UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

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

For fiscal year ended: December 31, 2013

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

For the transition period from _______________ to _______________

Commission file number: 000-1380412

Angstron Holdings Corporation

(Exact name of registrant as specified in its charter)

Delaware		20-5308449
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

800 E. Colorado Blvd., Suite 888 Pasadena, California 91101

(Address of principal executive offices) (Postal Code)

Registrant’s telephone number, including area code: 626-683-9120

Securities registered under Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes      . No  X .

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.

Yes      . No  X .

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

Yes  X . No      .

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  X . No      .

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

---

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  X . No      .

As of April 15, 2014, there were 1,277,039 shares of the registrant’s common stock, par value $0.001, issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

1.

8-K filed on August 16, 2013 is incorporated by reference in Part II.

2.

8-K filed on January 24, 2014 is incorporated by reference in Part II.

3.

8-K filed on February 3, 2014 is incorporated by reference in Part II.

4.

8-K filed on February 19, 2014 is incorporated by reference in Part II.

5.

8-K/A filed on March 5, 2014 is incorporated by reference in Part II.

2

---

TABLE OF CONTENTS

Item Number and Caption			Page
Forward-Looking Statements			4
PART I			5
1.	Business		5
1A.	Risk Factors		6
1B.	Unresolved Staff Comments		6
2.	Properties		6
3.	Legal Proceedings		6
4.	Mine Safety Disclosures		6
PART II			6
5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		6
6.	Selected Financial Data		9
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		9
7A.	Quantitative and Qualitative Disclosures About Market Risk		10
8.	Financial Statements and Supplementary Data		10
9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		10
9A.	Controls And Procedures		11
9B.	Other Information		12
PART III			12
10.	Directors, Executive Officers, and Corporate Governance		12
11.	Executive Compensation		13
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		15
13.	Certain Relationships and Related Transactions, and Director Independence		16
14.	Principal Accountant Fees and Services		16
PART IV			17
15.	Exhibits and Financial Statement Schedules		17
Signature			20

3

---

FORWARD-LOOKING STATEMENTS

Except for historical information, this report contains forward-looking statements. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the sections “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You should carefully review the risks described in this Annual Report and in other documents we file from time to time with the Securities and Exchange Commission (“SEC”). You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

All references in this Form 10-K to “Angstron Holdings Corporation,” “HK International Group, Inc.,” “Hygeialand Biomedical Corporation,” “Loreto,” “Loreto Resources,” the “Company,” “we,” “us” or “our” are to Angstron Holdings Corporation f/k/a Loreto Resources Corporation, and its wholly owned subsidiary.

4

---

PART I

ITEM 1.

BUSINESS

History and General Development of Our Business

We were incorporated in the State of Nevada on June 28, 2006 under the name Loreto Corporation. The Company was formed to design, print, market and sell greeting cards, wrapping paper, stationery products and collectibles in retail locations throughout Mexico (the “Legacy Business”).

During the latter part of 2007, we discontinued our Legacy Business and, in mid-2008, we decided to redirect our business focus and strategy towards identifying and pursuing business opportunities in the mining sector in South America. In connection with this change of business focus, on July 3, 2008, we changed our name to Loreto Resources Corporation.

In mid-2010, we changed our focus to primarily seeking quality assets and investment opportunities.  During the quarter ended September 30, 2010, we closed our office in Lima, Peru.

As of March 11, 2013, we sold 1,300 shares of our Series A convertible preferred stock, $0.001 par value per share (“Series A Preferred Stock”), to Commonwealth Investments, LLC, a California limited liability company (“Commonwealth”). These shares of Series A Preferred Stock are convertible into an aggregate of 12,770,339,600 shares of Common Stock, representing approximately 99.0% of our common equity on an as-converted basis; provided, however, that, we did not have a sufficient number of authorized shares available to convert all of the shares of Series A Preferred Stock to Common Stock until the Reverse Stock Split was effective on April 16, 2013.

On March 22, 2013, we changed our name to HK International Group, Inc., and increased our number of authorized shares from 310,000,000 shares consisting of (i) 300,000,000 shares of Common Stock, and (ii) 10,000,000 shares of preferred stock, par value $0.001 per share (“Preferred Stock”), 1,300 shares of which have been designated as Series A Preferred Stock, to 3,000,000,000 shares, consisting of (i) 2,000,000,000 shares of Common Stock, and (ii) 1,000,000,000 shares of Preferred Stock, 1,300 shares of which have previously been designated as Series A Preferred Stock (“Share Increase”).

Effective April 16, 2013, the Company’s board of directors approved a reverse split of the Company’s common stock on the basis of one share for each 100 shares issued and outstanding (1:100 reverse stock split).

On June 21, 2013, we changed our name to Hygeialand Biomedical Corporation.  Following FINRA’s approval, on July 11, 2013, the name change, and the change of our trading symbol to “HBMC,” became effective in the market.

In connection with the change of our business focus (described above), we split off (the “Split-Off”) our wholly-owned Peruvian subsidiary, Loreto Resources Peru S.R.L. Compania Minera (the “Subsidiary”), which is in the process of being dissolved, to Luis F. Saenz, our former sole officer and director. We entered into a Spilt-Off Agreement (the “Split-Off Agreement”) with Mr. Saenz (as discussed below) to effect the Split-Off, dated as of July 12, 2013 (the “ Split-Off Closing Date”), and the Split-Off has been completed.

Pursuant to the Split-Off Agreement, as of the Split-Off Closing Date:

·

we contributed, assigned, conveyed and transferred all of our assets and property, and all of our debts, adverse claims, liabilities, judgments and obligations relating to the Subsidiary, whether accrued, contingent or otherwise and whether known or unknown, to Mr. Saenz;

·

we transferred all of the outstanding capital stock of the Subsidiary to Mr. Saenz;

·

Mr. Saenz agreed to indemnify us and our officers and directors against any third party claims relating to the Subsidiary; and

·

the Subsidiary and Mr. Saenz pledged not to sue us and forever release us and our present and former officers, directors, stockholders, employees, agents, attorneys and representatives from any and all claims, actions, obligations, liabilities and the like, incurred or suffered by the Subsidiary or Mr. Saenz arising from, relating to, or in any way connected with, any fact, event, transaction, action or omission that occurred or failed to occur on or prior to the Split-Off Closing Date and related to the Subsidiary.

5

---

On July 23, 2013, we changed our name to Angstron Holdings Corporation.  Following FINRA’s approval, on August 19, 2013, the name change, and the change of our trading symbol to “ANGP,” became effective in the market.

On August 7, 2013, we increased our number of authorized shares from 3,000,000,000 shares of capital stock, consisting of (i) 2,000,000,000 shares of Common Stock, and (ii) 1,000,000,000 shares of Preferred Stock, 1,300 shares of which have been designated as Series A Preferred Stock, to 6,000,000,000 shares of capital stock, consisting of (i) 5,000,000,000 shares of Common Stock, and (ii) 1,000,000,000 shares of Preferred Stock, 1,300 shares of which have previously been designated as Series A Preferred Stock.

Going forward, our plan is to acquire other assets or business operations that will maximize shareholder value. However, no specific assets or businesses have been definitively identified and there is no certainty that any such assets or business will be identified or any transactions will be consummated.

Research and Development

We have not spent any amounts on research and development activities during either of the last two fiscal years.

Employees

As of the date of this report, we did not have any full time employees.

ITEM 1A.

RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are not required to provide the information under this item.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

 

None.

ITEM 2.

PROPERTIES

We did not own or rent any properties during the last two fiscal years. As of April 14, 2014, our executive offices are located at 800 East Colorado Boulevard, Suite 888, Pasadena, CA 91101 and cover an area of approximately 8,142 square feet. The use of these offices is supplied to us on a rent free basis by an affiliated party.

ITEM 3.

LEGAL PROCEEDINGS

No legal or governmental proceedings are presently pending or, to our knowledge, threatened, to which we are a party.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

PART II

 

ITEM 5.

