(358,171	)
		-			-

As at December 31, 2014, the Company had available for deduction against future taxable income in Canada non-capital losses of approximately $1,328,636. These losses, if unutilized, have expiration year until 2034.

During the years ended December 31, 2014 and 2013 and to the current date, the Company had not received any tax re-assessment from the federal and regional governmental authorities.

12 COMMITMENTS

As at December 31, 2014, the company doesn’t have any capital or operating commitments.

13 SEGMENT INFORMATION

Since the Company disposed its subsidiaries on December 19, 2013 as disclosed in note 4, the company reassessed its operations and considers the Company had one single operating segment and one georgraphical segment at December 31, 2013.

The Company derives its revenues from a few key customers. The customers from which more than 10% of total revenue has been derived and the percentage of total revenue from those customers is summarized as follows:

	2014		2013
	$		$

Customer A		-		200,000

Percentage of total revenue		-		100	%

F-18

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL MATTERS

None

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure controls and procedures

We maintain “disclosure controls and procedures”, as that term is defined in Rule 13a-15(e), and Rule 15d-15(e) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company's reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal accounting officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our principal executive officer and principal financial officer, evaluated our company’s disclosure controls and procedures as of the end of the period covered by this annual report on Form 10-K. Based on this evaluation, our management concluded that as of the end of the period covered by this annual report on Form 10-K, our disclosure controls and procedures were effective.

Internal control over financial reporting

Management's annual report on internal control over financial reporting

Our management, including our principal executive officer, our principal financial officer and our principal accounting officer and our Board of Directors, is responsible for establishing and maintaining a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our internal control over financial reporting as defined in Rule 13(a)-15(f) and Rule 15d-15(f) as of December 31, 2014. Our management’s evaluation of our internal control over financial reporting was based on the framework in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was not effective as of December 31, 2014 due to material weaknesses in our internal control over financial reporting as follows:

●

lack of segregation of duties; and

●

inadequate security.

Our management continues to review processes and will make necessary changes to strengthen our system of internal controls over financial reporting

A material weakness is a deficiency or a combination of control 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 prevented or detected on a timely basis.

Limitations on Effectiveness of Controls

Our principal executive officer and principal financial officer do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additional controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the fourth quarter of our fiscal year ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

Our directors and executive officers, their age, positions held, and duration of such, are as follows:

Name	Position Held with our Company	Age	Date First Elected or Appointed
Shibi Chen	President, Chief Executive Officer and Director	54	July 8, 2013
Peifeng Huang	Chief Financial Officer and Secretary	36
Wensi Lin	Director	62	September 23, 2013
Vincent Xu	Director	30	March 20, 2014
Baozhu Feng	Director	25	March 20, 2014
Quan Gu	Director	39	April 20, 2014
Wei Gu	Director	47	April 20, 2014
Chang Gu	Director	45	April 20, 2014
Sheng Liu	Director	48	December 24, 2014
Peide Wang	Director	38	December 24, 2014
Changwei Zhao	Director	48	December 24, 2014

Family Relationships

There are no family relationships between any director or executive officer except that Messrs. Quan Gu, Wei Gu, and Chang Gu are brothers.

Business Experience

Shibi Chen

Mr. Chen has over 30 years of coal mining experience. Since 1982, he has served as deputy production director at Fujian Longyan Hong Shang Coal Mine before joining the Company as Deputy Production Director in 2006. Mr. Chen has been our President, Chief Executive Officer and Director since July 8, 2013.

Peifeng Huang

Mr. Huang has served as a production manager of Tong Duan Ping Coal Mine in Fujian Province from 1997 to 2005 and has served as coal mine production manager of Fujian Huilong since 2006. Mr. Huang graduated from Fujian Coal University with a degree in coal mining.

Mr. Huang served as a director from May 11, 2011 until April 20, 2014. Mr. Huang has been our Chief Financial Officer and Corporate Secretary since May 7, 2013. We believe Mr. Huang is qualified to serve on our board of directors because of his knowledge of our current operations in addition to his education and business experiences described above.

Wensi Lin

Mr. Lin has been our director since September 23, 2013. He serves as an independent member of our Board. Mr. Lin has approximately 30 years of working experience in coal mine operation and management. He joined the Company in December 2005 as deputy technical manager.

