UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~March~~June 3130, 2015

☐ TRANSITION REPORT UNDER 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)

~~BritishColumbia~~British Columbia N/A (State of Incorporation) (IRS Employer Identification No.)

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

8 Sunning Road, Causeway Bay

Hong Kong

(852) 3691-8831

(Address of principal executive offices and telephone number)

Indicate whether the registrant (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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 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. (Check One):

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

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

There ~~were~~ were 373,793,578 shares of common stock issued and outstanding as of ~~July~~August 619, 2015.

GRAND CHINA ENERGY GROUP LIMITED

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED ~~MARCH~~JUNE 3130, 2015

Table of Contents

		Page
		Number
PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements	3
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	11
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	1213
ITEM 4.	Controls and Procedures	1213
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	1314
ITEM 1A.	Risk Factors	1314
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1314
ITEM 3.	Defaults Upon Senior Securities	1314
ITEM 4.	Mine Safety Disclosures	1314
ITEM 5.	Other Information	1314
ITEM 6.	Exhibits	1314
SIGNATURES		1415

GRAND CHINA ENERGY GROUP LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS AT ~~MARCH~~JUNE 3130, 2015 AND DECEMBER 31, 2014 (STATED IN US DOLLARS)

			March 31			December 31
			June 30			December 31
			2015			2014
	Note		$			$
ASSETS
Current Assets
Cash and cash equivalents		3		1,~~506~~537			1,646
Receivables		4		~~323~~328,~~208~~995			328,914
Total Current Assets				~~324~~330,~~714~~532			330,560
Non-current Assets
Property, plant and equipment		5		~~219~~207,~~018~~290			230,746
Total Non-current Assets				~~219~~207,~~018~~290			230,746
Total Assets				~~543~~537,~~732~~822			561,306
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current Liabilities
Account payable and accrued liabilities		6		~~374~~342,~~014~~762			395,667
Amounts due to related parties		7		~~329~~416,~~220~~470			328,411
Income tax payable				20,000			20,000
Loan payable – current		8		5457,~~715~~370			58,183
Total Current Liabilities and total liabilities				~~777~~836,~~949~~602			802,261
Stockholders’ Deficiency
Common stocks		9		9,138,544			9,138,544
Contributed surplus				100,000			100,000
Additional paid-in capital				100,000			100,000
Accumulated deficit				(9,~~578~~637,~~569~~798	)		(9,563,913	)
Accumulated other comprehensive income				~~5,808~~474			(15,586	)
Total Stockholders’ Deficiency				(~~234~~298,~~217~~780	)		(240,955	)
Total Liabilities and Stockholders’ Deficiency				~~543~~537,~~732~~822			561,306

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

GRAND CHINA ENERGY GROUP LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(LOSS)

(STATED IN US DOLLARS)

	Three months ended 31 March
	Three month ended 30 June						Six months ended 30 June
	2015			2014			2015			2014
	$			$			$			$
Revenue, net of sales tax		-			-
Revenue		-			-			-			-
Cost of revenue		-			-			-			-
Gross profit		-			-			-			-
Selling expenses		-			-			-			-
General and administrative		(18,607	)		(87,285	)
Depreciation & Amortization		(11,728	)		(3,856	)		(23,456	)		(3,856	)
Total operating expenses		(18,607	)		(87,285	)
General and administrative		(49,183	)		(34,650	)		(56,062	)		(121,936	)
Net loss from operations		(18,607	)		(87,285	)
Total operating expenses		(60,911	)		(38,506	)		(79,518	)		(125,792	)
Other items:
Net loss from operations		(60,911	)		(38,506	)		(79,518	)		(125,792	)
Interest expense		(1,548	)		(1,729	)
Other items:
Exchange gain		5,499			4,108
Interest expense		(1,495	)		(1,730	)		(3,043	)		(3,458	)
Loss before tax		(14,656	)		(84,906	)
Exchange gain		3,177			1,187			8,676			5,295
Income tax expense		-			-
		1,682			(543	)		5,633			1,837
Net loss for the period		(14,656	)		(84,906	)
Income(loss) before tax		(59,229	)		(39,049	)		(73,885	)		(123,955	)
Foreign currency translation adjustment		21,393			6,699
Income tax expense		-			-			-			-
Comprehensive income(loss)		6,737			(78,207	)
Net loss for the period		(59,229	)		(39,049	)		(73,885	)		(123,955	)
Earnings Per Share (cents) – Basic and diluted		(0.00	)		(0.00	)
Foreign currency translation adjustment		(5,334	)		(5,758	)		16,059			941
Weighted Average Shares Outstanding – Basic and diluted		373,793,578			373,793,578
Comprehensive income(loss)		(64,563	)		(44,807	)		(57,826	)		(123,014	)
Earnings Per Share (cents) – Basic and diluted		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Weighted Average Shares Outstanding – Basic and diluted		373,793,578			373,793,578			373,793,578			373,793,578