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

Our Common Stock is currently listed on the OTC Bulletin Board under the symbol “ANGP”.

6

---

For the period from January 1, 2012 through December 31, 2013, the table sets forth the high and low closing bid prices based upon information obtained from inter-dealer quotations on the OTC Bulletin Board without retail markup, markdown, or commission and may not necessarily represent actual transactions. Although our Common Stock was approved for listing on the OTC Bulletin Board on May 2, 2007, there has been minimal trading to date:

Fiscal Year Ended December 31, 2013 Quarter Ended		High Bid			Low Bid
March 31, 2013		$	0.00		$	0.00
June 30, 2013		$	0.00		$	0.00
September 30, 2013		$	0.00		$	0.00
December 31, 2013		$	0.00		$	0.00

Fiscal Year Ended December 31, 2012 Quarter Ended		High Bid			Low Bid
March 31, 2012		$	0.00		$	0.0131
June 30, 2012		$	0.00		$	0.01
September 30, 2012		$	0.00		$	0.01
December 31, 2012		$	0.00		$	0.001

Because our Common Stock is thinly traded, bid information on our Common Stock does not necessarily represent its fair market value.

Holders

As of April 15, 2014, we had 1,277,039 shares of our Common Stock issued and outstanding held by 24 shareholders of record.

Dividends

We have never declared any cash dividends with respect to our Common Stock. Future payment of dividends is within the discretion of our Board and will depend on our earnings, capital requirements, financial condition and other relevant factors. Although there are no material restrictions limiting, or that are likely to limit, our ability to pay dividends on our Common Stock, we presently intend to retain future earnings, if any, for use in our business and have no present intention to pay cash dividends on our Common Stock.

Securities Authorized For Issuance Under Equity Compensation Plans

On July 3, 2008, our Board and stockholders adopted the 2008 Equity Incentive Plan (the “2008 Plan”) which reserves a total of 16,000,000 shares of Common Stock for issuance under the 2008 Plan.  If an incentive award granted under the 2008 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to us in connection with an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the 2008 Plan. As of December 31, 2013, we have not issued any shares and there are no outstanding grants under the 2008 Plan.

7

---

The following table sets forth information about the Company’s equity compensation plans as of December 31, 2013:

Plan Category		Number of securities  to be issued upon exercise of outstanding options,  warrants and rights				Weighted- average exercise  price of  outstanding options, warrants and rights				Number of  securities remaining  available for future issuance under  equity compensation  plans
Equity compensation plans approved by security holders			0				-				16,000,000
Equity compensation plans not approved by security holders			0				-
Total			0				-				16,000,000

Performance Growth

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

Recent Sales of Unregistered Securities

On November 2, 2010 and on November 17, 2010, we completed closings of a private placement offering (the “November 2010 Offering”) of our convertible notes (the “November 2010 Notes”), totaling approximately $150,000 in principal, to eight stockholders and one unaffiliated third party. The November 2010 Notes bore interest of 10%, and would have matured on December 31, 2011. Both the principal and accrued interest were deemed mandatorily converted on March 15, 2011 at the price paid by investors in the March 2011 Offering (described below), expressed as a percentage of the face amount of debt securities.

 

On March 15, 2011, we completed closings of a private placement offering (the “March 2011 Offering”) of our convertible promissory notes (the “March 2011 Notes”), totaling approximately $90,000 in principal, to eight stockholders and one unaffiliated third party. As of March 1, 2011, we deemed the notes from the November 2010 Offering, along with accrued but unpaid interest, to have been converted, on a mandatory basis, into new notes on the same terms as the subsequent notes. The March 2011 Notes bore interest of 10%, and, if they had not been amended (as described below), were due to mature on March 31, 2012, and both the principal and accrued interest would have be mandatorily converted at a price equal to either (a) the price per share of stock (or unit of stock and other securities) paid by investors in the next securities offering or other financing by the Company, if the financing is an issuance of stock (or unit of stock and other securities), or (b) the price paid by investors in the next securities offering or other financing by the Company, expressed as a percentage of the face amount of debt securities, if the financing is an issuance of debt securities (or units of debt securities and other securities) (including debt securities convertible into stock), upon the closing of, and into the securities issued in, the next financing in which we sold at least $1,000,000 of our securities.

On October 10, 2011, we closed a private placement offering (the “October 2011 Offering”) of our convertible promissory notes (the “October 2011 Notes”). In the October 2011 Offering, we sold $52,500 in principal amount of the October 2011 Notes to an existing investor. The October 2011 Notes bore interest of 10%, and, if they had not been converted (as described below), were due to mature on April 9, 2013, and both the principal and accrued interest would have been mandatorily converted at a price equal to either (a) the price per share of stock (or unit of stock and other securities) paid by investors in the next securities offering or other financing by the Company, if the financing is an issuance of stock (or unit of stock and other securities), or (b) the price paid by investors in the next securities offering or other financing by the Company, expressed as a percentage of the face amount of debt securities, if the financing is an issuance of debt securities (or units of debt securities and other securities) (including debt securities convertible into stock), upon the closing of, and into the securities issued in, the next financing in which we sold at least $1,000,000 of our securities.

On March 31, 2012, the November 2010 Notes and the March 2011 Notes were amended, and the maturity dates were extended to September 30, 2013. In addition, the mandatory conversion terms for the aforementioned notes were amended to require conversion only if the minimum $1,000,000 financing closes concurrent with the closing of a related merger or other acquisition transaction.

On February 1, 2012, we closed a private placement offering (the “February 2012 Offering”) of our convertible promissory notes (the “February 2012 Notes”). In the February 2012 Offering, we sold $50,000 in principal amount of the February 2012 Notes to one existing investor. The February 2012 Notes bore interest of 10%, and, if they had not been converted (as described below), were due to mature on July 31, 2013, and both the principal and accrued interest would have been automatically converted at the initial closing of our next private placement in which we sold at least $1,000,000 of our securities, so long as such offering closed concurrent with the closing of a related merger or other acquisition transaction.

8

---

On July 25, 2012, we closed a private placement offering (the “July 2012 Offering”) of our convertible promissory notes (the “July 2012 Notes”). In the July 2012 Offering, we sold $70,000 in principal amount of the July 2012 Notes to one existing investor. The July 2012 Notes bore interest of 10%, and, if they had not been converted (as described below), were due to mature on January 24, 2014, and both the principal and accrued interest would have been automatically converted at the initial closing of our next private placement in which we sold at least $1,000,000 of our securities, so long as such offering closed concurrent with the closing of a related merger or other acquisition transaction.

On March 8, 2013, we entered into Promissory Note Conversion Agreements (the “Conversion Agreements”) with each of the holders (the “Noteholders”) of all of our outstanding convertible promissory notes (collectively, the “Notes”), pursuant to which, among other things, an aggregate of $430,538 of principal and accrued and unpaid interest due under the Notes, representing all of our outstanding indebtedness for money borrowed on March 8, 2013, was converted into a total of 57,405,074 shares of our Common Stock, at a conversion rate of $0.0075 per share (the “Debt Conversion Transaction”).

The Company evaluated the conversion options under FASB ASC Topic 815 – 40 for derivative treatment and determined that the conversion options are required to be accounted for as a derivative upon the aforementioned closing of the next private placement offering. As the closing had not occurred prior to the aforementioned promissory note conversions on March 8, 2013, and as per FASB ASC Topic 470 – 20, the derivative instrument nor the beneficial conversion feature need not be accounted for through the date of the promissory note conversions.

On March 11, 2013, we closed a private placement offering of our Series A Preferred Stock, in which we sold 1,300 shares of our Series A Preferred Stock to Commonwealth for an aggregate purchase price of $130,000. The shares of Series A Preferred Stock are currently convertible into an aggregate of 12,770,339,600 shares of our Common Stock, at a rate of $0.0000102826655692955 per share.