Vincent Xu

Vincent Xu graduated from Griffith University in Australia and received his Master’s degree of Applied Finance in Queensland University of Technology in 2007. Mr. Xu has been a corporate advisor since 2012. He served as a senior account executive at Well & Well JP Capital Group Limited and currently as a senior executive vice president at Strategic Capital Management (Asia) Limited. He has extensive experience in working closely with CEOs, their leadership teams, and corporate boards in such areas as team development, formulating and implementing corporate strategy and capital restructuring.

Baozhu Feng

Baozhu Feng is the Administration Manager of Hong Kong Jardine Chemical Limited, a chemical product trading company. She was graduated from Agricultural University of South China with a major in accounting and auditing. She served as the Administration and Operation manager of Carnival City Hotel in Dong Guan from 2007 to 2011, leading the team to provide high quality hospitality service for 4 years.

Quan Gu

Mr. Quan Gu, 39 years old, graduated from National University of Kyrhyz Republic major in international business. Mr. Gu has focused on mining advisory and exploration since 2004. He served as project management director at Xinjing Zhonghai Mining Company Limited and currently as an executive director and founding member of Beijing Shuntianying Project Management Co. Ltd. Mr. Gu has extensive experience in mining industry and strong networking in the industry.

Wei Gu

Mr. Wei Gu, 47 years old, graduated from Xian Institute of Physical Education in sports medicine. Mr. Gu has focused on marketing and human resources development since 1995. He served as the human resources director at Beijing Zhonghai Ziguang Co. Limited and currently serves as the senior project manager in Beijing Shuntianing Project Manage Co. Ltd.

Chang Gu

Chang Gu, 45 years old, graduated from Xinjing Normal University in Bachelor of Education. Mr. Gu has focused on marketing and human resources development since 1992. He served in Xinjiang Institute of Politics and Law from 1991 to 1994 and as senior project officer in charge of project schedule management and human resources management from 1994 to 2006. He is currently the executive director of Beijing Shuntianing Project Manage Co. Ltd.

Sheng Liu

Mr. Sheng Liu, 48 years old, graduated from Xian University in China, major in marketing. Mr. Liu has focused on marketing and advertising since 1988. He currently serves as the chairman of Yulin City Puda Technology Co. Ltd and the Vice Chairman for Yulin City Federation of industry and Commerce. Mr. Liu has extensive experience in project management and strong networks in both the business chamber and governments.

Peide Wang

Mr. Peide Wang, 38 years old, obtained his master’s degree from Beijing University, major in philosophy. Mr. Wang serves as the managing director for Beijing Shuntianying Management Co. Ltd. Mr. Wang has extensive experience in human resources management and strong government policy.

Changwei Zhao

Mr. Changwei Zhao, 48 years old, obtained his bachelor’s degree in Xian Medical University, major in medicine, and his master’s degree was granted by Southern Medical University, major in clinical cardiovascular. Mr. Zhao worked as a senior cardiologist in Peking University People’s Hospital until he joined Founder Group in 2006. He established and managed the PKU Medical Group since 2006 until March 2014. Mr. Zhao has extensive experience in the medical industry and strong management skills.

Term of Office

Our directors hold office until their successors are elected or appointed, or until their deaths, resignations or removals. Our officers hold office at the discretion of our board of directors, or until their deaths, resignations or removals.

Involvement in Certain Legal Proceedings

Our directors and executive officers have not been involved in any of the following events during the past ten years:

	1.	any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

	2.	any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

	3.	being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;

	4.	being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

	5.	being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

	6.	being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Compliance with section 16(a) of the Exchange Act

Because we are a foreign private issuer as defined under Rule 3b-4 promulgated under the Securities Exchange Act of 1934, our executive officers and directors and persons who own more than 10% of our common stock are not required to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission.

Code of Ethics

We have not adopted a code of ethics because our board of directors believes that our small size does not merit the expense of preparing, adopting and administering a code of ethics. Our board of directors intends to adopt a code of ethics when circumstances warrant.

Corporate Governance

Nominating or Compensation Committees

We currently do not have nominating or compensation committees or committees performing similar functions nor do we have a written nominating or compensation committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes that the functions of such committees can be adequately performed by our board of directors.

We do not have any defined policy or procedure requirements for shareholders to submit recommendations or nominations for directors. We do not currently have any specific or minimum criteria for the election of nominees to our board of directors and we do not have any specific process or procedure for evaluating such nominees. Our board of directors assesses all candidates, whether submitted by management or shareholders, and makes recommendations for election or appointment.

A shareholder who wishes to communicate with our board of directors may do so by directing a written request to the address appearing on the first page of this annual report.

