UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 10-Q/A
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended:  June 30, 2012
 
¨
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 000-29219
 
VIKING INVESTMENTS GROUP, INC.
(Exact name of registrant as specified in its charter)
 
Nevada
 
98-0199508
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification No.)
 
65 Broadway, 7th Floor
New York, NY  10006
 
10006
(Address of principal executive offices)
 
(Zip Code)
 
Issuer’s telephone number
 
(347) 329-2954
 
 
 (Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x No ¨
 
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 
o
Non Accelerated Filer 
o
Smaller Reporting Company 
x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨ No x
 
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
 
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes ¨ No ¨ Not Applicable x
 
APPLICABLE ONLY TO CORPORATE ISSUERS
 
The number of shares of common stock outstanding as of June 30, 2012 was 19,502,974.
 


 
 

 
 
EXPLANATORY NOTE

The financial statements for the period ended June 30, 2012 are being restated, and this Quarterly Report on Form 10-Q is being amended, to reflect the change to the following previously reported items: long term investment, additional paid in capital, and deficit. The accompanying consolidated financial statements for the quarter ended June 30, 2012 have been restated to reflect those corrections.

Due to the adjustments to restate the 2011 financial statements, the effects of the Company’s previously issued consolidated financial statement as of June 30, 2012 are summarized as follows:

Selected Consolidated Balance Sheet information as of June 30, 2012.
 
   
Previously
Reported
   
Increase
(Decrease)
Note 2a
   
Restated
 
Assets
                 
Long-term investment
   
2,267,252
     
(2,267,252
)
   
-
 
Total Assets
   
2,276,189
     
(2,267,252
)
   
8,937
 
Stockholders’ Equity (Deficiency)
                       
Additional Paid in Capital
   
8,237,826
     
(2,798,586
)
   
5,439,240
 
Deficit accumulated during the development stage
   
(4,912,214
)
   
531,334
     
(4,380,880
)
Total Stockholders’ Equity (Deficiency)
   
2,038,732
     
(2,267,252
)
   
(228,520
)
Total Liabilities and Stockholders’ Equity (Deficiency)
   
2,276,189
     
(2,267,252
)
   
8,937
 

The Company initially recorded the China Wood Shares at its fair value of $5,065,838 at the date of the transaction, and the Company relied upon Viking Nevis’s Guaranty and Repurchase Agreement to determine the value of China Wood shares, in which Viking Nevis, on April 11, 2012, guaranteed that the price per share of the China Wood Shares that it had previously sold to the Company in consideration of the Company issuing Viking Nevis 14,481,420 shares of Company common stock, would not be less than $4.50 per share and agreed to repurchase the China Wood Shares by tendering shares of common stock of the Company owned by Viking Nevis to the Company if the 45-day volume weighted average price (“VWAP”) of the China Wood Shares was equal to or less than US$4.00 per share. Accordingly, the Company valued the China Wood Shares at $4.00/share and an impairment loss of $2,798,586 was recognized in the Company’s previously issued consolidated financial statements for the year ended December 31, 2011.

During the three month period ended June 30, 2013, the Company re-visited the accounting treatment for the above transactions, and determined that the exchange of China Wood shares was a nonmonetary transaction and, therefore, should be accounted under ASC 845, “Nonmonetary Transactions.” The Company further determined that the exchange of shares had no commercial substance due to fact that the Company’s future cash flows were not expected to significantly change as a result of the exchange of shares. Therefore, the Company has recorded the value of the China Wood Shares at their carrying value on the transaction date, and the excess of the fair value of purchase consideration over the assets purchased was charged to additional paid in capital. On December 31, 2011, the China Wood Shares were fully impaired and charged to the income statements.
 
 
2

 
 
VIKING INVESTMENTS GROUP, INC. (FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
 
Form 10-Q/A
 
PART I – FINANCIAL INFORMATION
 
       
ITEM 1.
FINANCIAL STATEMENTS
       
 
 
       
 
Interim Consolidated Balance Sheets (Unaudited) (Restated)
   
F-2
 
 
 
       
 
Interim Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
   
F-3
 
 
 
       
 
Interim Consolidated Statements of Cash Flows (Unaudited) (Restated)
   
F-4
 
 
 
       
 
Interim Consolidated Statements of Stockholders' Deficiency (Unaudited) (Restated)
   
F-5 – F-6
 
 
 
       
 
Notes to Interim Consolidated Financial Statements (Unaudited)
   
F-7 – F-16
 
 
 
       
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   
4
 
 
 
       
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
9
 
 
 
       
ITEM 4.
CONTROLS AND PROCEDURES
   
9
 
 
 
       
PART II – OTHER INFORMATION
 
 
       
ITEM 1.
LEGAL PROCEEDINGS
   
10
 
 
 
       
ITEM 1A.
RISK FACTORS
   
10
 
 
 
       
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   
10
 
 
 
       
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
   
10
 
 
 
       
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   
10
 
 
 
       
ITEM 5.
OTHER INFORMATION
   
10
 
 
 
       
ITEM 6.
EXHIBITS
   
11
 
 
 
       
SIGNATURES
   
12
 
 
 
3

 
 
VIKING INVESTMENTS GROUP, INC.
 
 (FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
 
Interim Consolidated Financial Statements
(Unaudited)
 
PART I – FINANCIAL INFORMATION
 
ITEM 1.      FINANCIAL STATEMENTS
 
 
F-1

 
 
VIKING INVESTMENTS GROUP, INC.
(FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
Interim Consolidated Balance Sheets
(Unaudited)
(Amounts expressed in US dollars)

 
 
 
June 30
   
December 31
 
 
 
2012
   
2011
 
 
 
(Unaudited)
   
(Audited)
 
   
(Restated)
   
(Restated)
 
 
 
$
   
$
 
ASSETS
Cash
   
4,891
     
7,946
 
Advance to suppliers
   
-
     
-
 
Other receivables
   
4,046
     
718
 
Total current assets
   
8,937
     
8,664
 
Long-term Investment
   
-
     
-
 
                 
TOTAL ASSETS
   
8,937
     
8,664
 
 
               
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
LIABILITIES
               
Other Payables
   
121,958
     
-
 
Short-term loan (Note 7)
   
79,282
     
-
 
Accrued expenses
   
36,217
     
28,739
 
TOTAL LIABILITIES
   
237,457
     
28,739
 
                 
Related Party Transactions (Note 4)
               
Subsequent Event (Note 8)
               
 
               
STOCKHOLDER’S DEFICIENCY
               
Capital Stock
               
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued or
outstanding as of June 30, 2012 and December 31, 2011
   
