CHINA LONGYI GROUP INTERNATIONAL HOLDINGS
LIMITED
CONSOLIDATED BALANCE SHEETS
|
|
March 31,
|
|
|
December 31,
|
|
ASSETS
|
|
2017(Unaudited)
|
|
|
2016(Audited)
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
11,788
|
|
$
|
33,976
|
|
Inventories
|
|
425,834
|
|
|
440,643
|
|
Account receivables
|
|
43,261
|
|
|
52,957
|
|
Other
receivables
|
|
67,050
|
|
|
56,461
|
|
Deposits and prepayments
|
|
45,447
|
|
|
42,790
|
|
Total current assets
|
|
593,380
|
|
|
626,827
|
|
|
|
|
|
|
|
|
Investments
|
|
82,366
|
|
|
81,919
|
|
Property, plant and equipment (net)
|
|
281,859
|
|
|
285,149
|
|
|
$
|
957,605
|
|
$
|
993,895
|
|
|
|
|
|
|
|
|
LIABILITIES AND
DEFICIT
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Short-term loan
|
$
|
14,494
|
|
$
|
-
|
|
Accounts payable
|
|
1,420
|
|
|
1,413
|
|
Accrued
liabilities
|
|
320,193
|
|
|
315,237
|
|
Due to directors
|
|
576,521
|
|
|
573,587
|
|
Due to related
parties
|
|
827,813
|
|
|
813,665
|
|
Other payables
|
|
222,901
|
|
|
179,278
|
|
Total current liabilities
|
|
1,963,342
|
|
|
1,883,180
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
Common stock: par value $.01;
200,000,000 shares authorized;
77,655,862 shares issued
and outstanding
|
$
|
776,558
|
|
$
|
776,558
|
|
Additional
paid-in capital
|
|
28,877,540
|
|
|
28,877,540
|
|
Accumulated Deficit
|
|
(30,964,714
|
)
|
|
(30,839,409
|
)
|
Accumulated
other comprehensive income
|
|
266,776
|
|
|
248,955
|
|
Total China Longyi stockholders'
deficit
|
|
(1,043,840
|
)
|
|
(936,356
|
)
|
Noncontrolling interest
|
|
38,103
|
|
|
47,071
|
|
Total Deficit
|
|
(1,005,737
|
)
|
|
(889,285
|
)
|
|
$
|
957,605
|
|
$
|
993,895
|
|
See notes to consolidated financial statements
3
CHINA LONGYI GROUP INTERNATIONAL HOLDINGS
LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
|
|
Three months ended
|
|
|
|
March 31,
|
|
|
|
2017(Unaudited)
|
|
|
2016
(Unudited)
|
|
Revenues
|
|
|
|
|
|
|
Sales
|
$
|
37,277
|
|
$
|
16,466
|
|
Cost of sales
|
|
19,782
|
|
|
-
|
|
Gross margin
|
|
17,495
|
|
|
16,466
|
|
Operating expenses
|
|
|
|
|
|
|
General and administrative
expenses
|
|
132,663
|
|
|
103,486
|
|
|
|
132,663
|
|
|
103,486
|
|
Income (Loss) from operations
|
|
(115,168
|
)
|
|
(87,020
|
)
|
Other income (expense)
|
|
|
|
|
|
|
Interest income
|
|
11
|
|
|
7
|
|
Other income
(expense)
|
|
1,452
|
|
|
8,807
|
|
Foreign transaction exchange
gain (loss)
|
|
(20,029
|
)
|
|
(2,828
|
)
|
Interest expense
|
|
-
|
|
|
(5,860
|
)
|
|
|
(18,566
|
)
|
|
126
|
|
Income (Loss) before income
tax expense and noncontrolling interest
|
|
(133,734
|
)
|
|
(86,894
|
)
|
Net income (loss)
|
|
(133,734
|
)
|
|
(86,894
|
)
|
Less: Net income (loss)
attributable to noncontrolling interest
|
|
8,429
|
|
|
7,517
|
|
Net income (loss) attributable to China
Longyi
|
|
(125,305
|
)
|
|
(79,377
|
)
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
$
|
(0.0016
|
)
|
$
|
(0.0010
|
)
|
Weighted average number of
shares outstanding-basic and diluted
|
|
77,655,862
|
|
|
77,655,862
|
|
Comprehensive income (loss)
|
|
|
|
|
|
|
Net income
(loss)
|
|
(133,734
|
)
|
|
(86,894
|
)
|
Foreign currency translation
adjustment
|
|
17,282
|
|
|
(1,506
|
)
|
Comprehensive income (loss)
|
$
|
(116,452
|
)
|
$
|
(88,400
|
)
|
Comprehensive income (loss) attributable to
noncontrolling interest
|
$
|
(8,968
|
)
|
$
|
(8,244
|
)
|
Comprehensive income (loss)
attributable to China Longyi
|
$
|
(107,484
|
)
|
$
|
(80,156
|
)
|
See notes to consolidated financial statements
4
CHINALONGYI GROUP INTERNATIONAL HOLDINGS LIMITED
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
Three months ended March 31,
|
|
|
|
2017
(Unaudited)
|
|
|
2016(Unaudited)
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(133,734
|
)
|
$
|
(86,894
|
)
|
Adjustments to reconcile net
income (loss) to net cash used in operations:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
4,857
|
|
|
5,773
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts receivables
|
|
10,006
|
|
|
5,513
|
|
Other receivables
|
|
(10,301
|
)
|
|
(1,626
|
)
|
Deposits and prepayment
|
|
(2,428
|
)
|
|
(18,377
|
)
|
Inventory
|
|
17,252
|
|
|
(1,899
|
)
|
Other payables
|
|
46,634
|
|
|
68,474
|
|
Due to related parties
|
|
10,871
|
|
|
11,608
|
|
Net cash Provided by (used in) operations
|
|
(56,843
|
)
|
|
(17,428
|
)
|
|
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
|
Net cash Provided by (used in) investing activities
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Proceeds
(repayments) from short term loans
|
|