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

GRAND CHINA ENERGY GROUP LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(STATED IN US DOLLARS)

	Three months Ended 31 March
	Six months Ended 30 June
	2015			2014
	$			$
Cash flows from operating activities
Net loss for the period		(14,656	)		(84,906	)
Net income for the period		(73,885	)		(123,955	)
Items not involving cash:
Depreciation & amortization		1123,~~728~~456			-3,856
Exchange gain		~~(5,499~~	)		-
Interest expense		13,~~548~~043			13,~~729~~458
Changes in non-cash working capital:		(8,676	)
Receivables		-			(4103,~~149~~948	)
Prepaid expenses, deposit and other receivables		-			-
Accounts payable, accrued liabilities and income tax payables		-			87,326
Accounts payable , accrued liabilities and income tax payables		(35,758	)		459,050
Net cash used in operating activities		(6,879	)		-
Inventory		-			-
Net cash (used in )generated from operating activities		(91,820	)		238,461
Cash flows from investing activities
Purchase of property, equipment and mine development costs		-			-(238,461	)
Net cash used in investing activities
Acquiring mining rights
Net cash used in investing activities		-			(238,461	)
Cash flows from financing activities
Amounts advanced from a related party		6,879			-
Increase (decrease) of term loan		-			-
Amounts advanced from a related party		91,820			-
Net cash used in financing activities		-			-
Increase/(decrease) in cash and cash equivalents		-			-
Effect of exchange rate changes on cash		(~~140~~109	)		(653	)
Cash and cash equivalents – beginning of period		1,646			1,793
Cash and cash equivalents – end of period		1,~~506~~537			1,~~728~~790
Supplemental disclosure of cash flow information:
Income tax		-			-
Interest expense		-			-

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

GRAND CHINA ENERGY GROUP LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(DEFICIENCY) AS AT ~~MARCH~~JUNE 3130,2015 ~~2014~~ (STATED IN US DOLLARS)

	Common shares				Stocks to be		Contributed		Additional Paid-in		Retained earnings (Accumulated			~~Retained~~Accumulated ~~earnings~~other ~~(Accumulated~~comprehensive			~~Accumulated~~Total ~~other~~Stockholders’ ~~comprehensive~~equity			~~Total Stockholders’ equity~~
	Shares		Amount		be issued		surplus		capital		~~Reserve~~Deficit)			~~Deficit)~~income			~~income~~(deficiency)			~~(deficiency)~~
			$		$		$		$		$			$			$			$
Balance at December 31, 2014		373,793,578		9,138,544		-		100,000		100,000		-(9,347,096	)		(933,~~347,096~~780	)		(3342,~~780~~332	)		~~(42,332~~	)
Net loss for the year		-		-		-		-		-		-(216,817	)		~~(216,817~~-	)		-(216,817	)		~~(216,817~~	)
Currency translation		-		-		-		-		-		-			-(18,195	)		(18,195	)		~~(18,195~~	)
Balance at December 31, 2014		373,793,578		9,138,544		-		100,000		100,000		-(9,563,913	)		(915,~~563,913~~585	)		(15240,~~585~~954	)		~~(240,954~~	)
Net loss for the period		-		-		-		-		-		-(73,885	)		~~(14,656~~-	)		-(73,885	)		~~(14,656~~	)
Currency translation		-		-		-		-				-			-16,059			2116,~~393~~059			~~21,393~~
Balance at March 31, 2015		373,793,578		9,138,544		-		100,000		100,000		-			(9,578,569	)		5,808			(234,217	)
Balance at June 30, 2015		373,793,578		9,138,544		-		100,000		100,000		(9,637,798	)		474			(298,780	)

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

ORGANIZATION AND PRINCIPAL ACTIVITIES

~~SGB~~Grand China Energy Group Limited, formally known as SGB International Holdings Inc., (“SGB” or the “Company”) was incorporated in British Columbia, Canada on November 6, 1997. Through its subsidiary, the Company is engaged in providing services in relation of the coal business in People’s Republic of China.

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 coal mine in Fujian Province as well as engaging in coal trading activities in Fujian Province, People’s Republic of China.