-
     
-
 
Common stock, $0.001 par value, 100,000,000 shares authorized and outstanding 19,502,974
shares issued as of June 30, 2012, and 18,553,778 shares issued as of December 31, 2011
   
18,624
     
18,554
 
Additional Paid-In Capital
   
5,439,240
     
5,428,460
 
Deficit
   
(1,305,454
)
   
(1,305,454
)
Deficit accumulated during the development stage
   
(4,380,880
)
   
(4,161,635
)
Foreign currency translation adjustment
   
(50
)
   
-
 
                 
TOTAL STOCKHOLDER’S DEFICIENCY
   
(228,520)
     
(20,075)
 
 
               
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
   
8,937
     
8,664
 
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
 
F-2

 
 
VIKING INVESTMENTS GROUP, INC.
(FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
Interim Consolidated Statements of Operations And Comprehensive Loss
(Unaudited)
(Amounts expressed in US dollars)

 
 
 
Three months ended,
June 30,
   
Six months ended
June 30,
   
January 1, 2004
(Date of Inception of the Development Stage) to
June 30,
 
   
2012
   
2011
   
2012
   
2011
   
2012
 
                           
(Restated)
 
   
$
   
$
   
$
   
$
   
$
 
General and administrative expenses:
                             
Amortization
   
-
     
-
     
-
     
-
     
27,077
 
Bad debt
   
-
     
-
     
-
     
-
     
525
 
Corporate promotion
   
-
     
-
     
-
     
-
     
13,920
 
Finance charges
   
-
     
-
     
-
     
-
     
27,397
 
Insurance
   
-
     
-
     
-
     
-
     
15,901
 
Interest
   
6,183
     
-
     
6,183
     
-
     
40,831
 
Management and consultant fees
   
-
     
2,250
     
-
     
2,250
     
314,374
 
Office supplies and services
   
6,774
     
500
     
31,662
     
1,000
     
107,279
 
Professional fees
   
35,423
     
4,000
     
39,913
     
5,500
     
407,169
 
Rent
   
4,985
     
-
     
11,245
     
-
     
71,232
 
Wages
   
64,753
     
-
     
130,268
     
-
     
949,428
 
Impairment loss on long-term investment (Note 2)
   
-
     
-
     
-
     
-
     
2,267,252
 
Loss before other items
   
(118,118
)
   
(6,750
)
   
(219,271
)
   
(8,750
)
   
(4,242,385
)
Other items:
                                       
Loss on disposition of equipment
   
-
     
-
     
-
     
-
     
(15,028
)
Write-down of intangible assets
   
-
     
-
     
-
     
-
     
(50,001
)
Write-off of payables
   
-
     
-
     
-
     
-
     
73,607
 
Write-off of notes payable
   
-
     
-
     
-
     
-
     
14,823
 
Gain on settlement of lawsuit
   
-
     
-
     
-
     
-
     
44,445
 
Gain on sale of investment
   
-
     
-
     
-
     
-
     
31,874
 
Other income
   
19
     
-
     
26
     
-
     
42,570
 
Loss from continuing operations
   
(118,099
)
   
(6,750
)
   
(219,245
)
   
(8,750
)
   
(4,100,095
)
Operating loss from discontinued operations
   
-
     
-
     
-
     
-
     
(388,905
)
Gain on sales of discontinued operations
   
-
     
-
     
-
     
-
     
108,120
 
Foreign currency translation adjustment
   
(19
)
   
-
     
(50
)
   
-
     
(50
)
Net loss and Comprehensive loss
   
(118,118
)
   
(6,750
)
   
(219,295
)
   
(8,750
)
   
(4,380,930
)
Loss per common share - Basic and diluted
   
(0.006
)
   
(0.007
)
   
(0.012
)
   
(0.009
)
       
Weighted average number of common share outstanding – basic and diluted
   
19,482,084
     
995,655
     
18,813,624
     
995,655
         
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
 
F-3

 
 
VIKING INVESTMENTS GROUP, INC.
(FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
Interim Consolidated Statements of Cash Flows
(Unaudited)
(Amounts expressed in US dollars)

 
 
 
Six months
Ended
June 30, 2012
   
Six months
Ended
June 30, 2011
   
January 1, 2004
(Date of Inception of the Development Stage) to
June 30, 2012
 
               
(Restated)
 
Cash flows from operating activities:
                 
Net loss
   
(219,245
)
   
(8,750
)
   
(4,380,880
)
Adjustments to reconcile net loss to net cash used in operating activities:
           
-
         
Finance charges
           
-
     
27,387
 
Accrued interest on notes payable
           
-
     
31,414
 
Amortization
           
-
     
27,077
 
Expenses and service costs assumed by shareholders
   
10,850
     
2,000
     
870,378
 
Advanced payment to suppliers
   
-
     
-
     
-
 
Foreign exchange effect on notes payable
           
-
     
5,303
 
Issuance of common stock for services
           
-
     
1,000
 
Stock-based compensation
   
-
     
-
     
39,330
 
Loss on disposition of equipment
           
-
     
225,184
 
Write-down of intangible assets
           
-
     
360,001
 
Write-off of payables
           
-
     
(73,607
)
Write-off of notes payable
           
-
     
(18,729
)
Gain on settlement of lawsuit
           
-
     
(44,445
)
Gain on sale of discontinued operations
           
-
     
(108,121
)
Gain on sale of investments
           
-
     
(31,874
)
Other income
           
-
     
(42,530
)
Impairment loss on long-term investment (Note 2)
   
-
     
-
     
2,267,252
 
Changes in non-cash working capital items:
           
-
         
Increase in accrued expenses
   
129,436
     
6,750
     
155,492
 
Other receivables
   
(3,328
)
           
143,666
 
Cash used in continuing operations
   
(82,287
)
   
-
     
(546,702
)
Discontinued operations
                   
(171,213
)
Net cash used in operating activities
   
(82,287
)
   
-
     
(717,915
)
 
                       
Cash flows from investing activities:
                       
Proceeds from sale of subsidiary
   
-
     
-
     
1
 
Proceeds from assets disposition
   
-
     
-
     
5,458
 
Purchase of equipment
   
-
     
-
     
(5,808
)
Net cash used in investing activities
   
-
     
-
     
(349
)
 
                       
Cash flows from financing activities:
                       
Short-term loan
   
79,282
     
-
     
79,282
 
Settlement of notes payable
   
-
     
-
     
398,614
 
Proceeds from issuance of common stock
   
-
     
-
     
50,525
 
Net cash provided by financing activities
   
79,282
     
-
     
528,421
 
 
                       
Effect of exchange rate changes on cash
   
(50
)
   
-
     
(14,784
)
 
                       
Net increase/(decrease) in cash
   
(3,055
)
   
-
     
(204,627
)
 