Audit Committee and Audit Committee Financial Expert

The full text of our audit committee charter is disclosed as Schedule A to Exhibit 20-1 attached to our current report on Form 8-K filed with the SEC on June 8, 2012.

Composition of the Audit Committee

The entire board of directors acts as the audit committee of the Company and oversees the accounting and financial reporting processes and audits of the financial statements of the Company. Our board of directors has determined that we do not have a board member that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K.

Shibi Chen	Not independent	Financially literate
Wensi Lin	Independent	Financially literate
Vincent Xu	Independent	Financially literate
Baozhu Feng	Independent	Financially literate
Quan Gu	Not Independent	Financially literate
Wei Gu	Not Independent	Financially literate
Chang Gu	Not Independent	Financially literate
Sheng Liu	Independent	Financially literate
Peide Wang	Not Independent	Financially literate
Changwei Zhao	Not Independent	Financially literate

We believe that our board of directors is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The board of directors of our company does not believe that it is necessary to have an audit committee because we believe that the functions of an audit committee can be adequately performed by the board of directors. In addition, we believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any revenues from operations to date.

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation

The particulars of compensation paid to the following persons:

●

our principal executive officer;

●

each of our two most highly compensated executive officers who were serving as executive officers at the end of the year ended December 31, 2014 that received compensation in excess of $100,000 in 2014; and

●

up to two additional individuals that received compensation in excess of $100,000 in 2014 for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as an executive officer at the end of the most recently completed financial year,

who we will collectively refer to as the named executive officers, for our years ended December 31, 2013 and 2014 are set out in the following summary compensation table:

Name and Principal
Position

Year

Salary
($)

Bonus
($)

Stock
Awards
($)

Option
Awards
($)

Non-Equity
Incentive
Plan
Compensation
($)

Nonqualified
Deferred
Compensation
Earnings
($)

All Other Compensation
($)

Total ($)

Peifeng Huang
Chief Financial Officer and

2014

NIL

Secretary

2013

16,917

NIL

16,917

Shibi Chen
President, Chief Executive Officer and

2014

NIL

Director

2013

NIL

Employment Agreements

We have not entered into any employment agreement or consulting agreement with our directors and executive officers.

Retirement or Similar Benefit Plans

There are no arrangements or plans in which we provide retirement or similar benefits for our directors or executive officers.

Resignation, Retirement, Other Termination, or Change in Control Arrangements

We have no contract, agreement, plan or arrangement, whether written or unwritten, that provides for payments to our directors or executive officers at, following, or in connection with the resignation, retirement or other termination of our directors or executive officers, or a change in control of our company or a change in our directors’ or executive officers’ responsibilities following a change in control.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth for each named executive officer certain information concerning the outstanding equity awards as of December 31, 2014.

Option awards

Stock awards

Name

Number of
securities
underlying
unexercised
options
(#) exercisable

Number of
securities
underlying
unexercised
options
(#)
unexercisable

Equity
incentive
plan
awards:
Number of
securities
underlying
unexercised
unearned
options
(#)

Option
exercise
price
($)

Option
expiration
date

Number of shares or units of stock that have not
vested
(#)

Market value of shares of
units of stock
that have
not
vested
($)

Equity
incentive
plan
awards:
Number
of
unearned
shares, units or other
rights
that have
not vested (#)

Equity
incentive
plan
awards:
Market
or
payout
value of
unearned
shares,
units or
other
rights
that
have not ($)

Peifeng Huang

Nil

Shibi Chen

Nil

(1) Longwen Lin ceased to be director, Chief Executive Officer and President of the Company on July 8, 2013.

(2) Thomas Yeo ceased to be Chief Financial Officer and Corporate Secretary of the Company on May 7, 2013.

Compensation of Directors

We have no formal plan for compensating our directors for their services in their capacity as directors. Our directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth, as of June 30, 2015 certain information with respect to the beneficial ownership of our common shares by each stockholder known by us to be the beneficial owner of more than 5% of our common shares, by each of our directors, our named executive officers, and executive officers, and by our directors and executive officers as a group. We have determined the number and percentage of shares beneficially owned by such person in accordance with Rule 13d-3 under the Securities Exchange Act of 1934. This information does not necessarily indicate beneficial ownership for any other purpose.

