Consumer Capital Group, Inc. - FORM 10-Q

Attached files

file	filename
EX-32.1 - Consumer Capital Group, Inc.	v232093_ex32-1.htm
EX-31.2 - Consumer Capital Group, Inc.	v232093_ex31-2.htm
EX-31.1 - Consumer Capital Group, Inc.	v232093_ex31-1.htm
EX-32.2 - Consumer Capital Group, Inc.	v232093_ex32-2.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2011

¨ 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 333-152330

Consumer Capital Group Inc.

(Exact name of registrant as specified in its charter)

Delaware	26-2517432
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification Number)

35 North Lake Avenue, Suite 280, Pasadena, CA 91101

(Address of principal executive offices)

(626) 568-3368

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year,

if changed since last report)

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 181 days. Yes x No ¨.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.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 o No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated file. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x
(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 Exchange Act). Yes ¨ No x.

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 18,888,889 shares of common stock, par value $.0001 per share, outstanding as of August 15, 2011.

CONSUMER CAPITAL GROUP INC.

- INDEX -

PART I - FINANCIAL INFORMATION:
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2011 (Unaudited) and December 31, 2010	3
	Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2011 and 2010	4
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2011 and 2010	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41
PART II - OTHER INFORMATION:
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	(Removed and Reserved)	42
Item 5.	Other Information	42
Item 6.	Exhibits	42
Signatures		43

ITEM 1. FINANCIAL STATEMENTS.

Consumer Capital Group, Inc.

Consolidated Balance Sheets

	June 30, 2011			December 31,
	(Unaudited)			2010
ASSETS

Cash & cash equivalents	$	1,292,993		$	3,015,219
Accounts receivable		492,008			306,935
Inventory		602,497			334,972
Prepaid expenses		141,742			259,272
Other receivables		9,881			64,512
Related party receivable		-			125,528
Total current assets		2,539,121			4,106,438

Equipment, net		65,364			47,644
Other assets		207,814			258,285
Total noncurrent assets		273,178			305,929

Total assets	$	2,812,299		$	4,412,367

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable	$	564,395		$	531,729
Accrued liabilities		58,228			759,983
Deferred revenue		10,056			125,455
Taxes payable		95,215			494,057
Other payables		18,759			19,199
Related party payables		1,147,432			256,199
Total current liabilities		1,894,085			2,186,622

Stockholders' equity
Common stock, $0.0001 par value, 100,000,000 shares authorized 18,888,889 and 17,777,778 shares issued and outstanding as of June 30, 2011 and December 31, 2010, respectively	$	1,889		$	1,778

Discount on common stock issued to founders		(130,875	)		(130,741	)
Additional paid-in capital (1)		2,218,252			2,253,354
Subscription receivable		142,362			-
Accumulated other comprehensive income		58,985			78,775
Accumulated earnings (Deficit)		(1,374,236	)		21,540
Total Consumer Capital Group stockholders' equity		916,377			2,224,706

Noncontrolling interest in subsidiary		1,837			1,039

Total liabilities and equity	$	2,812,299		$	4,412,367

(1) The December 31, 2010 capital accounts of the Company have been retroactively restated to reflect the equivalent number of common shares based on the exchange ratio of the merger transaction. See Note 2.

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

Consumer Capital Group, Inc.

Consolidated Statements of Income and Comprehensive Income

(Unaudited)

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2011			2010			2011			2010

Net revenues - ecommerce	$	581,618		$	-		$	1,188,409		$	-
Net revenues - distribution		765,063			-			2,105,476			-
Cost of sales - distribution		750,707			-			2,076,865			-
Gross profit		595,974			-			1,217,020			-

Operating expenses:
Selling expenses		350,108			-			853,508			-
General & administrative expenses		580,289			42,541			1,787,761			142,983
Total operating expenses		930,397			42,541			2,641,269			142,983

Operating loss		(334,423	)		(42,541	)		(1,424,249	)		(142,983	)

Other income		19,836			-			100,794			-
Other (expense)		-			(14,669	)		-			(14,669	)
Total other income (expense)		19,836			(14,669	)		100,794			(14,669	)

Income loss before taxes		(314,587	)		(57,210	)		(1,323,455	)		(157,652	)

Provision for income taxes		15,776			-			72,320			-

Net loss		(330,363	)		(57,210	)		(1,395,775	)		(157,652	)
Net income attributable to noncontrolling interest		255			-			798			-
Net loss attributable to Consumer Capital Group, Inc.	$	(330,108	)	$	(57,210	)	$	(1,394,977	)	$	(157,652	)

Loss per share - basic and diluted $	$	(0.02	)	$	(0.00	)	$	(0.09	)	$	(0.01	)

Weighted average number of common shares outstanding - basic and diluted (2)		18,888,888			16,235,705			15,451,196			16,177,047

Net loss	$	(330,363	)	$	(57,210	)	$	(1,395,775	)		(157,652	)
Other comprehensive loss
Foreign currency translation adjustment		(20,492	)		(5	)		(19,790	)		(5	)

Net comprehensive loss	$	(350,855	)	$	(57,215	)	$	(1,415,565	)	$	(157,657	)

(2) The capital accounts of the Company have been retroactively restated to reflect the equivalent number of common shares based on the exchange ratio of the merger transaction in determining the basic and diluted weighted average shares. See Note 2.

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

Consumer Capital Group, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	Six months ended June 30,
	2011			2010
Cash flows from operating activities
Net Loss	$	(1,395,775	)	$	(157,652	)
Adjustments to reconcile net cash provided by (used in) operating activities
Depreciation		5,982			3,651
Change in operating assets and liabilities
Accounts receivable		(185,073	)		81,561
Other assets		50,471			(386	)
Other receivables		54,631			-
Inventories		(267,525	)		-
Prepaid expenses		117,530			(155,190	)
Accounts payable and accrued liabilities		32,666			(60,431	)
Accrued liabilities		(701,755	)		(223,464	)
Deferred revenue		(115,399	)		721,403
Taxes payable		(398,842	)		(7,933	)
Other payables		(440	)		577,400
Noncontrolling interest in subsidiary		(798	)		-
Net cash provided by (used in) operating activities		(2,804,327	)		778,959

Cash flows from investing activities
Acquisition of property and equipment		(23,702	)		(9,706	)
Net cash used in investing activities		(23,702	)		(9,706	)

Cash flows from financing activities
Short term loan		-			(250,100	)
Collection of common stock to service provider		(33,530	)		354,308
Proceeds from subscription of common stock		142,362			-
Related party, net		1,016,761			(123,484	)
Net cash provided by (used in) financing activities		1,125,593			(19,276	)

Effect of exchange rate fluctuation		(19,790	)		74,337

Net increase (decrease) in cash		(1,722,226	)		824,314

Cash and cash equivalents at beginning of period		3,015,219			266,096

Cash and cash equivalents at end of period	$	1,292,993		$	1,090,410

Supplemental disclosure of cash flow information
Income taxes paid	$	72,320		$	-

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

CONSUMER CAPITAL GROUP, INC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2011

(Unaudited)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

ORGANIZATION

Consumer Capital Group, Inc. ("CCG" and/or the "Company") is a California corporation incorporated on October 14, 2009. The accompanying condensed consolidated financial statements include the financial statements of the Company, its wholly owned subsidiaries and an affiliated PRC entity ("Affiliated PRC Entity"), an entity controlled through contractual arrangements. On February 5, 2010, in connection with the execution of a Stock Right Transfer Agreement, the Company formerly known as America Pine Bio-Tech, Inc. ("Former Company") transferred 100% of the stock rights of its wholly owned subsidiary Arki (Beijing) E-commerce Technology Co., Ltd. to CCG. The initial capitalization of the Company was by way of an investment of $420,000 and registered capital of $300,000 to Consumer Capital Group, Inc. Also on the same date, the Former Company transferred 100% of its stock rights of America Pine (Beijing) Bio-Tech to CCG.

On February 4, 2011, Mondas Minerals Corp. merged its newly-formed wholly-owned subsidiary, CCG Acquisition Corp. into itself and changed its corporate name to Consumer Capital Group, Inc. pursuant to a Plan and Agreement of Merger dated February 4, 2011. On February 17, 2011, Mondas Minerals Corp. changed its name to Consumer Capital Group, Inc. pursuant to Certificate of Ownership filed with the Secretary of State of Delaware. Unless the context specifies otherwise, as discussed in Note 2, references to the "Company" refers to Subsidiary prior to the Merger, and Consumer Capital Group, Inc. and the Subsidiary combined thereafter. The Company is principally engaged in the development and operation of its nationwide online retailing platform "Chinese Consumer Market Network" at www.ccmus.com, which provides a variety of manufacturers and distributors a platform to promote and sell products and services directly to consumers. The Company's principal operations and geographic markets are in the People's Republic of China ("PRC").