                       
Cash, beginning of period
   
7,946
     
-
     
209,518
 
 
                       
Cash, ending of period
   
4,891
     
-
     
4,891
 
 
Supplemental Cash Flow Information (See Note 4)
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
 
F-4

 
 
VIKING INVESTMENTS GROUP, INC.
(FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
Interim Consolidated Statements of Stockholder’s Deficiency
(Unaudited)
(Amounts expressed in US dollars)

 
 
                             
Deficit
     
 
                     
Accumulated
     
Accumulated
     
 
             
Additional
     
Other
     
During the
 
Total
 
 
 
Common Shares
 
Treasury
 
Paid-in
 
Subscriptions
 
Comprehensive
     
Development
 
Stockholders’
 
 
 
Number
 
Amount
 
Stock
 
Capital
 
Received
 
Income
 
Deficit
 
Stage
 
Deficiency
 
               
(Restated)
             
(Restated)
 
(Restated)
 
        $   $   $   $   $   $   $   $  
May 3, 1989 (Inception) through December 31, 1997
    60,022     600     -     9,400     -     -     (10,000 )   -     -  
Net loss
    -     -     -     -     -     -     (148,931 )   -     (148,931 )
Shares issued for cash
    180,000     1,800     -     148,200     2,000     -     -     -     152,000  
Balance at December 31, 1998
    240,022     2,400     -     157,600     2,000     -     (158,931 )   -     3,069  
Net loss
    -     -     -     -     -     -     (511,587 )   -     (511,587 )
Foreign currency translation adjustment
    -     -     -     -     -     (14,130 )   -     -     (14,130 )
Share issued for services
    15,000     150     -     124,850     -     -     -     -     125,000  
Subscription receivable
    12,000     120     -     99,880     8,000     -     -     -     108,000  
Share issued for intangible assets
    15,000     150     -     124,850     -     -     -     -     125,000  
Balance at December 31, 1999
    282,022     2,820     -     507,180     10,000     (14,130 )   (670,518 )   -     (164,648 )
Net loss
    -     -     -     -     -     -     (339,063 )   -     (339,063 )
Foreign currency translation adjustment
    -     -     -     -     -     18,885     -     -     18,885  
Shares issued for cash
    21,600     216     -     259,784     -     -     -     -     260,000  
Shares issued for settlement of debt
    4,500     45     -     174,955     -     -     -     -     175,000  
Subscription receivable
    600     6     -     9,994     (200 )   -     -     -     9,800  
Subscription received
    30,000     300     -     499,700     (9,350     -     -     -     490,650  
Stock option benefit
    -     -     -     14,235     -     -     -     -     14,235  
Balance at December 31, 2000
    338,722     3,387     -     1,465,848     450     4,755     (1,009,581 )   -     464,859  
Net loss
    -     -     -     -     -     -     375,621     -     375,621  
Foreign currency translation adjustment
    -     -     -     -     -     13,629     -     -     13,629  
Shares issued for cash
    300     3     -     2,247     -     -     -     -     2,250  
Subscription received
    -     -     -     -     200     -     -     -     200  
Stock option benefit
    -     -     -     118,920     -     -     -     -     118,920  
Repurchase of common stock for treasury
    -     -     (270 )   (6,611 )   -     -     -     -     (6,881 )
Balance at December 31, 2001
    339,022     3,390     (270 )   1,580,404     650     18,384     (633,960 )   -     968,598  
Net loss
    -     -     -     -     -           (63,864 )   -     (63,864 )
Foreign currency translation adjustment
    -     -     -     -     -     (1,155 )   -     -     (1,155 )
Shares issued for cash
    4,500     45     -     33,705     -     -     -     -     33,750  
Balance at December 31, 2002
    343,522     3,435     (270 )   1,614,109     650     17,229     (697,824 )   -     937,329  
Net loss
    -     -     -     -     -     -     (607,630 )   -     (607,630 )
Foreign currency translation adjustment
    -     -     -     -     -     1,752     -     -     1,752  
Stock option benefit
    -     -     -     11,800           -     -     -     11,800  
Cancellation of agreement
    -     -     -     -     (650 )   -     -     -     (650 )
Share issues for cash on exercise of options
    12,000     120     -     11,880     -     -     -     -     12,000  
Share issues for consulting services
    45,000     450     -     49,675     -     -     -     -     50,125  
Share issues for intangible assets
    60,000     600     -     104,400     -     -     -     -     105,000  
Share issued for software
    60,000     600     -     53,400     -     -     -     -     54,000  
Balance at December 31, 2003
    520,522     5,205     (270 )   1,845,264     -     18,981     (1,305,454 )   -     563,726  
Net loss
    -     -     -     -     -     -     -     (795,364 )   (795,364 )
Foreign currency translation adjustment
    -     -     -     -     -     (238 )   -     -     (238 )
Stock-based compensation
    -     -     -     4,460     -     -     -     -     4,460  
Shares issued for cash on exercise of options
    1,000     10     -     990     -     -     -     -     1,000  
Share issued for debt
    140,000     1,400     -     68,600     -     -     -     -     70,000  
Share issued for consulting services
    2,000     20     -     980     -     -     -     -     1,000  
Balance at December 31, 2004
    663,522     6,635     (270 )   1,920,294     -     18,743     (1,305,454 )   (795,364 )   (155,416 )
Net loss
    -     -     -     -     -     -     -     (54,416 )   (54,416 )
Foreign currency translation adjustment
    -     -     -     -     -     (702 )   -     -     (702 )
Share issues for consulting services
    18,000     180     -     8,820     -     -     -     -     9,000  
Balance at December 31, 2005
    681,522     6,815     (270 )   1,929,114     -     18,041     (1,305,454 )   (849,780 )   (201,534 )
 
 
F-5

 
 
VIKING INVESTMENTS GROUP, INC.
(FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
Interim Consolidated Statements of Stockholder’s Deficiency
(Unaudited)
(Amounts expressed in US dollars)

 
   
Common Shares
 
Treasury
 
Additional
Paid-in
 
Subscriptions
 
Accumulated
Other
Comprehensive
     
Deficit
Accumulated
During the
Development
 
Total
Stockholders’
 
   
Number
 
Amount
 
Stock
 
Capital
 
Received
 
Income
 
Deficit
 
Stage
 
Deficiency
 
               
(Restated)
             
(Restated)
 
(Restated)
 