All of the offerings discussed above were conducted pursuant to the exemption from the registration requirements of the federal securities laws provided by Regulation D and Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and Section 4(2) of the Securities Act. All of the securities were offered and sold only to “accredited investors,” as that term is defined by Rule 501 of Regulation D, and/or to persons who were neither resident in, nor citizens of, the United States. No commissions were paid in connection with any of these offerings.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

ITEM 6.

SELECTED FINANCIAL DATA

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion contains forward-looking statements. Please see “Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.

Results of Operations

Fiscal years Ended December 31, 2013 and 2012

We are still in our development stage and have generated no revenues to date.

We incurred operating expenses of $327,688 and $145,946 for the years ended December 31, 2013 and 2012, respectively. These expenses consisted of general operating expenses incurred in connection with the day to day operation of our business and the preparation and filing of our periodic reports.

9

---

Our net losses for years ended December 31, 2013 and 2012 were $352,793 and $179,447, respectively.

We have generated no revenues and our net operating loss from inception through December 31, 2013 was $4,540,912..

Liquidity and Capital Resources

Our cash and cash equivalents balance as of December 31, 2013 was $1,787,097.

As discussed above, during the past two years we have had a number of small private offerings of our convertible promissory notes.

In the March 2011 Offering, we raised $90,000, in the October 2011 Offering we raised $52,500, and in the February 2012 Offering we raised an additional $50,000. We utilized the proceeds of these offerings for working capital and general corporate purposes.

On March 8, 2013, an aggregate of $430,538 of principal and accrued and unpaid interest due under the Notes, representing all of our outstanding indebtedness for money borrowed at March 8, 2013, was converted into a total of 57,405,074 shares of our Common Stock.

On March 11, 2013, we sold 1,300 shares of our Series A Preferred Stock for an aggregate purchase price of $130,000. We used the net proceeds from the sale of the Series A Preferred Stock to pay outstanding obligations to advisors, service providers and vendors, and to pay any outstanding tax liabilities. In addition, the purchaser of the Series A Preferred Stock paid $37,500 of our legal fees incurred in connection with the transaction.

Working Capital Needs

We presently do not have any available credit, bank financing or other external sources of liquidity. Due to our brief history and historical operating losses, our operations have not been a source of liquidity. At our current level of operation, we do not have sufficient cash to meet our expenses for the next twelve months. We expect that we will need to obtain additional capital in order to meet our current working capital needs, execute our business plan, build our operations and become profitable. In order to obtain capital, we may need to sell additional shares of our Common Stock or debt securities, or borrow funds from private lenders or banking institutions. We have not made any decisions with respect to any such financing. There can be no assurance that we will be successful in obtaining additional funding in amounts or on terms acceptable to us, if at all. If we are unable to raise additional funding as necessary, we may have to suspend our operations temporarily or cease operations entirely.

Our auditors have included an explanatory paragraph in their report on our consolidated financial statements relating to the uncertainty of our business as a going concern, due to our limited operating history, our lack of historical profitability, and our limited funds. We believe that we will be able to raise the required funds for operations and to achieve our business plan.

Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

Our audited financial statements are included beginning immediately following the signature page to this report. See Item 15 for a list of the financial statements included herein.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

The Company previously reported the information required by this Item 9 in its Form 8-K/A filed on August 16, 2013, its Form 8-K filed on January 24, 2014, its Form 8-K filed on February 3, 2014, its Form 8-K on February 19, 2014 and its Form 8-K on March 5, 2014.

10

---

ITEM 9A.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act of 1934 (the “Exchange Act”) is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining an adequate system of internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act. Under the supervision and with the participation of our senior management, consisting of Luis Saenz, our former President and Interim Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, our former President and Interim Chief Financial Officer concluded, as of the Evaluation Date, that our disclosure controls and procedures were not effective because of the identification of what might be deemed a material weakness in our internal control over financial reporting which is identified below.

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on this evaluation, our sole officer concluded that, during the period covered by this annual report, our internal controls over financial reporting were not operating effectively. Management did not identify any material weaknesses in our internal control over financial reporting as of December 31, 2013; however, it has identified the following deficiencies that, when aggregated, may possibly be viewed as a material weakness in our internal control over financial reporting as of that date:

1.

We do not have an audit committee. We are not currently obligated to have an audit committee, including a member who is an “audit committee financial expert,” as defined in Item 407 of Regulation S-K, under applicable regulations or listing standards; however, it is management’s view that such a committee is an important internal control over financial reporting, the lack of which may result in ineffective oversight in the establishment and monitoring of internal controls and procedures.

2.

We did not maintain proper segregation of duties for the preparation of our financial statements. We currently only have one officer overseeing all transactions. This has resulted in several deficiencies including the lack of control over preparation of financial statements, and proper application of accounting policies.

Attestation Report of Our Registered Public Accounting Firm

This Annual Report on Form 10-K (“Annual Report”) does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. We are a non-accelerated filer; therefore, management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this Annual Report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the year ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

11

---

Officers’ Certifications

Appearing as exhibits to this Annual Report are “Certifications” of our President and Interim Chief Financial Officer. The Certifications are required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of the Annual Report contains information concerning the Controls Evaluation referred to in the Section 302 Certification. This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

ITEM 9B.

OTHER INFORMATION

None.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Executive Officers and Directors

Below are the names and certain information regarding our executive officers and directors as of December 31, 2013:

Name		Age		Title		Date First Appointed
Jianguo Xu		46		President, Chief Financial Officer and Treasurer		July 15, 2013
Borzeng Jang		61		Director		July 15, 2013
Sijun He		42		Director		July 15, 2013

Directors are elected to serve until the next annual meeting of stockholders and until their successors are elected and qualified.

Currently, directors are not compensated for their services, although their expenses in attending meetings may be reimbursed. Officers are elected by the Board and serve until their successors are appointed by the Board. Biographical resumes of each officer and director are set forth below.

Certain biographical information of our directors and officers:

Jianguo Xu. Mr. Xu, 46, has been President and Chief Executive Officer, and a member of the board of directors, of Apollo Acquisition Corporation since May 2013.  He has been Director of Hybrid Kinetic Group Limited since June 2010 and has also been serving as Vice-President for Global Sourcing for HK Motors commencing in April 2010.  Before joining HK Motors, Mr. Xu worked for Magna International Group to start his career in the automotive industry from March 2001 through March 2010.  In 2008, Mr. Xu was assigned to Magna Closures (Kunshan) Automotive Corporation as engineering manager to establish its technical center in China.  He has extensive experience in product development, engineering management, product planning, purchasing and supplier management.  Mr. Xu was involved in multiple projects for Asian and European automakers such as Nissan, Honda and Volkswagen.  From 1991 to 1999, Mr. Xu also worked for Structural Dynamics Research Corporation (SDRC) China Branch as a Computer Aided Design and Engineering Specialist, and served as the Regional Manager.  He was one of the key experts who developed the Chinese computer aided engineering industry in the 1990s.  Mr. Xu has 20 years of experience in mechanical engineering and the automotive industry, giving him an in-depth understanding of the global automotive industry, particularly the Chinese automotive industry.  Mr. Xu received his Master’s Degree in Mechanical Engineering from Shanghai Jiaotong University and his Bachelor’s Degree in Mechanical Engineering from Huazhong University of Science and Technology.

Borzeng Jang. Dr. Jang, 61, has been serving as the Chief Executive Officer of Angstron Materials, Inc. since August 2007.  Prior to this, Dr. Jang was the Chief Executive Officer of Nanotek Instruments, Inc. from March 1997 to July 2007. Dr. Jang has extensive experience in product development and commercialization of advanced manufacturing, 3-D printing, nano materials, and energy storage technologies.  He is an inventor of 240 patents, a pioneer in graphene science and technology, and a technology entrepreneur.  Dr. Jang has a Master’s of Science Degree and a Ph.D. in Materials Science and Engineering from the Massachusetts Institute of Technology in Cambridge, Massachusetts.  He also has a Bachelor’s Degree in Physics from National Central University in Taiwan.