Post Merger, Consumer Capital Group Inc. is authorized to issue up to 100,000,000 shares of common stock, par value $0.0001 per share. On February 4, 2011, Consumer Capital Group Inc. effected a reverse stock split (the "Stock Split"), as a result of which each 21.96 shares of Consumer Capital Group's common stock then issued and outstanding was converted into one share of Mondas Minerals' common stock.

Immediately prior to the Merger, Consumer Capital Group, Inc. had 390,444,109 shares of its common stock issued and outstanding. In connection with the Merger, Mondas Minerals issued 17,777,778 shares of its common stock in exchange for the issued and outstanding shares of common stock of Subsidiary. Immediately prior to the closing of the Merger, there were 2,500,000 issued and outstanding shares of the Company's common stock, 60% of which were held by the then-principal stockholder, CEO, and sole director of the Company, Mr. Bengfort. As a part of the Merger, CCG paid USD $335,000 in cash to Mr. Bengfort in exchange for his agreement to enter into various transaction agreements relating to the Merger, as well as the cancellation of 1,388,889 shares of the Company's common stock directly held by him, constituting 92.6% of his pre-Merger holdings of Company common stock.

Details of the Company's wholly owned subsidiaries and its Affiliated PRC Entity as of June 30, 2011 are as follows:

			Percentage of
	Date of	Place of	Ownership by			Principal
Company	Establishment	Establishment	the Company			Activities

Consumer Capital Group Inc. ("CCG" and "the Company")	October 14, 2009	Pasadena, California USA		n/a		US holding company and headquarters of the consolidated entities

Arki Beijing E-commerce Technology Corp. ("Arki Beijing")	March 6, 2008	PRC		100	% (2)	Maintains the various computer systems, software and data. Owns the intellectual property rights of the "consumer market network". Performed principal e-commerce operations prior to December 2010

America Pine Beijing Bio-Tech, Inc. ("America Pine Beijing")	March 21, 2007	PRC		100	% (2)	Import and sales of healthcare products from the PRC. This operations ceased February 5, 2010. It currently assist in payment collection for the Company’s Ecommerce business

America Arki Fuxin Network Management Co. Ltd. ("Arki Fuxin")	November 26, 2010	PRC		100	% (2)	Commencing in December 2010, performs the principal daily e-commerce operations, transactions and management of the "consumer market network"

Beijing Beitun Trade Co. Ltd. ("Beitun")	November 29, 2010	PRC		51	% (2)(2)	Wholesale distribution and import/export of domestic food and meat products. Separate business segment of the Company

America Arki Network Service Beijing Co. Ltd. ("Arki Network contractual Service" and "Affiliated PRC Entity")	November 26, 2010	PRC		0	%(2)(2)(2)	Entity under common control through relationships between Fei Gao and the Company. Holds the business license and permits necessary to conduct e-commerce operations in the PRC and maintains compliance with applicable PRC laws

(2) Wholly foreign owned entities (WFOE)

(2)(2) Joint venture

(2)(2)(2) VIE

In order to comply with the PRC law and regulations which prohibit foreign control of companies involved in internet content, the Company operates its website using the licenses and permits held by Arki Network Service, a 100% domestically owned entity. The equity interests of Arki Network Service are legally held directly by Mr. Jian Min Gao and Mr. Fei Gao, shareholders and directors of the Company. The effective control of Arki Network Service is held by Arki Beijing and Arki Fuxin through a series of contractual arrangements (the "Contractual Agreements"). As a result of the Contractual Agreements, Arki Beijing and Arki Fuxin maintain the ability to control Arki Network Service, and are entitled to substantially all of the economic benefits from Arki Network Service and are obligated to absorb all of Arki Network Services' expected losses. Therefore, the Company consolidates Arki Network Service in accordance with SEC Regulation SX-3A-02 and Accounting Standards Codification ("ASC") 810, Consolidation.

The following is a summary of the Contractual Agreements:

LOAN AGREEMENT

The shareholders of Arki Network Service, namely Mr. Jian Min Gao and Mr. Fei Gao, entered into a loan agreement with Arki Fuxin on February 3, 2011. Under this loan agreement, Arki Fuxin granted an interest-free loan of RMB 1.0 million to Mr. Jian Min Gao and Mr. Fei Gao, collectively, for their capital contributions to Arki Network Service, as required by the PRC. The term of the loan is for ten years from the date of execution until the date when Arki Fuxin requests repayment. Arki Fuxin may request repayment of the loan with 30 days advance notice. The loan is not repayable at the discretion of the shareholders and is eliminated upon consolidation.

EXCLUSIVE CALL OPTION AGREEMENT

The shareholders of Arki Network Service entered into an option agreement with Arki Fuxin on February 3, 2011, under which the shareholders of Arki Network Service jointly and severally granted to Arki Fuxin an option to purchase their equity interests in Arki Network Service. The purchase price will be set off against the loan repayment under the loan agreement. Arki Fuxin may exercise such option at any time until it has acquired all equity interests of Arki Network Service or freely transferred the option to any third party and such third party assumes the rights and obligations of the option agreement.

EXCLUSIVE BUSINESS COOPERATION AGREEMENT

Arki Fuxin and Arki Network Service entered into an exclusive business cooperation agreement deemed effective on November 26, 2010, under which Arki Network Service engages Arki Fuxin as its exclusive provider of technical support, consulting services, maintenance and other commercial services. Arki Network Service shall pay to Arki Fuxin service fees determined based on the net income of Arki Network Service. Arki Fuxin shall exclusively own any intellectual property arising from the performance of this agreement. This agreement has a term of ten years from the effective date and can only be terminated mutually by the parties in a written agreement. During the term of the agreement, Arki Network Service may not enter into any agreement with third parties for the provision of identical or similar service without the prior consent of Arki Fuxin.

SHARE PLEDGE AGREEMENT

The shareholders of Arki Network Service entered into a share pledge agreement with Arki Fuxin on February 3, 2011 under which the shareholders pledged all of their equity interests in Arki Network Service to Arki Fuxin as collateral for all of the payments due to Arki Fuxin and to secure their obligations under the above agreements. The shareholders of Arki Network Service may not transfer or assign the shares or the rights and obligations in the share pledge agreement or create or permit any pledges which may have an adverse effect on the rights or benefits of Arki Fuxin without Arki Fuxin's preapproval. Arki Fuxin is entitled to transfer or assign in full or in part the shares pledged. In the event of default, Arki Fuxin as the pledgee, will be entitled to request immediate repayment of the loan or to dispose of the pledged equity interests through transfer or assignment.

POWER OF ATTORNEY

The shareholders of Arki Network Service entered into a power of attorney agreement with Arki Fuxin effective on November 26, 2010 under which the shareholders irrevocably appointed Arki Beijing and Arki Fuxin to vote on their behalf on all matters they are entitled to vote on, including matters relating to the transfer of any or all of their respective equity interests in the entity and the appointment of the chief executive officer and other senior management members.

On March 28, 2011, the Company issued 300,000 prepaid debit cards in connection with a previously executed definitive agreement with a Chinese domestic bank for the purpose of establishing the capability of selling prepaid debit card services to its customers and members. Under this agreement, the bank and approved retail vendors can issue prepaid debit cards to the Company's customers and members who sign up for the service and fund their individual accounts with the bank. Members then use their card to purchase goods from the Company via its website and also other retail point of sale transactions where Union Pay is accepted. In order to incentivize members to sign up for the card, discounts are offered at the point of sale.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVERSE MERGER ACCOUNTING

Since former Subsidiary security holders owned, after the Merger, approximately 94% of Consumer Capital Group Inc. shares of common stock, and as a result of certain other factors, including that all members of the Company's executive management are from Subsidiary, Subsidiary is deemed to be the acquiring company for accounting purposes and the Merger was accounted for as a reverse merger and a recapitalization in accordance with generally accepted accounting principles in the United States ("GAAP"). These condensed consolidated financial statements reflect the historical results of Subsidiary prior to the Merger and that of the combined Company following the Merger, and do not include the historical financial results of Consumer Capital Group Inc. prior to the completion of the Merger. Common stock and the corresponding capital amounts of the Company pre-Merger have been retroactively restated as capital stock shares reflecting the exchange ratio in the Merger.

BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles ("U.S.GAAP").