        $   $   $   $   $   $   $   $  
Net loss
    -     -     -     -     -     -     -     (36,575 )   (36,575 )
Foreign currency translation adjustment
    -     -     -     -     -     563     -     -     563  
Share issues for debt
    50,000     500     -     24,500     -     -     -     -     25,000  
Balance at December 31, 2006
    731,522     7,315     (270 )   1,953,614     -     18,604     (1,305,454 )   (886,355 )   (212,546 )
Net loss
    -     -     -     -     -     -     -     (170,950 )   (170,950 )
Discount on notes payable
    -     -     -     20,573     -     -     -     -     20,573  
Foreign currency translation adjustment
    -     -     -     -     -     (13,391 )   -     -     (13,391 )
Balance at December 31, 2007
    731,522     7,315     (270 )   1,974,187     -     5,213     (1,305,454 )   (1,057,305 )   (376,314 )
Issuance of new shares
    284,637     2,846     -     267,559     -     -     -     -     270,405  
Cancellation of shares
    (20,504 )   (205 )   270     (65 )   -     -     -     -     -  
Services assumed by majority stockholder
    -     -     -     32,000     -     -     -     -     32,000  
Change in par value of common share from $0.01 per share to $0.001 per share
    -     (8,960 )   -     8,960     -     -     -     -     -  
Net income
    -     -     -     -     -     -     -     79,122     79,122  
Foreign currency translation adjustment
    -     -     -     -     -     (5,213 )   -     -     (5,213 )
Balance at December 31, 2008 (audited)
    995,655     996     -     2,282,641     -     -     (1,305,454 )   (978,183 )   -  
Services assumed by majority stockholder
    -     -     -     28,004     -     -     -     -     28,004  
Stock-based compensation
                      24,020                             24,020  
Net Loss
    -     -     -     -     -     -     -     (52,024 )   (52,024  
Balance at December 31, 2009 (audited)
    995,655     996     -     2,334,665     -     -     (1,305,454 )   (1,030,207 )   -  
Services assumed by majority stockholder
    -     -     -     25,198     -     -     -     -     25,198  
Net Loss
    -     -     -     -     -     -     -     (25,198 )   (25,198 )
Balance at December 31, 2010
    995,655     996     -     2,359,863     -     -     (1,305,454 )   (1,055,405 )   -  
Net Loss
    -     -     -     -     -     -     -     (3,106,230 )   (3,106,230 )
Shares issued for expenses assumed by shareholders
    -     -     -     51,148     -     -     -           51,148  
Issuance 14,481,420 new shares for exchanging 566,813 shares of the common stock of China Wood (Note 2)
    14,481,420     14,481           2,252,771                             2,267,252  
Issuance new shares for investment from shareholders
    263,780     264           49,261                             49,525  
Issuance new shares to shareholders for expenses assumed
    2,812,923     2,813           715,417                             718,230  
Balance at December 31, 2011 (Audited)
    18,553,778     18,554     -     5,428,460     -     -     (1,305,454 )   (4,161,635 )   (20,075 )
Net loss
                                              (219,245 )   (219,245 )
Foreign currency translation adjustment
                                  (50 )               (50 )
Issuance new shares to shareholders for expenses assumed
    70,000     70           10,780                             10,850  
Issuance new shares for loan collateral
    879,196     879           60,665                             61,544  
Pledged as securities for loan
          (879 )         (60,665 )                           (61,544 )
Balance at June 30,2012 (Unaudited)
    19,502,974     18,624     -     5,439,240     -     (50 )   (1,305,454 )   (4,380,880 )   (228,520 )
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
 
F-6

 
 
VIKING INVESTMENTS GROUP, INC. (FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Amounts expressed in US dollars)

 
1.  Nature of Business and Going Concern Assumption
 
The Company was originally incorporated under the laws of the State of Florida on May 3, 1989 as Sparta Ventures Corp. and remained inactive until June 27, 1998. The name of the Company was changed to Thermal Ablation Technologies Corporation on October 8, 1998 and then to Poker.com, Inc. on August 10, 1999. On September 15, 2003, the Company changed its name to LegalPlay Entertainment Inc. and on November 8, 2006, the name of the Company was changed to Synthenol Inc. Effective November 3, 2008, the Company merged with and into a wholly-owned subsidiary, SinoCubate, Inc. (“SinoCubate, Inc.”), which remained the surviving entity of the merger. SinoCubate was formed in the State of Nevada on September 11, 2008. The merger resulted in a change of name of the Company from Synthenol Inc. to SinoCubate, Inc. and a change in the state of incorporation of the Company from Florida to Nevada. On June 13, 2012, the Company changed its name to Viking Investments Group, Inc., and effective July 16, 2012, The Financial Industry Regulatory Authority (“FINRA”) approved this name change.
 
On June 29, 2011, and on August 29, 2011, Viking Investments Group, LLC, a company controlled and managed by the Company’s Chairman, Chief Executive Officer and President, Tom Simeo, incorporated under the laws of The Federation of St. Kitts and Nevis (“Viking Nevis”), sold 100,000 and 466,813 shares respectively of China Wood, Inc., publicly listed in the United States with the ticker “CNWD”, (the “China Wood Shares”) owned by Viking Nevis, in exchange for 1,912,000 and 12,569,420 newly issued restricted shares of the Company respectively (the “Company Shares”). Also on August 29, 2011, the Company acquired, from Tom Simeo, the Company’s Chairman, Chief Executive Officer and President, Viking Investments Group, LLC, incorporated in Delaware (“Viking Delaware”) for a value of One Hundred Dollars ($100). By August 29, 2011, the Company completed the purchase of the China Wood Shares by having delivered a total of 566,813 shares of common stock in China Wood, Inc. to the Company. The China Wood Shares were registered in a Form S-1 Registration Statement declared effective by the SEC on April 7, 2011. The China Wood Shares are subject to a “Leak-Out Provision” whereby only a certain amount of shares can be sold per month up and until the first anniversary of the effective day of the aforementioned registration statement, April 7, 2012. The Company accounted the exchange of shares under ASC 845 - Nonmonetary transactions. Due to the fact that the exchange of shares had no commercial substance, the Company recorded the China Wood Shares as a long-term investment and valued the shares at the carrying value on the transaction date. The shares were fully impaired as of December 31, 2011. See Note 2 and 4 for additional information.
 
The Company’s current business plan is to provide incubate resources and services to support the successful development of late stage, non-publicly-listed companies based in the United States and emerging growth countries with the ultimate goal and endeavor for them to become publicly listed in the United States. This incubate service includes financing, professional advisory services, board member services, CFO services, corporate governance advice and general corporate management advisory services to entrepreneurs and their advisers in consideration for a fee, comprised of either cash or equity, or a combination of both (hereinafter referred to as a “Transaction” or plural “Transactions”). It is believed that successful completion of a business incubation program increases the likelihood that a company will stay in business for the long term. The Company is neither an underwriter as the term is defined in Section 2(a)(11) of the Securities Act of 1933, nor an investment company pursuant to the Investment Company Act of 1940. The Company is not an investment adviser pursuant to the Investment Advisers Act of 1940. The Company is not registered with The Financial Industry Regulatory Authority “FINRA” or Securities Investor Protection Corporation (“SIPC”).
 
