CREDIT ONE FINANCIAL INC - FORM 10-K/A

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XML - IDEA: XBRL DOCUMENT - CREDIT ONE FINANCIAL INC	R9999.htm
EX-32 - EXHIBIT 32 - CREDIT ONE FINANCIAL INC	exhibit32.htm
EX-31 - EXHIBIT 31 - CREDIT ONE FINANCIAL INC	exhibit31.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A2

(Mark One)


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

For the fiscal year ended December 31, 2015


o	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: 000-50320

CREDIT ONE FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Florida

59-3641205

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

80 Wall Street, Suite 818

New York, New York 10005

(Address of principal executive offices, including zip code)

(212) 809-1200

(Registrant’s telephone number, including area code)

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

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

Common Stock, $.001 par value

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 Section 15(d) of the 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 Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES 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 (§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 x NO ¨

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

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


Large accelerated filer o		Accelerated filer x

Non-accelerated filer o		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ¨ NO x

State the aggregate market value of the voting and non-voting equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: Approximately $224 million.

(APPLICABLE ONLY TO CORPORATE REGISTRANT)

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 326,155,623 shares of the registrant’s common stock were outstanding as of August 12, 2016.

DOCUMENTS INCORPORATED BY REFERENCE:

A description of "Documents Incorporated by Reference" is contained in Part IV, Item 15.

EXPLANATORY NOTE

This Amendment No. 2 amends Credit One Financial, Inc.’s (the “Company”) Annual Report on Form 10-K for the year ended December 31, 2015, which was originally filed with the Securities and Exchange Commission (“SEC”) on March 30, 2016 and amended on April 18, 2016 (Amendment No. 1 Filing). The Company is filing this Amendment No. 2 for the sole purpose of replacing the audit report of Moss, Krusick & Associates, LLC by an audit report from an independent audit firm that is currently registered with PCAOB for the Company’s financial statements at December 31, 2014 and for each of the two years ended December 31, 2014. This Amendment No. 2 does not amend any other information set forth in the Amendment No. 1 Filing.

CREDIT ONE FINANCIAL, INC.

TABLE OF CONTENTS


ITEM		Page
PART I

1.	Business	4

1A.	Risk Factors	5

1B.	Unresolved Staff Comments	9

2.	Properties	9

3.	Legal Proceedings	9

4.	Mine Safety Disclosure	9
PART II

5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	10

6.	Selected Financial Data	11

7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

7A.	Quantitative and Qualitative Disclosures About Market Risk	17

8.	Financial Statements and Supplementary Data	17

9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	32

9A	Controls and Procedures	32

9B.	Other Information	34

PART III

10.	Directors, Executive Officers and Corporate Governance	34

11.	Executive Compensation	36

12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	38

13.	Certain Relationships and Related Transactions, and Director Independence	39

14.	Principal Accounting Fees and Services	40

PART IV

15.	Exhibits, Financial Statement Schedules	41

PART I

Item 1. BUSINESS

Background

Credit One Financial, Inc. (the "Company") was incorporated in the State of Florida on September 24, 1999. Prior to July 2007, the Company was engaged in market research regarding the cost and availability of non-performing credit card debt portfolio and in contemplating the acquisition of non-performing accounts receivable. In spite of it, no meaningful operations were carried out.

In July 2007, the Company’s four principal shareholders sold an aggregate of 6,962,438 shares, which represented 89.48% of the Company’s capital shares, to ten persons for a total of $625,000 in cash. Following the change of control, the Company made an effort to provide funding, primarily in the form of advance, to small- and medium-sized companies with good and feasible business plans, but lacking capital to implement their business plans. In January 2008, the Company ceased this business, and a joint venture, Moderation Limited (“Moderation”) was established in Hong Kong. The Company owned 51.6% of Moderation’s equity interest.

In January 2009, Liaoning Sinorth Resources Co., Ltd. was established in Liaoning, China, as Moderation’s wholly owned subsidiary. Its main business was production, processing and sale of mineral products, primarily graphite, in China. Despite the efforts the Company had made, the sales did not grow as much as the Company had expected. The Company found it more and more difficult to carry out its graphite business as planned. Accordingly, the Company started looking for new business opportunities.

On November 18, 2010, the Company sold its 51.6% equity interest in Moderation for $16 million Hong Kong dollars, approximately $2.06 million in cash. The transaction was closed on November 30, 2010, and the Company ceased to be a processor and distributor of graphite products.

On August 26, 2010, E&M International Limited (“E&M”), a newly established wholly-owned subsidiary of the Company, entered into an advertising agreement with Macau Lotus Satellite TV Media Limited (“Lotus TV”), pursuant to which Lotus TV authorizes E&M as its exclusive agent to operate all of its advertising businesses.

The term of this agreement is ten years from September 1, 2010 to August 31, 2020. In consideration for Lotus TV’s grant of the exclusive advertising rights, E&M agrees to pay Lotus TV a fixed fee on an annual basis regardless of the total amount of revenues generated from the advertising business to be received by E&M. Under the agreement, E&M paid Lotus TV an annual fee of approximately $129,000 (HK$1,000,000) for the first year of the agreement. Such fee will 10% every year for the following five years.

E&M also agrees to extend to Lotus TV, interest free, a credit facility consisting of a series of loans totaling a minimum of $10 million (amended to $15 million on June 13, 2014) over a period of ten years. The terms of each loan will be negotiated by the parties. As of December 31, 2015, the Company has loaned Lotus TV approximately $10.97 million under this agreement, and as of December 31, 2015, Lotus TV has repaid $2.06 million (HK$15,500,600) due under the notes.

The funds the Company loaned to Lotus TV were from the private placements conducted in reliance upon exemptions from registration provided by Regulation S and/or Section 4(a)(2) promulgated under the Securities Act of 1933, as amended. All investors were not a “U.S. Person” as that term is defined in Regulation S.

On November 25, 2014, CEM amended its 2010 Agreement with Lotus TV whereby Lotus TV agreed to accelerate its repayment of the loan balance in annual instalments of $2,000,000 (amended to annual minimum instalments of $1,000,000 on December 28, 2015) each starting from 2015 until the entire remaining loan balance shall have been paid in full, and CEM agreed to forego its exclusive advertising rights granted by Lotus TV, but remain as Lotus TV’s preferred advertising agent.

On September 16, 2010, the name of E&M was changed to CEM International Ltd.

The Company has not been involved in any bankruptcy, receivership or similar proceeding.

Description of Business

The Company, through its wholly owned subsidiary CEM International Ltd, operates as an advertising agent to place and handle advertising for its clients. On August 26, 2010, CEM entered into an exclusive agreement with Lotus TV to provide advertising services for a ten-year period commencing on September 1, 2010. Because the Company’s clients have created and produced their own advertising clips and trailers, or programs, the Company currently acts only as an advertising placement agent for Lotus TV. There is no advertising creating and planning activities involved at this time.

As Lotus TV’s preferred advertising agent, the Company provides advertising agency services to its clients by providing the advertising time slots the Company obtains from Lotus TV. Advertisers can purchase advertising time slots of Lotus TV directly from the Company.

The Company generates revenues primarily from advertising sales paid by clients for the planning and placement of advertisements on Lotus TV.

Sales and Marketing

Currently, all our clients are introduced or brought in by Lotus TV.

Government Regulation

As a U.S. based company doing business in Macau, the Company seeks to comply with all Macau laws, rules and regulations and pronouncements, and endeavor to obtain all necessary approvals from applicable Chinese regulatory agencies. The Company believes it is in compliance in all material respects with existing applicable statutes and government regulations affecting its business and operations.

Seasonality

In general, there is no seasonal nature in our business.

Patents, trademarks, franchises, concessions, royalty agreements or labor contracts

The Company does not own any copyrights, franchises, concessions, royalty agreements, or labor contracts.

The Company has applied for certain patent and trademark. The legal costs associated with serving and protecting patent and trademark are being capitalized and amortized over its estimated useful life.

Employees

As of December 31, 2015, the Company had two employees. As its business activities increase in size, the Company may need to hire additional employees. None of the Company’s employees are covered by collective bargaining agreements. We believe our relationships with employees to be satisfactory.

Item 1A. RISK FACTORS

An investment in us involves a high degree of risk. Investors should carefully consider the risks below before making an investment decision. Our business, financial condition or results of operations could be materially adversely affected by any of these risks. In such case, the trading price of our common stock could decline and investors could lose all or part of their investment. As of the date of this report, our management is aware of the following material risks.

Risks Related to the Company’s Business

We have incurred net losses in the past and may incur losses in the future.

We have incurred operating losses since our inception. As a result, at December 31, 2015, we had an accumulated deficit of $3,302,453. Our revenues from continuing operations for the years ended December 31, 2015, 2014, and 2013 were $232,186, $193,431 and $719,330, respectively. There is no assurance that we can achieve profitability.

We have a limited operating history, which may make it difficult for you to evaluate our business and prospects.

We have a limited operating history, which may not provide a meaningful basis for you to evaluate our business, financial performance and prospects. As a young company, we are subject to all of the risks associated with a new business enterprise. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by new business endeavors. We do not have a significant operating history, which would provide you with meaningful information about our future operations.

Our business is dependent on our relationship with Lotus TV, and the loss of this relationship could materially reduce our revenues, liquidity and cash flows.

We entered into an agreement with Lotus TV on August 26, 2010 to provide advertising services for a ten-year period commencing on September 1, 2010. Currently our business is dependent on our relationship with Lotus TV. The loss of this relationship, or Lotus TV’s inability to continue its business, will have a material adverse impact on our business, operating results and financial conditions.

We are dependent on limited number of clients to generate revenues. The loss of our clients’ business could result in a total lack of revenues unless we are able to continually attract additional clients.

Currently, the number of our clients is limited. If there were a material business disruption in any of those clients, we would likely lose a substantial amount of revenues. We intend to seek new and additional clients. With minimal clientele and no long-term arrangements or agreements with those clients, our future operations could be seriously affected especially if we fail to continue to secure additional and new clients. This could result in a total lack of revenues and would negatively impact our cash flows.

We generally do not have long-term contracts with our clients.

Our clients typically hire us on a project-by-project basis. Moreover, they generally have the right to terminate their relationships with us without penalty and with relatively short or no notice. Once a project is completed there is no assurance that a client will engage us for further services. The termination of our business relationships with any of our significant clients, or a material reduction in the use of our services by any of our significant clients, could adversely affect our future business, operating results and financial condition.