12

---

Sijun He. Dr. He, 42, has been a member of the board of directors of Apollo Acquisition Corporation since May 2013.  He has served as Director, Worldwide Purchasing for Hybrid Kinetic Corporation since December 2009.  Prior to this, he was Global Supplier Footprint Champion for General Motors Corporation from October 2000 through November 2009, where, among other things, he directed the purchasing data management team to support GM’s board meetings, acted as the liaison between executive teams and commodities for coordinating global sourcing activities, and was responsible for buyer training initiatives.  Dr. He has a Master’s of Business Administration from Indiana University, a Ph.D. in Mechanical Engineering from the University of Michigan, and a Master’s of Science Degree from Tsinghua University in China.  He also has a Bachelor’s Degree in Mechanical Engineering from Central South University of Hunan in China.

Involvement in Certain Legal Proceedings.

There have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any director, executive officer, promoter or control person of ours during the past five years.

Board Committees

The Company currently has not established any committees of the Board. Our Board may designate from among its members an executive committee and one or more other committees in the future. We do not have a nominating committee or a nominating committee charter. Further, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, no security holders have made any such recommendations. Our sole director performs all functions that would otherwise be performed by committees. Given the present size of our Board it is not practical for us to have committees. If we are able to grow our business and increase our operations, we intend to expand the size of our Board and allocate responsibilities accordingly.

Shareholder Communications

Currently, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, no security holders have made any such recommendations.

Code of Ethics

We have adopted a written code of ethics (the “Code of Ethics”) that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. We believe that the Code of Ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. To request a copy of the Code of Ethics, please make written request to our Secretary at 800 E. Colorado Blvd., Suite 888 Pasadena, CA 91101, tel. (626) 683-9120.

Compliance with Section 16(a) of the Exchange Act

Our Common Stock is not registered pursuant to Section 12 of the Exchange Act. Accordingly, our officers, directors and principal shareholders are not subject to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act.

ITEM 11.

EXECUTIVE COMPENSATION

The following table sets forth information concerning the total compensation paid or accrued by us during the last two fiscal years ended December 31, 2013 to (i) all individuals that served as our principal executive officer or acted in a similar capacity for us at any time during the fiscal year ended December 31, 2013; (ii) all individuals that served as our principal financial officer or acted in a similar capacity for us at any time during the fiscal year ended December 31, 2012; and (iii) all individuals that served as executive officers of ours at any time during the fiscal year ended December 31, 2013 that received annual compensation during the fiscal year ended December 31, 2013 in excess of $100,000.

13

---

Summary Compensation Table

(1)

Jianguo Xu was appointed President, Chief Executive Officer and Treasurer of the Company on July 15, 2013. Mr. Xu also serves as Director and Chief Executive Officer of HK Battery Technology, Inc. Prior to joining the Company, from January 2007 until March 2010, Mr. Xu was Engineering Manager of Magna Closures Group, an operating division of Magna International, and, from March 2001 through December 2006, he was Magna’s Senior Design Engineer.  Magna International designs, develops and manufactures automotive systems, assemblies, modules and components, and engineers and assembles complete vehicles, primarily for sale to original equipment manufacturers of cars and light trucks in North America, Europe, Asia, South America and Africa. Mr. Xu holds a Bachelor Degree in Engineering from Huazhong University in China and a Master Degree of Science in Engineering from Shanghai Jiaotong University in China.  

Employment Agreements and Arrangements

We do not have formal employment agreements with any members of management.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information regarding stock options held by our Named Executive Officers at December 31, 2013.

Name and Principal Position	Number of securities underlying unexercised options exercisable (#)	Number of securities underlying unexercised options unexercisable (#)	Equity incentive plan awards: Number of securities underlying unexercised and unearned options (#)	Option Plan exercise price ($)	Option expiration date
(a)	(b)	(c)	(d)	(e)	(f)
Jianguo Xu, President,
Chief Executive Officer and Treasurer	0	0	0	-	-

There were no stock awards to executive officers during the year ended December 31, 2013, and there are no stock awards outstanding as of December 31, 2013.

Compensation of Directors

None of our directors receives any compensation for serving as such, for serving on committees (if any) of the Board or for special assignments. During the fiscal year ended December 31, 2013 there were no arrangements between us and our directors that resulted in our making payments to any of our directors for any services provided to us by them as directors.

14

---

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information with respect to the beneficial ownership of our Common Stock known by us as of April 15, 2014 by:

·

each person or entity known by us to be the beneficial owner of more than 5% of our common stock;

·

each of our directors;

·

each of our executive officers; and

·

all of our directors and executive officers as a group.

Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent such power may be shared with a spouse.

NAME OF OWNER		TITLE OF CLASS		NUMBER OF SHARES OWNED (1)		PERCENTAGE OF COMMON STOCK (2)
Jianguo Xu		Common Stock		0		*
Borzeng Jang		Common Stock		0		*
Sijun He		Common Stock		0		*
All Officers and Directors As a Group (1 person)		Common Stock		0		*
Commonwealth Investments, LLC		Series A Preferred Stock (3)		1,300		99.0%(3)

*Less than 1%.

(1)

Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days of April 15, 2014 are deemed outstanding for computing the percentage of the person holding such option or warrant but are not deemed outstanding for computing the percentage of any other person.

(2)

Percentage based upon 1,277,039 shares of common stock outstanding as of April 15, 2014.

(3)

Commonwealth holds 1,300 shares of our Series A Preferred Stock, which are convertible into an aggregate of 12,770,339,600 shares of our Common Stock, representing approximately 99.0% of our common equity on an as-converted basis. Jimmy Wang is the Manager of Commonwealth and has sole voting and investment power over the shares owned thereby.  Mr. Wang disclaims beneficial ownership of these shares, except to the extent of his pecuniary interest therein.

Securities Authorized for Issuance Under Equity Compensation Plans

On July 3, 2008, our Board and stockholders adopted the 2008 Plan which reserves a total of 16,000,000 shares of Common Stock for issuance under the 2008 Plan.  If an incentive award granted under the 2008 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to us in connection with an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the 2008 Plan. As of the date hereof, we have not issued any shares under the 2008 Plan and we do not have any outstanding options or other awards under the 2008 Plan.

We have not issued any stock options or maintained any stock option or other incentive plans other than our 2008 Plan (See “Item 5. Market for Common Equity and Related Stockholder Matters – Securities Authorized for Issuance Under Equity Compensation Plans” above.) We have no other plans in place and have never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans.

15

---

The following table sets forth information about the Company’s equity compensation plans as of December 31, 2013:

Plan Category		Number of securities  to be issued upon exercise of outstanding options,  warrants and rights				Weighted- average exercise  price of  outstanding options, warrants and rights				Number of  securities remaining  available for future issuance under  equity compensation  plans
Equity compensation plans approved by security holders			0				-
Equity compensation plans not approved by security holders			0				-				-
Total			0				-

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

On March 8, 2013, we entered into Conversion Agreements with each of our Noteholders, pursuant to which, among other things, an aggregate of $430,538 of principal and accrued and unpaid interest due under the Notes, representing all of our outstanding indebtedness for money borrowed at March 8, 2013, was converted into a total of 57,405,074 shares of our Common Stock, at a conversion rate of $0.0075 per share. An aggregate of $162,168.33 of principal and accrued and unpaid interest due under the Notes was due to Andrew Meade, who, at that time, beneficially owned more than 5% of our Common Stock. As a result the Debt Conversion Transaction, Mr. Meade, and his affiliate, received an aggregate of 6,051,046 shares of our Common Stock.

Since January 1, 2014, we have had no other transactions with related persons, promoters or certain control persons.

Director Independence

We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the Board be “independent” and, as a result, we are not at this time required to (and we do not) have our Board comprised of a majority of “Independent Directors.”

