CHJI China Changjiang Mining and New Energy Company Ltd (CE)

PART 1. FINANCIAL INFORMATION

In addition to the historical information contained herein, we make statements in this Quarterly Report on Form 10-Q that are forward-looking statements. Sometimes these statements will contain words such as "believes," "expects," "intends," "should," "will," "plans," and other similar words. Forward-looking statements include, without limitation, assumptions about our future ability to increase income streams, reduce and control costs, to grow revenue and earnings, and our ability to obtain additional debt and/or equity capital on commercially reasonable terms, none of which is certain. These statements are only predictions and involve known and unknown risks, uncertainties and other factors included in our periodic reports with the SEC. Although forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment, actual results could differ materially from those anticipated in such statements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

The following discussion and analysis should be read in conjunction with our March 31, 2016 unaudited consolidated financial statements and related notes thereto included in this quarterly report and with our consolidated financial statements and notes thereto for the year ended December 31, 2015.

Overview

We have transitioned our business from mining to clean new energy, and mainly focus on the solar photovoltaic, or "PV", downstream market at present stage. We are currently in the development stage with the goal of becoming a turnkey developer and Engineering, Procurement and Construction contractor of solar PV energy facilities. We intend to design, engineer, construct, market and sell high-quality PV energy facilities for commercial and utility applications to local markets.

Before June 1, 2012, we were engaged in exploration for commercially recoverable metal-bearing mineral deposits. On June 1, 2012, we entered into an agreement with Xunyang Yongjin Mining Co., Ltd to transfer our mining exploration rights for a cash payment of $2,380,612 (RMB 15,000,000). Further, on December 30, 2013, our subsidiary, Shaanxi Changjiang Mining & New Energy Co., Ltd. ("Shaanxi Changjiang"), entered into Equity Transfer Agreements with each of Zhang Hong Jun, a director of the Company and owner of a controlling interest in the Company (holding 54.42% as of March 31, 2016), and Wang Sheng Li, a director and shareholder of the Company (holding 2.36% as of March 31, 2016), to sell Shaanxi Changjiang's entire 60% interest in Shaanxi East Mining Co., Ltd., ("East Mining" and formerly referred to as "Dongfang Mining") for a total consideration of $885,696 (RMB 5,400,000). The consideration payable to the Company was used to offset amounts owed to each of the acquirers. Each of the acquirers obtained 30% equity in this transaction.

We also hold land use rights in a land parcel and we lease a portion of the land use rights on the 5.7 square kilometer parcel to Shaanxi Huanghe Bay Ecological Agriculture Co., Ltd (previously Shaanxi Huanghe Bay Spring Lake Park Co., Ltd.), a company with a common control person. The term of the lease agreement is from January 1, 2011 to December 31, 2029. Our land use rights are amortized over their 50 year term. The Land use right was our largest asset, with an annual rent of approximately $1.2 million (RMB 7, 500,000).

As of March 31, 201 6 , we only received rent payment of 2011 and no any collection afterwards. Due to the uncertain collectability, we decided to write off all the receivable related to land lease of $3,618,818 (equivalent to RMB 22,500,000) and decided not to recognize any revenue for the year ended December 31, 2015 and for the three months ended March 31, 2016.

The following is a summary of the book value of our land use rights as of March 31, 2016:

Amortization expenses were $97,861 and $104,300 for the three months ended March 31, 2016 and 2015, respectively.

As reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit of $7,534,527 as of March 31, 2016, which includes net loss for common stockholders of $131,361 for the three months ended March 31, 2016. The Company's operations used cash of $31,246 for the three months ended March 31, 2016.

In the past, the Company relied on the loan received from the related parties, and cash generated from operations to meet its operating requirements. Although the Company was successful in the past in obtaining financing, there can be no assurance that it will be able to obtain adequate financing in the future or that the terms of such financings will still be favorable. However in the event that we have insufficient cash to meet our operating requirements, our related companies and shareholders will commit to provide loan to maintain liquidity.

We believe that we have adequate capital to assure that we will be able to meet our obligations or obtain sufficient capital to complete our plan of operations for the next twelve (12) months.

RESULTS OF OPERATIONS

Sales revenue

We did not recognize revenue for the three months ended March 31, 2016 due to uncertainty of collectability, compared with revenue of $309,183 for the three months ended March 31, 2015.

Operating Expenses

Total operating expense for the three months ended March 31, 2016 was $138,529 compared with operating expense of $154,715 for the three months ended March 31, 2015, representing a decrease of $16,186 or 10%. Administrative expense decreased by $4,784 or 13% for the quarter ended March 31, 2016. The amortization expense for the three months ended March 31, 2016 remained stable, as no addition or disposal occurred for land use rights. The depreciation for the three months ended March 31, 2016 decreased by $4,963 or 37%, compared with the same period of 2015, which was mainly due to the disposal of property occurred in May 2015.

Loss before taxes for the three months ended March 31, 2016 was $138,649, compared to income of $137,132 for the three months ended March 31, 2015.

Net Loss

We incurred net loss of $138,649 for the three months ended March 31, 2016, compared to net income of $137,132 for the three months ended March 31, 2015. Because we did not recognize revenue for Land use right leasing segment and Solar PV segment due to uncertainty of collectability.