Name and Address of Beneficial Owner	Title of Class	Amount and Nature of Beneficial Ownership		Percentage of Class(1)

Shibi Chen Room 401, Suxi Building, Jiuyi-Nan Road, Longyan City, Fujian Province China	Common Shares	Nil		N/A

Peifeng Huang Jinhuai Middle Street, Hong Hua Yuan Block 1 Unit 907 Fengze District, Quanzhou City, Fujian Province PRC China 362300	Common Shares	Nil		N/A

Changwei Zhao Room 204, Building 6, No. 26, Zhugezhuang. Haidian District, Beijing City, China. 100020	Common Shares	Nil		N/A

Wensi Lin Room 401, Suxi Building, Jiuyi-Nan Road, Longyan City Fujian Province, China	Common Shares	Nil		N/A

Vincent Xu Room 33/C, Tower M7, No 9, Yuen Lung Road, Yuen Long, NT. Hong Kong SAR	Common Shares	Nil		N/A

Baozhu Feng NO.271 Zhen'an Road Chang'an Town Dongguan Guangdong China	Common Shares	Nil		N/A

WEI GU M 702 BLK 1 ZONE 2 YUE QUAN BAI LITIAN CUN SHAN NAN RD BEIJING, CHINA	Common Shares	79,309,174 18,300,000 61,009,174	Shares Direct Indirect(2)	21.22%

QUAN GU RM 702 BLK 1 ZONE 2 YUE QUAN BAI LITIAN CUN SHAN NAN RD BEIJING, CHINA	Common Shares	79,309,174 18,300,000 61,009,174	Shares Direct Indirect(2)	21.22%

CHANG GU RM 702 BLK 1 ZONE 2 YUE QUAN BAI LITIAN CUN SHAN NAN RD BEIJING, CHINA	Common Shares	79,309,174 18,300,000 61,009,174	Shares Direct Indirect(2)	21.22%

SHENG LIU NO 16 FUQIANG XIANG BAONING ROAD YUYANG DISTRICT YULIN CITY, SHANXI PROVINCE CHINA	Common Shares	38,715,901	Shares, Direct	10.36%

PEIDE WANG UNIT 502, BUILDING 1, NO 16 ZIJIN CHANGAN HAIDIAN DISTRICT BEIJING CITY, CHINA	Common Shares	45,648,054	Shares, Direct	12.21%

All directors and executive officers as a group (11 persons)	Common Shares	322,291,477		86.22%

1 Percentage of ownership is based on 373,793,578 shares of our common shares issued and outstanding as of June 30, 2015. Except as otherwise indicated, we believe that the beneficial owners of the common shares listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Common shares subject to options or warrants currently exercisable or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person.

2 Includes approximately 7,333,333 shares owned through JM Capital Limited, a Hong Kong corporation, 36,386,130 shares owned through Inter Dynamic Worldwide Limited, a British Virgin Islands corporation, and 17,289,710 shares owned through Grand China Energy Group Limited, a British Virgin Islands corporation.

Change in Control

There are no provisions in our articles that would delay, defer or prevent a change in control of our company and that would operate only with respect to an extraordinary corporate transaction involving our company or subsidiary, such as merger, reorganization, tender offer, sale or transfer of substantially all of our assets, or liquidation.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Transactions with Related Persons

Since January 1, 2014, there have been no transactions and there are no currently proposed transactions, in which our company was or is to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, and in which any of the following persons had or will have a direct or indirect material interest:

	(i)	Any director or executive officer of our company;

	(ii)	Any beneficial owner of shares carrying more than 5% of the voting rights attached to our outstanding common shares;

	(iii)	Any person who acquired control of our company when it was a shell company or any person that is part of a group, consisting of two or more persons that agreed to act together for the purpose of acquiring, holding, voting or disposing of our common shares, that acquired control of our company when it was a shell company; and

	(iv)	Any immediate family member (including spouse, parents, children, siblings and in-laws) of any of the foregoing persons.

Director Independence

We currently act with ten directors consisting of Shibi Chen, Peifeng Huang, Vincent Xu, Baozhu Feng, Quan Gu, Wei Gu, Chang Gu, Sheng Liu Peide Wang and Changwei Zhao. Our common shares are eligible for quotation on the OTCQB Market operated by OTC Markets Group Inc., which does not impose any director independence requirements. Under NASDAQ rule 5605(a)(2), a director is not independent if he or she is also an executive officer or employee of the corporation, was, at any time during the past three years, employed by the corporation or has a relationship with the Company which would interfere with the exercise of independent judgment on carrying out the responsibility of a director. Using this definition of independent director, Vincent Xu, Baozhu Feng, Wensi Chen and Changwei Zhao are independent.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

Audit Fees

The following table sets forth the fees billed to our company for the year ended December 31, 2014 and 2013 for professional services rendered by our independent registered accounting firm.