The impact of worldwide economic and business conditions, including the resulting effect on advertising budgets as the same are being reallocated to Internet marketing, may adversely affect our business, operating results and financial condition.

Our performance is subject to worldwide economic conditions and their impact on levels of advertising. In addition, the marketing budgets that have been traditionally invested in mediums such as print and television media are now being reallocated to internet marketing, our existing and potential clients may no longer consider investment in our marketing solutions a necessity, or may reduce their advertising budgets in television. Historically, economic downturns have resulted in overall reductions in advertising spending. In particular, television marketing advertising solutions may be viewed by some of our existing and potential clients as a lower priority and may be among the expenditures to be reduced first as a result of unfavorable economic conditions. These developments could have an adverse effect on our business, operating results and financial condition.

We will require additional financing in the future, but such financing may not be available to us.

We will require additional capital to continue our operations. To date, our revenues from operations have not generated cash flow sufficient to finance our operations and growth. As a result, we have since our inception sought financing and we will likely continue to require additional financing in the future. If adequate funds are not available on acceptable terms, we may be unable to fund the operation of our business. As a result, we would likely be forced to dramatically alter or cease our operations.

If we raise additional capital, such capital raisings could dilute current shareholders’ ownership interests.

If additional funds are raised by the issuance of our equity securities, such as through the issuance of stock or convertible securities, then the ownership interest of our existing stockholders will be diluted. If additional funds are raised by the issuance of debt or other equity instruments, we may become subject to certain operational limitations (e.g., negative operating covenants), and such securities may have rights senior to those of the existing holders of common stock.

We face significant competition, and if we do not compete successfully, our profits may decline.

As a small business in the advertising industry, we face significant competition. We compete for advertisers primarily on the basis of network size and coverage, location, price, program quality, the range of services offered and brand recognition. We compete for advertising dollars spent in the television advertising sector. We also compete for overall advertising spending with other alternative advertising media, such as internet, street facilities, billboard and public transport advertising, and with other traditional advertising media such as newspapers, magazines and radio.

Significant competition could reduce our operating margins and profitability and could have an adverse effect on our business, operating results and financial condition. Even though we have entered a long-term exclusive agreement with Lotus TV, our competitors generally have significantly larger advertising networks than we do, which gives them an ability to reach a larger number of potential consumers. There is no assurance that we will be able to successfully compete against new or existing competitors, and failure to compete may have an adverse effect on our business, operating results and financial condition.

Our operating results may fluctuate significantly, which make our future results difficult to predict and could cause our operating results to fall below expectations.

Our operating results may fluctuate significantly in the future due to a variety of factors, many of which are beyond our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful, and, therefore, prior results are not necessarily indicative of results to be expected in future periods.

Loss of key management personnel or our inability to attract and retain new qualified personnel could hurt our ability to operate and grow successfully.

Our success is dependent to a significant extent on our executive officers and key personnel. We do not have key man life insurance covering any of our executive officers. We may not be able to retain our executive officers and key personnel or attract additional qualified personnel. The loss of any of our executive officers or other key personnel, or our inability to recruit and retain qualified personnel, could hurt our ability to operate and make it difficult to execute our acquisition and internal growth strategies.

Risks Related to Doing Business in Macau

Our business operations may be adversely affected by the changing political and economic policies in Macau.

Considerable portions of our assets are located in Macau, and a considerable portion of our revenues are expected to derive from our operations in Macau. The Macau government exerts substantial influence and control over the manner in which we must conduct our business activities. Our ability to operate in Macau may be adversely affected by changes in Macau laws and regulations, including those relating to taxation, import and export tariffs, raw materials, environmental regulations, land use rights, property and other matters. As a result, changes in the political and economic policies of the Macau government could have a significant impact on the results of our operations and financial condition.

Our assets, officers and directors are located outside of the U.S. It is difficult to effect service of process and enforcement of legal judgments upon us and our officers and directors.

Our assets, officers and directors are located outside of the United States. As a result, it may be difficult to effect service of process within the United States and enforce judgment of the U.S. courts obtained against us and our executive officers and directors. Particularly, our shareholders may not be able to:

Effect service of process within the United States on us or any of our executive officers and directors;

Enforce judgments obtained in U.S. courts against us based upon the civil liability provisions of the U.S. federal securities laws;

Enforce, in a court in Macau, judgments of U.S. courts based on the civil liability provisions of the U.S. federal securities laws; and

Bring an original action in a court in Macau to enforce liabilities against us or any of our executive officers and directors based upon the U.S. federal securities laws.

Fluctuations in the exchange rate between the Hong Kong dollar and the United States dollar may bring down our operating income.

The functional currency of our operations in Macau is the Hong Kong dollar. Results of our operations are translated at average exchange rates into United States dollars for purposes of reporting results. During the years ended December 31, 2015, 2014 and 2013 and through this date, there has been no significant fluctuation in exchange rates between Hong Kong dollars and US dollars. However, future fluctuations in exchange rates may adversely affect our expenses and results of operations as well as the value of our assets and liabilities. Any significant fluctuations in the exchange rate between the Hong Kong dollar and the United States dollar may bring down our operating income and lower our stock price. We have no current plans to undertake any hedging activity to minimize exchange rate fluctuations.

Risks Related to the Company’s Securities

Management exercises significant control over matters requiring shareholder approval which may result in the delay or prevention of a change in our control.

Dicky Cheung, our President and CEO, beneficially owned 90,693,454 shares, or approximately 27.8%, and Liang Huang, an investor, beneficially owned 86,000,000 shares, or approximately 26.4%, of our outstanding common stock as of December 31, 2015. Accordingly, they could significantly influence us on matters submitted to the stockholders for approval. These matters include the election of directors, mergers, consolidations, the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control that might otherwise be beneficial to our other stockholders. Their interests may differ from the interests of our other shareholders.

Our stock is very thinly traded, and the price has been extremely volatile and may continue to fluctuate significantly, which may make it more difficult for you to resell shares when you want at prices you find attractive.

Our common stock is very thinly traded, and the price, if traded, has been and may continue to be subject to significant daily fluctuations. Consequently, investors may not be able to liquidate their investment at all, or if they are able to liquidate it may only be at a price that does not reflect the value of the business. Even if a more active market should develop, the price may be highly volatile. Consequently, there can be no assurances as to whether:

any market for our common stock will develop;

the prices at which our common stock will trade; or

the extent to which investor interest in us will lead to the development of an active, liquid trading market.

Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors.

In addition, our common stock is unlikely to be followed by any market analysts, and there may be few institutions acting as market makers for our common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock. Until our common stock is fully distributed and an orderly market develops in our common stock, if ever, the price at which it trades is likely to fluctuate significantly. There are no assurances that an orderly or liquid market will ever develop for the shares of our common stock.

Our common stock is subject to the penny stock restrictions which will create a lack of liquidity and make trading difficult or impossible.

Our common stock is currently subject to the penny stock rules adopted by the Securities and Exchange Commission. Under the SEC Rule 15g-9, a stock is considered a “penny stock” if it meets one or more of the following conditions: (i) the stock trades at a price less than $5.00 per share; (ii) it is not traded on a “recognized” national exchange; (iii) it is not quoted on the Nasdaq Capital Market, or even if so, has a price less than $5.00 per share; or (iv) is issued by a company that has been in business less than three years with net tangible assets less than $5 million. The penny stock rules require brokers to provide extensive disclosure explaining the penny stock market and the risks associated with investing in penny stocks to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities.

We may never pay any dividends to shareholders.

We have paid no cash dividends on our common stock to date and it is not anticipated that any cash dividends will be paid to holders of our common stock in the near future. While our dividend policy will be based on our operating results and capital needs of the business, it is anticipated that any earnings will be retained to finance our future expansion. As an investor, you should take note of the fact that a lack of a dividend can further affect the market value of our stock, and could significantly affect the value of any investment in the Company.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

Item 2. PROPERTIES

Our principal executive offices are located at 80 Wall Street, Suite 818, New York, NY 10005. We pay rent of $650 per month for this space on a month-by-month sublease basis.

Our subsidiary, CEM International Ltd, operates in Macau. A Macau corporation, Lotus TV, also uses CEM’s phone services. In exchange, Lotus TV provides office space, utility, and other office related expense to CEM without charges.

We believe that our property is suitable and adequate for our present and proposed needs. If additional spaces are required, we believe that we will be able to obtain such space on commercially reasonable terms.

Item 3. LEGAL PROCEEDINGS

We are not a party to any pending legal proceedings and, to our knowledge, none of our officers, directors or principal shareholders are party to any legal proceeding in which they have an interest adverse to us.

Item 4. MINE SAFETY DISCLOSURE

Not applicable.

PART II

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

Market Information

The Company’s common stock is currently quote on the OTCQB marketplace under the symbol "COFI", and has been traded very thinly and infrequently, which limits its ability to locate accurate high and low bid prices for each quarter within the last two fiscal years. The following table lists the quotations for the high and low bid prices, which reflect inter-dealer prices without retail mark-up, markdown, or commissions and may not represent actual transactions.


		High		Low
Year ended December 31, 2015:
	First quarter	$	3.00	$	1.00
	Second quarter	$	3.00	$	1.00
	Third quarter	$	3.00	$	1.00
	Fourth quarter	$	3.00	$	2.00

Year ended December 31, 2014:
	First quarter	$	2.00	$	2.00
	Second quarter	$	2.00	$	1.05
	Third quarter	$	1.50	$	1.50
	Fourth quarter	$	1.10	$	1.10

Holders

As of December 31, 2015, the Company had approximately 84 holders of record of its common stock. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.

Dividends

The Company has never declared or paid any cash dividends on its common stock nor does the Company anticipate paying any in the foreseeable future. The Company expects to retain any future earnings to finance its operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon the Company’s earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.

Securities Authorized for Issuance under Equity Compensation Plans

The Company does not have any equity compensation plans.

Recent Sales of Unregistered Securities

On January 30, 2013, the Company entered into a Securities Purchase Agreement with certain investors in a private placement. Pursuant to the agreement, the Company agreed to issue and investors agree to purchase an aggregate of 183 million shares of the Company's common stock, at a price of $0.03 per share, for an aggregate consideration of $5,490,000 in cash. As to date, two investors executed the agreement to purchase 24 million shares for $720,000. The Company has received $720,000 on April 9, 2013.