14,523
|
|
|
-
|
|
Proceeds from (repayments to)
directors
|
|
(131
|
)
|
|
7,087
|
|
Net cash Provided by (used in) financing activities
|
|
14,392
|
|
|
7,087
|
|
Effect of foreign exchange rate
fluctuation
|
|
20,263
|
|
|
2,912
|
|
Increase(decrease) in cash and cash equivalents
|
|
(22,188
|
)
|
|
(7,429
|
)
|
Cash and cash equivalents,
beginning of period
|
|
33,976
|
|
|
29,429
|
|
Cash and cash
equivalents, end of period
|
$
|
11,788
|
|
$
|
22,000
|
|
|
|
|
|
|
|
|
Supplemental disclosures of
cash flow information:
|
|
|
|
|
|
|
Cash paid for interest
|
$
|
-
|
|
$
|
-
|
|
Cash paid for
income taxes
|
$
|
-
|
|
$
|
-
|
|
See notes to consolidated financial statements
5
CHINA LONGYI GROUP INTERNATIONAL HOLDINGS LIMITED
Notes to
consolidated financial statements
The accompanying consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of American (US GAAP) for financial information and with the
instructions to Form 10Q and Item 310 of Regulation S. The accounts of China
LongYi Group International Holdings Limited and all of its subsidiaries are
included in the consolidated financial statements. All significant intercompany
accounts and transactions have been eliminated in consolidation.
1.
|
BUSINESS DESCRIPTION AND
ORGANIZATION
|
We are a holding company that only operates through our
indirect Chinese subsidiaries Beijing SOD and Chongqing SOD. Through our Chinese
subsidiaries, we develop, manufacture and market our SOD products in China. SOD
is a naturally occurring enzyme which may act as a potent antioxidant defense in
cells that are exposed to oxygen.
The following chart reflects our organizational structure as of
the date of this report.
CONTROL BY PRINCIPAL STOCKHOLDERS
The directors, executive officers, affiliates and related
parties own, beneficially and in the aggregate, the majority of the voting power
of the outstanding shares of the common stock of the Company. Accordingly, if
they voted their shares uniformly, directors, executive officers and affiliates
would have the ability to control the approval of most corporate actions,
including increasing the authorized capital stock of China Longyi and the
dissolution, merger or sale of the Company's assets.
GOING CONCERN
These financial statements have been prepared on a going
concern basis, which implies that the Company will continue to realize its
assets and discharge its liabilities in the normal course of business. During
three months ended March 31, 2017, the Company incurred a net loss of $133,734.
As at March 31, 2017, the Company has a working capital deficiency of $1,369,962
and accumulated deficit from recurring net losses of $30,964,714 incurred. As at
March 31, 2017, the Company has cash and cash equivalents of $11,788. The
continuation of the Company as a going concern is dependent upon the continued
financial support from its shareholder, the ability to raise equity or debt
financing, and the attainment of profitable operations from the Company's future
business. These factors raise substantial doubt regarding the Companys ability
to continue as a going concern. These financial statements do not include any
adjustments to the recoverability and classification of recorded asset amounts
and classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
6
CHINA LONGYI GROUP INTERNATIONAL HOLDINGS LIMITED
Notes to
consolidated financial statements
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
|
PRINCIPLES OF CONSOLIDATION AND BASIS
OF PRESENTATION
The unaudited consolidated financial
statements for all periods presented include the financial statements of China
Longyi Group International Holdings Limited, and its subsidiaries: Top Team
Holdings Limited, Full Ample Group Limited (Daykeen Group, BVI), Top Time
International Limited (HK), Beijing SOD, and Chongqing SOD. The unaudited
consolidated financial statements have been prepared in accordance with US GAAP.
All significant intercompany accounts and transactions have been eliminated
during consolidation.
The Company has determined the Peoples
Republic of China Chinese Yuan Renminbi (RMB) to be its functional currency.
The accompanying unaudited consolidated financial statements are presented in
United States (US) dollars. The unaudited consolidated financial statements are
translated into US dollars from RMB at year-end exchange rates for assets and
liabilities, and average exchange rates for revenues and expenses. Capital
accounts are translated at their historical exchange rates when the capital
transactions occurred.