PRINCIPLES OF CONSOLIDATION

The accompanying unaudited condensed consolidated financial statements primarily reflect the financial position, results of operations and cash flows of Subsidiary (as discussed above). The accompanying unaudited condensed consolidated financial statements of Subsidiary have been prepared in accordance with GAAP for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission. Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011, or for any other period. Amounts related to disclosures of December 31, 2010, balances within those interim condensed consolidated financial statements were derived from the audited 2010 consolidated financial statements and notes thereto filed on Form 8-K on February 10, 2011.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries based in the PRC, which include America Pine (Beijing) Bio-Tech, Inc., Arki (Beijing) E-Commerce Technology Corp., Beijing Beitun Trading Co., Ltd. and America Arki (Fuxin) Network Management Co. Ltd. As a result of contractual arrangements with Arki Network Service, the Company consolidates Arki Network Service in accordance with SEC Regulation SX-3A-02 and Accounting Standards Codification ("ASC") 810, Consolidation (see Note1). All significant intercompany transactions and balances have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in the Company's financial statements include, but are not limited to, customer incentives, allowances for doubtful accounts, lower of cost or market of inventories, useful lives of long-lived assets, share-based compensation expense and uncertain tax positions. Actual results could differ from those estimates.

FOREIGN CURRENCY TRANSLATION

The reporting currency is the U.S. dollar. The functional currency of the Company is the local currency, the Chinese Yuan (RMB). The financial statements of the Company are translated into United States dollars in accordance with ASC 830, FOREIGN CURRENCY MATTERS (Pre-codification: Statement of Financial Accounts Standards ("SFAS") No. 52, FOREIGN CURRENCY TRANSLATION, using year-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses and historical rates for equity. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. At June 30, 2011 and December 31, 2010, the cumulative translation adjustment of $58,985 and $78,775, respectively, was classified as an item of other comprehensive income in the stockholders' equity (deficit) section of the consolidated balance sheets. For the six months ended June 30, 2011 and June 30, 2010, the foreign currency translation adjustment to accumulated other comprehensive loss was $19,790 and $5, respectively. For the three months ended June 30, 2011 and June 30, 2010, the foreign currency translation adjustment to accumulated other comprehensive loss was $20,492 and $5, respectively.

REVENUE RECOGNITION

We recognize revenue from product sales or services rendered when the following four revenue recognition criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured.

E-COMMERCE REVENUE RECOGNITION

We evaluate whether it is appropriate to record the net amount of sales earned as commissions. We are not the primary obligor nor are we subject to inventory risk as the agreements with our suppliers specify that they have the responsibility to provide the product or service to the customer. Also, the amounts we earn from our vendors/suppliers is based on a fixed percentage and bound contractually. Additionally, the Company does not have any obligation to resolve disputes between the vendors and the customers that purchase the products on our website. Any disputes involving damaged, non-functional, product returns, and / or warranty defects are resolved between the customer and the vendor. The Company has no obligation for right of return and / or warranty for any of the sales completed using its website. Since we are not primarily obligated and amounts earned are determined using a fixed percentage, a fixed-payment schedule, or a combination of the two, we record our revenues as commissions earned on a net basis.

Our sales are net of promotional discounts and rebates and are recorded when the products are shipped and title passes to customers. Revenues are recorded net of sales and consumption taxes. We periodically provide incentive offers to our customers to encourage purchases. Such offers include current discount offers, such as percentage discounts off current purchases, inducement offers, such as daily sweepstakes reward opportunities which is based on volume of purchases, and other similar offers. Current discount offers and inducement offers are presented as a net amount in "Net revenues."

The Company records deferred revenue when cash is received in advance of the performance of services or delivery of goods. Deferred revenue is also recorded to account for the 7 day grace period offered to customers for potential product disputes, if any. Deferred revenues totaled $10,056 and $125,455 as of June 30, 2011 and December 31, 2010, respectively.

We offered a temporary limited time promotion for a fixed period during the year ended December 31, 2010 where customers were incentivized to purchase from our E-commerce platform and in exchange, were awarded points which were then converted to common shares of the Company. These shares were valued using Level 2 inputs for determining fair value and deducted from revenues. For the year ended December 31, 2010, $301,462 was recognized as contra revenue on a "net" basis. During the three and six months ended June 30, 2011, there were no promotional expenses incurred due to cancellation of the program.

DISTRIBUTION REVENUE RECOGNITION

Product sales and shipping revenues, net of return allowances, are recorded when the products are shipped and title passes to customers. Return allowances, which reduce product revenue, are estimated using historical experience. Revenue from product sales and services rendered is recorded net of sales and consumption taxes.

REWARD PROGRAMS

The Reward Programs are primarily designed for customers residing in China. Customers may earn reward points from the purchase of merchandise and services from the Company. Points are earned based on the amount and types of merchandise and services purchased. Customers residing in China may redeem the reward points for drawings into the Company's lottery sweepstakes for chances to win cash prizes. In addition, customers may attain a tiered membership status based on the value of merchandise and services purchased over the past twelve months. Membership status entitles the holder to certain discounts on future purchases of selected items on the Company's website. The Company accrues for the estimated cost of redeeming the benefits at the time the benefits are earned by the customer. The estimated lottery expense for the six months ending June 30, 2011 and 2010 was $588,135 and $0, respectively. The estimated lottery expense for the three months ending June 30, 2011 and 2010 was $236,165 and $0, respectively.

COST OF SALES

Cost of sales consists of the purchase price of consumer products and content sold by us, inbound and outbound shipping charges, and packaging supplies. Shipping charges to receive products from our suppliers are included in inventory cost, and recognized as "Cost of sales" upon sale of products to our customers. Payment processing and related transaction costs, including those associated with seller transactions, are classified in "Selling Expenses" on our consolidated statements of operations.

SHIPPING ACTIVITIES

Outbound shipping charges to customers are included in "Net sales." Outbound shipping-related costs are included in "Cost of sales."

NONCONTROLLING INTEREST

Noncontrolling interests in our subsidiary is recorded as a component of our equity, separate from the parent's equity. Purchase or sale of equity interests that do not result in a change of control are accounted for as equity transactions. Results of operations attributable to the noncontrolling interest are included in our consolidated results of operations and, upon loss of control, the interest sold, as well as interest retained, if any, will be reported at fair value with any gain or loss recognized in earnings.

COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, ASC 220, Comprehensive income (loss) requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. For the years presented, the Company's comprehensive income (loss) includes net income (loss) and foreign currency translation adjustments and is presented in the consolidated statements of changes in operations.

INCOME TAXES

We have implemented certain provisions of ASC 740, INCOME Taxes ("ASC 740"), which clarifies the accounting and disclosure for uncertain in tax positions, as defined. ASC 740 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. We adopted the provisions of ASC 740 as of January 1, 2007, and have analyzed filing positions in each of the Peoples Republic of China ("PRC") jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. We have identified the PRC as our "major" tax jurisdiction. Generally, we remain subject to PRC examination of our income tax returns. We believe that our income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to our financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. In addition, we did not record a cumulative effect adjustment related to the adoption of ASC 740. Our policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes. Our tax provision for interim periods is determined using an estimate of our annual effective tax rate based on rates established within the PRC and, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment. The 2011 and 2010 annual effective tax rates are estimated to be the 25% PRC statutory rate primarily based on the expected taxable net income of our operating subsidiaries, Arki Beijing and Arki Fuxin. Taxes payable as of June 30, 2011 and December 31, 2010 were $95,215 and $494,057, respectively.

NET INCOME (LOSS) PER SHARE

We calculate basic earnings per share ("EPS") by dividing our net income (loss) by the weighted average number of common shares outstanding for the period, without considering common stock equivalents. Diluted EPS is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period and the weighted average number of dilutive common stock equivalents, such as options and warrants. Options and warrants are only included in the calculation of diluted EPS when their effect is not anti-dilutive. The Company had no dilutive securities as of June 30, 2011 and December 31, 2010.

CASH AND CASH EQUIVALENTS

We consider all investments with an original maturity of three months or less to be cash equivalents. Cash equivalents primarily represent funds invested in bank checking accounts, money market funds and domestic Chinese bank certificates of deposit. At June 30, 2011 and December 31, 2010, the Company had invested cash of $0 and $153,846 in a highly liquid investment instrument with a PRC bank.

ACCOUNTS RECEIVABLE

Accounts receivable are carried at realizable value. The Company considers many factors in assessing the collectability of its receivables, such as, the age of the amounts due, the customer's payment history and creditworthiness. An allowance for doubtful accounts is recorded in the period in which a loss is determined to be probable. Accounts receivable balances are written off after all collection efforts have been exhausted. Bad debt expense for the three and six months ending June 30, 2011 and 2010 was $0 and there was no allowance for doubtful accounts at June 30, 2011 and December 31, 2010.

INVENTORIES

Inventories, consisting of food products available for sale, are accounted for using the first-in first-out method, and are valued at the lower of cost or market. This valuation requires the Company to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category.