The shares sold as described above were unregistered under the Securities Act of 1933, as amended. The shares were issued in reliance upon exemptions from registration provided by Regulation S and/or Section 4(a)(2) promulgated under the Securities Act of 1933, as amended.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

No purchases of our equity securities were made by us or any affiliated entity during the year ended December 31, 2015.

Item 6. SELECTED FINANCIAL DATA

The following selected consolidated financial data should be read in conjunction with the consolidated financial statements and the notes thereto in Item 8 of Part II, “Financial Statements and Supplementary Data,” and the information contained in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Historical results are not necessarily indicative of future results.



	Year Ended December 31,
	2015		2014		2013		2012		2011

Statements of Operations:
Net sales	$	232,186	$	193,431	$	719,330	$	407,832	$	123,504
Loss from operations		(1,885,431)		(772,500)		(470,550)		(646,613)		(535,170)
Net loss		(1,266,030)		(202,692)		(671,419)		(251,590)		(60,977)
Loss per share - basic and diluted		(0.00)		(0.00)		(0.00)		(0.00)		(0.08)
Weighted average shares - basic and diluted		326,155,623		326,155,623		319,711,803		302,155,623		302,155,623

Statements of Cash Flows:
Net cash used in operating activities	$	(397,788)	$	(34,307)	$	(1,333,825)	$	(29,906)	$	(406,686)
Net cash provided by (used in) investing activities		1,257,835		(1,410,001)		2,754,662		(25,941)		(8,558,204)
Net cash provided by financing activities		-		-		444,355		-		9,000,000

	Year December 31,
	2015		2014		2013		2012		2011
Balance Sheets:
Total assets	$	9,626,132	$	11,170,276	$	11,284,330	$	13,626,676	$	11,585,887
Total shareholders’ equity		9,618,053		10,875,030		11,082,404		11,035,333		11,261,243

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains forward-looking statements. These statements are subject to risks and uncertainties including those described in Item 1A under the heading “Risk Factors,” and elsewhere in this Annual Report, that could cause actual results to differ materially from those projected in these forward-looking statements. The Company cautions investors not to place undue reliance on the forward-looking statements contained in this document. These statements speak only as of the date of this document, and the Company undertakes no obligation to update or revise the statements, except as may be required by law.

Overview

Until November 30, 2010, the Company’s main business was processing and distribution of mineral products, primarily graphite products, in China. Despite the efforts it had made, the Company’s sales did not grow as much as the Company had expected. Because it was more and more difficult to carry out its graphite business, on November 18, 2010, the Company entered into a share purchase agreement with China Minerals International Ltd., by which the Company sold its 51.6% equity interest in Moderation Ltd. for $16 million Hong Kong dollars, approximately $2.06 million in cash, to China Mineral. The transaction was closed on November 30, 2010, and the Company ceased to be a processor and distributor of graphite products.

On August 26, 2010, CEM International Limited (“CEM”, formerly E&M International Ltd.), a wholly-owned subsidiary of the Company, entered into an advertising agreement with Macau Lotus Satellite TV Media Limited (“Lotus TV”), pursuant to which Lotus TV authorized CEM its exclusive agent to operate all of its advertising businesses (“Advertising Rights”).

The term of this agreement is ten years from September 1, 2010 to August 31, 2020. In consideration for Lotus TV’s grant of the Advertising Rights, CEM agreed to pay Lotus TV a fixed fee on an annual basis regardless of the total amount of revenues generated from the advertising business to be received by CEM. Under the agreement, CEM paid Lotus TV an initial annual fee of HK$1,000,000 for the first year of the agreement, which will increase at 10% every year for the following five years.

CEM also agreed to extend to Lotus TV, interest free, a credit facility consisting of a series of loans totaling a minimum of $10 million (amended to $15 million on June 13, 2014) over a period of ten years. The terms of each loan and the increase of the annual fee after the first three years of the agreement will be renegotiated by the parties. As of December 31, 2015, the loan balance to Lotus TV was approximately $10.97 million under this agreement, and as of December 31, 2015, Lotus TV has repaid about $2.06 million (HK$15,500,600) due under the notes.

As an advertising agent, the Company operates as an advertising agent to place and handle advertising for its clients. The Company’s revenues are derived primarily from advertising placement and sale of advertising time obtained from Lotus TV.

Because all of our clients have created and produced their own advertising clips and trailers, or programs, we currently act only as an advertising placement agent for Lotus TV, and there is no advertising creating and planning activities involved at this time. Advertisers can purchase advertising time slots of Lotus TV directly from the Company.

During 2011 and 2013, the Company invested in gold bullion. In September 2012, the Company entered into a Trust Agreement with a law firm as the trustee to hold the Company’s gold bullions. Upon receipt of the gold bullions, the Trustee issued electronic receipts, each known as a “Goldeq”, which can be used, in lieu of gold, as an intermediary to facilitate the exchange of goods and services conducted on the Company’s proposed joint venture with Lotus TV, in which a series of interactive game shows will be launched via satellite TV and the internet for viewers throughout the world to participate, and Lotus TV will provide broadcasting time. The goods and services originally proposed for exchange were household items or household services, such as books and audios, cosmetics, shoes and leather bags, computers and office suppliers, home repairs or web design, etc. This project was unsuccessful.

In addition to its investment in gold bullion, the Company also received gold bullion as payment from sale of advertising time. In September 2012, the Company entered into an Advertising Time Purchase Agreement with Scientific Energy Inc. in exchange for $2,014,825 of gold bullion. The terms of the contract provide that the Company will sell 10,000 minutes of advertising time divided into 30-second time slots for a total of 20,000 advertising slots. As a result, the Company received 190 gold bullions, 5-tael per bullion, valued at $2,014,825 at that time.

Although revenue is recognized as advertisements are aired, the $2,014,825 in gold bullion was prepaid. During the year ended December 31, 2013 and 2012, $504,752 and $149,978 of revenue was recognized related to advertising time slots used, respectively. Pursuant to the agreement between the Company and the Client, the remaining amount of deferred revenue of $978,687 was refunded to client on December 30, 2013, which resulted in a gain of $380,510 to the Company due to fluctuations in the price of gold bullion and related Goldeq.

On February 17, 2013 and on December 12, 2013, the Company sold all its gold bullion on hand for $3,384,203 (HK$26,249,236) in cash, which resulted in a cumulative loss of approximately $1,206,798 since the gold was originally acquired in 2012 and 2011.

In December 2013, pursuant to Scientific Energy Inc.’s request, the Company agreed to refund the unused advertising time

on Lotus TV in the aggregate amount of $978,687 (HK$7,593,834) , which represented 6,750 minutes of unused advertising TV time.

Results of Operations

Comparison of Years Ended December 31, 2015 and 2014

Operating Revenues

The following table presents a breakdown of our operating revenues from sale of the advertising TV time obtained from Lotus TV:


	Year Ended December 31,
	2015			2014
	Amount	% of Total Operating Revenues		Amount		% of Total Operating Revenues
Operating revenues:
Advertising revenue	$ 232,186	100	%	$	193,431	100	%

In October 2014, the Company entered into an advertising agreement with a third party. Pursuant to the agreement, the Company agreed to provide advertising service to the third party from January 1, 2015 to December 31, 2015 for a monthly fee of approximately $38,300 (HK$300,000) with service from July to December 2015 free of charge. For the year ended December 31, 2015, the Company recorded advertising revenue of approximately $232,000 (HK$1,800,000) related to this agreement.

Operating expenses

The following table presents a breakdown of our operating expenses:


	Year Ended December 31,
	2015			2014
	Amount	% of Total Operating Expenses		Amount		% of Total Operating Expenses
Operating expenses:
License fee	$ 195,153	9.2	%	$	177,359	18.4	%
Amortization of advertising right	349,423	16.5	%	607,128		62.9	%
Impairment loss	1,390,826	65.7	%	-		-
Other general and administrative	182,215	8.6	%	181,444		18.7	%
Total operating expenses	$ 2,117,617	100.0	%	$	965,931	100.0	%

Operating expenses for the year ended December 31, 2015 were $2,117,617, as compared to $965,931 for the year ended December 31, 2014. The increase in operating expenses was mainly due to the increase in impairment loss on patents, trademark and advertising right.

Other income (expenses)

Our other income for the years ended December 31, 2015 and 2014 was $619,401 and $569,808, respectively. All other income for both years was interest income.

Net loss

For the year ended December 31, 2015, the Company had net loss of $1,266,030 as compared to $202,692 for 2014. The change was due to factors discussed above.

Comparison of Years Ended December 31, 2014 and 2013

Operating Revenues

The following table presents a breakdown of our operating revenues among advertising revenues and revenue from TV program, i.e., revenue from sale of the advertising TV time obtained from Lotus TV:


	Year Ended December 31,
	2014			2013
	Amount	% of Total Operating Revenues		Amount		% of Total Operating Revenues
Operating revenues:
Advertising revenue	$ 193,431	100.0	%	$	698,141	97.1	%
TV Program	-	0.0	%	21,189		2.9	%
Total operating revenues	$ 193,431	100.0	%	$	719,330	100.0	%

In September 2012, the Company entered into an Advertising Time Purchase Agreement with Scientific Energy Inc. in exchange for $2,014,825 of gold bullion. The terms of the contract provide that the Company will sell 10,000 minutes of advertising time divided into 30-second time slots for a total of 20,000 advertising slots. Revenue is recognized as advertisements are aired. During the year ended December 31, 2013, $504,752 of revenue was recognized related to advertising time slots used and was paid by Scientific Energy, Inc. per the Advertising Time Purchase Agreement. The remaining amount was included in deferred revenue.

On December 12, 2013, the Company refunded all unused advertising time on Lotus TV in the aggregate amount of 404,995 seconds (or 6,750 minutes) valued HK$7,593,835. As of December 31, 2013, there was no more deferred revenue related to Scientific Energy’s advance payment.