RMB is not freely convertible into the
currency of other nations. All such exchange transactions must take place
through authorized institutions. There is no guarantee the RMB amounts could
have been, or could be, converted into US dollars at rates used in translation.
These condensed consolidated financial
statements include all of the adjustments, which, in the opinion of management,
are necessary to a fair presentation of financial position and results of
operations. All such adjustments are of a normal and recurring nature. Interim
results are not necessary indicative of results for a full year. The condensed
consolidated balance sheet information as of December 31, 2016 was derived from
the audited consolidated financial statements include in the Form 10-K. These
condensed consolidated financial statements should be read in conjunction with
the audited financial statements in the Companys Annual Report on Form 10-K for
the fiscal year ended December 31, 2016, filed on April 17, 2017.
NONCONTROLLING INTEREST IN SUBSIDIARIES
The Company owns 90% of the equity
interest in the Beijing LongYi Biology Technology Co. Ltd, and the remaining 10%
is owned by Miss Ran Wang. Therefore, the Company records noncontrolling
interest to allocate 10% of the results of the Beijing Longyi Biology Technology
limited to Miss Ran Wang, its noncontrolling shareholder.
The Company owns 81% of the equity
interest in the Chongqing JiuZhou Dismutase Biology Technology Co. Ltd, and
remaining 9% is owned by Miss Ran Wang, and another 10% is owned by Mr. Guoqing
Tan. Therefore, the Company records noncontrolling interest to allocate 19% of
the results of the Chongqing JiuZhou Dismutase Biology Technology Co. Ltd to
Miss Ran Wang and Mr. Guoqing Tan, its noncontrolling shareholder.
USE OF ESTIMATES
The preparation of financial statements
in conformity with US GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
SIGNIFICANT ESTIMATES
Several areas require significant
management estimates relating to uncertainties for which it is reasonably
possible that there will be a material change in the near term. The more
significant areas requiring the use of management estimates related to the
valuation of acquired companies, inventories, allowance for doubtful accounts,
equipment, patent rights, accrued liabilities and stock options, and the useful
lives for amortization and depreciation.
7
CHINA LONGYI GROUP INTERNATIONAL HOLDINGS LIMITED
Notes to
consolidated financial statements
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
|
|
|
REVENUE RECOGNITION
|
|
|
|
Revenue is recognized when persuasive evidence of an
arrangement exists, the price is fixed and determinable, delivery has
occurred and there is a reasonable assurance of collection of the sales
proceeds. The Company generally obtains purchase authorizations from its
customers for a specified amount of products at a specified price and
considers delivery to have occurred when the customer takes title of the
products.
|
|
|
|
CASH AND CASH EQUIVALENTS
|
|
|
|
Cash equivalents consist of highly liquid investments
that are readily convertible to cash generally with maturities of three
months or less when purchased.
|
|
|
|
Cash and Cash Equivalents as of March 31, 2017 and
December 31, 2016 were $11,788 and 33,976.
|
|
|
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
Property, plant and equipment are recorded at cost.
Significant additions and improvements are capitalized, while repairs and
maintenance are charged to expenses as incurred. Equipment purchased for
specific research and development projects with no alternative uses are
expensed. Assets under construction are not depreciated until construction
is completed and the assets are ready for their intended use. Gains and
losses from the disposal of property, plant and equipment are recorded in
loss on disposal and impairment of property, plant and equipment included
in the consolidated statements of comprehensive income (loss).
|
|
|
|
Depreciation and amortization are provided for financial
reporting purposes primarily on the straight-line method over the
estimated useful lives of the respective assets as
follows:
|
|
Estimated
|
|
Useful Life
|
|
|
Transportation equipment
|
5 years
|
Furniture and fixtures
|
5 years
|
Production equipment
|
10 years
|
Building and improvements
|
20 years
|
INVENTORY
Prior to January 1, 2015, inventories
are stated at the lower of cost or replacement cost with respect to raw
materials and the lower of cost or market with respect to finished goods and
work in progress. The Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) No. 201511 (ASU 2015-11), Simplifying the
Measurement of Inventory, which the Company adopted on January 1, 2015.
Subsequent to January 1, 2015, inventories are stated at the lower of cost or
replacement cost with respect to raw materials and the lower of cost or net
realizable value with respect to finished goods and work in progress. The cost
of work in progress and finished goods is determined on a weighted average cost
basis and includes direct material, direct labor and overhead costs. Net
realizable value represents the anticipated selling price, net of distribution
cost, less estimated costs to completion for work in progress.
Inventories as of March 31, 2017 were
$425,834 and $440,643 in December 31, 2016.
8
CHINA LONGYI GROUP INTERNATIONAL HOLDINGS LIMITED
Notes to
consolidated financial statements
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
FOREIGN CURRENCY TRANSLATION
The financial records of the Groups subsidiaries are
maintained in their local currencies. Monetary assets and liabilities
denominated in currencies other than their local currencies are translated into
local currencies at the rates of exchange in effect at the balance sheet dates.