EQUIPMENT, NET

Equipment is recorded at cost, consists of computer equipment, office equipment and furniture and is depreciated using the straight-line method over the estimated useful lives of the related assets (generally three years or less). Costs incurred for maintenance and repairs are expensed as incurred and expenditures for major replacements and improvements are capitalized and depreciated over their estimated remaining useful lives. Depreciation expense for the six months ending June 30, 2011 and 2010 was $5,982 and $3,651, respectively. Depreciation expense for the three months ending June 30, 2011 and 2010 was $2,478 and $2,817, respectively. Accumulated depreciation for the Company's equipment was $20,803 and $13,341 at June 30, 2011 and December 31, 2010, respectively.

IMPAIRMENT OF LONG-LIVED ASSETS

We evaluate long-lived assets for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate their net book value may not be recoverable. When these events occur, we compare the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. The Company's management currently believes there is no impairment of its long-lived assets. There can be no assurance, however, that market conditions will not change or demand for the Company's products will continue. Either of these could result in the future impairment of long-lived assets.

SEGMENT REPORTING

The Company follows ASC 280, SEGMENT REPORTING. The Company's chief operating decision maker, who has been identified as the executive chairman of the board of directors and the chief executive officer, reviews the individual results of the e-commerce and distribution businesses when making decisions about allocating resources and assessing the performance of the Company as a whole and hence, the Company has two reportable segments. The Company's operating business are organized and based on the nature of markets and customers. As the Company's long-lived assets are substantially all located in the PRC and substantially all the Company's revenues are derived from within the PRC, no geographical segments are presented.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments include cash and cash equivalents, accounts receivable, accounts payables and accrued liabilities. These financial instruments are measured at their respective fair values. For fair value measurement, U.S. GAAP establishes a three-tier hierarchy which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 include other inputs that are directly or indirectly observable in the marketplace.

Level 3 unobservable inputs which are supported by little or no market activity.

Fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company's cash and cash equivalents are classified within Level 1 using quoted prices. The Company's carrying value of its investment in Beitun is classified within Level 2 since it is valued using market observable inputs.

FINANCIAL INSTRUMENTS: The estimated fair values of our financial assets and liabilities that are recognized at fair value on a recurring basis, using available market information and other observable data are as follows:

	June 30, 2011
	Level 1		Level 2		Level 3		Total
	Quoted Prices in Active Markets or Identical Assets		Significant Other Observable Inputs		Significant Unobservable Input
ASSETS:
Cash & cash equivalents	$	1,292,993	$	-	$	-	$	1,292,993
Other assets		-		207,814		-		207,814
Total assets	$	1,292,993	$	207,814	$	-	$	1,500,807
LIABILITIES:
		-		-		-		-
Total liabilities	$	-	$	-	$	-	$	-

	December 31, 2010
	Level 1		Level 2		Level 3		Total
	Quoted Prices in Active Markets or Identical Assets		Significant Other Observable Inputs		Significant Unobservable Input
ASSETS:
Cash & cash equivalents	$	3,015,219	$	-	$	-	$	3,015,219
Other assets		-		258,285		-		258,285
Total assets	$	3,015,219	$	258,285	$	-	$	3,273,504
LIABILITIES:
		-		-		-		-
Total liabilities	$	-	$	-	$	-	$	-

Common stock was issued in exchange for consulting services to be provided to the Company over the next two years for the purpose of advising management on public company matters. As a result, the Company recorded an asset to be amortized over the term of the consulting contract, that was measured at its fair value on the date of grant based on Level 2 inputs reflecting market based and our own assumptions consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. The calculated fair values of the stock-based payment are amortized to expense over the term of the contract. The carrying value of accounts receivable, trade payables and accrued liabilities approximates their fair value due to their short-term maturities.

SHARE-BASED COMPENSATION

The Company applies ASC 718, Compensation-Stock Compensation to account for its service providers' share-based payments. Common stock of the Company was given to service providers to retain their assistance in becoming a U.S. public company, assistance with public company regulations, investors' communications and public relations with broker-dealers, market makers and other investment professionals. In accordance with ASC 718, the Company determines whether a share payment should be classified and accounted for as a liability award or equity award. All grants of share-based payments to service providers classified as equity awards are recognized in the financial statements based on their grant date fair values which are calculated using an option pricing model. The Company has elected to recognize compensation expense using the straight-line method for all equity awards granted with graded vesting based on service conditions provided that the amount of compensation cost recognized at any date is at least equal to the portion of the grant-date value of the options that are vested at that date. To the extent the required vesting conditions are not met resulting in the forfeiture of the share-based awards, previously recognized compensation expense relating to those awards are reversed. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent period if actual forfeitures differ from initial estimates. Share-based compensation expense was recorded net of estimated forfeitures such that expense was recorded only for those share-based awards that are expected to vest.

CONCENTRATION OF CREDIT RISK

Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents, other receivables and held-to-maturity investments. The maximum exposure of such assets to credit risk is their carrying amounts as of the balance sheet dates. As of June 30, 2011, substantially all of the Company's cash and cash equivalents were deposited in financial institutions located in the PRC, which management believes are of high credit quality.

CONCENTRATION OF CUSTOMERS AND SUPPLIERS

There are no revenues from customers or purchases from suppliers which individually represent greater than 10% of the total revenues or purchases at June 30, 2011 and December 31, 2010.

CURRENCY CONVERTIBILITY RISK

The Company transacts all of its business in RMB, which is not freely convertible into foreign currencies. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People's Bank of China (the "PBOC"). However, the unification of the exchange rates does not imply that the RMB may be readily convertible into United States dollars or other foreign currencies. All foreign exchange transactions continue to take place either through the PBOC or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC.

Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers' invoices, shipping documents and signed contracts.

Additionally, the value of the RMB is subject to changes in central government policies and international economic and political developments affecting supply and demand in the PRC foreign exchange trading system market.

FOREIGN CURRENCY EXCHANGE RATE RISK

From July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. The depreciation of the U.S. dollar against RMB was approximately 2% and -0.2% for the six months ending June 30, 2011 and 2010, respectively. While the international reaction to the RMB appreciation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the RMB against the U.S. dollar.

BUSINESS RISK

Foreign ownership of Internet-based businesses is subject to significant restrictions under current PRC laws and regulations. Foreign investors are not allowed to own more than a 50% equity interest in any entity with an Internet content distribution business. Currently, the Company conducts its operations in China through a series of contractual arrangements entered into among Arki (Beijing) E-Commerce Technology Corp., America Arki (Fuxin) Network Management Co. Ltd. and America Arki Network Service Beijing Co., Ltd. The relevant regulatory authorities may find the current ownership structure, contractual arrangements and businesses to be in violation of any existing or future PRC laws or regulations. If so, the relevant regulatory authorities would have broad discretion in dealing with such violations.

LITIGATION

From time to time, we may become involved in disputes, litigation and other legal actions. We estimate the range of liability related to any pending litigation where the amount and range of loss can be estimated. We record our best estimate of a loss when the loss is considered probable. Where a liability is probable and there is a range of estimated loss with no best estimate in the range, we record a charge equal to at least the minimum estimated liability for a loss contingency when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements and (ii) the range of loss can be reasonably estimated.

NOTE 3 - RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUCEMENTS

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

In May 2011, the Financial Accounting Standards Board ("FASB") issued a new accounting standard on fair value measurements that clarifies the application of existing guidance and disclosure requirements, changes certain fair value measurement principles and requires additional disclosures about fair value measurements. The standard is effective for interim and annual periods beginning after December 15, 2011. Early adoption is not permitted. The Company does not expect the adoption of this accounting guidance to have a material impact on its consolidated financial statements and related disclosures.

In June 2011, the FASB issued new guidance on the presentation of comprehensive income. The new guidance allows an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in stockholders’ equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income from that of current accounting guidance. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. Upon adoption, the Company will present its consolidated financial statements under this new guidance. The Company does not expect the adoption of this accounting guidance to have a material impact on its consolidated financial statements and related disclosures.

NOTE 4 - INVENTORY

Inventory consisted of the following at June 30, 2011 and December 31, 2010:

	June 30, 2011		December 31, 2010
Finished goods - packaged food	$	602,497	$	334,972
Less: reserve for inventory		-		-
Total inventory	$	602,497	$	334,972

NOTE 5 - PREPAID EXPENSES

Prepaid expenses consisted of the following at June 30, 2011 and December 31, 2010:

	June 30, 2011		December 31, 2010
Prepaid professional fees	$	-	$	218,265
Prepaid services		105,026		22,409
Deposits		36,716		18,598
Total prepaid expenses	$	141,742	$	259,272

NOTE 6 - EQUIPMENT, NET

Property and equipment consisted of the following at June 30, 2011 and December 31, 2010:

	June 30, 2011		December 31, 2010
Office equipment & computers	$	19,677	$	14,775
Equipment		9,032		4,199
Vehicles		17,433		17,287
Office furniture & fixtures		40,025		24,724
		86,167		60,985
Less: Accumulated depreciation		20,802		13,341
Total equipment, net	$	65,365	$	47,644

For the six months ending June 30, 2011 and 2010, depreciation expense was $5,982 and $3,651, respectively. For the three months ending June 30, 2011 and 2010, depreciation expense was $2,478 and $2,817, respectively.