 
F-7

 
 
VIKING INVESTMENTS GROUP, INC. (FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Amounts expressed in US dollars)

 
As at June 30, 2012, the Company had an accumulated loss of $4,380,930 and had cash balances in the amount of $4,891. The Company’s loss in 2012 was higher than 2011 as a result of increased wage, office rental and other administrative expenses. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and to repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances; however there is no assurance of additional funding being available.
 
2.  Restatement
 
The financial statements for the period ended June 30, 2012 are being restated, and the Quarterly Report on Form 10-Q is being amended, to reflect the change to the following previously reported items: long term investment, additional paid in capital, and deficit. The accompanying consolidated financial statements for the quarter ended June 30, 2012 have been restated to reflect those corrections.

Due to the adjustments to restate the 2011 financial statements, the effects of the Company’s previously issued consolidated financial statement as of June 30, 2012 are summarized as follows:

Selected Consolidated Balance Sheet information as of June 30, 2012.
 
   
Previously
Reported
   
Increase
(Decrease)
Note 2a
   
Restated
 
Assets
                 
Long-term investment
   
2,267,252
     
(2,267,252
)
   
-
 
Total Assets
   
2,276,189
     
(2,267,252
)
   
8,937
 
Stockholders’ Equity (Deficiency)
                       
Additional Paid in Capital
   
8,237,826
     
(2,798,586
)
   
5,439,240
 
Deficit accumulated during the development stage
   
(4,912,214
)
   
531,334
     
(4,380,880
)
Total Stockholders’ Equity (Deficiency)
   
2,038,732
     
(2,267,252
)
   
(228,520
)
Total Liabilities and Stockholders’ Equity (Deficiency)
   
2,276,189
     
(2,267,252
)
   
8,937
 

Note 2a

The Company has restated its 2012 and 2011 financial statements to correct an error in the recording of the carrying value of its investment in China Wood Inc. (“China Wood”)

The Company initially recorded the China Wood Shares at its fair value of $5,065,838 at the date of the transaction, and the Company relied upon Viking Nevis’s Guaranty and Repurchase Agreement to determine the value of China Wood shares, in which Viking Nevis, on April 11, 2012, guaranteed that the price per share of the China Wood Shares that it had previously sold to the Company in consideration of the Company issuing Viking Nevis 14,481,420 shares of Company common stock, would not be less than $4.50 per share and agreed to repurchase the China Wood Shares by tendering shares of common stock of the Company owned by Viking Nevis to the Company if the 45-day volume weighted average price (“VWAP”) of the China Wood Shares was equal to or less than US$4.00 per share. Accordingly, the Company valued the China Wood Shares at $4.00/share and an impairment loss of $2,798,586 was recognized in the Company’s previously issued consolidated financial statements for the year ended December 31, 2011.
 
 
F-8

 
 
VIKING INVESTMENTS GROUP, INC. (FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Amounts expressed in US dollars)


During the three month period ended June 30, 2013, the Company re-visited the accounting treatment for the above transactions, and determined that the exchange of China Wood shares was a nonmonetary transaction and, therefore, should be accounted under ASC 845, “Nonmonetary Transactions.” The Company further determined that the exchange of shares had no commercial substance due to fact that the Company’s future cash flows were not expected to significantly change as a result of the exchange of shares. Therefore, the Company has recorded the value of the China Wood Shares at their carrying value on the transaction date, and the excess of the fair value of purchase consideration over the assets purchased was charged to additional paid in capital. On December 31, 2011, the China Wood Shares were fully impaired and charged to the income statements.
 
3.  Summary of Significant Accounting Policies
 
a)  Basis of Presentation
 
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in United States or “U.S. GAAP” for interim financial information and with the instructions to Form 10-Q as promulgated by the Securities and Exchange Commission or the SEC.  Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. The accompanying unaudited financial statements and related notes should be read in conjunction with the audited financial statements and the Form 10-K of the Company for the year ended December 31, 2011. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.
 
b)  Consolidated Financial Statements
 
The financial statements presented herein reflect the consolidated financial results of the Company and its wholly owned subsidiary Viking Delaware. All significant intercompany transactions and balances have been eliminated upon consolidation.
 
 
F-9

 
 
VIKING INVESTMENTS GROUP, INC. (FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Amounts expressed in US dollars)

 
The foregoing interim unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles or GAAP for consolidated financial information and with the instructions to Form 10-Q as promulgated by the Securities and Exchange Commission or the SEC.  Accordingly, these consolidated financial statements include all of the disclosures required by generally accepted accounting principles for complete consolidated financial statements.
 
c)  Use of Estimates
 
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. The Company’s actual results could vary materially from management’s estimates and assumptions. Significant areas requiring the use of management estimates relate to the determination of expected tax rates for future income tax recoveries, stock-based compensation and impairment of long-term investment.
 
d)  Financial Instruments
 
ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 820, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measurements.  The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
 
·
Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
 
·
Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
 
·
Level 3: inputs to the valuation methodology are unobservable and significant to the fair value measurement.
 
 
F-10

 
 
VIKING INVESTMENTS GROUP, INC. (FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Amounts expressed in US dollars)

 
The Company provides disclosures regarding financial instruments as prescribed by generally accepted accounting principles. These disclosures do not purport to represent the aggregate net fair value of the Company. The long-term investment is impaired and its carrying value is reduced to reflect its fair value based on level 3 inputs. As of December 31, 2011, the long-term investment was fully impaired.
 
e)  Cash
 
Cash includes bank deposits and cash on hand.
 
f)  Loss per share
 
Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and, adjusted by any effects of warrants and options outstanding, if dilutive, that may add to the number of common shares during the period.
 
g)  Comprehensive income
 
FASB ASC 220 “Comprehensive Income,” establishes standards for the reporting and display of comprehensive income and its components in the consolidated financial statements. For the six months ended June, 2012 and 2011, comprehensive loss was $ (219,295) and $ (8,750) respectively.
 
h)  Income taxes
 
The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets likely. The Company did not incur any material impact to its financial condition or results of operations due to the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company is subject to U.S federal jurisdiction income tax examinations for the tax years 2006 through 2012. In addition, the Company is subject to state and local income tax examinations for the tax years 2006 through 2012.
 