Transactions denominated in currencies other than their local currencies during
the year are converted into local currencies at the applicable rates of exchange
prevailing when the transactions occur. Transaction gains and losses are
recorded in other income/ (expense), net in the statements of income.
FOREIGN CURRENCY TRANSLATION (Continued)
The reporting currency of the Group is the United States dollar
(US dollar). When translating local financial reports of the Groups
subsidiaries into US dollar, assets and liabilities are translated at the
exchange rates at the balance sheet date, equity accounts are translated at
historical exchange rates and revenue, expenses, gains and losses are translated
at the average rate for the period. Translation adjustments are reported as
cumulative translation adjustments and are shown as a separate component of
other comprehensive income in the statements of operations and comprehensive
income.
The relevant exchange rates are listed below:
|
March 31,
|
|
2017
|
|
2016
|
|
RMB
|
HK$
|
|
RMB
|
HK$
|
|
|
|
|
|
|
Balance sheet items, except
for equity accounts
|
6.8993
|
7.7713
|
|
6.4612
|
7.7542
|
|
|
|
|
|
|
Items in the statements of
income and comprehensive income, and the statements of cash flows
|
6.8854
|
7.7604
|
|
6.5301
|
7.7738
|
FINANCIAL INSTRUMENTS
For certain of the Companys financial instruments, including
cash and equivalents, accounts receivable, accounts payable, other receivable,
short term loan and other payable, the carrying amounts approximate their fair
values due to their short maturities.
ASC Topic 820, Fair Value Measurements and Disclosures,
requires disclosure of the fair value of financial instruments held by the
Company. ASC Topic 825, 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 measures. The
carrying amounts reported in the consolidated 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 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, quoted prices for identical
or similar assets in inactive markets, and inputs that are observable for the
asset or liability, either directly or indirectly, for substantially the full
term of the financial instrument.
9
CHINA LONGYI GROUP INTERNATIONAL HOLDINGS LIMITED
Notes to
consolidated financial statements
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
-
Level 3 inputs to the valuation methodology use one or more unobservable
inputs which are significant to the fair value measurement.
The Company analyzes all financial instruments with features of
both liabilities and equity under ASC Topic 480, Distinguishing Liabilities from
Equity, and ASC Topic 815, Derivatives and Hedging. As of March 31, 2017 and
2016, the Company did not identify any assets and liabilities required to be
presented on the balance sheet at fair value.
INCOME TAXES
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carry-forwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to be
applied to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period when
a different tax rate is enacted.
Pursuant to the provisions of ASC No. 740, Income Taxes, the
Group provides valuation allowances for deferred tax assets for which it does
not consider realization of such assets to be more likely than not. The ultimate
realization of deferred tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary differences become
deductible. Management considers the historical taxable income generation,
projected future taxable income, the reversal of existing deferred tax
liabilities and tax planning strategies in making this assessment.
The corporate income tax rate applicable to the company is from
15% to 35%. As of March 31, 2017, the Company had a Net Operating Loss of $30
million to be carried forward into future years and will begin expiring in 2035 if
not utilized. A full valuation allowance is established against all deferred tax
assets relating to NOL carry forwards based on estimates of recoverability.
While the Company has optimistic plans for its business, it is determined that
such a valuation allowance was necessary given the uncertainty with respect to
its ability to generate sufficient profits from its new business model.
EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per common share ("EPS") is calculated by
dividing net income (loss) by the weighted average number of common shares
outstanding during the period. Diluted earnings (loss) per common share is
calculated by adjusting the weighted average outstanding shares, assuming
conversion of all potentially dilutive stock options.
10
CHINA LONGYI GROUP INTERNATIONAL HOLDINGS LIMITED
Notes to
consolidated financial statements
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The numerator and denominator used in the basic and diluted LPS
of common stock computations are presented in the following table:
|
Three months ended March 31,
|
|
2017
(Unaudited)
|
2016
(Unaudited)
|
NUMBERATOR FOR BASIC AND DILUTED EPS
|
|
|
Net income
(loss) attributable to common stockholders
|
$ (133,734)
|
$
(79,377)
|
DENOMINATOR FOR BASIC AND DILUTED EPS
|
|
|
Weighed average shares of common stock
outstanding
|
77,655,862
|
77,655,862
|
EPS Basic and diluted
|
$
(0.0017)
|
$
(0.0010)
|
There were no potentially dilutive securities outstanding at
March 31, 2017 and 2016 as the result would be anti-dilutive.
COMPARATIVE FIGURES
Certain comparative figures have been reclassified in order to
conform to the presentation adopted in the current period.
COMPREHENSIVE INCOME (LOSS)
The Companys comprehensive income (loss) consists of net
income (loss) and foreign currency translation.
RECENTLY ADOPTED ACCOUNTING STANDARDS
There were no new accounting pronouncements that may have
material impacts on the Companys consolidated financial statements, in addition
to those disclosed in our audited consolidated financial statements for the year
ended December 31, 2016, except for the following:In July 2015, the FASB amended
its guidance related to the measurement of inventory. The amended guidance
requires inventory to be measured at the lower of cost and net realizable value
and thereby simplifies the current guidance of measuring inventory at the lower
of cost or market. The amended guidance is effective prospectively for fiscal
years, and interim periods within those fiscal years, beginning after December
15, 2016. The Company adopted the guidance during the first quarter of 2017 and
it did not have a material impact on its Consolidated Financial Statements.