NOTE 7 - OTHER ASSETS

Other assets consisted of the following at June 30, 2011 and December 31, 2010:

	June 30, 2011		December 31, 2010
Common stock issued for services	$	116,433	$	166,333
Deposit for office		91,381		89,340
Other		-		2,612
Total other assets	$	207,814	$	258,285

The prepaid consulting service contracts have a term of 24 months. Amortization for the six months ending June 30, 2011 and 2010 was $50,772 and $0, respectively. Amortization for the three months ending June 30, 2011 and 2010 was $25,799 and $0, respectively. On March 31, 2011, the Company cancelled 227,609 shares due to early termination of a portion of a service contract with a consultant. The adjustment to prepaid assets and equity of $41,374 was recorded as of June 30, 2011 (see Note 10 - Share Based Compensation).

NOTE 8 - ACCRUED LIABILITIES

Accrued liabilities consisted of the following at June 30, 2011 and December 31, 2010:

	June 30, 2011		December 31, 2010
Accrued customer incentives	$	41,462	$	745,056
Advances		-		-
Accrued payroll		16,766		8,998
Other		-		5,929
Total accrued liabilities	$	58,228	$	759,983

NOTE 9 - STOCKHOLDERS' EQUITY

The Company's stockholder base consists of approximately 9,100 stockholders as of June 30, 2011.

COMMON STOCK ISSUED TO SERVICE PROVIDERS AND MEMBER CUSTOMERS

During 2010, Company management issued stock to customer members, which represented sales inducement incentives to make purchases through the Company's website. Certain service providers were also granted stock for the value of their services provided to the Company. Common stock issued to service providers and member customers throughout 2010 were measured at the date of grant, and based on Level 2 fair value measurements which uses observable inputs reflecting our own and market based assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. The calculated fair values of the share-based sales inducement offers are deducted from revenues when granted. Share-based awards to service providers are expensed when services are incurred. The Company estimates the fair value of these share issuances using Level 2 inputs and determined that the value of each share is $0.01. For the six months ending June 30, 2011 and 2010, there were no incentives offered to member customers.

As of December 31, 2010, $200,000 was recognized in stockholders' equity for common stock issued for services. As of June 30, 2011, 227,609 shares of common stock and $35,102 was reduced from Additional Paid in Capital as a result of early termination of one of service provider contracts. For the six months ending June 30, 2011 and 2010, $50,772 and zero was amortized to general and administrative expense for the pro-rata portion of the remaining service contract realized (see Note 10 - Share Based Compensation). For the three months ending June 30, 2011 and 2010, $25,799 and zero was amortized to general and administrative expense for the pro-rata portion of the remaining service contract realized

COMMON STOCK

At March 13, 2011, the Company cancelled 227,609 retroactively restated to reflect the recapitalization of common stock originally issued to a service provider due to management deciding to early termination of their related contract. Immediately after the cancellation, the Company reissued the 227,609 shares to management for no consideration and $23 was recognized as a discount on common stock issued.

Immediately prior to the closing of the Merger on February 4, 2011, there were 2,500,000 issued and outstanding shares of the Company's common stock, 60% of which were held by the then-principal stockholder, CEO, and sole director of the Company, Mr. Bengfort. As a part of the Merger, CCG paid USD $335,000 in cash to Mr. Bengfort in exchange for his agreement to enter into various transaction agreements relating to the Merger, as well as the cancellation of 1,388,889 shares of the Company's common stock directly held by him, constituting 92.6% of his pre-Merger holdings of Company common stock.

In August, September and December 2010, the Company issued 2,628,419 shares retroactively restated to reflect the recapitalization of common stock to related parties of the Company's founders and officer of the Company for no par value. As a result, the Company recorded a discount on common stock issued to the officer and relatives of the Company's founders of $26,284 due to issuance of the common stock below $0.01 par value.

In September 2010, the Company issued 910,644 retroactively restated to reflect the recapitalization of common stock as consideration for consulting services with a term of 24 months. At March 13, 2011, the Company cancelled 227,609 retroactively restated to reflect the recapitalization of common stock originally issued to a service provider due to management deciding to early termination of their related contract. Immediately after the cancellation, the Company reissued the 227,609 shares to management for no consideration and $23 was recognized as a discount on common stock issued.

In December 2010, the Company issued 45,532 retroactively restated to reflect the recapitalization of common stock to the owners of Beitun as consideration for the Company's 51% ownership interest of Beitun. The fair value of the shares issued for the acquisition was $10,000.

During the quarter ended June 30, 2011, the Company received subscription of $142,362 for common stock issuance. The terms of the issuance has not be determined as of the reporting date.

NOTE 10 - SHARE BASED COMPENSATION

Stock-based compensation cost is measured at the date of grant, based on the calculated fair value of the stock-based award, and is recognized as expense over the service providers' requisite service period (generally the vesting period of the award). The Company estimates the fair value of stock for service granted using the Black-Scholes Option Pricing Model. Key assumptions used to estimate the fair value of stock options include the exercise price of the award, the fair value of the Company's common stock on the date of grant, the expected option term, the risk free interest rate at the date of grant, the expected volatility and the expected annual dividend yield on the Company's common stock.

The following weighted average assumptions were used in estimating the fair value of the share-based payment arrangements to service providers:

	June 30, 2011
Annual dividends		0
Expected volatility		40% - 75	%
Risk-free interest rate		0.75	%
Expected life	2 years

Since there is insufficient stock price history that is at least equal to the expected or contractual terms of the Company's share-based payments, the Company has calculated volatility using the historical volatility of similar public entities in the Company's industry. In making this determination and identifying a similar public company, the Company considered the industry, stage, life cycle, size and financial leverage of such other entities. This resulted in an expected volatility of 40% to 75%. The expected option term in years is calculated using an average of the vesting period and the option term, in accordance with the "simplified method" for "plain vanilla" stock options allowed under GAAP. The risk free interest rate is the rate on the U.S. Treasury securities 2-year constant maturity with a remaining term equal to the expected option term. The expected volatility is derived from an industry-based index, in accordance with the calculated value method.

The Company is required to estimate the number of forfeitures expected to occur and record expense based upon the number of awards expected to vest. The Company expects all remaining awards issued will be fully vested over the expected life of the awards. There were no forfeitures during the quarter ended June 30, 2011.

A summary of share-based compensation activity for the six months ended June 30, 2011 is as follows:

	Number of Shares			Weighted Average Fair Value		Amount
Share-based compensation outstanding at January 1, 2010		-		$	-	$	-
Granted		910,644			0.01		9,106
Cancelled		-			-		-
Forfeited		-			-		-
Share-based compensation outstanding at January 1, 2011		910,644			0.01		9,106
Granted		-			-		-
Cancelled		(227,609	)		0.01		(2,276	)
Forfeited		-			-		-
Share-based compensation outstanding at June 30, 2011		683,035		$	0.01	$	6,830

For the six months ended June 30, 2011 and 2010, $37,400 and $0, respectively were amortized to general and administrative expense to recognize the incurred cost of the service providers. For the three months ended June 30, 2011 and 2010, $18,700 and $0, respectively were amortized to general and administrative expense to recognize the incurred cost of the service providers. The future expense amortization as of June 30, 2011 is as follows:

2011	$	56,254
2012		50,004
Total	$	106,258

NOTE 11 - RELATED PARTIES

a) Related parties:

Name of related parties		Relationship with the Company
Mr. Jack Gao		Stockholder, Chief Executive Officer, Chief Financial Officer and Chairman of the Board of the Company
Ms. Ling Zhang		Stockholder and Corporate Secretary
Mr. Fei Gao		Stockholder and Chief Operating Officer
Ms. Wei Guo		Stockholder and Managing Director of Beitun

b) The Company had the following related party balances at June 30, 2011 and December 31, 2010:

	June 30, 2011		December 31, 2010
Loan from Mr. Jack Gao	$	204,574	$	51,425
Loan from Ms. Wei Guo		942,858		204,774
Total related party payables		1,147,432		256,199
Loan to Mr. Jack Gao		-		125,528
Toal related party, net	$	1,147,432	$	130,671

The related party payable and receivable are non-interest bearing and have no specified maturity date. Jack Gao is the husband of Ling Zhang, Ling Zhang is the wife of Jack Gao, Jack Gao is the father of Fei Gao, and Fei Gao is the son of Jack Gao.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

In China, we have entered into a lease agreement in the Beijing Chaoyang District for our Arki (Beijing) E-commerce Technology Co., Ltd. wholly owned subsidiary beginning February 15, 2010 and ending February 14, 2012. Our full service gross monthly rental rate is $385. Rent expense (including related common area maintenance charges) totaled $2,310 for six months ended June 30, 2011. Rent expense (including related common area maintenance charges) totaled $1,155 for three months ended June 30, 2011.