Our Board has considered the independence of its directors in reference to the definition of “independent director” established by the Nasdaq Marketplace Rule 5605(a)(2). In doing so, the Board has reviewed all commercial and other relationships of each director in making its determination as to the independence of its directors. After such review, the Board has determined that neither of our current directors qualifies as independent under the requirements of the Nasdaq listing standards.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees.

The aggregate fees billed to us by our principal accountant for services rendered during the fiscal years ended December 31, 2012 and 2011 are set forth in the table below:

Fee Category		Fiscal year ended December 31, 2013			Fiscal year ended December 31, 2012
Audit fees (1)		$	8,750		$	14,500
Audit-related fees (2)			-			-
Tax fees (3)			-			-
All other fees (4)			-			-
Total fees		$	8,750		$	14,500

(1)

Audit fees consists of fees incurred for professional services rendered for the audit of consolidated financial statements, for reviews of our interim consolidated financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements.

(2)

Audit-related fees consist of fees billed for professional services that are reasonably related to the performance of the audit or review of our consolidated financial statements, but are not reported under “Audit fees.”

(3)

Tax fees consist of fees billed for professional services relating to tax compliance, tax planning, and tax advice.

(4)

All other fees consist of fees billed for all other services.

16

---

Audit Committee’s Pre-Approval Practice.

We do not have an audit committee. Our Board performs the function of an audit committee. Section 10A(i) of the Securities Exchange Act of 1934, as amended, prohibits our auditors from performing audit services for us as well as any services not considered to be audit services unless such services are pre-approved by our audit committee or, in cases where no such committee exists, by our Board (in lieu of an audit committee) or unless the services meet certain de minimis standards.

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Financial Statement Schedules

The consolidated financial statements of Angstron Holdings Corporation are listed on the Index to Financial Statements on this annual report on Form 10-K beginning on page F-1.

17

---

Exhibits

The following Exhibits are being filed with this Annual Report on Form 10-K:

Exhibit No.		SEC Report Reference Number		Description
3.1		3.1		Amended and Restated Articles of Incorporation of Registrant as filed with the Nevada Secretary of State on July 3, 2008 (1)
3.2		3.2		By-Laws of Registrant (2)
3.3		3.1		Certificate of Amendment to Amended and Restated Articles of Incorporation as filed with the Nevada Secretary of State on March 22, 2013 (8)
3.4		3.1		Certificate of Amendment to Amended and Restated Articles of Incorporation as filed with the Nevada Secretary of State on June 21, 2013 (9)
3.5		3.1		Certificate of Amendment to Amended and Restated Articles of Incorporation as filed with the Nevada Secretary of State on July 23, 2013 (10)
3.6		3.1		Certificate of Amendment to Amended and Restated Articles of Incorporation as filed with the Nevada Secretary of State on August 12, 2013 (11)
4.1		3.3		Form of 2010 10% Convertible Promissory Note (3)
4.2		3.4		Form of 2011 10% Convertible Promissory Note (3)
4.3		3.5		Form of 2012 10% Convertible Promissory Note (6)
4.4		4.1		Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock, filed with the Secretary of State of the State of Nevada on March 8, 2013 (7)
10.1		10.4		2008 Equity Incentive Plan (4)
10.2		10.7		Form of Subscription Agreement between the Registrant and each subscriber in the 2011 10% convertible notes private placement offering (3)
10.3		10.6		Form of Subscription Agreement between the Registrant and each subscriber in the 2011 10% convertible notes private placement offering (3)
10.4		10.8		Form of Subscription Agreement between the Registrant and each subscriber in the 2012 10% convertible notes private placement offering (6)
10.5		10.1		Form of Promissory Note Conversion Agreement between the Company and each of the holders of the Company’s outstanding promissory notes (7)
10.6		10.2		Series A Preferred Stock Purchase Agreement between the Company and Commonwealth Investments, LLC, dated March 8, 2013 (7)
10.7		10.1		Splitoff Agreement, dated July 12, 2013 (12)
14.1		14		Code of Ethics (5)
21.1		*		List of Subsidiaries
31.1		*		Certification of Principal Executive and Financial Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		*		Certification of Principal Executive and Financial Officer, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
101.INS		*		XBRL Instance Document***
101.SCH		*		XBRL Taxonomy Extension Schema Document***
101.CAL		*		XBRL Taxonomy Extension Calculation Linkbase Document***
101.DEF		*		XBRL Taxonomy Extension Definition Linkbase Document***
101.LAB		*		XBRL Taxonomy Extension Label Linkbase Document***
101.PRE		*		XBRL Taxonomy Extension Presentation Linkbase Document***

(1)

Filed with the SEC on July 10, 2008 as an exhibit, numbered as indicated above, to the Registrant’s current report on Form 8-K, which exhibit is incorporated herein by reference.

(2)

Filed with the SEC on January 23, 2007 as an exhibit, numbered as indicated above, to the Registrant’s registration statement (SEC File No. 333-140148) on Form SB-2, which exhibit is incorporated herein by reference.

(3)

Filed with the SEC on April 12, 2011 as an exhibit, numbered as indicated above, to the Registrant’s annual report on Form 10-K, which exhibit is incorporated herein by reference.

(4)

Filed with the SEC on April 14, 2009 as an exhibit, numbered as indicated above, to the Registrant’s annual report on Form 10-K, which exhibit is incorporated herein by reference.

18

---

(5)

Filed with the SEC on March 31, 2008 as an exhibit, numbered as indicated above, to the Registrant’s annual report on Form 10-KSB, which exhibit is incorporated herein by reference.

(6)

Filed with the SEC on April 16, 2012 as an exhibit, numbered as indicated above, to the Registrant’s annual report on Form 10-K, which exhibit is incorporated herein by reference.

(7)

Filed with the SEC on March 14, 2013 as an exhibit, numbered as indicated above, to the Registrant’s current report on Form 8-K, which exhibit is incorporated herein by reference.

(8)

Filed with the SEC on March 25, 2013 as an exhibit, numbered as indicated above, to the Registrant’s current report on Form 8-K, which exhibit is incorporated herein by reference.

(9)

Filed with the SEC on June 27, 2013 as an exhibit, numbered as indicated above, to the Registrant’s current report on Form 8-K, which exhibit is incorporated herein by reference.

(10)

Filed with the SEC on July 29, 2013 as an exhibit, numbered as indicated above, to the Registrant’s current report on Form 8-K, which exhibit is incorporated herein by reference.

(11)

Filed with the SEC on August 13, 2013 as an exhibit, numbered as indicated above, to the Registrant’s current report on Form 8-K, which exhibit is incorporated herein by reference.

(12)

Filed with the SEC on July 18, 2013 as an exhibit, numbered as indicated above, to the Registrant’s current report on Form 8-K, which exhibit is incorporated herein by reference.

* Filed herewith.

** This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

 

*** Furnished herewith.  Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections.

In reviewing the agreements included as exhibits and incorporated by reference to this Annual Report, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:

·

should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

·

have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

·

may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

·

were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Annual Report and our other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.

19

---

SIGNATURES

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

	ANGSTRON HOLDINGS CORPORATION
Dated:  April 15, 2014	By:	/s/ Jianguo Xu
		Jianguo Xu
		President, Chief Executive Officer and Treasurer

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

SIGNATURE		TITLE		DATE
/s/ Jianguo Xu		President, Chief Executive Officer and Treasurer		April 15, 2014
Jianguo Xu

20

---

PART IV – FINANCIAL INFORMATION

 

ITEM 15. FINANCIAL STATEMENTS

 

	Page
Report of Independent Registered Public Accounting Firm	F-2
Balance Sheets as of December 31, 2013 and 2012	F-3
Statements of Operations for the years ended December 31, 2013 and 2012 and for the period from June 28, 2006 (inception) through December 31, 2013	F-4
Statements of Changes in Stockholders’ Deficit for the period from June 28, 2006 (inception) through December 31, 2013	F-5
Statements of Cash Flows for the years ended December 31, 2013 and 2012 and for the period from June 28, 2006 (inception) through December 31, 2013	F-6
Notes to Financial Statements	F-7

F-1

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders’ of

Angstron Holdings Corporation:

We  have  audited  the  accompanying   balance  sheets  of  Angstron  Holdings  Corporation  (a  development   stage  company) (the “Company”)  as of December 31, 2013, and the related statement of operations, changes in stockholders’  deficit, and cash flows for each  of  the  year  then  ended  and  the  period  from  January 1, 2013  through  to  December  31,  2013.  These financial statements are  the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting  Oversight  Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that we considered appropriate under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Angstron Holdings Corporation as of December 31, 2013, and the results of their operations and their cash flows for each of the year then ended and the period from January 1, 2013 through to December 31, 2013, in conformity with accounting  principles generally  accepted  in the United States of America.