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

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~~June 3130, ~~2014~~2015 and ~~March~~ December 31, ~~2015~~2014, the Company had working capital deficiency of $~~471~~506,~~701~~070 and $~~453~~471,~~235~~701 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. 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.

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.

SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and preparation

The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by generally accepted accounting principles in the United States for complete financial statements. In the opinion of management, all of the normal and recurring adjustments necessary to fairly present the interim financial information set forth herein have been included. The results of operations for interim periods are not necessarily indicative of the operating results of a full year or of future years.

These interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and follow the same accounting policies and methods of their application as the most recent annual financial statements. The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. These interim financial statements should be read in conjunction with the financial statements and related footnotes included in the Annual Report on Form 10-K of the Company for the year ended December 31, 2014.

CASH AND CASH EQUIVALENTS

	March 31,		December 31,
	June 30,		December 31,
	2015		2014
	$		$
Cash denominated in Canadian Dollars		1,~~506~~537		1,646

RECEIVABLES

	March 31,		December 31,
	June 30,		December 31,
	2015		2014
	$		$
Receivable from disposal of subsidiaries(i)		~~123~~128,~~208~~995		128,914
Others (i)		200,000		200,000
		323,208		328,914
		328,995		328,914

Notes:

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

PROPERTY, PLANT AND EQUIPMENT

			Accumulated		Net book
	Cost		amortization		value
	$		$		$
June 30, 2015
Motor vehicles		260,626		53,336		207,290
Total		260,626		53,336		207,290
December 31, 2014
Motor vehicles		260,626		41,608		219,018
Total		260,626		41,608		219,018
December 31, 2014
Motor vehicles		260,626		29,880		230,746
Total		260,626		29,880		230,746

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

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

	March 31,		December 31,
	June 30,		December 31,
	2015		2014
	$	$	$	$
Accounts payable		8,~~136~~307		8,893
Staff costs / wage payable		2425,~~883~~404		27,196
Accrued liabilities		~~165~~130,~~386~~000		168,674
Other payable		~~175~~179,~~609~~051		190,904
		374,014		395,667
		342,762		395,667

AMOUNTS DUE TO RELATED PARTIES

	March 31,		December 31,
	June 30,		December 31,
	2015		2014
	$	$	$	$
Amounts due to SGB C&C Investment		10,~~257~~471		11,210
Amounts due to a director - Gu Chang		~~318~~405,~~963~~999		317,201
		329,220		328,411
		416,470		328,411

The amounts as at ~~March~~June 3130, 2015 and December 31, 2014 are unsecured, non-interest bearing and due on demand.

LOAN PAYABLE

The following is a summary of term loan:

	March 31,		December 31,
	June 30,		December 31,
	2015		2014
	$		$
Interest bearing loan at 15% per annum, unsecured and due on demand		5457,~~715~~370		58,183
Total		5457,~~715~~370		58,183
Current portion		5457,~~715~~370		58,183
Non-current		-		-

STOCKHOLDERS’ EQUITY

Authorized:

Unlimited number of common shares without par value and an unlimited number of preferred shares without par value.

Unlimited number of preferred shares without par value

Issued and outstanding

As at ~~March~~June 3130, 2014 and December 31, ~~2013~~2014, 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.

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.

RELATED PARTY TRANSACTIONS

During the ~~quarter~~period ended ~~March~~June 3130, 2015 and 2014, the Company engaged following related party transactions:

● Accrued or paid $ nil (~~March~~June 3130 2014: $nil) in salaries and bonus to senior officers and directors of the Company;

As at ~~March~~June 3130, 2015 and December 31, 2014, following receivable and payable were outstanding:

●

Included in accounts payable and accrued liabilities, $Nil (December 31, 2014: $Nil) were payable to the senior officers and directors of the Company

●

Included in receivable, $nil was receivable (December 31, 2014: $Nil) from a senior officer and director of the Company.

COMMITMENTS

As at December 31, 2014 and ~~March~~June 3130, 2015, the company doesn’t have any capital or operating commitments.

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

Our Business

Prior to the December 19, 2013 disposal of Dragon International and its subsidiary, Fujian Huilong, our principal operations were those of Fujian Huilong which was engaged in coal production and sales involving the exploration, development and mining of coal properties. Fujian Huilong owns and operates a coal mine, located in Shangzhai Village, Yongding County, Longyan City of Fujian Province, People’s Republic of China.