11
CHINA LONGYI GROUP INTERNATIONAL HOLDINGS LIMITED
Notes to
consolidated financial statements
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
In March 2016, the FASB amended its guidance related to the
accounting for certain aspects of share-based payments to employees. The amended
guidance requires that all tax effects related to share-based payments are
recorded at settlement (or expiration) through the income statement, rather than
through equity. Cash flows related to excess tax benefits are no longer
separately classified as a financing activity apart from other income tax cash
flows. The amended guidance also allows for an employer to repurchase additional
employee shares for tax withholding purposes without requiring liability
accounting and clarifies that all cash payments made to tax authorities on an
employees behalf for withheld shares should be presented as a financing
activity on the Consolidated Statements of Cash Flows. The guidance is effective
for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2016. The Company adopted the guidance during the first quarter of
2017 and it did not have a material impact on its Consolidated Financial
Statements.
Other amendments to GAAP in the U.S. that have been issued by
the FASB or other standards-setting bodies that do not require adoption until a
future date are not expected to have a material impact on our audited
consolidated financial statements upon adoption.
3. STOCKHOLDERS' EQUITY DEFICIT
The Company's capital structure as of March 31, 2017and
December 31, 2016 was as follows:
Common stock par value
$0.01
|
Authorized
|
Issued and outstanding
|
|
|
|
March 31, 2017
|
200,000,000
|
77,655,862
|
|
|
|
December 31,
2016
|
200,000,000
|
77,655,862
|
As of March 31, 2017, the Company had accumulated deficit of
$30,880,527.
4. INVESTMENTS
On January 5, 2010, the Company acquired 20% equity interest in
Cangshan Duoha Vegetable Food Company (Duoha) by issuing 50,000 shares of
common stock of the Company at $0.2 per share to Duohas shareholders. According
to the investment agreement, although we own 20% equity interest of Duoha, we do
not have significant influence over Duohas operating and financing activities.
Therefore, the Company used cost method to record the above investment.
In May of 2015, we signed an investment agreement with Guizhou
Biology Technology Ltd. (Guizhou). According to the investment agreement, the
Company invested RMB 500,000 ($74,875) to acquire 20% equity interest in of
Guizhou. Although we own 20% equity of Guizhou, we do not have significant
influence over Guizhous operating and financing activities.
The amount of investment as of March 31, 2017 and December 31,
2016was $82,366 and $81,919, respectively.
12
CHINA LONGYI GROUP INTERNATIONAL HOLDINGS LIMITED
Notes to
consolidated financial statements
5. INVENTORIES
Inventories at March 31, 2017 and December 31, 2016 consisted
of:
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(Unaudited)
|
|
|
|
|
Raw Materials
|
$
|
80,560
|
|
$
|
46,254
|
|
Low value consumables
|
|
12,692
|
|
|
12,623
|
|
Work in progress
|
|
209,431
|
|
|
208,292
|
|
Finished goods
|
|
36,068
|
|
|
83,908
|
|
Processing materials
|
|
140,389
|
|
|
142,582
|
|
Subtotal
|
|
479,140
|
|
|
493,659
|
|
Less: reserve for
obsolescence
|
|
53,306
|
|
|
53,016
|
|
|
$
|
425,834
|
|
$
|
440,643
|
|
The amount of inventory expensed as of March 31, 2017 and 2016
were $14,809 and $(3,720), respectively.
6. ACCOUNT RECEIVABLES
Trade accounts receivable arise from the product sales in the
normal course of business. Based on managements assessment of the customers
credit history and current relationships with them, management makes conclusions
whether any balances outstanding at the end of the period will be deemed
uncollectible on an individual basis and aging analysis basis. The Company
reserves 5% of accounts receivable balances that have been outstanding between 1
year and 2 years, reserves 20% of accounts receivable balances that have been
outstanding between 2 years and 3 years, reserves 40% of receivable balances
that have been outstanding between 3 years to 5 years, and reserves 100% of
receivable balances that have been outstanding more than 5 years.
The allowance for doubtful accounts recognized as of March 31,
2017 and December 31, 2016 was Nil and Nil, respectively.
Account receivables at March 31, 2017 and December 31, 2016
consisted of:
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(Unaudited)
|
|
|
|
|
Chongqinwuji Limited.
|
$
|
23,481
|
|
$
|
36,327
|
|
RuipuRuisen Limited.