On October 21, 2010, we entered into a new lease agreement for office facility expansion in the Beijing Chaoyang District, Hua Mao Center. The straight-line monthly gross rental rate is $30,831 with a 36 month term. Rent expense (including related common area maintenance charges) totaled $188,090 for six months ended June 30, 2011. Rent expense (including related common area maintenance charges) totaled $95,597 for three months ended June 30, 2011.

Total future minimum rental lease commitments as of June 30, 2011 are as follows:

2011	$	400,776
2012		385,374
2013		123,324
Total	$	909,474

SUPPLIER COMMITMENTS

At June 30, 2011 and 2010, we have outstanding amounts owed to our suppliers of $55,253 and $0, respectively which represents amounts collected from customers of our Arki Beijing and Arki Fuxin subsidiaries.

NOTE 13 - BUSINESS SEGMENT REPORTING

Our operating businesses are organized based on the nature of markets and customers. Segment accounting policies are the same as described in Note 2 - Summary of Significant Accounting Policies.

Effects of transactions between related companies are eliminated and consist primarily of inter-company transactions and transfers of cash or cash equivalents from corporate to support each business segment's payroll, inventory sourcing and overall operations when each segment has working capital requirements.

A description of our operating segments as of June 30, 2011 and December 31, 2010, can be found below.

E-COMMERCE PLATFORM (ARKI BEIJING, AMERICA PINE BEIJING, ARKI FUXIN, ARKI NETWORK SERVICE)

The website provides an online marketing and retail platform for a wide variety of manufacturers and distributors to promote and sell their products and services directly to consumers in the PRC. The website also provides access to certain Western products that are generally unavailable in the PRC such as handbags and eyewear made by U.S. companies and food and beverage products from Spain, Germany, and France.

FOOD PRODUCT DISTRIBUTION (BEITUN)

Beitun is principally engaged in the wholesale distribution and import/export of various food and meat products to businesses located throughout the PRC. All products are sold in the PRC and are considered finished goods.

For the six months ending June 30, 2010, the Company did not invest in the joint venture with Beitun.

	For the six months ended June 30, 2011
	E-Commerce			Food Distribution		Consolidated
Net revenues	$	1,188,409		$	2,105,476	$	3,293,885
Cost of sales		-			2,076,865		2,076,865

Gross profit		1,188,409			28,611		1,217,020

Operating expenses:
Selling expenses		830,730			22,778		853,508
General and administrative		1,783,923			3,838		1,787,761
Total operating expenses		2,614,653			26,616		2,641,269

Operating income (loss)		(1,426,244	)		1,995		(1,424,249	)
Other income (expense)		100,794			-		100,794
Total other income (expense)		100,794			-		100,794
Income (loss) before taxes		(1,325,450	)		1,995		(1,323,455	)
Provision for income taxes		71,474			846		72,320
Net income (loss)		(1,396,924	)		1,149		(1,395,775	)
Net income attributable to non controlling interest		798			-		798
Net income attributable to Consumer Capital Group, Inc.		(1,396,126	)		1,149		(1,394,977	)
Net income (loss)		(1,396,924	)		1,149		(1,395,775	)
Foreign currency translation adjustment		(19,790	)		-		(19,790	)
Net comprehensive income	$	(1,416,714	)	$	1,149	$	(1,415,565	)

For the three months ending June 30, 2010, the Company did not invest in the joint venture with Beitun.

	For the three months ended June 30, 2011
	E-Commerce			Food Distribution			Consolidated
Net revenues	$	581,618		$	765,063		$	1,346,681
Cost of sales		-			750,707			750,707
Gross profit		581,618			14,356			595,974
Operating expenses:
Selling expenses		338,674			11,434			350,108
General and administrative		912,885			2,404			915,289
Total operating expenses		1,251,559			13,838			1,265,397

Operating income (loss)		(669,941	)		518			(669,423	)
Other income (expense)		354,836			-			354,836
Income (loss) before taxes		(315,105	)		518			(314,587	)
Provision for income taxes		15,299			477			15,776
Net income (loss)		(330,404	)		41			(330,363	)
Net income attributable to non controlling interest		255			-			255
Net income attributable to Consumer Capital Group, Inc.		(330,149	)		41			(330,108	)
Net income (loss)		(330,404	)		41			(330,363	)
Foreign currency translation adjustment		(20,487	)		(5	)		(20,492	)
Net comprehensive income (loss)	$	(350,891	)	$	36		$	(350,855	)

NOTE 14 - INCOME TAX EXPENSE

Prior to January 1, 2008, PRC enterprise income tax (EIT), was generally assessed at the rate of 33% of taxable income. In March 2007, a new enterprise income tax law (the "New EIT Law") in the PRC was enacted which was effective on January 1, 2008. The New EIT Law generally applies a uniform 25% EIT rate to both foreign invested enterprises and domestic enterprises.

Dividends paid by PRC subsidiaries of the Company out of the profits earned after December 31, 2007 to non-PRC tax resident investors would be subject to PRC withholding tax. The withholding tax is 10%, unless a foreign investor's tax jurisdiction has a tax treaty with China that provides for a lower withholding tax rate.

Loss before income taxes consists of:

	For the Six Months Ended June 30,
	2011		2010
Non-PRC	$	620,159	$	27,979
PRC		703,296		129,674
	$	1,323,455	$	(157,652)

There was no current or deferred income tax expense for the six months ended June 30, 2011 and year ended December 31, 2010. The PRC income tax returns for fiscal year 2006 through fiscal year 2011 remain open for examination.

The components of deferred taxes are as follows:

	For the six months ended June 30,
	2011			2010
Deferred tax assets, current portion
Fair value of stock issued for sales incentive	$	-		$	-
Amortization of fair value of stock for services		64,052			-
Deferred revenue		10,056			721,403
Total deferred tax assets, current portion		74,108			721,403
Valuation allowance		(74,108	)		(721,403	)
Deferred tax assets, current portion, net	$	-		$	-

Deferred tax assets, non-current portion
Fixed assets	$	1,027		$	334
Net operating losses		(1,424,250	)		(142,983	)
Total deferred tax assets, non-current portion		(1,423,053	)		(142,650	)
Valuation allowance		1,423,053			142,650
Deferred tax assets, non-current portion, net	$	-		$	-

As of June 30, 2011, the Company had net losses of $1,374,236 which can be carried forward to offset future net profit for income tax purposes. The net operating loss carry forwards as of June 30, 2011 will expire in years 2011 to 2015 if not utilized.

There is no need for the Company to accrue interest or penalty associated with the uncertain tax positions, and, accordingly, no such accruals have been made in the Company's account.

The PRC tax law provides a (3-5 years) statute of limitation and the Company's income tax returns are subject to examination by tax authorities during that period. All penalties and interest are expensed as incurred. For three months ended June 30, 2011 and December 31, 2010, there were no penalties and interest.

NOTE 15 - EARNINGS PER SHARE

Basic and diluted loss per share for each of the years presented are calculated as follows:

	For the three months ended June 30,				For the six months ended June 30,
	2011		2010		2011		2010
Numerator:
Net loss	$	330,363	$	57,210	$	1,395,775	$	157,652
Net loss attributable to common stockholders for computing basic and diluted loss per common share		330,108		57,210		1,394,977		157,652
Denominator:
Weighted average number of common shares outstanding for computing basic and diluted loss per common share		18,888,888		16,235,705		15,451,196		16,177,047
Basic and diluted loss per share	$	0.02	$	0.00	$	0.09	$	0.01

For the six months ended June 30, 2011 and 2010, there were no common stock equivalents for computing diluted earnings per share.

NOTE 16 - SUBSEQUENT EVENTS

In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through reporting date, the date the financial statements were available to be issued.

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

FORWARD LOOKING STATEMENT NOTICE

Certain statements made in this Quarterly Report on Form 10-Q are "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Consumer Capital Group Inc. ("we", "us", "our" or the "Company") to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Quarterly Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

DESCRIPTION OF BUSINESS

The Company was originally incorporated as "Mondas Minerals Corp." ("Mondas", “the Company”, “we”, “us”, “our”) in Delaware on April 25, 2008, and was engaged in the acquisition, and exploration, and development of natural resource properties. As of December 31, 2010 and immediately prior to the merger transaction described below, we were an exploration stage company with nominal assets and no revenues or operating history.