Operating expenses

The following table presents a breakdown of our operating expenses:


	Year Ended December 31,
	2014			2013
	Amount	% of Total Operating Expenses		Amount		% of Total Operating Expenses
Operating expenses:
License fee	$ 177,359	18.4	%	$	161,200	13.5	%
Amortization of advertising right	606,893	62.9	%	528,141		44.4	%
Other general and administrative	181,679	18.7	%	500,539		42.1	%
Total operating expenses	$ 965,931	100.0	%	$	1,189,880	100.0	%

Operating expenses for the year ended December 31, 2014 were $965,931, as compared to $1,189,880 for 2013. Operating expenses decreased because the Company terminated the Advertising Time Purchase Agreement with Scientific Energy Inc. on December 12, 2013, and therefore no cost related to the agreement occurred in 2014.

Other income (expenses)

Our total other income for the year ended December 31, 2014 was $569,808, which consisted of interest income. For the year ended December 31, 2013, total other expense was $200,869, which primarily consisted of interest income of $394,679, loss on investments of $976,058, and gain on refund of Goldeq of $380,510.

Net loss

For the year ended December 31, 2014, the Company had a net loss of $202,692 as compared to a net loss of $671,419 for the year ended December 31, 2013.

Liquidity and Capital Resources

Cash flow information is as follows:



	Year Ended December 31,
	2015		2014		2013
Cash provided by (used in):
Operating activities	$	(397,788)	$	(34,307)	$	(1,333,825)
Investing activities		1,257,835		(1,410,001)		2,754,662
Financing activities		-		-		444,355
Effect of exchange rate on cash and cash equivalents		274		(1,121)		20,960
Net increase (decrease) in cash and cash equivalents	$	860,321	$	(1,445,429)	$	1,886,152

At December 31, 2015, the Company had a cash balance of $1,501,835. For the year ended December 31, 2015, the operating activities of the Company used net cash of $397,788, as compared to net cash used by the operating activities of $34,307 for the prior year. The difference is mainly because the Company received advance from a customer in 2014 for service rendered in 2015.

Net cash provided by investing activities for the year ended December 31, 2015 was $1,257,835, compared to $1,410,001 of net cash used in 2014. Cash provided by investing activities in 2015 pertains primarily to a partial repayment of notes receivable of $1,257,835. Cash used in investing activities in 2014 pertains primarily to investment in notes receivable of $1,392,165 and investment in trademark of $17,836.

For the year ended December 31, 2014, the operating activities of the Company used net cash of $34,307, as compared to net cash used by the operating activities of $1,333,825 for the year ended December 31, 2013. The difference mainly resulted from a refund of cash to customer in 2013 of $979,041.

Net cash used in investing activities for the year ended December 31, 2014 was $1,410,001, compared to $2,754,662 of net cash provided in 2013. This 2014 amount pertains primarily to investment in notes receivable of $1,392,165 and investment in trademark of $17,836. The 2013 amount pertains primarily to proceeds from gold sale of $3,384,203, and offset by net cash used in investments in notes receivable of $600,591and trademark of $28,950.

For the years ended December 31, 2015 and 2014, there were no financing activities. For the year ended December 31, 2013, the Company’s financing activities provided net cash of $444,355, of which $720,000 were proceeds from issuance of 24 million shares of the Company’s common stock in a private placement offset by payment of related party loan of $275,645.

On January 30, 2013, the Company entered into a Securities Purchase Agreement with certain investors in a private placement. Pursuant to the agreement, the Company agreed to issue and investors agreed to purchase an aggregate of 183 million shares of the Company's common stock, at a price of $0.03 per share, for an aggregate consideration of $5,490,000 in cash. As to date, there were 24 million shares of the Company’s common stock issued.

Off-Balance Sheet Arrangements

None.

Commitments

On August 26, 2010, CEM International Ltd. entered into an Advertising Agreement with Lotus TV, pursuant to which Lotus TV authorized CEM as its exclusive agent to operate all of its advertising business, and to be entitled to all the revenues generated therefrom (“Advertising Rights”). On November 25, 2014 and December 28, 2015, CEM amended the 2010 agreement and forego its exclusive advertising rights but remain as Lotus TV’s preferred advertising agent.

The term of this agreement is 10 years from September 1, 2010 to August 31, 2020. In consideration for Lotus TV’s grant of the Advertising Rights, CEM agreed to pay Lotus TV a fixed annual fee every year regardless of the total amount of advertising revenues received by CEM. Under the agreement, CEM paid Lotus TV an initial annual fee of $128,900 (HK$1,000,000) for the first year of the agreement. The annual fee will increase at 10% every year until 2017. The amount of annual fee payable at December 31, 2015 and 2014 was $0 and $62,110, respectively.

CEM also agreed to extend to Lotus TV, interest free, a credit facility consisting of a series of loans totaling a minimum of $15 million over a period of 10 years. The terms of each loan will be renegotiated by the parties. The Company currently expects that the loans will be originated from its cash reserve, advertising revenue and, if necessary, raised from the capital market. On November 25, 2014, CEM amended its 2010 agreement with Lotus TV whereby Lotus TV agreed to accelerate its repayment of the loan balance in annual instalments of $2,000,000 (amended to annual minimum instalments of $1,000,000 on December 28, 2015) each starting from 2015 until the entire remaining loan balance shall have been paid in full.

License fee expense for the year ended December 31, 2015, 2014 and 2013 was $195,153, $177,359 and $161,200, respectively.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, such as doubtful accounts and impairment of long-lived assets. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The accounting policies that we follow are set forth in Note 2 to our consolidated financial statements as included in this report. These accounting policies conform to accounting principles generally accepted in the United States, and have been consistently applied in the preparation of the financial statements.

Inflation

In general, our costs are affected by inflation and we may experience the effects of inflation in future periods. Such effects have not been material to us in the past and we believe will not materially affect us in the future.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Exchange Risk

The functional currency of our subsidiary in Macau is the Hong Kong dollar. The results of operations of, and certain of our intercompany balances associated with, are exposed to foreign exchange rate fluctuations. Upon consolidation, as exchange rates vary, net sales and other operating results may differ materially from expectations, and we may record significant gains or losses on the remeasurement of intercompany balances. During the years ended December 31, 2015, 2014 and 2013 and through this date, there has been no significant fluctuation in exchange rates between Hong Kong dollars and US dollars. However, future fluctuations in exchange rates may adversely affect our expenses and results of operations as well as the value of our assets and liabilities. Any significant fluctuations in the exchange rate between the Hong Kong dollar and the United States dollar may bring down our operating income and lower our stock price. We have no current plans to undertake any hedging activity to minimize exchange rate fluctuations.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Credit One Financial, Inc.

New York, New York

We have audited the accompanying consolidated balance sheets of Credit One Financial, Inc. as of December 31, 2015 and 2014, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the three years ended December 31, 2015. Credit One Financial, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Credit One Financial, Inc. as of December 31, 2015 and 2014 and the results of its operations and its cash flows for each of the three years ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 13 to the consolidated financial statements, the Company has restated its financial statements as of and for the year ended December 31, 2015 to impair its intangible and trademark and expense certain legal fees previously capitalized. We audited the restatement adjustments described in Note 13 that were applied to restate the 2015 consolidated financial statements. In our opinion, such adjustments are appropriate and have been properly applied.

/s/ GBH CPAs, PC

GBH CPAs, PC

www.gbhcpas.com

Houston, Texas

August 12, 2016

CREDIT ONE FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS


			December 31,	December 31,
			2015	2014
			(Restated)
Assets
Current Assets:
	Cash and cash equivalents		$ 1,501,835	$ 641,514
	Prepaid expense and other current assets		682,319	716,394
		Total current assets	2,184,154	1,357,908

Property and equipment, net of accumulated depreciation			-	45
Patents and trademark, net of accumulated amortization and impairment			-	95,156
Notes receivable, net of discount			7,441,978	8,073,263
Advertising right, net of accumulated amortization and impairment			-	1,643,904

Total Assets			$ 9,626,132	$ 11,170,276

Liabilities and Shareholders’ Equity

Current Liabilities:
	Accounts payable and accrued expenses		$ 8,079	$ 63,218
	Deferred revenue		-	232,028
		Total current liabilities	8,079	295,246


Commitment and Contingencies

Shareholders’ Equity:
	Common stock, $0.001 par value, 500,000,000 shares authorized, 326,155,623 shares issued and outstanding		326,156	326,156
	Additional paid-in capital		12,589,304	12,589,304
	Accumulated deficit		(3,302,453)	(2,036,423)
	Accumulated other comprehensive income (loss) - currency translation adjustment		5,046	(4,007)
		Total shareholders’ equity	9,618,053	10,875,030

Total Liabilities and Shareholders’ Equity			$ 9,626,132	$ 11,170,276

See the accompanying notes to consolidated financial statements.

CREDIT ONE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS


			For the year ended December 31,
			2015	2014	2013
			(Restated)
Revenues:
Advertising revenue			$ 232,186	$ 193,431	$ 698,141
TV program			-	-	21,189
	Total revenues		232,186	193,431	719,330

Operating Expenses:
	License fee		195,153	177,359	161,200
	Amortization of advertising right		349,423	606,893	528,141
	Impairment loss		1,390,826	-	-
	Selling, general and administrative		182,215	181,679	500,539
		Total operating expenses	2,117,617	965,931	1,189,880

Loss From Operations			(1,885,431)	(772,500)	(470,550)

Other Income (Expenses)
	Interest income		619,401	569,808	394,679
	Loss on investment in gold		-	-	(976,058)
	Gain on refund of Goldeq		-	-	380,510
		Total other income (expenses)	619,401	569,808	(200,869)

Net Loss			$ (1,266,030)	$ (202,692)	$ (671,419)

Other Comprehensive Income (Loss):
	Foreign currency translation adjustment		9,053	(4,682)	(1,511)

Total Comprehensive Loss			$ (1,256,977)	$ (207,374)	$ (672,930)

Loss Per Common Share – Basic and Diluted			$ (0.00)	$ (0.00)	$ (0.00)

Weighted Average Number of Common Shares Outstanding – Basic and Diluted			326,155,623	326,155,623	319,711,801

See the accompanying notes to consolidated financial statements.