	Year Ended		Year Ended
	December 31,		December 31,
	2014		2013
Audit and Audit Related Fees	$	38,710	$	19,148
Tax Fees		-		-
All Other Fees		-		-
Total	$	38,710	$	19,148

Pre-Approval Policies and Procedures

Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors before the respective services were rendered.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

Exhibit Number		Description
3.1		Articles of Incorporation (incorporated by reference to an exhibit to our Registration Statement on Form SB-2 filed on August 7, 2007)
3.2		Notice of Alteration filed with the Ministry of Finance, BC Registry Services effective March 3, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on March 5, 2009)
3.3		Amended and Restated Articles of Incorporation of SGB International Holdings Inc. (incorporated by reference to our Current Report on Form 8-K filed on March 5, 2009)
3.4		Notice of Alteration and Certificate of Name Changed filed with the Ministry of Finance BC Registry Services effective August 6, 2014 (incorporated by reference to our Current Report on Form 8-K filed on August 12, 2014)
10.1		Form of stock option agreement (incorporated by reference to our Current Report on Form 8-K filed on January 21, 2011)
10.2		Loan agreements between Yongding Shangzhai Coal Mine Co., Ltd. and Mr. Longwen Lin (incorporated by reference to Amendment No. 2 of our Current Report on Form 8-K/A filed on September 13, 2011)
10.3		Loan agreements between Yongding Shangzhai Coal Mine Co., Ltd. and Mr. Longwen Lin (incorporated by reference to Amendment No. 3 of our Current Report on Form 8-K/A filed on October 24, 2011)
20.1		Notice of Annual and Special Meeting of Shareholders and Information Circular (incorporated by reference to our Current Report on Form 8-K filed on September 5, 2013)
20.2		Form of Proxy (incorporated by reference to our Current Report on Form 8-K filed on September 5, 2013)
20.3		Supplemental Mailing list form (incorporated by reference to our Current Report on Form 8-K filed on September 5, 2013)
21.1*		Subsidiaries of Registrant
21.2		Fujian Huilong Mining Co., Ltd. (formerly Yongding Shangzhai Coal Mine Co., Ltd.), a People’s Republic of China corporation
31.1*		Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
31.2*		Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32.1*		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
32.2*		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
101.INS*		XBRL INSTANCE DOCUMENT
101.SCH*		XBRL TAXONOMY EXTENSION SCHEMA
101.CAL*		XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF*		XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB*		XBRL TAXONOMY EXTENSION LABEL LINKBASE
101.PRE*		XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

* Filed herewith.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Grand China Energy Group Limited

	By:	/s/ Shibi Chen
		Shibi Chen
		President, Chief Executive Officer and Director
		(Principal Executive Officer)
		Date: July 6, 2015

	By:	/s/ Peifeng Huang
		Peifeng Huang
		Chief Financial Officer and Secretary
		(Principal Financial Officer and Principal Accounting Officer)
		Date: July 6, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

	By:	/s/ Shibi Chen
		Shibi Chen
		President, Chief Executive Officer and Director
		(Principal Executive Officer)
		Date: July 6, 2015

	By:	/s/ Peifeng Huang
		Peifeng Huang
		Chief Financial Officer and Secretary
		(Principal Financial Officer and Principal Accounting Officer)
		Date: July 6, 2015

	By:	/s/ Vincent Xu
		Vincent Xu
		Director
		Date: July 6, 2015

	By:	/s/ Wensi Lin
		Wensi Lin
		Director
		Date: July 6, 2015

	By:	/s/ Baozhu Feng
		Baozhu Feng
		Director
		Date: July 6, 2015

	By:	/s/ Quan Gu
		Quan Gu
		Director
		Date: July 6, 2015

	By:	/s/ Wei Gu
		Wei Gu
		Director
		Date: July 6, 2015

	By:	/s/ Chang Gu
		Chang Gu
		Director
		Date: July 6, 2015

	By:	/s/ Sheng Liu
		Sheng Liu
		Director
		Date: July 6, 2015

	By:	/s/ Peide Wang
		Peide Wang
		Director
		Date: July 6, 2015

	By:	/s/ Changwei Zhao
		Changwei Zhao
		Director
		Date: July 6, 2015

Grand China Energy Group Ltd 10-K