|
|
10,088
|
|
|
11,504
|
|
Tang sanbao
|
|
187
|
|
|
186
|
|
Bai dachun
|
|
4,870
|
|
|
4,844
|
|
Others
|
|
4,635
|
|
|
97
|
|
Total
|
$
|
43,261
|
|
$
|
52,958
|
|
13
CHINA LONGYI GROUP INTERNATIONAL HOLDINGS LIMITED
Notes to
consolidated financial statements
7. PROPERTY AND EQUIPMENT
Property and equipment at cost consisted of:
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(Unaudited)
|
|
|
|
|
Transportation equipment
|
$
|
53,609
|
|
$
|
53,317
|
|
Furniture and office equipment
|
|
61,573
|
|
|
61,239
|
|
Production equipment,
buildings and improvements
|
|
354,202
|
|
|
352,277
|
|
Subtotal
|
|
469,384
|
|
|
466,833
|
|
Less: impairment provision
|
|
(44,767
|
)
|
|
(44,523
|
)
|
accumulated depreciation
|
|
(317,537
|
)
|
|
(310,990
|
)
|
|
|
107,080
|
|
|
111,320
|
|
Construction in progress
|
|
174,779
|
|
|
173,829
|
|
|
$
|
281,859
|
|
$
|
285,149
|
|
Depreciation expense for three months ended March 31, 2017 and
2016 were $6,547 and $7,359, respectively. Impairment for three months ended
March 31, 2017and 2016 were $44,767 and $47,802,
8. COMMITMENTS AND
CONTINGENCIES
From time to time, the Company has disputes that arise in the
ordinary course of its business. Currently, according to management, there are
no material legal proceedings to which the Company is a party to or to which any
of their property is subject that will have a material adverse effect on the
Companys financial condition.
The Company rents office space from the related company on a
month to month basis.
9. SHORT-TERM LOAN
During the year of 2015, ShilingWang provided the company an
unsecured loan in an amount of RMB 380,000 ($56,905), and the interest rate of
the loan is 25% per annum. As of December 31, 2016, the Company has repaid loan
in full.
During the year of 2017, RanWang provided the company an
unsecured loan in an amount of RMB 100,000 ($14,494), and the interest rate of
the loan is 25% per annum.
The principal amount for three months ended March 31, 2017 and
the year ended 2016 were $14,494 and $0 respectively, and were recorded on the
balance sheet as short-term loan.
14
CHINA LONGYI GROUP INTERNATIONAL HOLDINGS LIMITED
Notes to
consolidated financial statements
10. OTHER PAYABLES
Other payables as of March 31, 2017and December 31, 2016
consist of the following:
|
|
March 31,
|
|
|
December 31, 2016
|
|
|
|
2017
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
Xinxiang Tianjieshan Biotechnology Co.,
Ltd.
|
$
|
52,460
|
|
$
|
56,281
|
|
Qingdao cooperation win - win Trading Company
|
|
-
|
|
|
15,396
|
|
Educational funds
|
|
7,946
|
|
|
7,903
|
|
Wage payable
|
|
90,681
|
|
|
70,069
|
|
Project payment
|
|
21,741
|
|
|
21,623
|
|
Other payable
|
|
50,073
|
|
|
8,006
|
|
Total
|
$
|
222,901
|
|
$
|
179,278
|
|
11.RELATED PARTY TRANSACTIONS AND STOCKHOLDERS LOAN
The caption Due to Related Company are loans that are
unsecured, non-interest bearing and have no fixed terms of repayment, therefore,
deemed payable on demand. The Company rents office space from the related
company.
The related party transactions list:
Related Party Transactions
|
Due from
related parties
|
Due to
related parties
|
Due to
directors
|
Related parties
|
2017.3.31 (Unaudited)
|
|
|
|
Chen Jie
|
|
|
129,119
|
Li Changde
|
|
|
217,809
|
Wang Wei
|
|
|
9,186
|
Li, Hongliang
|
|
|
220,407
|
Beijing De Reng Sheng Limited
|
|
195,636
|
|
Shandong Cangshan Duoha Vegetables company
|
|
460
|
|
SiChuan Longyi Limited
|
|
19,683
|
|
Liu, Guizhi
|
|
226,975
|
|
Beijing De Qiu HongLimited
|
|
385,059
|
|
Total
|
-
|
827,813
|
576,521
|
2016.12.31
|
|
|
|
Chen Jie
|
|
|
128,418
|
Li Changde
|
|
|
216,755
|
Wang Wei
|
|
|
9,205
|
Li, Hongliang
|
|
|
219,209
|
Beijing De Reng Sheng Limited
|
|
194,573
|
|
Shandong Cangshan Duoha Vegetables company
|
|
458
|
|
SiChuan Longyi Limited
|
|
19,576
|
|
Liu, Guizhi
|
|
216,092
|
|
|
|
382,966
|
|
Total
|
-
|
813,665
|
573,587
|
15
CHINA LONGYI GROUP INTERNATIONAL HOLDINGS LIMITED
Notes to
consolidated financial statements
Related Party Transactions
|
Rental
|
Inventories Purchase
from related party
|
Due to directors
|
Payment for related
party
|
Related parties
|
2017.1-2017.3 (Unaudited)
|
|
|
|
|
Liu, Guizhi
|
10,871
|
|
|
|
Total
|
10,871
|
|
|
|
2016.1-2016.3 (Unaudited)
|
|
|
|
|
Chen Jie
|
|
|
16,197
|
|
Liu, Guizhi
|
11,608
|
|
|
|
Total
|
11,608
|
|
16,197
|
|
12. MAJOR SUPPLIERS AND CUSTOMERS
The Company purchases the majority of its SOD material from two
suppliers which accounted for 100% of our total purchases in 2017. One of the
suppliers is Xinxiang Tianjie Mountain Biological Technology Co., Ltd. Another
is Guizhou Shengxin Biological Technology Co., Ltd. As of March 31, 2017, other
payables due to Xinxiang Tianjie Mountain Biological Technology Co., Ltd. was $
52,460, which accounts for 24% of the total other payables.