CREDIT ONE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Years Ended December 31, 2015, 2014 and 2013



			Additional		Currency	Total
	Common Shares		Paid-in	Accumulated	Translation	Stockholders’
	Number	Amount	Capital	Deficit	Adjustment	Equity
Balance at December 31, 2012	302,155,623	$302,156	$11,893,304	($1,162,312)	$ 2,186	$11,035,334
Issuance of common stock for cash	24,000,000	24,000	696,000	-	-	720,000
Currency translation adjustment	-	-	-	-	(1,511)	(1,511)
Net loss	-	-	-	(671,419)	-	(671,419)
Balance at December 31, 2013	326,155,623	326,156	12,589,304	(1,833,731)	675	11,082,404
Currency translation adjustment	-	-	-	-	(4,682)	(4,682)
Net loss	-	-	-	(202,692)	-	(202,692)
Balance at December 31, 2014	326,155,623	326,156	12,589,304	(2,036,423)	(4,007)	10,875,030
Currency translation adjustment (Restated)	-	-	-	-	9,053	9,053
Net loss (Restated)	-	-	-	(1,266,030)	-	(1,266,030)
Balance at December 31, 2015 (Restated)	326,155,623	$326,156	$12,589,304	($3,302,453)	$ 5,046	$ 9,618,053

See the accompanying notes to consolidated financial statements.

CREDIT ONE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


					For the Year Ended December 31,
					2015		2014		2013
					(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss			$	(1,266,030)	$	(202,692)	$	(671,419)
	Adjustments to reconcile net loss to net cash used in operating activities:
	Accretion of interest on notes receivable				(619,398)		(569,570)		(394,675)
	Amortization of advertising right				349,423		606,893		528,141
	Depreciation				45		453		1,764
	Impairment loss				1,390,826		-		-
	Loss on investment in gold bullion				-		-		960,330
	Gain on refund of Goldeq				-		-		(380,510)
	Changes in operating assets and liabilities:
		Prepaid expense and other current assets			34,714		37,288		354,190
		Accounts payable and accrued expenses			(55,182)		(138,707)		(93,141)
		Refund of cash to customer from sale of gold			-		-		(979,041)
		Deferred revenue			(232,186)		232,028		(659,464)
			Cash used in operating activities		(397,788)		(34,307)		(1,333,825)

CASH FLOWS FROM INVESTING ACTIVITIES:
	Investment in notes receivable				-		(1,392,165)		(600,591)
	Proceeds from notes receivable				1,257,835		-		-
	Proceeds from investment in gold bullion				-		-		3,384,203
	Investment in patents and trademark				-		(17,836)		(28,950)
		Cash provided by (used in) investing activities			1,257,835		(1,410,001)		2,754,662

CASH FLOWS FROM FINANCING ACTIVITIES:
	Payments on related party loan				-		-		(275,645)
	Proceeds from issuance of common stock				-		-		720,000
		Cash provided by financing activities			-		-		444,355

Impact of exchange rate on cash and cash equivalents					274		(1,121)		20,960

Net increase (decrease) in cash and cash equivalents					860,321		(1,445,429)		1,886,152

Cash and cash equivalents, beginning					641,514		2,086,943		200,791

Cash and cash equivalents, ending				$	1,501,835	$	641,514	$	2,086,943

SUPPLEMENTAL CASH FLOWS INFORMATION:
		Cash paid for interest		$	-	$	-	$	-
		Cash paid for income taxes		$	-	$	-	$	-

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCIGN ACTIVITIES:
		Increase in notes receivable		$	-	$	1,889,427	$	-
		Decrease in advertising right		$	-	$	(1,889,427)	$	-

See the accompanying notes to consolidated financial statements.

CREDIT ONE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Nature of Business

Credit One Financial, Inc. (the “Company”) was incorporated in the State of Florida on September 24, 1999. In August 2010, the Company established a wholly owned subsidiary, E&M International Limited (“E&M”), in the Cayman Islands. On September 16, 2010, E&M changed its name to CEM International Ltd. (“CEM”).

The Company, through CEM, operates as an advertising agent to place and handle advertising for its clients. On August 26, 2010, CEM entered into an exclusive agreement with Macau Lotus Satellite TV Media Limited (“Lotus TV”) to provide advertising services for a ten-year period commencing on September 1, 2010. Because the clients of the Company have created and produced their own advertising clips and trailers, or programs, the Company currently acts only as an advertising placement agent for Lotus TV, and there is no advertising creating and planning activities involved at this time. The exclusive right agreement was amended in 2014. The Company is currently a preferred advertising agent of Lotus TV.

As Lotus TV’s preferred advertising agent, the Company provides advertising agency services to its clients by providing them with the advertising time slots the Company obtains from Lotus TV. Advertisers can purchase advertising time slots of Lotus TV directly from the Company.

The Company generates revenues primarily from advertising sales paid by clients for the planning and placement of advertisements on Lotus TV.

Note 2 - Summary of Significant Accounting Policies

Consolidation Scope and Principles of Consolidation

The consolidated financial statements present the financial position and the results of operations of Credit One Financial, Inc. and its 100% owned subsidiary, CEM International Ltd. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates in the Preparation of the Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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 and those differences could be material.

Fair Value Measurements

The Company follows accounting guidance relating to fair value measurements. This guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.

Level 2 – inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

Level 3 – unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the unobservable inputs.

The fair value of the Company’s financial instruments, which consist principally of cash and cash equivalents, are based on level 1 input, and equal carrying amounts.

Foreign Currency

The Company reports its financial position and results of operations in U.S. dollars. For its subsidiaries that have functional currencies that are foreign currencies, the elements of the financial statements are translated by using a current exchange rate. For assets and liabilities, the exchange rate at the balance sheet date is used. Revenues, expenses, gains, and losses were translated at the average exchange rate for the periods presented. Transaction adjustments result from the process of translating the subsidiary’ financial statements into U.S. dollars are not included in determining net income, but are reported in other comprehensive income (loss).

Foreign currency transactions are transactions denominated in a currency other than the entity's functional currency. At the date the transaction is recognized, each asset, liability, revenue, expense, gain, or loss arising from the transaction is measured and recorded in the functional currency of the recording entity by use of the exchange rate in effect at that date. At each balance sheet date, recorded balances that are denominated in a currency other than the functional currency of the recording entity are adjusted to reflect the current exchange rate, with any resulting differences reported in the current period statement of operations.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

As of December 31, 2015, the Company maintained $1,457,411 in foreign bank accounts not subject to Federal Deposit Insurance Corporation (“FDIC”) coverage. The remaining balance of $44,424 at December 31, 2015 was maintained in a U.S. bank account and was fully insured by FDIC.

Investment in Gold Bullion

The Company invested in gold bullion in 2011. As a precious metal, the investment in gold bullion was stated at its monetary fair value as determined by the Chinese Gold & Silver Exchange Society. Any adjustments to the fair value of the investments were recorded in unrealized gain or loss on the accompanying consolidated statements of operations and comprehensive income (loss).

In September 2012, the Company entered into a Trust Agreement with William G. Hu, Esq. as the trustee to hold the Company’s gold bullions. Upon receipt of the gold bullions, the trustee issued electronic receipts, each known as a “Goldeq”, which can be used, in lieu of gold, as an intermediary to facilitate the exchange of goods and services conducted on the Company’s proposed joint venture with Lotus TV, in which a series of interactive game shows will be launched via satellite TV and the internet for viewers throughout the world to participate, and Lotus TV will provide broadcasting time. This project was unsuccessful.

In addition to its investment in gold bullion, the Company also received gold bullion as payment from sale of advertising time. In September 2012, the Company entered into an Advertising Time Purchase Agreement with Scientific Energy, Inc. in exchange for $2,014,825 of gold bullion. The terms of the contract provide that the Company will sell 10,000 minutes of advertising time divided into 30-second time slots for a total of 20,000 advertising slots. As a result, the Company received 190 gold bullions, 5-tael per bullion, valued at $2,014,825 at that time.

On February 17, 2013 and on December 12, 2013, the Company sold its all gold bullion on hand for $3,384,203 (HK$26,249,236) in cash, which resulted in a cumulative loss of approximately $1,206,798 since the gold was acquired in 2012 and 2011.

In December 2013, Scientific Energy, Inc. decided that the remaining unused advertising time would no longer be needed, and the Company agreed to refund to it for the unused advertising time on Lotus TV in the aggregate amount of $979,041 (HK$7,593,834), which represented 6,750 minutes of unused advertising TV time.

Property and Equipment

Acquisitions of property and equipment are recorded at cost. Improvements and replacements of property and equipment are capitalized. Maintenance and repairs that do not improve or extend the lives of furniture and equipment are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful life of each class of depreciable assets, which is 3-20 years.

Patents and Trademark

Legal costs associated with patents and trademark are being capitalized. Patents’ estimated period of benefit are determined based on expected use of the asset by the Company and are amortized using the straight-line method over their estimated period of benefit. The Company evaluates the recoverability of patents and trademark periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists.

Notes Receivable

Notes receivable are recorded at issuance at its present value using an effective interest rate. At the balance sheet date, the notes are revalued with the change in present value recorded as interest income in the Consolidated Statements of Operations.

Advertising Right

Advertising right represented costs for right to advertise on Lotus TV network as a preferred agent. The costs are determined as the difference between the face value of non-interest bearing notes receivable from Lotus TV and the present value of the notes receivable at the time of issuance. The right is being amortized over the remaining life of the right, which expires August 31, 2020, using straight-line method.

Impairment of Long Lived Assets

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison for the carrying amount of an asset to future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets which considers the discounted future net cash flows.

Revenue Recognition

The Company recognizes revenue in accordance with Securities and Exchange Commission revenue recognition accounting standards.

As an advertising agent, CEM is in the service business dedicated to planning and handling advertising for its clients. Advertising revenue is recognized upon the delivery of the contracted advertising services and when no significant Company performance obligation remains. Service revenue is recognized as the contracted services are rendered.

Provision for Income Taxes

An asset and liability approach is used for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences between income tax and financial reporting and principally relate to recognition of revenue and expenses in different periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws. In addition, a deferred tax asset can be generated by net operating loss carryforwards. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.

Earnings (Loss) Per Common Share

Earnings (loss) Per Common Share (“EPS”) is computed by dividing net income available to common stockholders by the weighted average number of common stock shares outstanding during the year. Diluted EPS is computed by dividing net income available to common stockholders by the weighted average number of common stock shares outstanding during the year plus potential dilutive instruments such as stock options and warrants. The effect of stock options on diluted EPS is determined through the application of the treasury stock method, whereby proceeds received by the Company based on assumed exercises are hypothetically used to repurchase the Company's common stock at the average market price during the period. The Company has no stock options, warrants or other potentially dilutive instruments outstanding at December 31, 2015, 2014 and 2013.

