STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2014

STOCKHOLDERS' EQUITY [Text Block]

4.	STOCKHOLDERS' EQUITY
	Top Time was incorporated in Hong Kong in December 2006 and currently has two subsidiaries: Beijing SOD and Chongqing SOD. Beijing SOD is 90% owned by Top Time and was incorporated in China in March 2005. Chongqing SOD was incorporated in China in March 2007. Chongqing SOD is 90% owned by Beijing SOD. For accounting purposes, the acquisition of Top Time was treated as a reorganization of entities under common control.
	ISSUANCE OF COMMON STOCK
	In February 2002, the Company issued 372,807 shares of the Company's common stock at $.20 per share in a private placement. The total amount due of $74,561 was determined to be uncollectible during 2004 and was charged to additional paid in capital.
	In April 2002, 540,260 options were exercised by a former director at a cashless exercise amount of $416,000. The balance of the 2,000,000 options granted to this former director was forfeited in 2002.
	In November 2002, 1,100,000 shares were issued to the Board of Directors at $.13 per share, for a total consideration of $143,000, for services provided to the Company in 2002.
	In March 2003, the Company issued 1,513,969 shares of common stock for $.12 per share, for a total consideration of $181,676 to settle various debts with third party vendors and a loan payable to a former Director of the Company.
	On September 29, 2003, the Company entered into its first stock subscription agreement with the Beijing Qiang Long Real Estate Development Co., Ltd. (“Qiang Long”), relating to the purchase of 15,000,000 shares of the Company's common stock at a purchase price of $.40 per share, for an aggregate consideration amount of $6,000,000. In October 2003, 1,511,488 shares of stock were purchased according to the subscription agreement for $604,595. In addition to $604,595, $604,887 was received in advance for the stocks issued in January 2004. Total amount received was $1,209,482 during October 2003. In January 2004, 3,023,998 shares of stock were purchased under the same agreement for a price of $1,209,599. Amount received was $604,712 which was $1,209,482 less $604,887. In 2004, 10,464,514 shares of stock were purchased under the subscription agreement for an aggregate consideration of $4,185,806. Accordingly, the Company has received all the payments from the first stock subscription receivable.
	On January 29, 2004 a second stock subscription agreement was entered into with Qiang Long. The second agreement calls for the purchase of 140,000,000 shares of the Company's common stock at a purchase price of $.21 per share, for an aggregate consideration of $29,400,000. Qiang Long will become the controlling stockholder of the Company as a result of this second agreement. During 2004 the Company collected $653,795 as a partial payment toward the stock subscription receivable, however, no stocks were issued. In December 2006, pursuant to this agreement, Qiang Long Real Estate Development Co. Ltd., paid $632,911 in partial fulfillment of the agreement. Company issued 3,013,862 shares of common stock to Qiang Long.
	Prior to the issuance of the shares, the Company is required to hold a stockholders meeting to increase the number of common shares authorized, in order to have enough common shares to satisfy its stock obligations to Qiang Long. Qiang Long does not have the right to cancel its subscription and the consideration is not refundable.
	In January 2004 the Company issued 24,036,269 shares of its common stock to Kingsrich Development Limited in satisfaction of debt in accordance with a prior agreement.
	On January 29, 2004 the Company issued 28,210,000 shares of its common stock in the acquisition of the 15% minority interest in Minghua China. The shares were valued at $.14 per share. The transaction is further discussed in Note 1.
	In February 2004, the Company issued 4,000,000 shares of its common stock in exercise of stock options. The exercise price was paid in services to the Company. Compensation expense of $480,000 was charged to current expense as a result of the transaction.
	During May of 2004 the Company issued 16,483,514 shares of its common stock to China Cardinal Limited, of Hong Kong, in satisfaction of a subscription agreement. The stock was sold at a price of $.14 per share, for an aggregate amount of $2,307,692.

Luck Pond Enterprises Limited by Hong Kong (“Luck Pond”) had provided consulting services and acted as a finder in connection with the above-mentioned two subscription agreements with Qiang Long and an investment that was made in January 2004 by China Cardinal Limited of Hong Kong. In consideration of those services, Luck Pond will receive a ten percent commission on the total investment proceeds from both investors, payable in common stock of the Company and was determined by management to be equivalent to 28,390,531 common shares. This commission is contingent upon final funding of 100% of all the three above-mentioned subscription agreements. During 2004, at the completion of two of the agreements, the Company charged $830,100 to expense. The amount was included in accrued liabilities at December 31, 2004, and in January 2005, the Company issued 5,770,000 shares of its common stock in payment of the liability.
On June 29, 2007, the Board of Directors of Company unanimously approved, subject to the Majority Shareholders approval, the 1 -for-20 Reverse Split of company’s issued and outstanding Common Stock, which will be effectuated in conjunction with the adoption of the Certificate of Amendment. The Majority Shareholders also approved this action in the Written Consent.
The Reverse Split reduce the number of issued and outstanding shares of Company’s Common Stock and effectively increase the number of authorized and unissued shares of our Common Stock available for future issuance. The Reverse Split will become effective on the Effective Date, which occurs when the Certificate of Amendment is filed with the Secretary of State for the State of New York following the expiration of the 20 -day period mandated by Rule 14c of the Exchange Act.
Effect of Reverse Split on Common Stock
The table below sets forth, as of the Record Date and as of the Effective Date the following information both before and after the proposed Reverse Split (subject to slight adjustments resulting rounding of fractional shares):
	The number of issued and outstanding shares of Common Stock
	The number of authorized and reserved shares of Common Stock;
	The number of authorized but unissued and unreserved shares of Common Stock.