On February 4, 2011, the Company acquired Consumer Capital Group, Inc. ("CCG"), a consumer e-commerce business with operations in the People's Republic of China ("PRC") in a reverse merger transaction (the "Merger") pursuant to an Agreement and Plan of Merger ("Merger Agreement") by and among the Company, the Company's wholly owned subsidiary, CCG Acquisition Corp., a Delaware corporation ("CCG Delaware"), Consumer Capital Group Inc., a California corporation ("CCG), and Scott D. Bengfort.

In connection with the Merger, the mining rights held by the Company were assigned to Mr. Bengfort, and in turn Mr. Bengfort also personally assumed all liabilities of the Company existing immediately prior to the closing, under the terms of an Assignment and Assumption Agreement between the Company and Mr. Bengfort effective on the closing date of the Merger (the "Assignment and Assumption Agreement"). Mr. Bengfort also agreed to discharge and forego his rights to be repaid approximately $16,000, which the Company owed to him immediately prior to the closing of the Merger, along with all other claims against the Company, by executing a release agreement ("Release") effective on the closing date of the Merger. Mr. Bengfort also agreed to be a party to the Merger Agreement including various representations and warranties, and execute an indemnification agreement ("Indemnification Agreement") in favor of CCG and the CCG shareholders to indemnify them for any breach of the Merger Agreement or unpaid or unresolved liabilities of the Company that may materialize within a one year period after the closing. The closing of the Merger occurred on February 4, 2011.

In connection with the closing, Mr. Bengfort resigned as the Company's sole officer and director, and designees of CCG were appointed as new directors. These new directors took office and appointed new officers of the Company promptly following the closing of the Merger.

As a result of the Merger, CCG became our wholly owned subsidiary and CCG's subsidiaries, America Pine (Beijing) Bio-Tech, Inc., a People's Republic of China ("PRC") corporation, Arki (Beijing) E-Commerce Technology Corp., a PRC corporation, Beijing Beitun Trading Co., Ltd., a PRC corporation, and America Arki (Fuxin) Network Management Co. Ltd., a PRC corporation (together, the "PRC Subsidiaries"), became our indirect subsidiaries. Arki (Beijing) E-Commerce Technology Corp. has a contractual relationship with an entity under common control that is 100% owned by two of CCG's major shareholders and officers, America Arki Network Service Beijing Co., Ltd. ("Arki Network Service"), which is a PRC limited liability company. CCG, the PRC Subsidiaries, and Arki Network Service are collectively referred to as the "CCG Group."

Upon completion of the Merger, our name has been changed to "Consumer Capital Group Inc." pursuant to Certificate of Ownership filed with the Secretary of State of Delaware with an effective date of February 17, 2011. Our current principal offices are located at 35 North Lake Avenue, Suite 280, Pasadena, CA 91101. Our trading symbol on the Over-the-Counter Bulletin Board (the "OTCBB") is now CCGN.

From and after the closing of the Merger, our primary operations now consist of the business and operations of the CCG Group, which are conducted in the PRC.

The Company, through Arki (Beijing) E-Commerce Technology Corp., is primarily engaged in the development and operation of its nationwide online retailing platform "Chinese Consumer Market Network" at www.ccmus.com. The website provides an online marketing and retail platform for a wide variety of manufacturers and distributors to promote and sell products and services directly to consumers in the PRC at a substantial discount through our rewards and incentive programs. This platform eliminates the extended network of intermediaries in the manufacturing-distribution-retail chain by providing direct access to our members. Our website also provides access to certain Western products that are generally unavailable in the PRC such as handbags and eyewear made by U.S. companies and food and beverage products from Spain, Germany, and France.

The Company, also through Arki (Beijing) E-Commerce Technology Corp., cooperates with Fuxin bank in China to issue a cobranded debit card. The Company authorizes certain vendors the right to issue this cobranded debit card. Each vendor will be entitled for a percentage of future transactions of the cards issued by the vendor. The Company charges each participating vendor a percentage of transactions with the vendor. Cardholders will receive certain amount of cash refund from participating vendors and certain virtue money to be spent in the Company’s ecommerce website www.ccmus.com. The Company hires dealers to develop vendors network as well as managing card issuance. Currently the Company has issued over approximately 500,000 cards and has 32 dealers at province level and 292 dealers at city level, approximately 2,000 vendors. For the quarter ended June 30, 2011, there was no revenue from this business model yet.

We also operate a meat distribution business in the PRC through a 51% stake in an operating subsidiary, Beijing Beitun Trading Co., Ltd. ("Beitun Trading"), which is a PRC trade and distribution company engaged in the wholesale distribution and import/export of various food and meat products, industrial machinery, and electrical equipment.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our management's discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported net sales and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are more fully described in Note 2 to our financial statements under the section above titled "Financial Statements", we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this discussion and analysis:

REVENUE RECOGNITION

E-COMMERCE REVENUE RECOGNITION

Our sales are net of promotional discounts and rebates and are recorded when the products are shipped by our vendors and title passes to customers. Revenues are recorded net of sales and consumption taxes. We periodically provide incentive offers to our customers to encourage purchases. Such offers include current discount offers, such as percentage discounts off current purchases, inducement offers, such as daily sweepstakes reward opportunities which is based on volume of purchases, and other similar offers. Current discount offers and inducement offers are presented as a net amount in "Net revenues." The Company records deferred revenue when cash is received in advance of the performance of services or delivery of goods. Deferred revenue is also recorded to account for the 7 day grace period offered to customers for potential product disputes, if any. Deferred revenues totaled $10,056 and $125,455 as of June 30, 2011 and December 31, 2010, respectively.

We offered a temporary limited time promotion for a fixed period during the year ended December 31, 2010 where customers were incentivized to purchase from our E-commerce platform and in exchange, were awarded points which were then converted to common shares of the Company. These shares were valued using Level 2 inputs for determining fair value and deducted from revenues. For the year ended December 31, 2010, $301,462 was recognized as contra revenue on a "net" basis. During the six months ended June 30, 2011, there were no promotional expenses incurred due to cancellation of the program.

DISTRIBUTION REVENUE RECOGNITION

REWARD PROGRAMS

The Reward Programs are primarily designed for customers residing in China. Customers may earn reward points from the purchase of merchandise and services from the Company. Points are earned based on the amount and types of merchandise and services purchased. Customers residing in China may redeem the reward points for drawings into the Company's lottery sweepstakes for chances to win cash prizes. In addition, customers may attain a tiered membership status based on the value of merchandise and services purchased over the past twelve months. Membership status entitles the holder to certain discounts on future purchases of selected items on the Company's website. The Company accrues for the estimated cost of redeeming the benefits at the time the benefits are earned by the customer. The estimated lottery expense for the six months ending June 30, 2011 and June 30, 2010 was $588,135 and $0, respectively. The estimated lottery expense for the three months ending June 30, 2011 and June 30, 2010 was $236,165 and $0, respectively.

COST OF SALES

SHIPPING ACTIVITIES

Outbound shipping charges to customers are included in "Net sales." Outbound shipping-related costs are included in "Cost of sales."

ACCOUNTS RECEIVABLE

Accounts receivable are carried at realizable value. The Company considers many factors in assessing the collectability of its receivables, such as, the age of the amounts due, the customer's payment history and creditworthiness. An allowance for doubtful accounts is recorded in the period in which a loss is determined to be probable. Accounts receivable balances are written off after all collection efforts have been exhausted. Bad debt expense for the six months ending June 30, 2011 and 2010 was zero and there was no allowance for doubtful accounts at June 30, 2011 and December 31, 2010.

INVENTORIES

SHARE-BASED COMPENSATION

In accordance with ASC 718, the Company determines whether a share payment should be classified and accounted for as a liability award or equity award. All grants of share-based payments to service providers classified as equity awards are recognized in the financial statements based on their grant date fair values which are calculated using an option pricing model. The Company has elected to recognize compensation expense using the straight-line method for all equity awards granted with graded vesting based on service conditions provided that the amount of compensation cost recognized at any date is at least equal to the portion of the grant-date value of the options that are vested at that date. To the extent the required vesting conditions are not met resulting in the forfeiture of the share-based awards, previously recognized compensation expense relating to those awards are reversed. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent period if actual forfeitures differ from initial estimates. Share-based compensation expense was recorded net of estimated forfeitures such that expense was recorded only for those share-based awards that are expected to vest.