Subsequent Events

The Company’s management reviewed all material events through the date of the consolidated financial statements were issued for subsequent event disclosure consideration.

Recently Issued Accounting Standards

In May 2014, a pronouncement was issued that creates common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards. The new guidance supersedes most preexisting revenue recognition guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with an option to adopt the standard one year earlier. The new standard is to be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is currently evaluating the impact of the new pronouncement on its financial statements.

In February 2016, a pronouncement was issued that creates new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early application permitted. The new standard is to be applied using a modified retrospective approach. The Company is currently evaluating the impact of the new pronouncement on its financial statements.

The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.

Reclassification

Certain prior year amounts have been reclassified for consistency with the current period presentation.

Note 3 – Prepaid Advertising Cost

In 2012, the Company paid $1,000,000 to Lotus TV for 20,000 advertising slots. The Company had used 6,500 slots as of December 31, 2015 and 2014. As of December 31, 2015 and 2014, the Company had prepaid advertising cost of approximately $680,000 and $716,000, respectively.

Note 4 - Notes Receivable and Advertising Right

On August 26, 2010, CEM entered into an exclusive agreement with Lotus TV to provide advertising services for a ten-year period commencing on September 1, 2010. In consideration for the exclusive advertising rights granted by Lotus TV, CEM will provide advertising services and issue, over the course of the agreement, $10 million in loans to Lotus TV. The amount and duration of each loan shall be negotiated by the parties, depending on Lotus’s financial needs.

Prior to December 31, 2013, CEM issued Lotus TV various non-interest bearing promissory notes of approximately $9,500,000 (HK$74,242,425). During the year ended December 31, 2014, CEM issued Lotus TV an additional loan of approximately $1,390,000 (HK$10,800,000). All the notes receivable were due on August 31, 2020 and discounted to its estimated fair value using an effective interest rate of 8%. This difference between the face value and the present value of was allocated to the intangible asset captioned Advertising Rights. This difference was deemed an asset because the interest-free note was a condition of the advertising right agreement.

On November 25, 2014, CEM amended its 2010 agreement with Lotus TV whereby Lotus TV agreed to accelerate its repayment of the loan balance in annual instalments of $2,000,000 (amended to annual minimum instalments of $1,000,000 on December 28, 2015) each starting from 2015 until the entire remaining loan balance shall have been paid in full. Additionally, CEM agreed to forego its exclusive advertising rights granted by Lotus TV, but remain as Lotus TV’s preferred advertising agent.

As a result of the November 25, 2014 amendment to accelerate repayment of the notes and to forego exclusive rights but remain as a preferred agent, the Company increased the carrying value of the notes receivable by $1,889,427 and decreased the intangible asset by $1,889,427. The adjustment was based on the calculated present value of the notes in aggregate using annual repayment installments of $2 million beginning in 2015 until paid in full and an effective interest rate of 8%.

A summary of the notes receivable is as follows:


Issuance Date		December 31, 2015		December 31, 2014
December 17, 2010	$	1,935,309	$	1,933,563
January 31, 2011		784,961		784,253
May 12, 2011		5,638,200		5,633,113
August 9, 2011		619,299		618,740
April 9, 2013		601,033		600,490
February 17, 2014		1,006,361		1,005,453
June 13, 2014		387,063		386,712
Total principal		10,972,226		10,962,324
Total repayments		(2,063,199	)	(804,362	)
Discount		(1,467,049	)	(2,084,699	)
Notes receivable, net	$	7,441,978	$	8,073,263

For the years ended December 31, 2015, 2014 and 2013, the Company recorded interest income on the notes of $619,398, $569,570 and $394,675, respectively.

A summary of the advertising right is as follows:


		December 31, 2015		December 31, 2014
Cost	$	3,547,731	$	3,640,521
Accumulated amortization		(2,251,841	)	(1,996,617	)
Accumulated impairment		(1,295,890	)	-
Advertising right, net	$	-	$	1,643,904

For the years ended December 31, 2015, 2014 and 2013, the Company recorded amortization expense of $349,423, $606,893 and $528,141, respectively.

At December 31, 2015, the Company determined that the advertising right was impaired and recorded an impairment loss of $1,295,605 (translated at average exchange rate for the year ended December 31, 2015).

Note 5 – Property and Equipment

Property and equipment consisted of the following as of December 31, 2015 and 2014:


		December 31, 2015		December 31, 2014
Office equipment and furniture	$	1,552	$	1,552
Software		5,005		5,005
Total property and equipment		6,557		6,557
Accumulated depreciation		(6,557	)	(6,512	)
Property and equipment, net	$	-	$	45

Note 6 – Patents and Trademark

Patents and trademark consisted of the following as of December 31, 2015 and 2014:


		December 31, 2015		December 31, 2014
Cost	$	95,242	$	95,156
Accumulated impairment		(95,242	)	-
Patents and trademark, net	$	-	$	95,156

During the year ended December 31, 2015, the Company recorded an impairment loss of $95,221 (translated at average exchange rate for the year ended December 31, 2015) on the patents and trademark because the Company believes the cost is no longer recoverable due to the suspension of a project.

Note 7 – Income Taxes

The Company operates through the parent company in the United States and a subsidiary in Macau, China. Income taxes have been provided based upon the tax laws and rates of the countries in which operations are conducted and income is earned. Effective January 1, 2008, the Chinese government enacted the Corporate Income Tax Law, and promulgated related regulations, which, among other things, imposes a unified income tax rate of 25% for both domestic and foreign invested enterprises. The tax rate for Macau is 12%. As of December 31, 2015, the Company had net operating loss carry-forwards of approximately $689,000 in U.S. and $1,230,000 in Macau.

Due to the Company’s accumulated net losses, there was no provision for income taxes. The Company’s effective tax rate for the period ended December 31, 2015 was 0% due to the net operating loss carry-forward. A valuation allowance equal to the tax benefit of the accumulated net operating losses has been established since it is uncertain that future taxable income from operations in the United States of America will be realized during the applicable carry-forward periods. The net operating loss carry-forwards may be limited under the change of control provisions of the Internal Revenue Code, Section 382.

The following are the major tax jurisdictions in which the Company operates and the tax year that net operating loss carry-forward subject to expiration:


Jurisdiction			Expiration
United States			2019 - 2035
Macau			2015 - 2018

Note 8 – Common Stock

On January 30, 2013, the Company entered into a Securities Purchase Agreement with certain investors in a private placement. Pursuant to the agreement, the Company agreed to issue and investors agreed to purchase an aggregate of 183 million shares of the Company’s common stock at a price of $0.03 per share, for an aggregate consideration of $5,490,000 in cash. On April 9, 2013, the Company received cash of $720,000 for 24,000,000 shares.

Note 9 – Advertising Revenue

In September 2012, the Company entered into an advertising agreement in exchange for $2,014,825 of gold bullion. During the years ended December 31, 2013, $504,752 of revenue were earned under the arrangement. Pursuant to the agreement between the Company and the client, the remaining amount of $978,687 was refunded to client on December 30, 2013.

In October 2014, the Company entered into an advertising agreement with a third party. Pursuant to the agreement, the Company agreed to provide advertising service to the third party from January 1, 2015 to December 31, 2015 for a monthly fee of approximately $38,300 (HK$300,000) with service from July to December 2015 free of charge. The Company received prepayment from the third party in 2014 and recorded deferred revenue of $232,028 at December 31, 2014. For the year ended December 31, 2015, the Company recorded advertising revenue of approximately $232,000 (HK$1,800,000) related to this agreement.

All of the Company’s revenues are from one customer for the years ended December 31, 2015 and 2014.

Note 10 - Commitments and Contingencies

In consideration for Lotus TV’s grant of the advertising right, E&M agreed to pay Lotus TV a fixed annual fee every year regardless of the total amount of advertising revenues received by E&M. Under the agreement, E&M paid Lotus TV an initial annual fee of approximately $128,900 (HK$1,000,000) for the first year of the agreement, which annual fee will increase at 10% every year for the following five years. As of December 31, 2015 and 2014, the Company had license fee payable of $0 and $62,910, respectively. For the years ended December 31, 2015, 2014 and 2013, the Company recorded license fee expense of $195,153, $177,359 and $161,200, respectively.

The Company’s future minimum annual license fee payments under the agreement for years ending after December 31, 2015 are as follows:


		Amount
2016	$	207,789
2017		207,789
2018		207,789
2019		207,789
2020 and thereafter		138,526
Total	$	969,682

Note 11 – Risks and Uncertainties

The Company’s business, financial condition and results of operations could be materially affected by many risks and uncertainties including the following:

As a U.S. based company doing business in Macau, the Company must comply with all laws, rules and regulations, and pronouncements, and endeavor in Macau to obtain all necessary approvals from applicable Chinese regulatory authorities.

Fluctuations in the exchange rate between the Hong Kong currency and the U.S. dollar may impact the Company’s operating income.

Note 12 – Related Party Transactions

A director of the Company purchased investments in gold bullion on behalf of the Company in August 2011. Purchases made under this arrangement totaled approximately $2.6 million (HK$20 million). At December 31, 2012, the Company had payable of $275,645 (HK$2,137,915) to the director. The payable was non-interest bearing and due on demand. In September 2013, the remaining payable balance was paid off.

Note 13 – Restatement

Subsequent to the Company’s filing of its Form 10-K for the year ended December 31, 2015 on March 30, 2016, the Company finalized its evaluation of impairment on certain long-live assets and determined that the carrying amount of its advertising right, patents and trademark is not recoverable. Accordingly, the Company recorded impairment loss of $1,380,017 to the consolidated financial statements as of December 31, 2015 and for the year then ended.

In addition, the Company finished its review of legal costs capitalized during the year ended December 31, 2015 and determined that $2,721 of the costs should have been expensed because those fees were not directly related to the acquisition of the patents.