CAPITALIZATION STRUCTURE OF THE COMPANY AT VARIOUS TIMES

	Capital Structure	Capital Structure
	Pre-Reverse Split	Post-Reverse Split
	(As of Record Date)	(On Effective Date)
Issued and outstanding shares of Common Stock	198,509,866	9,925,493
Authorized and reserved shares of Common Stock	-	-
Authorized but unissued and unreserved shares of Common Stock	1,490,134	190,074,507

As shown in the table above, the Reverse Split of the outstanding shares of our Common Stock will reduce the number of issued and outstanding shares of our Common Stock and effectively increase the number of authorized and unissued shares of our Common Stock available for future issuance.

On January 29,2004, company entered into a certain contract with Qiang Long Real Estate Development Co., Ltd., under which, as amended and supplemented from time to time, Qiang Long is obligated to purchase 140,000,000 shares of the Company’s common stock, par value $0.01 at an aggregate purchase price of US$29,400,000, or $0.21 per Share, US$653,795 of which was paid to the Company as a performance bond at the signing of the Agreement, US$632,911 of which was paid to the Company in 2006 in exchange from 3,013,862 Shares, and the balance of US$28,113,294 (the “Final Installment”) of which was to be paid in full by June 30, 2007, for the remaining 136,986,138 Shares.

On June 29, 2007, the Company and Qiang Long entered into a letter agreement (the “letter Agreement”), pursuant to which the Company and Qiang Long acknowledged their consummation of the Qiang Long Contract. Pursuant to the Letter Agreement, the Company acknowledged its receipt of the Final Installment in cash from Qiang Long as fulfillment of Qiang Long’s investment obligation, and agreed to issue the remaining Shares to Qiang Long as follows:
1.	The Company will issue 50,000,000 of the Shares to Qiang Long on or before July 23, 2007, the date that is fifteen business days after the Company receives the Final Installment from Qiang Long; and
2.	Within fifteen (15) business days following the effective date of an amendment to the Company’s Certificate of Incorporation to effect a one-for-twenty reverse split of the Company’s outstanding Common Stock (the “Amendment”), the Company will issue the remaining 86,986,138 Shares to Qiang Long, which will be equal to 4,349,307 Shares post-reverse split.

On July 27, 2007, the Company instructed prior Transfer Agent to issue the 50,000,000 shares of common stock to deliverable Qiang Long in the name of Jolly Concept Management Limited, in accordance with Qiang Long’s instructions.

On December 14, 2007, according to Qiang Long’s request, company instructed present Transfer Agent to issue the replacement certificate showing the new name of the Company and the correct number of shares, post reverse-split, and the remaining 4,349,307 shares of common stock issuable to Qiang Long, to Jolly Concept Management Limited and to Zhang, Lifang. The Company also agreed to issue 1,131,026 shares of common stock post-reverse-split to Luck Pond Enterprises Limited or its designee, for its services as finder in connection with the Qiang Long investment.

On November 12, 2007, the Company completed an acquisition transaction with Top Time whereby we paid Daykeen a total consideration of $54.9 million, in exchange for 100% ownership of Top Time, consisting of $30 million in cash and $24.9 million in shares of our common stock issuable within 90 days of the closing. The equity portion of the purchase price amounts to a total of 62,250,000 shares of our common stock. The share number was calculated based upon $0.02 /share, the average of the closing price of the Company’s common stock on the OTCBB for the 365 calendar days prior to May 31, 2007, which was adjusted for our stock split which occurred on October 16, 2007. As a result, the effective purchase price per share was $0.40.

On December 14, 2007, the Company instructed present Transfer Agent to issue the total amount of 62,250,000 shares of the Company’s common stock, post-reverse-split, issuable to Daykeen, to Daykeen Investment Limited.

The Company's capital structure as of December 31, 2014 and 2013 was as follows:

Common stock – par value $0.01	Authorized	Issued and outstanding
December 31, 2014	200,000,000	77,655,862
December 31, 2013	200,000,000	77,655,862

STOCK OPTION PLAN

On April 5, 2001, the Company's 2001 Stock Option Plan (the “2001 Plan”) was adopted by the board of directors and was approved by the Company's shareholders at the stockholders' annual meeting on August 2, 2001. Pursuant to the 2001 Plan, the Company may grant incentive and non-statutory (nonqualified) stock options to key employees and directors of the Company. A total of 20,000,000 shares of common stock have been reserved for issuance under the 2001 Plan. No employee may be granted options for more than 2,000,000 restricted shares under the 2001 Plan in any one fiscal year.

The maximum term of options granted under the 2001 Plan is ten years. Options granted are nontransferable and generally expire within three months after the termination of the grantee's services.

The exercise price of incentive stock options must not be less than the fair value of the common stock on the date of the grant. The 2001 Plan expired on April 5, 2011.

In 2001, the Company granted 2,000,000 nonqualified stock options under the 2001 Plan to the Chairman with a 5 -year expiration date, and an exercise price of $1.75 per share. However, all 2,000,000 options were forfeited on May 10, 2004 when the chairman resigned.