 
F-11

 
 
VIKING INVESTMENTS GROUP, INC. (FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Amounts expressed in US dollars)

 
i)  Stock-based compensation
 
The Company may issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs. The Company has adopted ASC Topic 718 (formerly SFAS 123R), “Accounting for Stock-Based Compensation”, which establishes a fair value method of accounting for stock-based compensation plans. In accordance with guidance now incorporated in ASC Topic 718, the cost of stock options and warrants issued to employees and non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period.
 
The fair value of stock warrants was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instrument. The dividend yield assumption is based on historical patterns and future expectations for the Company to declare dividends.
 
j)   Long-term investment
 
Management determines the appropriate classification of investment securities at the time of purchase. Securities are classified held-to-maturity when the Company has both the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost. Securities that are bought and held principally for the purpose of selling in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings. Securities not classified as held-to-maturity or trading are classified as available-for-sale. Available-for-sale securities are stated at fair value, with the impairment losses, net of income taxes, charged to net income in the period in which it occurs.
 
The fair value of securities is based on quoted market prices. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. A decline in the market value of any available-for-sale or held-for-maturity security below cost that is deemed to be other-then-temporary results in a reduction in carrying amount to fair value.
 
 
F-12

 
 
VIKING INVESTMENTS GROUP, INC. (FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Amounts expressed in US dollars)

 
Impairments that are considered other-than-temporary are recognized as a loss in the consolidated statements of operations. The Company considers various factors in reviewing impairments, including the length of time and extent to which fair value has been less than the Company’s cost basis, the financial condition and near-term prospects of the issuer, and the Company’s intent and ability to hold the investments for a period of time sufficient to allow for any anticipated recovery in market value.
 
As June 30, 2012 and 2011, the Company has no trading and held-to-maturity securities. The Company’s long-term investment in the China Wood Shares was written off as of December 31, 2011. See Note 4 for more information regarding the China Wood Shares.
 
k)  Short-term loan
 
Short-term loan is obligation which is to be repaid within one year of the date issued.
 
l)   Recent Accounting Pronouncements
 
In May 2011, FAB issued ASU No 2011-4, “Fair value Measurement (Topic 820): Amendments to achieve Common Fair Value Measurement and Disclosure Requirements in US GAAP and IFRSs.” ASU 2011-04 amends Topic 820 to provide common fair value measurement and disclosure requirements in US General Accepted Accounting Principles (“U.S. GAAP”) and International Financial Reporting Standards.  Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements, as well as providing guidance on how fair value should be applied where it is used already required or permitted by other standards within U.S. GAAP.  ASU No 2011-04 is to be applied prospectively, and early adoption is not permitted.  For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011.  The adoption of ASU No. 2011-04 is not expected to have a material impact on our results of operations or our financial position.
 
In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income (“ASU 2011-05 which is intended to facilitate the convergence of U.S. GAAP and International Financial Reporting Standards (“IFRS”) as well as to increase the transparency of items reported in other comprehensive income.  As a result of ASU 2011-05, all non-owner changes in stockholders’ equity are required to be presented in a single continuous statement of comprehensive income or in two separate but consecutive statements.  The option to present other comprehensive income in the statement of changes in equity has been eliminated.  ASU 2011-05 is effective for fiscal years beginning after December 15, 2011 and should be applied retrospectively.  The Company expects to adopt this standard beginning in 2012.  As ASU 2011-05 impacts presentation only, it will have no effect on the Company’s consolidated financial statements.
 
 
F-13

 
 
VIKING INVESTMENTS GROUP, INC. (FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Amounts expressed in US dollars)

 
In December 2011, the FASB issued ASU 2011-12, “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Item Out of Accumulated Other Comprehensive Income in Accounting Standards Update No 2011-05.” ASU 2011-12 defers the specific requirement to present items that are reclassified from accumulated other comprehensive income to net income separately with their respective components of net income and other comprehensive income.  ASU 2011-12 did not defer the requirement to report comprehensive income either in a single continuous statement or in two separate but consecutive financial statements.  The amendments are effective at the same time as the amendments in ASU 2011-05.
 
4.  Related Party Transactions
 
On April 3, 2009, the Company entered into an agreement with Viking Delaware, providing that effective August 15, 2008, Viking Delaware will pay for any services performed on behalf of the Company by third parties until such time that Viking Delaware is no longer the majority shareholder of the Company.  On August 2, 2011, effective as of April 1, 2011, Viking Delaware will advance and pay all third party costs for the Company as needed, but the Company has an obligation to reimburse Viking Delaware at a later stage upon demand from Viking Delaware.  As of August 29, 2011, Viking Delaware’s rights and obligations are transferred to Viking Nevis.
 
On June 29, 2011, and on August 29, 2011, Viking Investments, LLC, a company controlled and managed by the Company’s Chairman, Chief Executive Officer and President, Tom Simeo, incorporated under the laws of The Federation of St. Kitts and Nevis, (“Viking Nevis”) sold 100,000 and 466,813 shares respectively of China Wood, Inc., publicly listed in the United States with the ticker “CNWD”, (the “China Wood Shares”) owned by Viking Nevis, in exchange for 1,912,000 and 12,569,420 newly issued restricted shares of the Company respectively (the “Company Shares”). By August 29, 2011, the Company completed the purchase of the China Wood Shares by having delivered a total of 566,813 shares of common stock in China Wood, Inc. to the Company. The China Wood Shares were registered in a Form S-1 Registration Statement declared effective by the SEC on April 7, 2011. The China Wood Shares are subject to a “Leak-Out Provision” whereby only a certain amount of shares can be sold per month up and until the first anniversary of the effective day of the aforementioned registration statement, (April 7, 2012). These investments were repurchased on April 15, 2013.
 
 
F-14

 
 
VIKING INVESTMENTS GROUP, INC. (FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Amounts expressed in US dollars)

 
5.   Supplemental Cash Flow Information
 
 
 
Six months ended
June 30
   
January 1, 2004
(Date of Inception the Development stage) to
June 30,
 
 
 
2012
   
2011
   
2012
 
 
 
$
   
$
   
$
 
Cash paid for:
                       
Interest
   
-
     
-
     
-
 
Income taxes (recovery)
   
-
     
-
     
(3,934
)
 
                       
Common shares issued to settle notes payable
           
-
     
295,405
 
Issuance new shares to shareholders for expenses assumed
   
10,850
     
2,000
     
870,378
 
 
6.  Expenses
 
Expenses including the rental, professional service fee, other office expenses for three month ended June 30, 2012 and June 30, 2011 were $118,099 and $6,750, respectively.  Expenses including the rentals, professional fees, other office expenses for six month ended June 30, 2012 and June 30, 2011 were $219,245 and $8,750, respectively. On March 20, 2012, the Company issued 45,000 shares of common stock, par value $0.001 per share, to Howard Lee (25,000 shares) and Gongquan Zhang (20,000 shares) respectively for services rendered under their respective consulting agreement. The Company recorded the stock-based expenses with an amount of $8,100 in net income. On May 1, 2012, the Company issued 25,000 shares of common stock, par value $0.001 per share, to Gongquan Zhang for services rendered under the consulting agreement with him. The Company recorded the stock-based expenses with an amount of $2,750 representing trading value of common stock on the date of issuance.
 