The  accompanying  financial  statements  have  been  prepared  assuming  that  the  Company  will  continue  as  a  going concern. As discussed in Note 3 to the financial statements, the Company has experienced recurring operating losses and negative cash flow since inception and has financed its working capital requirements through issuance of notes payable, common stock, and advances from related parties. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management's plans concerning these matters are also described in Note 3 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Anton & Chia, LLP

Newport Beach, California

April 15, 2014

F-2

---

REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM

To the Board of Directors of

HK International Group, Inc

(A Development Stage Company) Pasadena, California

We have audited the accompanying consolidated balance sheets of HK International Group, Inc (now Angstron Holdings Inc.), and its subsidiary (formerly known as Loreto Resources Corporation)  (a development  stage company) (collectively,  “the Company”), as of December  31, 2012 and the related consolidated  statements  of operations,  stockholders’  deficit and cash flows for the year ended. These consolidated  financial  statements  are the responsibility  of the Company’s  management.  Our responsibility  is to express  an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards  require  that  we  plan  and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the  consolidated financial statements are free of material misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing  audit  procedures  that  are  appropriate  in  the  circumstances,  but  not  for  the  purpose  of  expressing  an  opinion  on  the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated  financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2012 and the consolidated results of their operations and their cash flows for the year ended in conformity with accounting principles generally accepted in the United States of America.

The  accompanying  consolidated  financial  statements  have  been  prepared  assuming  that  the  Company  will  continue  as  a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations, which  raises  substantial  doubt  about  its ability  to continue  as a going  concern.  Management’s  plans  regarding  those  matters  are described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ MaloneBailey, LLP

MALONEBAILEY, LLP

www.malone-bailey.com

Houston, Texas

April 5, 2013

F-3

---

ANGSTRON HOLDINGS CORPORATION

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

		As of December 31,			As of December 31,
		2013			2012
ASSETS
Current Assets
Cash		$	1,789,961		$	4,965
Due from AMI			65,935
Due from related party			-			6,329
Total Current Assets			1,853,032			11,294
Non-Current Assets
Loan to ACI			1,932,115
Deposits			0			3,000
			1,932,115			3,000
TOTAL ASSETS		$	3,788,011		$	14,294
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Bank Overdraft		$	2,864		$
Accounts payable			2,555			120,791
Convertible Note and Interest Payable						423,482
Payable to affiliate – ACI			81,162
Accrued Expenses			23,664
Loan from LYG			4,000,000
TOTAL LIABILITIES			4,110,245			544,273
Shareholders’ Deficit
Preferred Stock, $.001 par value 1,000,000,000 shares authorized; 1,300 designated Series A Convertible shares; 1,300 designated Series A Convertible shares issued and outstanding as of December 31, 2013 and December 31, 2012, respectively			1
Additional paid in capital – preferred stock			129,999
Common Stock; par value $.001; 2,000,000,000 shares authorized, 1,277,039 and 702,983 shares issued and outstanding as of December 31, 2013 and December 31, 2012, respectively			1,277			703
Additional paid in capital			4,087,401			3,657,437
Deficit accumulated during development stage			(4,540,912)			(4,188,119)
Total Stockholders’ Deficit			(322,234)			(529,979)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		$	3,788,011		$	14,294

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

F-4

---

ANGSTRON HOLDINGS CORPORATION

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

								June 28, 2006
		Year End			Year End			(Inception)
		Ended			Ended			through
		December 31,			December 31,			December 31,
		2013			2012			2013
Operating expenses
General and administrative expenses		$	327,688		$	145,946		$	4,548,192
Total Operating Expenses			(327,688)			(145,946)			(4,548,192)
Other income (expense):
Interest income			-			5			10,058
Interest expense			(25,105)			(33,506)			(88,304)
Gain on forgiveness of debt			-			-			85,526
Total other income (expense)			(25,105)			(33,501)			7,280
Net loss		$	(352,793)		$	(179,447		$	(4,540,912)
Loss per share - basic and diluted		$	(0.28)		$	(0.26)
Weighted average number of common shares outstanding - basic and diluted		$	1,277,039		$	702,983

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

F-5

---

ANGSTRON HOLDINGS CORPORATION

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF STOCKHOLDERS’ DEFICIT

 

	Prefer Stock	Prefer Stock Amount	Common Stock	Common Stock Amount		Additional Paid-in Capital		Deficit Accumulated During the Development Stage		Total
		($)		($)		($)		($)		($)
Balance, June 28 2006
Stock Issued for cash on October 3, 2006	-	-	400,000	400		9,600		-		10,000
Net Loss, 2006	-	-	-	-		-		(877)		(877)
Balance, December 31, 2006	-	-	400,000	400		9,600		(877)		9,123
Stock Issued for cash on Febuary 23, 2007	-	-	360,000	360		17,640		-		18,000
Stock Issued for service on July 2, 2007	-	-	240,000	240		4,260		-		4,500
Net Loss, 2007	-	-	-	-		-		(43,518)		(43,518)
Balance, December 31, 2007	-	-	1,000,000	1,000		31,500		(44,395)		(11,895)
Stock Issued for cash	-	-	20,000	20		49,980		-		50,000
Debt forgiveness from related party	-	-	-	-		13,200		-		13,200
Restricted stock cancellation on July 18, 2008	-	-	(400,000)	(400)		400		-		-
Stock based compensation on July 21, 2008	-	-	-	-		181,612		-		181,612
Stock issued for cash, net offering cost	-	-	81,000	81		1,980,232		-		1,980,313
Net Loss, 2008	-	-	-	-		-		(699,020)		(699,020)
Balance, December 31, 2008	-	-	701,000	701		2,256,924		(743,415)		1,514,210
Stock based compensation	-	-	-	-		549,720		-		549,720
Net Loss, 2009	-	-	-	-		-		(2,045,633)		(2,045,633)
Balance, December 31, 2009	-	-	701,000	701		2,806,644		(2,789,048)		18,297
Stock based compensation	-	-	-	-		640,826		-		640,826
Related party forgiveness of accounts payable	-	-	-	-		160,389		-		160,389
Stock issue for settlement of accounts payable	-	-	1,983	2		49,578		-		49,580
Net Loss, 2010	-	-	-	-		-		(1,007,873)		(1,007,873)
Balance, December 31, 2010	-	-	702,983	703		3,657,437		(3,796,921)		(138,781)
Net Loss, 2011	-	-	-	-		-		(211,751)		(211,751)
Balance, December 31, 2011	-	-	702,983	703		3,657,437		(4,008,672)		(350,532)
Net Loss, 2012	-	-	-	-		-		(179,447)		(179,447)
Balance, December 31, 2012	-	-	702,983	703		3,657,437		(4,188,119)		(529,979)
Debt conversion to Stock on March 8, 2013	-	-	574,056	574		429,964		-		430,538
Prefer stock was issued in March 8, 2013	1,300	1	-	-		129,999		-		130,000
Net Loss, 2013	-	-	-	-		-		(352,793)		(352,793)
Balance, December 31, 2013	-	-	1,277,039	$	1,277	$	4,217,400	$	(4,540,912)	$	(322,234)