Following is a summary of the restatement changes made to the consolidated financial statements previously issued as of and for the year ended December 31, 2015:


		Originally Reported		Restatement		As Restated
Consolidated Balance Sheet:
Patents and trademark, net of accumulated amortization and impairment	$	87,431	$	(87,431)	$	-
Advertising right, net of accumulated amortization and impairment		1,295,890		(1,295,890)		-
Accumulated deficit		(1,919,436)		(1,383,017)		(3,302,453)
Accumulated other comprehensive income (loss) -currency translation adjustment		5,350		(304)		5,046

Consolidated Statement of Operations and Comprehensive Income (Loss):
Selling, general and administrative, license fee and amortization	$	724,070	$	2,721	$	726,791
Impairment loss		10,530		1,380,296		1,390,826
Net income (loss)		116,987		(1,383,017)		(1,266,030)
Other comprehensive income - foreign currency translation adjustment		9,357		(304)		9,053
Total comprehensive income (loss)		126,344		(1,383,321)		(1,256,977)

Consolidated Statements of Shareholders’ Equity:
Currency translation adjustment	$	9,357	$	(304)	$	9,053
Net income (loss)		116,987		(1,383,017)		(1,266,030)

Consolidated Statements of Cash Flows:
Net income (loss)	$	116,987	$	(1,383,017)	$	(1,266,030)
Impairment loss		10,530		1,380,296		1,390,826
Cash used in operating activities		(395,067)		(2,721)		(397,788)
Investment in patents and trademark		(2,721)		2,721		-
Cash provided by investing activities		1,255,114		2,721		1,257,835

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON AUDITING AND FINANCIAL DISCLOSURE

(a) Resignation of independent registered public accounting firm

Moss, Krusick & Associates, LLC (“Moss, Krusick”), the independent registered public accounting firm of the Company resigned as the Company’s auditors, effective January 5, 2016. The reports of Moss, Krusick on the Company’s financial statements as of and for the years ended December 31, 2014 and December 31, 2013, contained no adverse opinion or disclaimer of opinion nor was qualified or modified as to uncertainty, audit scope, or accounting principle.

During the Company’s two most recent fiscal years ended December 31, 2014, and the subsequent period through January 5, 2016, there were no disagreements between the Company and Moss, Krusick on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to Moss, Krusick’s satisfaction, would have caused them to make reference to the subject matter of the disagreement in connection with their reports on the Company’s financial statements for such years or periods; and there were no reportable events as described in Item 304(a)(1)(v) of Regulation S-K.

(b) New independent registered public accounting firm

On January 5, 2016, the Board of Directors of the Company engaged GBH CPAs, PC of Houston, Texas (“GBH”) as the Company’s new independent public accounting firm. The engagement of GBH was approved by the Board of Directors of the Company.

During the Company’s two most recent fiscal years ended December 31, 2014, and the subsequent period through January 5, 2016, neither the Company nor anyone on its behalf did consult with GBH with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, or any other matters or reportable events as set forth in Item 304(a)(2) (i) and (ii) of Regulation S-K.

Item 9A. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

The Company carried out an evaluation required by the 1934 Act, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the 1934 Act, as of December 31, 2015. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2015, our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the 1934 Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

(b) Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the 1934 Act. Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2015 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013). As a result of this assessment, management concluded that, as of December 31, 2015, the Company’s internal control over financial reporting was not effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

The Company had material weaknesses in its internal control over financial reporting. Specifically, management identified the following material weaknesses at December 31, 2015:

Lack of functioning audit committee, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;

Insufficient personnel resources within the accounting function to segregate the duties over financial transaction processing and reporting and to allow for proper monitoring controls over accounting;

Insufficient written policies and procedures over accounting transaction processing and period end financial disclosure and reporting processes.

To remediate our internal control weaknesses, management intends to implement the following measures:

The Company will appoint an audit committee.

The Company will add sufficient knowledgeable accounting personnel to properly segregate duties and to effect a timely, accurate preparation of the financial statements.

Upon the hiring of additional accounting personnel, the Company will develop and maintain adequate written accounting policies and procedures.

The implementation is contingent upon the Company’s future growth on operations.

We understand that remediation of material weaknesses and deficiencies in internal controls are a continuing work in progress due to the issuance of new standards and promulgations. However, remediation of any known deficiency is among our highest priorities. Our management will periodically assess the progress and sufficiency of our ongoing initiatives and make adjustments as and when necessary.

Limitations on Controls

Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

(c) Changes in Internal Control Over Financial Reporting

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

(d) Attestation Report of the Registered Public Accounting Firm

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting because we believed we are not subject to attestation by our independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in the annual report.

At June 30, 2015, our public float was approximately $164 million. The reasons that we believe that we are not subject to attestation by our independent registered public accounting firm are as below:

(1) We have never had meaningful revenue, which is far, far less than $50 million per annum as mentioned in Rule 12b-2 of the Exchange Act of 1934, as amended. Our annual revenue were only $0.23 million, $0.19 million, and 0.72 million for the fiscal years of 2015, 2014 and 2013, respectively; and

(2) Of 326,155,637 shares of our outstanding shares, only 25,668 shares, or 0.00008%, are non-restricted shares. As a result, our shares have been traded very thinly and infrequently, and its market value as calculated is hence not meaningful.

We believe that it is not the legislative intent of the Congress and the SEC to treat a very small company like us, which has very little annual revenue and its shares traded very thinly and infrequently, as an accelerated filer. Based on the forgoing, therefore, we believe that we are not subject to attestation by our independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in the annual report.

Item 9B. OTHER INFORMATION

None.

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Directors and Executive Officers

The following table sets forth the information about our directors and executive officer:


Name	Age	Positions Held	Director Since

Dicky Cheung	44	President, Chief Executive Officer, Chief Financial Officer, Secretary and Director	2007

Xueyi Fan	46	Director	2011

Mr. Dicky Cheung has been the Company's President, Chief Executive Officer, Chief Financial Officer, Secretary and the Director since July 2007. Mr. Cheung also serves the President of Companhhia Internacional Tek Tat Limitada, a privately held company located in Macau, since its formation in 2007.

Ms. Fan has been selected as a director of the Company since December 2011. She is the founder of XYZ Gallery, which makes and markets a variety of paintings and drawings in Beijing, China. Since 2002, Ms. Fan has been XYZ Gallery’s President, Chief Executive Officer, and Chief Financial Officer. In 2007, Ms. Fan co-founded Four-Season Matou Space Gallery in Beijing, China, and she has been served as its vice president in Arts and Business Development.

During the past five years, each of Mr. Cheung and Ms. Fan did not hold any directorship in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.

Significant Employees

There are no significant employees other than our executive officer.

Family Relationships

None of our directors, executive officers, or key employees is related by blood, marriage, or adoption to any other Director, executive officer, or other key employees.

Involvement in Certain Legal Proceedings

None.

CORPORATE GOVERNANCE

The business, properties and affairs of the Company are managed by the Chief Executive Officer under the direction of the Board of Directors. The Board has responsibility for establishing broad corporate policies and for overall performance and direction of the Company, but is not involved in day-to-day operations. Members of the Board keep informed of the Company’s business by participating in Board meetings, by reviewing analyses and reports sent to them regularly, and through discussions with the Chief Executive Officer and other officers.

Board Leadership Structure and Board's Role in Risk Oversight

Mr. Dicky Cheung, our Chief Executive Officer, serves as the Chairman of the Board of Directors. As a result of the size of the Company and only having one executive officer, the Board believes this leadership structure provides the most efficient and effective leadership model for the Company by enhancing the Chairman and Chief Executive Officer’s ability to provide clear insight and direction of business strategies and plans to both the Board and management.

Management is responsible for the day-to-day management of risks the Company faces, while our whole board of directors has responsibility for the oversight of risk management. In its risk management role, our board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.

Because the Company has two board members, the board of directors’ role in overseeing the management of risk we face is conducted primarily through its committees, as discussed in the description of each committee below and as specified in each committee’s respective charter. The board of directors (or the appropriate board committee in the case of risks that are under the purview of a particular committee) discusses with management potential risk exposures, their potential impact on our company and the steps we take to manage them. When a board committee is responsible for evaluating and overseeing the management of a particular risk or risks, the committee will report such matters to the full board. This enables the board of directors and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.

Management provides timely and comprehensive information to the board to support the board’s role in oversight, approval and decision-making. As often as required, the board reviews the Company’s strategy, the key risks affecting strategy, operations, reporting, legal and compliance, the status of those risks, and how those risks are being managed. At present the board has a standing Audit Committee, but the board does not have outstanding Nominating or Compensation Committees.

The board also regularly receives reports from our internal personnel and independent accountants.

Committees of the Board of Directors

The Company does not have nominating, compensation or audit committees of the Board. The full board conducts the function of an audit committee.

Audit Committee

Presently, the board of directors acts as the audit committee. Our board of directors does not have an “audit committee financial expert,” within the meaning of such phrase under applicable regulations of the Securities and Exchange Commission, serving on its audit committee. However, the board of directors believes that all members of its board are financially literate and experienced in business matters, and that one or more members of the board are capable of (i) understanding generally accepted accounting principles ("GAAP") and financial statements, (ii) assessing the general application of GAAP principles in connection with our accounting for estimates, accruals and reserves, (iii) analyzing and evaluating our financial statements, (iv) understanding our internal controls and procedures for financial reporting; and (v) understanding audit committee functions, all of which are attributes of an audit committee financial expert. The board believes that its current board is able to fulfill its role under SEC regulations despite not having a designated "audit committee financial expert."

Nominating Committee

The full board of directors of the Company functions as a Nominating Committee to select potential directors of the Company. The board has not specifically designated a separate nominating committee because all members of the board of directors desire to be involved in the selection of any new director. The board does not have a specific charter to govern its actions as a nominating committee.

There are no specific, minimum qualifications that the board of directors believes must be met by a candidate recommended by the board of directors. The entire board of directors will assess candidates, whether submitted by management or stockholders, and make recommendations for election or appointment.

Stockholders may recommend director nominee candidates by sending the following information to the Board of Directors, Credit One Financial, Inc., 80 Wall Street, Suite 818, New York, NY 10005: stockholder’s name, number of shares owned, length of period held, and proof of ownership; name, age and address of candidate; candidate’s detailed resume; description of any arrangements or understandings between the stockholder and the candidate; and signed statement from the candidate confirming his or her willingness to serve on the Board of Directors.

The Company intends to seek additional qualified independent directors to serve on the board and ultimately form standing audit, nominating and compensation committees.

Director Independence

We are presently not required to comply with the director independence requirements of any securities exchange, which requires that a majority of a company's directors be independent.

Our board of directors has determined that Ms. Xueyi Fan is independent within the applicable rules of the SEC, and that she is also an independent director under Rule 10A-3 of the Exchange Act for the purpose of audit committee membership.