 
F-15

 
 
VIKING INVESTMENTS GROUP, INC. (FORMERLY SINOCUBATE, INC.)
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Amounts expressed in US dollars)

 
7.  Short-term Loan
 
On March 22, 2012, the company entered into a six-month loan agreement with Qin Ling (the Lender), a third party, in an amount with a US Dollar equivalent of $79,282. The company issued 879,196 shares common stock of the Company as collateral to the Lender. The collateral will be returned to the company on the payback date of the loan.
 
8.  Subsequent Event
 
On July 3, 2012, the Company authorized and approved the issuance of 25,000 restricted shares of the Companys common stock to each of Mr. Zhenghao Tang and Tejesh Srivastav in consideration for becoming members of the Board of Directors of the Company.  On July 10, 2012, the Company authorized and approved the issuance of 277,778 free trading shares of common stock to David Rees in consideration for legal services.  The shares were issued to Mr. Zhenghao Tang, Mr. Tejesh Srivastav and Mr. David Rees subsequently.  The Company authorized and approved the issuance of 25,000 restricted shares of the Companys common stock to Ms. Jiyun Ge in consideration for becoming a member of the Board of Directors of the Company during the first quarter of 2012, and those shares were issued to Ms. Jiyun Ge subsequently after the period ended June 30, 2012.
 
 
F-16

 
 
VIKING INVESTMENTS GROUP, INC.
 
(FORMERLY SINOCUBATE, INC.)
 
 (A Development Stage Company)
 
ITEM 2.      MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
In preparing the management’s discussion and analysis, the registrant presumes that you have read or have access to the discussion and analysis for the preceding fiscal year.
 
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This document includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 or the Reform Act.   All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earning, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions of performance; and statements of belief; and any statements of assumptions underlying any of the foregoing.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: our ability to raise capital and the terms thereof; ability to gain an adequate player base to generate the expected revenue; competition with established gaming websites; adverse changes in government regulations or polices; and other factors referenced in this Form 10-Q.
 
The use in this Form 10-Q of such words as “believes”, “plans”, “anticipates”, “expects”, “intends”, and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. These forward-looking statements present the Company’s estimates and assumptions only as of the date of this Report.  Except for the Company’s ongoing obligation to disclose material information as required by the federal securities laws, the Company does not intend, and undertakes no obligation, to update any forward-looking statements.
 
Although the Company believes that the expectations reflected in any of the forward-looking statements are reasonable, actual results could differ materially from those projected or assumed or any of the Company’s forward-looking statements.  The Company’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.
 
 
4

 
 
PLAN OF OPERATIONS
 
Overview
 
The Company’s current business plan is to invest in and to provide incubate resources and services to support the successful development of late stage, non-publicly-listed companies based in the United States and emerging growth countries with the ultimate goal and endeavor for them to become publicly listed in the United States.  This incubate service includes financing, professional advisory services, board member services, CFO services, corporate governance advice and general corporate management advisory services to entrepreneurs and their advisers in consideration for a fee, comprised of either cash or equity, or a combination of both (hereinafter referred to as a “Transaction” or plural “Transactions”). It is believed that successful completion of a business incubation program increases the likelihood that a company will stay in business for the long term.  The Company may also invest in publicly listed securities that the Company believes are undervalued.  The Company is neither an underwriter as the term is defined in Section 2(a)(11) of the Securities Act of 1933, nor an investment company pursuant to the Investment Company Act of 1940.  The Company is not an investment adviser pursuant to the Investment Advisers Act of 1940. The Company is not registered with FINRA or SIPC. 
 
Effective January 1, 2012 and January 9, 2012, the Company entered into Letter of Intents with two new Chinese companies located in Beijing and Shanghai to provide those companies with consulting and general business development services, including consultation regarding potential stock listings through reverse mergers in the United States and other investments.  The Beijing client operates over 100 retail stores selling women’s underwear.  In addition to adding up to 200 more stores in the next two years, the client plans to establish a comprehensive online presence.  The Shanghai client, a restaurant and tea house company, operates close to 130 stores in Shanghai and the Hunan province.  The client plans to add 50 more stores per year during the next three years and to build a central kitchen serving 300 stores.  Upon completion of the listing in the United States, the Company will own a stake in both of those clients.
 
On January 18, 2012, the Company signed an engagement letter with a Chinese client located in the Zhejiang Province to provide consulting and general business services, including consultation regarding potential stock listings through a reverse merger in the United States.  This client is in the apparel business and owns 3 clothing factories, several name brands and operates multiple retail stores in China, and exports some of its products to foreign countries.  The client plans to increase its production facility, establish a comprehensive online presence and increase its retail chain in China. Upon completion of the listing in the United States, the Company will own a stake in this client.
 
 
5

 
 
Selection of Clients and Investment Targets
 
To a large extent, management’s decision to assist clients is largely dependent on management’s assessment of the business prospects of each client.  Because the Company’s contractual arrangements with its clients generally provide for the Company to be compensated for its services partially or wholly in equity in the clients, the Company must assess the quality of its clients’ and investment targets’ business prospects, financial statements, management and personnel, the anticipated acceptability of new products or marketing concepts, the merit of technological changes, the perceived benefit these companies will derive from accessing the US securities’ markets, and numerous other factors which are difficult, if not impossible, to analyze through the application of any objective criteria.  In many instances, it is anticipated that the historical operations of a prospective client or investment target may not necessarily be indicative of the potential for future equity appreciation because of the possible need to access capital, shift marketing approaches substantially, expand significantly, change product emphasis, change or substantially augment management, or make other changes. The Company will be dependent upon its prospective clients and investment targets to identify any such problems which may exist and to implement, or be primarily responsible for the implementation of, required changes. Because the Company expects a significant portion of its clients or investment targets to be newly organized or entering a new phase of growth, it should be emphasized that the Company will be exposed to the risk that its equity ownership in those client companies or investment targets will not be as valuable as anticipated because those companies’ management in many instances will not have proved its abilities or effectiveness, the eventual market for such companies’ products or services will likely not be established, and such companies may not be profitable after the Company provided services to or invested in such companies.
 