On October 3, 2013, we incorporated a wholly owned subsidiary, SGB Investment Limited. 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 the quarter ended ~~March~~June 3130, 2015, we conducted no consulting activities related to the mines in Fujian Province, choosing instead to devote our resources to engaging in due diligence on coal mining properties elsewhere in China and in Uzbekistan and Kyrgyzstan. We continue to search for potential coal mining entities, properties and assets for acquisition

Results of Operations

For the three months ended ~~March~~June 3130, 2015 compared with the three months ended ~~March~~June 3130, 2014

Gross Revenues

The revenue for the three months ended ~~March 31~~June 30, ~~2014~~2015 and ~~March~~June 3130, ~~2013~~2014 is nil respectively.

Operating Expenses

Operating expenses for the three months ended June ~~March 31~~30, 2015 and three months ended ~~March~~June 3130, 2014 is $1860,~~607~~911 and $8738,~~285~~506 respectively. The expenses consisted of filing fees, professional fees, payroll and benefits and other general expenses.

We expect that our general and administrative expenses will continue to increase as we incur additional costs to support the growth of the business.

Net Loss

Net Loss for the three months ended ~~March~~June 3130, 2015 and three months ended ~~March~~June 3130, 2014 is $1460,~~656~~911 and $8438,~~906~~506 respectively.

Liquidity and Capital Resources

~~At March~~As 31at June 30, 2015 and December 31, we2014, the Company had working capital ~~deficit~~deficiency of $~~453~~506,~~235~~070 asand ~~compared to a working capital deficit of~~ $471,701 ~~at December 31~~respectively, ~~2014.~~

Current liabilities ~~decreased~~increased by $2434,~~312~~341 from $802,261 as at December 31, 2014 to $~~777~~836,~~949~~602 at ~~March~~June 3130, ~~2014~~2015, principally a result of ~~the~~ ~~decreased~~an increase in account payable and accrued liabilities.

Net cash provided by (used in) operating activities for the ~~three~~six months ended ~~March~~June 3130, 2015 was ~~nil~~($91,820) as compared to net cash used in operating activities of ($6238,~~879)~~461 for the ~~three~~ six months ended ~~March~~June 3130, 2014.

Net cash provided by (used in) investing activities was ($238,461) for the ~~three~~six months ended ~~March~~June 3130, 2014 and nil for the ~~three~~six months ended ~~March~~June 3130, ~~2015~~ ~~were both nil~~2015.

We will likely require additional capital to continue to operate our business, and to further expand our business. Sources of additional capital through various financing transactions or arrangements with third parties may include equity or debt financing, bank loans or revolving credit facilities. We may not be successful in locating suitable financing transactions in the time period required or at all, and we may not obtain the capital we require by other means. Our inability to raise additional funds when required may have a negative impact on our operations, business development and financial results. We will likely require additional capital to continue to operate our business, and to further expand our business. Sources of additional capital through various financing transactions or arrangements with third parties may include equity or debt financing, bank loans or revolving credit facilities. We may not be successful in locating suitable financing transactions in the time period required or at all, and we may not obtain the capital we require by other means. Our inability to raise additional funds when required may have a negative impact on our operations, business development and financial results.

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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Smaller reporting companies are not required to provide the information required by this item.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We maintain “disclosure controls and procedures”, as that term is defined in Rule 13a-15(e), promulgated by the Securities and Exchange Commission pursuant to the Exchange Act. 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 Exchange Act 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.

As required by paragraph (b) of Rules 13a-15 under the Exchange Act, 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 quarterly report on Form 10-Q. Based on this evaluation, our management concluded that as of the end of the period covered by this quarterly report on Form 10-Q, our disclosure controls and procedures were effective.

Our management continues to review processes and intend 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.

12Changes in Internal Control over Financial Reporting

~~Changes~~ There were no changes in ~~Internal~~our ~~Control~~internal control over ~~Financial~~financial ~~Reporting~~reporting during the quarter ended June 30, 2015 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2015 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.13

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

To the best of our knowledge, there are no material pending legal proceedings to which we are a party or of which any of our property is the subject or proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS.

There were no material changes to the Risk Factors disclosed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2014. For more information concerning our risk factors, please see “Item 1A. Risk Factors” of our Annual Report on Form 10-K.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

Not applicable.

ITEM 6. EXHIBITS

Exhibits required by Item 601 of Regulation S-K:

Exhibit Number		Description
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

* In accordance with SEC Release 33-8238, Exhibits 32.1 and 3.2.2 are furnished and not filed.

1314

SIGNATURES

Pursuant to the requirements 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
	Date: August 19, 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/ Peifeng Huang
	Peifeng Huang
	Chief Financial Officer and Secretary
	(Principal Financial Officer and Principal Accounting Officer)
	Date: August 19, 2015

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