The Company had one major customer for three months ended March
31, 2017: Qingdao cooperation win-win Trading Company. The company accounted for
53% ($19,757) of revenue for three months ended March 31, 2017..
13. INCOME TAX
At March 31, 2017 and 2016, based on the weight of available
evidence, management determined that it was unlikely that the Company's deferred
tax assets would be realized and have provided for a full valuation allowance
associated with the net deferred tax assets.
The Company periodically analyzes its tax positions taken and
expected to be taken and has determined that since inception there has been no
need to record a liability for uncertain tax positions. The Company classifies
income tax penalties and interest, if any, as part of selling, general and
administrative expenses in the accompanying statements of operations. There was
no accrued interest or penalties as of March 31, 2017 and 2016.
The Company is neither under examination by any taxing
authority, nor has it been notified of any impending examination. The Company's
tax years for its Federal and State jurisdictions which are currently open for
examination are the years of 2012 - 2017.
China
Under the Law of Peoples Republic of China on
Enterprise Income Tax (EIT Law), which was effective from January 1, 2008,
domestically-owned enterprises and foreign-invested enterprises are subject to a
uniform tax rate of 25%. As of March 31, 2017, the PRC entities have net
operating losses carry forward of $30 million that begin expiring in 2035. The
potential benefit of the companys net operating losses has not been recognized
in these financial statements because it is more likely-than-not it will not
utilize the net operating losses carried forward as it does not expect to
generate sufficient taxable income in future or the amount involved is not
significant.
16
CHINA LONGYI GROUP INTERNATIONAL HOLDINGS LIMITED
Notes to
consolidated financial statements
|
|
Period Ended March 31,
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
Income tax at U.S. statutory
rate (34%)
|
|
(34%
|
)
|
|
(34%
|
)
|
Tax rate difference
|
|
8.0%
|
|
|
8.0%
|
|
Valuation allowance
|
|
26%
|
|
|
26%
|
|
|
|
0%
|
|
|
0%
|
|
|
|
|
|
|
|
|
14. SUBSEQUENT EVENT
The management assessed there were no events occurring after
balance date as of March 31, 2017 and prior to the time of annual report
completion which might affect the financial report.
17
First Quarter of 2017 Financial Performance
Highlights
The following are some financial highlights for the three
months ended March 31, 2017:
-
Revenue
: Revenue increase by $20,811, to $37,277 for the three
months ended March 31, 2017, from $16,466 for the same period in 2016.
-
Expense from operations
: Expense from operations increased by
$29,177, or 28.19%, to $132,663 for the three months ended March 31, 2017,
from $103,486 for the same period in 2016.
-
Net loss
: Net loss increased by $46,840, or 53.90%, to $133,734 for
the three months ended March 31, 2017, from net loss of $86,894 for the same
period in 2016.
-
Fully diluted net income per share
: Fully diluted net income per
share was $0 for the three months ended March 31, 2017, as compared to $0 for
the same period in 2016.
Provision for Income Taxes
-
United States
: China Longyi Group International Holding Limited is
subject to United States tax at a tax rate of 34%. No provision for income
taxes in the United States has been made as China Longyi Group International
Holding Limited had no income subject to United States taxation in the first
quarter of 2017.
-
British Virgin Islands
: Our wholly owned subsidiary Top Team
Holdings Limited was incorporated in the British Virgin Islands, or the BVI,
and, under the current laws of the BVI, is not subject to income taxes.
-
China
: Before the implementation of the enterprise income tax, or
EIT, Foreign Invested Enterprises or FIEs, established in the PRC were
generally subject to an EIT rate of 33%, which includes a 30% state income tax
and a 3% local income tax. On March 16, 2007, the National Peoples Congress
of China passed the new Corporate Income Tax Law, or EIT Law, and on November
28, 2007, the State Council of China passed the Implementing Rules for the EIT
Law, or Implementing Rules, which took effect on January 1, 2008. The EIT Law
and Implementing Rules impose a unified EIT of 25% on all domestic- invested
enterprises and FIEs, unless they qualify under certain limited exceptions.
Therefore, nearly all FIEs are subject to the new tax rate alongside other
domestic businesses rather than benefiting from the old tax laws applicable to
FIEs, and its associated preferential tax treatments, beginning January 1,
2008.
Despite these pending changes, the EIT Law gives the FIEs
established before March 16, 2007, or Old FIEs, such as our subsidiaries
Beijing SOD and Chongqing SOD, a five-year grandfather period during which
they can continue to enjoy their existing preferential tax treatments. During
this five-year grandfather period, the Old FIEs which enjoyed tax rates lower
than 25% under the original EIT Law shall gradually increase their EIT rate by
2% per year until the tax rate reaches 25%. In addition, the Old FIEs that are
eligible for the two-year exemption and three-year half reduction or
five-year exemption and five-year half-reduction under the original EIT Law,
are allowed to remain to enjoy their preference until these holidays expire.