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

F-6

---

ANGSTRON HOLDINGS CORPORATION

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

								June 28, 2006
		Year			Year			(Inception)
		Ended			Ended			through
		December 31,			December 31,			December 31,
		2013			2012			2013
Operating Activities
Net loss from the period		$	(352,793)		$	(179,447		$	(4,540,912)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock option expense			-			-			1,372,158
Common stock issued for services			-			-			4,500
Gain on forgiveness of debt									(85,526)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets			-			41,920			131,617
Accounts payable and accrued liabilities			(94,572)			(11,414)			85,381
Accounts payable-related party			81,162			-			241,551
Interest accrued on notes payable			7,056			32,963			65,529
Interest accrued on notes payable-related party			-			-			268
Due from related party			(59,606)			4,383			(65,935)
Deposits			3,000			6,228			9,228
Interest accrued on note receivable			(2,115)			-			(2,115)
Net cash used in operating activities			(417,868)			(105,367)			(2,784,256	)
Financing Activities
Loan from stockholder									-
Issuance of convertible stock, net of offering costs			130,000			-			130,000
Bank overdraft			2,864			-			2,864
Loan from LYG			4,000,000			-			(4,000,000	)
Loan to ACI			(1,930,000)			-			(1,930,000)
Issuance of common stock, net of offering costs									2,058,313
Repayment of insurance financing			-			(13,804)			(112,630	)
Proceeds from convertible notes payable			-			120,000			395,927
Proceeds from notes payable-related party						-			16,543
Net cash provided by financing activities			2,202,864			106,196			4,574,217
Net Increase in Cash			1,784,996			829			1,789,961
Cash at Beginning of Period			4,965			4,136			-
Cash at End of Period		$	1,789,961		$	4,965		$	1,789,961
Supplemental Cash Flow Information
Cash paid for interest		$	-		$	543		$	2,605
Cash paid for income taxes		$	-		$	-		$	-
Non-Cash Financing Activities
Debt forgiveness		$	-		$	-		$	173,589
Insurance financing		$	-		$	28,215		$	123,467
Stock issued for settlement of accounts payable		$	-		$	-		$	49,580

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

F-7

---

ANGSTRON HOLDINGS CORPORATION

Notes to Financial Statements

For the Year ended December 31, 2013

 

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Angstron Holdings Corporation (the “Company”) was incorporated on June 28, 2006 in the state of Nevada under the name Loreto Corporation. The Company pursued its original business plan to create, market, and sell greeting cards to wholesalers and retail customers in shopping malls in its own planned retail shops. However, in 2008, the Company decided to redirect its business focus and strategy toward identifying and pursuing business opportunities in the mining sector in South America, more specifically, in Peru. The Company later changed its name to Loreto Resources Corporation, subsequently to HK International Group Inc. and then to Angstron Holdings Corporation. On July 11, 2013, the Company split off its wholly owned subsidiary Loreto Resources Peru S.R.L. Compania Minera The Company is in the development stage in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic No. 915, Accounting and Reporting by Development Stage Enterprises.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements as of December 31, 2013 and 2012 and for the years then ended have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Use of Estimates and Assumptions

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash Equivalents

The Company considers all highly liquid debt instruments with original maturities of three months or less when acquired to be cash equivalents. There are no cash equivalents as of December 31, 2013.

Basic Earnings per Share

Basic and diluted earnings or loss per share (“EPS”) amounts in the financial statements are computed in accordance with ASC Topic 260 – 10 “Earnings per Share,” which establishes the requirements for presenting EPS. Basic EPS is based on the weighted average number of common shares outstanding. Diluted EPS is based on the weighted average number of common shares outstanding and dilutive common stock equivalents. We didn’t calculate diluted EPS since there are anti-dilute factor such as warrants exist. Basic EPS is computed by dividing net income/loss available to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period.

Fair Value of Financial Instruments

The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of December 31, 2013 and 2012, the carrying value of the assets and liabilities approximated fair value due to the short-term nature and maturity of these instruments.

Recent Accounting Pronouncements

The Company does not expect that the adoption of recently issued accounting pronouncements will have a material impact on its financial position, results of operations, or cash flows.

F-8

---

Income Taxes

We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their perspective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded, when necessary, to reduce deferred tax assets to the amount expected to be realized.

As a result of the implementation of certain provisions of ASC 740, Income Taxes (“ASC 740”), which clarifies the accounting and disclosure for uncertainty in tax position, as defined, ASC 740 seeks to reduce the diversity in practice associated with certain aspect of the recognition and measurement related to accounting for income taxes. We adopted the provisions of ASC 740 as of June 28, 2006, and have analyzed filing positions in each of the federal and state jurisdictions where we are required to file income tax returns, as well as open tax years in these jurisdictions. We have identified the U.S. federal and Nevada as our “major” tax jurisdictions and generally, we remain subject to Internal Revenue Service examination of our 2007 through 2013 U.S. federal income tax returns. However, we have certain tax attribute carryforwards which will remain subject to review and adjustment by the relevant tax authorities until the statute of limitations closes with respect to the year in which such attributes are utilized.

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. We have no interest or penalties as of December 31, 2013.

NOTE 3. GOING CONCERN

During the year ended December 31, 2013, the Company has not generated any revenue and therefore has been unable to generate cash flows sufficient to support its operations and has been dependent on debt and equity financing. In addition to negative cash flow from operations, the Company has experienced recurring net losses, and has an accumulated deficit of $4,540,912 as of December 31, 3013.

These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Going forward, the Company’s plan is to acquire other assets or business operations that will maximize shareholder value. During the last quarter of 2013, the Company has pursued a potential merger with a company manufacture graphene products. This potential merger is currently under evaluation and will be completed in 2014 if possible.

NOTE 4. CONVERTIBLE PROMISSORY NOTES

On November 2, 2010 and on November 17, 2010, the Company completed closings of a private placement offering of its convertible notes (the “2010 Notes”), totaling approximately $150,000 in principal, to eight stockholders and one unaffiliated third party. The 2010 Notes bore interest of 10%, and would have matured on December 31, 2011. Both the principal and accrued interest are deemed mandatorily converted (see below) on March 15, 2011 at the price paid by investors in that offering, expressed as a percentage of the face amount of debt securities.

On March 15, 2011, the Company completed closings of a private placement offering of its convertible promissory notes (the “March 2011 Notes”), totaling approximately $90,000 in principal, to eight stockholders and one unaffiliated third party. As of March 1, 2011, the Company deemed the notes from the 2010 offering, along with accrued but unpaid interest, to have been converted, on a mandatory basis, into new notes on the same terms as the subsequent notes. The subsequent notes bear interest of 10%, matured on March 31, 2012, and both the principal and accrued interest will be mandatorily converted at a price equal to either (a) the price per share of stock (or unit of stock and other securities) paid by investors in the next securities offering or other financing by the Company, if the financing is an issuance of stock (or unit of stock and other securities), or (b) the price paid by investors in the next securities offering or other financing by the Company, expressed as a percentage of the face amount of debt securities, if the financing is an issuance of debt securities (or units of debt securities and other securities) (including debt securities convertible into stock), upon the closing of, and into the securities issued in, the next financing in which the Company sells at least $1,000,000 of its securities.

On October 10, 2011, the Company closed a private placement offering (the “October 2011 Offering”) of its 10% convertible promissory notes (the “October 2011 Notes”). In the October 2011 Offering, the Company sold $52,500 in principal amount of the October 2011 Notes to an existing investor.

F-9

---

The October 2011 Notes bear interest of 10%, mature on April 9, 2013, and both the principal and accrued interest will be mandatorily converted at a price equal to either (a) the price per share of stock (or unit of stock and other securities) paid by investors in the next securities offering or other financing, if the financing is an issuance of stock (or unit of stock and other securities), or (b) the price paid by investors in the next securities offering or other financing by the Company, expressed as a percentage of the face amount of debt securities, if the financing is an issuance of debt securities (or units of debt securities and other securities) (including debt securities convertible into stock), upon the closing of, and into the securities issued in, the next financing in which the Company sells at least $1,000,000 of its securities.