RESULTS OF OPERATIONS

COMPARISON OF THREE MONTHS ENDED JUNE 30, 2011 AND JUNE 30, 2010

(A) REVENUES

Net revenues derived from our e-commerce business were $581,618 and $0 for the three months ended June 30, 2011 and 2010, respectively. The Company began its principal operations during 2010 with the launch of the e-commerce website. The increase is the result of our efforts in marketing our business to attract and grow our membership base and growth of our vendor arrangements and relationships, which provides the products and services for our e-commerce retail platform.

Net revenues derived from our distribution business were $765,063 and $0 for the three months ended June 30, 2011 and 2010, respectively. The increase is the result of our acquisition of Beitun Trading, a meat distribution business on November 29, 2010. The Company did not have a distribution business for the three months ending June 30, 2010.

Cost of sales associated with distribution were $750,707 and $0 for the three months ended June 30, 2011 and 2010, respectively. Cost of sales consists of the purchase price of consumer products and content sold by us, inbound and outbound shipping charges, and packing supplies. The increase is the result of our acquisition of Beitun Trading on November 29, 2010.

(B) TOTAL OPERATING EXPENSES

Total operating expenses consist of selling expenses, general and administrative expenses, and financial expenses. Total operating expenses were $1,265,397 and $42,541 for the three months ended June 30, 2011 and 2010, respectively, an increase of $1,222,856.

Selling expenses were $338,674 and $0 for the three months ended June 30, 2011 and 2010, respectively. The increase was primarily due to the Company commencing principal operations and incurring selling costs related to the generation of net revenues.

General and administrative expenses were $912,885 and $42,541 for the three months ended June 30, 2011 and 2010, respectively. The increase in general and administrative expenses was primarily due to increased professional expenses such as legal and accounting expenses as a public company since February 2011.

COMPARISON OF SIX MONTHS ENDED JUNE 30, 2011 AND JUNE 30, 2010

(A) REVENUES

Net revenues derived from our e-commerce business were $1,188,409 and $0 for the six months ended June 30, 2011 and 2010, respectively. The Company began its principal operations during 2010 with the launch of the e-commerce website. The increase is the result of our efforts in marketing our business to attract and grow our membership base and growth of our vendor arrangements and relationships, which provides the products and services for our e-commerce retail platform.

Net revenues derived from our distribution business were $2,105,476 and $0 for the six months ended June 30, 2011 and 2010, respectively. The increase is the result of our acquisition of Beitun Trading, a meat distribution business on November 29, 2010. The Company did not have a distribution business for the six months ending June 30, 2010.

Cost of sales associated with distribution were $2,076,865and $0 for the six months ended June 30, 2011 and 2010, respectively. Cost of sales consists of the purchase price of consumer products and content sold by us, inbound and outbound shipping charges, and packing supplies. The increase is the result of our acquisition of Beitun Trading on November 29, 2010.

(B) TOTAL OPERATING EXPENSES

Total operating expenses consist of selling expenses, general and administrative expenses, and financial expenses. Total operating expenses were $2,641,269 and $142,983 for the six months ended June 30, 2011 and 2010, respectively, an increase of $2,611,769.

Selling expenses were $853,508 and $0 for the six months ended June 30, 2011 and 2010, respectively. The increase was primarily due to the Company commencing principal operations and incurring selling costs related to the generation of net revenues.

General and administrative expenses were $1,787,761 and $142,983 for the six months ended June 30, 2011 and 2010, respectively. The increase in general and administrative expenses was primarily due to increased professional expenses such as legal and accounting expenses as a public company since February 2011.

LIQUIDITY

Cash flow information is as follows:

	Six months ended June 30,
	2011			2010
Operating activities	$	(2,804,327	)	$	778,959
Investing activities	$	(23,702	)	$	(9,706	)
Financing activities	$	1,125,593		$	(19,276	)

Cash used in operating activities was $2,804,327 for the six months ended June 30, 2011, a decrease of $3,583,286 or 460%, compared to $778,959 provided by operating activities for the same period last year. The decrease of cash provide by operating activities is mainly because increased accounting receivable due to its distribution business which was partially acquired on November 29, 2010. The decrease is also caused by increased accrued liabilities because during the six months ended June 30, 2011 the Company did not provide customer incentives which caused the major accrued liabilities for the same period last year.

Cash used in investing activities was $23,702 for the six months ended June 30, 2011, a decrease of $13,996 or 144%, compared to $9,702 for the same period last year. The increase of cash used in investing activities is because of more investment in office equipment during the six months ended June 30, 2011 compared to the same period last year.

Cash provided by financing activities was $1,125,593 for the six months ended June 30, 2011, an increase of $1,144,869 or 5,939%, compared to cash used by financing activities $19,276 for the same period last year. The increase is really due to increased receivable from related parties.

CAPITAL RESOURCES

As of June 30, 2011, cash and cash equivalents totaled $1,292,993. Although cash flow from operations during the quarter was negative, we were able to finance our operations with cash balances carried over from December 31, 2010. The lending from our directors also supports our business. The Company is also actively seeking new business model to generate more cash flow. We believe that our current cash and cash equivalents and cash flow from operations will be sufficient to meet our anticipated cash needs, including our cash needs for working capital and capital expenditures for the next 12 months.

We may, however, require additional cash due to changes in business conditions or other future developments, including any investments we may decide to pursue. To the extent it becomes necessary to raise additional cash in the future, we may seek to raise it through the sale of debt or equity securities, funding from joint-venture or strategic partners, debt financing or loans, issuance of common stock, or a combination of the foregoing. We cannot provide any assurances that we will be able to secure the additional cash or working capital we may require to continue our operations.

(A) LEASE COMMITMENTS

Our Company has entered into a sub-lease agreement for its Pasadena office facility beginning August 1, 2010 and ending November 30, 2012. Our full service gross monthly rental rate is $2,567. Rent expense (including related common area maintenance charges) totaled $15,396 for six months ended June 30, 2011. Rent expense (including related common area maintenance charges) totaled $7,695 for three months ended June 30, 2011. In China, we have entered into a lease agreement in the Beijing Chaoyang District for our Arki (Beijing) E-commerce Technology Co., Ltd. wholly owned subsidiary beginning February 15, 2010 and ending February 14, 2012. Our full service gross monthly rental rate is $385. Rent expense (including related common area maintenance charges) totaled $2,310 for six months ended June 30, 2011. Rent expense (including related common area maintenance charges) totaled $1,155 for three months ended June 30, 2011. On October 21, 2010, we entered into a new lease agreement for office facility expansion in the Beijing Chaoyang District, Hua Mao Center. The straight-line monthly gross rental rate is $30,831 with a 36 month term. Rent expense (including related common area maintenance charges) totaled $188,090 for six months ended June 30, 2011. Rent expense (including related common area maintenance charges) totaled $95,597 for three months ended June 30, 2011.

Total future minimum rental lease commitments as of June 30, 2011 are as follows:

2011	$	400,776
2012		385,374
2013		123,324
Total	$	909,474

(B) SUPPLIER COMMITMENTS

CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

CONTRACTUAL OBLIGATIONS

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

OFF-BALANCE SHEET ARRANGEMENTS

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholders' equity or that are not reflected in our financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk, or credit support to us or engages in leasing, hedging, or research and development services with us.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules, regulations and related forms, and that such information is accumulated and communicated to our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As of June 30, 2011, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and our principal financial officer of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms because of the lack of finance and accounting personnel with an appropriate level of knowledge, experience, and training in the application of U.S. GAAP.

We are in the process of implementing the following measures to remediate these material weaknesses: (a) hire additional financial reporting and accounting personnel with relevant account experience, skills, and knowledge in the preparation of financial statements under the requirements of U.S.GAAP and financial reporting disclosure pursuant to SEC rules; and (b) continue to work with internal and external consultants to improve the process for collecting and reviewing information required for the preparation of financial statements. We plan on continuing to identify and implement remedial measures.

CHANGES IN INTERNAL CONTROLS

There have been no changes in our internal controls over financial reporting during the quarter ended June 30, 2011 that have materially affected or are reasonably likely to materially affect our internal controls.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are presently no material pending legal proceedings to which the Company, any of its subsidiaries, any executive officer, any owner of record or beneficially of more than five percent of any class of voting securities is a party or as to which any of its property is subject, and no such proceedings are known to the Registrant to be threatened or contemplated against it.

ITEM 1A. RISK FACTORS

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. REMOVED AND RESERVED

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) Exhibits required by Item 601 of Regulation S-K.

Exhibit
Number		Description

31.1*

Certification of the Company's Principal Executive and Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011

32.1*

Certification of the Company's Principal Executive and Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*Filed herewith

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.

	CONSUMER CAPITAL GROUP, INC.

Dated: August 15, 2011	By:	/s/ Jianmin Gao
		Jianmin Gao
		Principal Executive Officer
		Principal Financial Officer

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