Code of Business Conduct and Ethics

Our Code of Ethics is applicable to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and all of our employees. It has been designed to deter wrongdoing and to promote:

Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

Full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with, or submits to, the Commission and in other public communications made by the Company;

Compliance with applicable governmental laws, rules and regulations;

Prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and

Accountability for adherence to the Code.

Compensation Interlocks and Insider Participation

There were no compensation committee or board interlocks among the members of our Board.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of our common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were

required, as of the date of this report, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners are complied with.

Item 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The following tables set forth the compensation of the Company's executive officers during the last two fiscal years:

Summary Compensation Table


										Non- Equity		Nonqualified
										Incentive		Deferred		All
Name and						Stock		Option		Plan		Compensation		Other
Principal		Salary		Bonus		Awards		Awards		Compensation		Earnings		Compensation		Total
Position	Year	($)		($)		($)		($)		($)		($)		($)		($)
Dicky Cheung	2015		-		-		-		-		-		-		-		-
CEO,	2014		-		-		-		-		-		-		-		-
President	2013		-		-		-		-		-		-		-		-
& CFO

There were no "most highly compensated executive officers" as that term is defined in Item 402(a)(2) of Regulation S-K and there were no additional individuals for whom disclosure would have been made in this table.

Equity Compensation Plans

The Company has no equity compensation plans at present, and there have been no grants of plan-based award made to a named executive officer in the last two completed fiscal years under any plan.

Outstanding Equity Awards at Fiscal Year-End

The Company does not have any equity incentive plans. There was no outstanding equity awards at fiscal year ended December 31, 2015.

Option Exercises and Stock Vested

The Company does not have any equity incentive plans. There have been no exercise of stock options, SARs and similar instruments, and no vesting of stock, including restricted stock, restricted stock units and similar instruments, during the last two completed fiscal year for each of the named executive officers.

Employment Contracts, Termination of Employment, Change-in-Control Arrangements

The Company does not have employment agreements in place with its executive officers and directors. There are no contracts, agreements, plans or arrangements, whether written or unwritten, that provides for payment(s) to a named executive officer at, following, or in connection with the resignation, retirement or other termination of a named executive officer, or a change in control of the Company or a change in the named executive officer's responsibilities following a change in control, with respect to each named executive officer.

Employee Benefits Plans

(i) Pension Benefits

We do not sponsor any qualified or non-qualified pension benefit plans.

(ii) Nonqualified Deferred Compensation

We do not maintain any non-qualified defined contribution or deferred compensation plans. At this time we do not have a tax qualified defined contribution 401(k) plan in which all eligible executive officers and employees may participate.

Securities Authorized for Issuance under Equity Compensation Plans

As of the end of the most recently completed fiscal year, there were no compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance.

Potential Conflicts of Interest of Compensation Consultants

No compensation consultants have ever been hired to advise the Company and its Board of Directors.

Director Compensation

Directors do not receive any compensation for their services as directors. Our Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity. As of the date of this proxy statement, no guidelines for the compensation of our non-employee directors have been adopted.

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

The following tables set forth certain information as of April 18, 2016, regarding (i) each person known by the Company to be the beneficial owner of more than 5% of the outstanding shares of Common Stock, (ii) each director, nominee and executive officer of the Company and (iii) all officers and directors as a group.

Security Ownership of Certain Beneficial Owners


Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Owner (3)	Percent of Class
Common	Dicky Cheung 80 Wall Street, Suite 818 New York, NY 10005	90,693,454	27.8%

common	Liang Huang	86,000,000	26.4%
	c/o 80 Wall Street, Suite 818 New York, NY 10005
Common	Total of All Shareholders with 5% or greater	176,693,454	54.2%

Security Ownership of Management

Title of Class

Name and Address of Beneficial Owner

Amount and Nature of Beneficial Owner (3)

Percent of Class

Common

Dicky Cheung

80 Wall Street, Suite 818

New York, NY 10005

90,693,454

27.8%

Common

All officers and directors

as a group(a)

90,693,454

27.8%

Notes:


(1)		Except as otherwise noted herein, percentage is determined on the basis of 326,155,623 shares of the Company’s common stock outstanding plus securities deemed outstanding pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Under Rule 13d-3, a person is deemed to be a beneficial owner of any security owned by certain family members and any security of which that person has the right to acquire beneficial ownership within 60 days, including, without limitation, shares of common stock subject to currently exercisable options.

(2)	The Company has not granted any stock options or warrants to purchase shares of its common stock, and the Company has not issued and does not have any securities outstanding that may be converted into its common shares or have any rights convertible or exchangeable into shares of the Company’s common stock.
(3)	All shares are held by a corporation of which he is a controlling shareholder.

Changes in Control

There are no arrangements, known to the Company, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the registrant.

Securities Authorized for Issuance under Equity Compensation Plans

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS; AND DIRECTOR INDEPENDENCE

Transactions with Related Persons

Dicky Cheung, the Company’s director, President and CEO, purchased gold bullions on behalf of the Company in August 2011. Purchases made under this arrangement totaled approximately HKD $20 Million (USD $2.6 Million), which was non-interest bearing and due on demand. By September 2013, the balance was paid off.

Procedures for Approval of Transactions with Related Persons

All transactions involving related persons are to be presented to and assessed by the independent members of the board of directors. Related persons include the Company’s directors and executive officers, immediate family members of the directors and executive officers, and certain large security holders and their family members. If the determination is made that a related person has or may have a material direct or indirect interest in any Company transaction and that the amount involved equals or exceeds $120,000, the Company’s independent directors will review, approve and ratify the transaction, if appropriate, and the transaction will be disclosed if required under SEC rules. If the related party at issue is a director of the Company or a family member of a director, then that director will not participate in the relevant discussion and review.

Information considered in evaluating such transactions include the nature of the related person’s interest in the transaction, the material terms of the transaction, the importance of the transaction to the Company and the related person, whether the transaction is on terms no less favorable to the Company than those available with other parties, whether the transaction would impair the judgment of a director or an executive officer to act in the best interests of the Company, and any other matters that management or the independent directors deem appropriate.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Principal Accountant Fees and Services

The following is a summary of the fees billed to us by our auditors for professional services rendered for the fiscal years ended December 31, 2015, 2014 and 2013:



Fee Category		2015		2014		2013
Audit fees	$	43,000	$	43,000	$	43,793
Audit related fees		-		-		-
Tax fees*		2,300		2,300		2,300

Total fees	$	45,300	$	45,300	$	46,093

*100% of the services were pre-approved by the Board of Directors.

(1) Audit fees represent fees for professional services provided in connection with the audit of our financial statements and review of our quarterly financial statements included in our Form 10-Q.

(2) Audit related fees. None.

(3) Tax fees. Tax return preparation.

(4) All other fees. None.

(5) Pre-Approval Policies

The Board’s policy is to pre-approve all audit services and all permitted non-audit services (including the fees and terms thereof) to be provided by the Company's independent auditor; provided, however, pre-approval requirements for non-audit services are not required if all such services (1) do not aggregate to more than five percent of total revenues paid by the Company to its accountant in the fiscal year when services are provided; (2) were not recognized as non-audit services at the time of the engagement; and (3) are promptly brought to the attention of the Board and approved prior to the completion of the audit.

Our Board pre-approved all of the fees described above.

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(1) Consolidated Financial Statements.

The financial statements are set forth under Item 8 of this Annual Report on Form 10-K.

(2) Financial Statement Schedules

Financial statement schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

(3) Exhibits

3.1

Articles of Incorporation, incorporated by reference herein from Exhibit 3(i) (A) to our Form 10-SB filed June 25, 2003.

3.2

Amended Articles of Incorporation, incorporated by reference herein from Exhibit 3(i)(B) to our Form 10-SB filed June 25, 2003

3.3

Amended Articles of Incorporation, incorporated by reference herein from Exhibit 3(i)(C) to our Form 10-QSB for the fiscal quarter ended March 31, 2005

3.4

Amended Articles of Incorporation, incorporated by reference herein from Exhibit 3.3 to our Current Report on Form 8-K filed January 4, 2010

3.5

By-laws incorporated by reference herein from Exhibit 3(ii) to our Form 10-SB filed June 25, 2003

10.1

Stock Purchase Agreement with STM 1, LLC dated May 3, 2006, incorporated by reference herein from Exhibit 99 to our Form 8-K filed May 9, 2006

10.2

Exclusive Advertising Agreement dated August 26, 2010, incorporated by reference herein from Exhibit 10.2 to our Form 8-K filed October 9, 2013

10.3

A Form of Promissory Note, incorporated by reference herein from Exhibit 10.3 to our Form 8-K filed October 9, 2013

10.4.

Advertising Time Purchase dated September 27, 2012, incorporated by reference herein from Exhibit 10.4 to our Form 8-K filed October 9, 2013

10.5

Securities Purchase Agreement dated January 30, 2013, incorporated by reference herein from Exhibit 10.5 to our Form 8-K filed October 9, 2013

10.6

Trust Agreement dated September 5, 2012, incorporated by reference herein from Exhibit 10.6 to our Form 10-K/A filed October 9, 2013

10.7

Amendment to the Exclusive Advertising Agreement dated August 28, 2013

10.8

Second Amendment to the Exclusive Advertising Agreement dated June 13, 2014

10.9

Third Amendment to the Exclusive Advertising Agreement dated November 25, 2014

10.10

Fourth Amendment to the Exclusive Advertising Agreement dated December 28, 2015

Code of Ethics, incorporated by reference herein from Exhibit 14 to our Form 8-K filed February 1, 2010

List of Subsidiaries of the Company, incorporated by reference herein from Exhibit 21 to our Form 10-K for the year 2012 filed April 15, 2013

31.1

Certification pursuant to Section 13a-14 of the Securities Exchange Act of 1934

32.1

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 USC 1830)

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

SIGNATURES

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

CREDIT ONE FINANCIAL, INC.

By: /s/ Dicky Cheung

Dicky Cheung

President & CEO

(Principal Executive Officer and Principal Financial Officer)

Date: August 12, 2016

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons behalf of the registrant and in the capacities and on the dates indicated.

By: /s/ Dicky Cheung

Dicky Cheung

President & CEO

(Principal Executive Officer and Principal Financial Officer)

Date: August 12, 2016

By: /s/ Xueyi Fan

Xueyi Fan, Director

Date: August 12, 2016

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