Other Comprehensive Income

Our other comprehensive incomes were $75, 436 and $100,081 for the three months ended March 31, 2016 and 2015 respectively. The comprehensive income for each period referred to net income plus the foreign currencies translation gain (loss), between the U.S. Dollar and the Chinese Yuan RMB (or Hong Kong Dollar for Wah Bon).

Stockholders' Equity

Stockholders' equity decreased to $11,424,180 as of March 31, 2016, from $11,487,393 as of December 31, 2015. The decrease was due to the net loss of $138,649, and offset by other comprehensive income (foreign currency translation income) of $75, 436, for the three months ended March 31, 2016.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows From Operating Activities

Net cash used in operating activities of $31,246 for the three months ended March 31, 2016, decreased by $5,498 or 15%, compared with net cash used of $36,744 for the three months ended March 31, 2015. The adjustments to reconcile our net loss to net cash flow include depreciation expense of $8,507, amortization of $97,861 for land use rights, an increase in operating assets of $1,356 and an increase in operating liability of $2,391.

Cash Flows From Investing Activities

There was no cash flow in investing activities for the three months ended March 31, 2016. And net cash provided by investing activities of $16,657 for the three months ended March 31, 2015 was the proceeds from related parties.

Cash Flows From Financing Activities

The Company borrowed $29,054 and $0 from its related parties for the three months ended March 31, 2016 and 2015 respectively.

General

As in previous year, we have access to short and long term loans of cash from our directors or other related parties.

The Company borrowed $ 29 , 05 4 from related parties for the three months ended March 31, 201 6 .

Our current assets decreased by $495 and total assets increased by $1,053 respectively.

We have cash of $11,667 and $13,550 as of March 31, 2016 and December 31, 2015 respectively.

We believe that we have sufficient cash to fund operations for the next twelve (12) months.

FINANCING

We anticipated the cash generated from operating activities will be sufficient to sustain our daily operations for the next twelve months.

INFLATION

Our management believes that inflation did not have a material effect on our results of operations for the three months ended March 31, 2016.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements.

CONTRACTUAL OBLIGATIONS

None

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities to comply with generally accepted accounting principles. We base our estimates on historical experience and on various other assumptions that we believe are 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 could differ from our estimates, which would affect the related amounts reported in our financial statements.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimates are made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur, could materially impact the consolidated financial statements. We believe that the following critical accounting policies reflect the significant estimates and assumptions which are used in the preparation of the consolidated financial statements and affect our financial condition and results of operations.

Revenue Recognition

The Company recognizes revenue when the earnings process is complete, both significant risks and rewards of ownership are transferred or services have been rendered and accepted, the selling price is fixed or determinable, and collectability is reasonably assured.

We are currently leasing the land use right to Huanghe for the development and operation of a theme park. We generally collect the annual rent every year, and then recognize land use right leasing revenue over the beneficial period described by the agreement, as the revenue is realized or realizable and earned.

The Company supplied electricity power by its solar PV energy segment. The electricity revenue is earned and recognized upon transmission of electricity to Heyang County Huanghe Bay Resort Hotel Co., Ltd., a related company or the power grid controlled and owned by the respective regional or provincial grid companies.

Related Party

A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, member of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting party might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

Our related parties are the following individuals and entities: (i) Mr. Wang Sheng Li (a director of the Company), Mr. Chen Weidong (our President, Chief Executive Officer and Chairman of the Board), Ms Li Ping (a director of the Company), and Ms. Chen Min (a director of the Company), all of whom are shareholders of the Company; (ii) Mr. Zhang Hong Jun, who is currently a director and controlling shareholder of the Company; (iii) Ms. Li Ping (our Chief Financial Officer and who has the same name with our Director Ms. Li Ping); and (iv) the following companies: Shaanxi Jiuzu Shaokang Liquor Co., Ltd.(Previously Shaanxi Baishui Dukang Liquor Development Co., Ltd.), Shaanxi Baishui Dukang Marketing Management Co., Ltd.(Previously Huitong World Property Superintendent Co.,Ltd.), Shaanxi Xi Deng Hui Development Stock Co., Ltd., Shaanxi Baishui Dukang Brand Management Co., Ltd., Zhongke Aerospace & Agriculture Development Stock Co., Ltd., Shaanxi Huanghe Bay Ecological Agriculture Co., Ltd (Previously Shaanxi Huanghe Bay Spring Lake Park Co., Ltd.), Shaanxi Changfa Industrial Co., Ltd., Shaanxi Tangrenjie Advertising Media Co., Ltd. (Previously "Shaanxi Changjiang Zhongxiayou Investment Co., Ltd.), Shaanxi Dukang Liquor Trading Co., Ltd., Shaanxi East Mining Co., Ltd., Heyang County Huanghe Bay Resort Hotel Co., Ltd., Shaanxi Baishui Dukang Liquor Co., Ltd, and Shaanxi Du Kang Liquor Group Co., Ltd.

Cash flows from due from related parties are classified as cash flows from investing activities. Cash flows from due to related parties are classified as cash flows from financing activities.