On March 31, 2012, the 2010 Notes and the March 2011 Notes were amended, and the maturity dates were extended to September 30, 2013. In addition, the mandatory conversion terms for the aforementioned notes were amended to require conversion only if the minimum $1,000,000 financing closes concurrent with the closing of a related merger or other acquisition transaction. As of the report date, no financing activities occurred so the Notes were not convert.

On February 1, 2012, the Company closed a private placement offering (the “February 2012 Offering”) of its 10% convertible promissory notes (the “February 2012 Notes”). In the February 2012 Offering, the Company sold $50,000 in principal amount of the February 2012 Notes to one existing investor. The February 2012 Notes mature on July 31, 2013 and will be automatically converted at the initial closing of the Company’s next private placement in which it sells at least $1,000,000 of its securities, so long as such offering closes concurrent with the closing of a related merger or other acquisition transaction. As of the report date, no financing activities occurred so the notes were not convert.

On July 25, 2012, the Company closed a private placement offering (the “July 2012 Offering”) of its 10% convertible promissory notes (the “July 2012 Notes”). In the July 2012 Offering, the Company sold $70,000 in principal amount of the July 2012 Notes to one existing investor. The July 2012 Notes mature on January 24, 2014 and will be automatically converted at the initial closing of the Company’s next private placement in which it sells at least $1,000,000 of its securities, so long as such offering closes concurrent with the closing of a related merger or other acquisition transaction.

On March 8, 2013, the Company entered into Promissory Note Conversion Agreements (the “Conversion Agreements”) with each of the holders (the “Noteholders”) of the Company’s outstanding convertible promissory notes (the “Notes”), to convert an aggregate of $430,538 of principal and accrued but unpaid interest due under the Notes, representing all of the Company’s outstanding indebtedness for money borrowed at March 8, 2013, was converted into a total of 57,405,074 shares (pre-reverse stock split) (the “Note Conversion Shares”) of the Corporation’s common stock, $0.001 par value per share (“Common Stock”), at a conversion rate of $0.0075 per share (the “Debt Conversion Transaction”).

The Company evaluated the conversion options under FASB ASC Topic 815 – 40 for derivative treatment and determined that the conversion options are required to be accounted for as a derivative upon the aforementioned closing of the next private placement offering. As the closing had not occurred prior to the aforementioned promissory note conversions on March 8, 2013, and as per FASB ASC Topic 470 – 20, the derivative instrument nor the beneficial conversion feature need not be accounted for through the date of the promissory note conversions.

As of December 31, 2013 and as of December 31, 2012, the Company owed principal and accrued interest of $0 and $423,482, respectively.

NOTE 5. STOCK HOLDER’S EQUITY

On October 3, 2006, the Company issued 40,000,000 common shares to a director for $10,000.

 

On February 23, 2007, the Company issued 36,000,000 common shares to 36 non-affiliated stockholders for a total of $18,000.

 

On July 2, 2007, the Company issued 24,000,000 common shares to Magdalena Cruz, then President and CEO, in exchange for her services valued at $4,500.

 

On February 7, 2008, the Company issued 2,000,000 common shares to Milestone Enhanced Fund Ltd. for $50,000.

 

On July 18, 2008, 40,000,000 common shares held by Magdalena Cruz, the director in 2008, were cancelled.

 

F-10

---

On July 18, 2008, January 15, 2009, and January 15, 2010, the Company declared two for one (2-for-1) forward stock splits on each common share. All share and per share amounts have been adjusted retroactively from inception to reflect these splits.

 

In September 2008, the Company issued 81,000 shares through a private placement to various individuals and entities at the price of $0.25 per share. Total proceeds were $1,983 net of offering costs of $44,687.

 

Each forward split entitled each Loreto shareholder of record on the specified dates to receive one additional common share for each one share owned. The stock split did not affect the amount of common stock authorized for issuance.

 

On November 11, 2010, the Company reached a settlement agreement with its legal counsel, whereby the legal counsel agreed to forego payment of $49,580 in legal fees due for the 2009 fiscal year upon delivery of 198,322 restricted shares of the Company’s common stock. The restricted shares were valued at $0.25 per share. 

Debt Conversion Transaction

On March 8, 2013, the Company entered into Promissory Note Conversion Agreements (the “Conversion Agreements”) with each of the holders (the “Note holders”) of the Company’s outstanding convertible promissory notes (the “Notes”), to convert an aggregate of$430,538 of principal and accrued but unpaid interest due under the Notes, representing all of the Company’s outstanding indebtedness for money borrowed at March 8, 2013, was converted into a total of 57,405,074 shares (pre-reverse stock split) (the“Note Conversion Shares”) of the Corporation’s common stock, $0.001 par value per share (“Common Stock”), at a conversion rate of $0.0075 per share (the “Debt Conversion Transaction”). (See Note 4)

Series A Preferred Stock Issuance

On March 8, 2013, the Company entered into a Series A Preferred Stock Purchase Agreement (the “Purchase Agreement”) with a California limited liability company (the “Purchaser”), pursuant to which, among other items, on March 11, 2013 (the “Closing Date”), the Company sold to the Purchaser, and the Purchaser purchased from the Company, 1,300 shares of the Company’s Series A Preferred Stock, at the price of $100 per share, for an aggregate purchase price of $130,000, with offering costs of $37,500. This Series A Preferred Stock is a convertible stock and can be convert into an aggregate of 127,703,396 shares (post-reverse stock split) of the Company’s Common Stock (the “Series A Transaction”).

Effective April 16, 2013, the Company’s board of directors approved a reverse split of the Company’s common stock on the basis of one share for each 100 shares issued and outstanding (1:100 reverse stock split). The total number of authorized shares was also changed. The Company increased its number of authorized shares from 310,000,000 shares, consisting of 300,000,000 shares of common stock and 10,000,000 shares of preferred stock, 1,300 shares of which have been designated as Series A Preferred Stock, to 3,000,000,000 shares, consisting of 2,000,000,000 shares of common stock and 1,000,000,000 shares of preferred stock, 1,300 shares of which have previously been designated as Series A Preferred Stock.

All common shares presented in these financial statements and accompany notes have been retroactively adjusted to reflect the reverse stock split effective on April 16, 2013.

NOTE 6. RELATED PARTY

For the last three quarters, the affiliate company, ACI, Inc. has paid the company’s operating expense includes legal fee, filing fee and auditing fee. As of December 31, 2013, the balance of accounts payable to ACI total $81,162.

NOTE 7. LOAN FROM LYG

On September 30, 2013, Lianyungang Hybrid Kinetic New Energy Co., Ltd made a loan in the amount of $4,000,000 to the Company. This is an unsecure, no interest bearing loan due upon request.

NOTE 8. LOAN TO ACI

 

On December 11, 2013, the company made a loan in the amount of $1,930,000 to ACI, Inc. an affiliate company. This is an unsecured, with interest rate at 2% note due upon request.

F-11

---

NOTE 9. TAXES

Net deferred tax assets consist of the following components as of December 31, 2013 and 2012:

		2013			2012
Deferred tax assets:
NOL carryover		$	1,816,365		$	1,675,248
Valuation allowance			(1,816,365)			(1,675,248)
Net deferred tax asset		$	-		$	-

The income tax provision is summarized as follows:

		2013			2012
Income tax benefit at statutory rate		$	(141,117)		$	(59,615)
Valuation allowance			141,117			59,615
Net deferred tax asset		$	-		$	-

At December 31, 2013, the Company had net operating loss carry forwards of approximately $4.5 million that may be offset against future taxable income through 2030. No tax benefit has been reported in the December 31, 2013 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

F-12