Furthermore, the Company may effect transactions having a potentially adverse impact upon the Company’s shareholders pursuant to the authority and discretion of the Company’s management and board of directors without submitting any proposal to the stockholders for their consideration. Holders of the Company’s securities should not anticipate that the Company will necessarily furnish such holders, prior to any contractual arrangement or combination, with financial statements, or any other documentation, concerning a target company or its business. In some instances, however, a proposed arrangement may be submitted to the stockholders for their consideration, either voluntarily by such directors to seek the stockholders’ advice and consent or because federal and/or state law so requires.
 
Prior to making a decision to contract with new clients or invest in a similar business opportunity, the Company’s officers may meet personally with a target company’s management and key personnel, may visit and inspect material facilities, request historical and projected business and/or financial information and records, obtain independent analysis or verification of certain information provided, check references of management and key personnel, and take other reasonable investigative measures, to the extent allowed by the Company’s limited financial resources.
 
Going Concern Qualification
 
The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.  Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances; however there is no assurance of additional funding being available.
 
 
6

 
 
RESULTS OF CONTINUING OPERATIONS
 
The following discussion of the financial condition and results of operation of the Company should be read in conjunction with the Financial Statements and the related Notes included elsewhere in this Report.
 
Three months ended June 30, 2012 compared to the three months ended June 30, 2011
 
Liquidity and Capital Resources
 
At June 30, 2012 and June 30, 2011, the Company respectively had US$4,891 and US$0 cash holding.  On August 2, 2011, effective as of April 1, 2011, Viking Delaware advanced and paid all third party costs for the Company as needed, but the Company has an obligation to reimburse Viking Delaware at a later stage upon demand from Viking Delaware.  As of August 29, 2011, Viking Delaware’s rights and obligations are transferred to Viking Nevis.
 
Revenue
 
The Company had no net sales for the three months ended June 30, 2012 or June 30, 2011.
 
Expenses
 
The operating expenses increased by $111,349 to $118,099 in the three months period ended June 30, 2012 from $6,750 in the corresponding period in 2011. The increase was mainly due to employee salaries, office rental and other administrative expenses. The salary expenses increased from $0 to $64,753 in the three months period ended June 30, 2012 comparing to the corresponding period in 2011.  For the three months ended June 30, 2012, the salary expenses to management and the shareholders who holds more than 5% shares of the company amounted to $60,948.
 
Net Loss
 
The Company incurred a net loss of $118,118 during the three months ended June 30, 2012 compared with net loss of $6,750 for June 30, 2011. The increase in net loss was mainly due to the increase of employee salaries, office rental and other administrative expenses in the current three months period ended June 30, 2012 compared to the same period of 2011.
 
 
7

 
 
Six months ended June 30, 2012 compared to the Six months ended June 30, 2011
 
Liquidity and Capital Resources
 
At June 30, 2012 and June 30, 2011, the Company respectively had US$4,891 and US$0 cash holding.  On August 2, 2011, effective as of April 1, 2011, Viking Delaware advanced and paid all third party costs for the Company as needed, but the Company has an obligation to reimburse Viking Delaware at a later stage upon demand from Viking Delaware.  As of August 29, 2011, Viking Delaware’s rights and obligations are transferred to Viking Nevis.
 
Revenue
 
The Company had no net sales for the six months ended June 30, 2012 or June 30, 2011.
 
Expenses
 
The operating expenses increased by $210,495 to $219,245 in the six months period ended June 30, 2012 to the corresponding period in 2011. The increase was mainly due to increased employee salaries, office rental and other administrative expenses. The salary expenses increased from $0 to $130,268 in the six months period ended June 30, 2012 comparing to the corresponding period in 2011. For the six months ended June 30, 2012, the salary expenses to management and the shareholders who holds more than 5% shares of the company amounted to $118,158.
 
Net Loss
 
The Company incurred a net loss of $219,295 during the six months ended June 30, 2012 compared with net loss of $8,750 for June 30, 2011. The increase in net loss was mainly due to the increase of employee salaries, office rental and other administrative expenses in the current six months period ended June 30, 2012 compared to the same period of 2011.
 
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
 
The Company has adopted various accounting policies that govern the application of accounting principles generally accepted in the United States of America in the preparation of the Company’s financial statements which requires it to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
 
Although these estimates are based on management’s knowledge of current events and actions the Company may undertake in the future, the final results may ultimately differ from actual results. Certain accounting policies involve significant judgments and assumptions, which have a material impact on the Company’s financial condition and results. Management believes its critical accounting policies reflect its most significant estimates and assumptions used in the presentation of the Company’s financial statements. The Company’s critical accounting policies include debt management and accounting for stock-based compensation. The Company does not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities”.
 
 
8

 
 
ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, the Company is not required to provide the information under this item.
 
ITEM 4.      CONTROLS AND PROCEDURES
 
Disclosure Controls and Procedures
 
The Company does not currently maintain controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified by the Commission’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
 
Under the supervision and with the participation of management, including the Company’s Chief Executive Officer, the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2012 have been evaluated, and, based upon this evaluation, the Company’s Chief Executive Officer has concluded that these controls and procedures are not effective in providing reasonable assurance of compliance.
 
Changes in Internal Control over Financial Reporting
 
Management and directors will continue to monitor and evaluate the effectiveness of the Company's internal controls and procedures and the Company's internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
 
 
9

 
 
PART II — OTHER INFORMATION
 
ITEM 1.      LEGAL PROCEEDINGS
 
None.
 
ITEM 1A.   RISK FACTORS
 
As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, the Company is not required to provide the information under this item.
 
ITEM 2.      UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
 
None.
 
ITEM 3.      DEFAULTS UPON SENIOR SECURITIES
 
None.
 
ITEM 4.      MINE SAFETY DISCLOSURES
 
None.
 
ITEM 5.      OTHER INFORMATION
 
None.
 
 
10

 
 
ITEM 6.      EXHIBITS
 
Number
 
Description
 
 
 
31.1
 
Certification of Principal Executive Officer required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
31.2
 
Certification of Principal Financial Officer required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
32.1
 
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63
 
 
 
32.2
 
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63
 
 
 
101.INS**
 
XBRL Instance Document
 
 
 
101.SCH**
 
XBRL Taxonomy Extension Schema Document
 
 
 
101.CAL**
 
XBRL Taxonomy Extension Calculation Linkbase Document
 
 
 
101.DEF**
 
XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB**
 
XBRL Taxonomy Extension Label Linkbase Document
 
 
 
101.PRE**
 
XBRL Taxonomy Extension Presentation Linkbase Document
 
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 
 
11

 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
VIKING INVESTMENTS GROUP, INC.
(Registrant)
 
       
Date: September 24, 2013
By:
/s/ Tom Simeo
 
   
Tom Simeo
 
   
Chief Executive Officer,
 
   
Director and Treasurer
 
 
 
 
12