The discontinuation of any such special or preferential tax treatment or other
incentives would have an adverse effect on any organizations business, fiscal
condition and current operations in China.
In addition to the changes
to the current tax structure, under the EIT Law, an enterprise established
outside of China with de facto management bodies within China is considered
a resident enterprise and will normally be subject to a EIT of 25.0% on its
global income. The Implementing Rules define the term de facto management bodies as an establishment that exercises,
in substance, overall management and control over the production, business,
personnel, accounting, etc., of a Chinese enterprise. If the PRC tax
authorities subsequently determine that we should be classified as a resident
enterprise, then our consolidated global income will be subject to PRC income
tax of 25.0%.
19
We incurred no income taxes in either the three months ended
March 31, 2017and 2016.
Results of Operations
Three Months Ended March 31, 2017 Compared to Three
Months ended March 31, 2016
The following table summarizes the results of our operations
for the three months ended March 31, 2017 and 2016 and provides information
regarding the dollar and percentage increase or (decrease) from the three months
ended March 31, 2016 to the same period of 2017.
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
Increase
|
|
|
% Increase
|
|
Item
|
|
2017
|
|
|
2016
|
|
|
(Decrease)
|
|
|
(%
Decrease)
|
|
Revenue
|
$
|
37,277
|
|
$
|
16,466
|
|
$
|
20,811
|
|
|
126.39%
|
|
Cost of Revenue
|
|
19,782
|
|
|
-
|
|
|
19,782
|
|
|
-
|
|
Gross Profit
|
|
17,495
|
|
|
16,466
|
|
|
1,029
|
|
|
6.25%
|
|
Operating Expenses
|
|
132,663
|
|
|
103,486
|
|
|
29,177
|
|
|
28.19%
|
|
Other Income (expense)
|
|
18,566
|
|
|
126
|
|
|
18,692
|
|
|
14834.92%
|
|
Provision for Taxes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Net income(loss) attributable to China
|
$
|
(125,305
|
)
|
$
|
(79,377
|
)
|
$
|
(45,928
|
)
|
|
(57.86%
|
)
|
Revenues.
Our revenues are derived primarily from sales
of our SOD products. Our revenues increased $20,811, to $37,277for the three
months ended March 31, 2017, from $16,466 for the same period in 2016. The
increase in revenues was due to more SOD products being sold for the three
months ended March 31, 2017compared with the same period of 2016.
Cost of Revenues.
Our cost of revenues is primarily
comprised of the costs of our raw materials, labor and overhead. Our cost of
revenues increased$19,782, to $19,782 for the three months ended March 31, 2017,
from $0 during the same period in 2016 due to the increase in sales revenues. No
cost of revenue was recognized during the three months ended Mar 31, 2016 as a
result of inventory adjustments made in previous years (refer to relevant
disclosures in the Companys Annual Report on Form 10-K for the fiscal year
ended December 31, 2016, filed on April 17, 2017).
Gross Profit.
Our gross profit increased by $1,029, to
$17,495 for the three months ended March 31, 2017 from $16,466 during the same
period in 2016.The gross profit increased mainly due to more SOD products being
sold for the three months ended March 31, 2017compared with the same period of
2016.
Operating Expenses
. Our total operating expenses for the
three months ended March 31, 2017 increased $29,177, or 28.19%, to $132,663,
from $103,486 for the same period in 2016. This increase was mainly because we
paid more office expenses, rental, sales tax and consulting fees.
Other Income (expense)
Other expense was $18,566 during
the three months ended March 31, 2017, an increase of $18,692 from $126 during
the same period in 2016. Such increase was mainly due to the transaction
exchange loss. Transaction exchange loss for three months ended March 31, 2017
and 2016 was $(20,029) and $(2,828), respectively. Such difference was due to
foreign exchange rate fluctuations.
20
Net loss attributable to China Longyi.
As a result of
above facts, our net loss increased by $45,928, or 57.86%, to $125,305 for the
three months ended March 31, 2017, from $79,377of net loss for the same period
in 2016.
Liquidity and Capital Resources
We had $11,788 in cash and cash equivalents as of March 31,
2017. As of such date, we also had total current assets of $593,380 and total
assets of $957,605. We had total current liabilities (consisting of accounts
payable, accrued liabilities, due to directors, other payables, short-term loan
and due to related parties) in the amount
of $1,963,342. Our stockholders deficit as of March 31, 2017 was $(1,005,737).
Since inception, we have accumulated a net loss of $30,964,714.
The following table summarizes the statements of cash flows
from the unaudited condensed consolidated interim financial statements for the
three months ended March 31, 2017compared to the three months ended March 31,
2016:
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
Net Cash Provided By (Used
In) Operating Activities
|
$
|
(56,843
|
)
|
$
|
(17,428
|
)
|
Net Cash Provided By (Used In) Investing
Activities
|
|
-
|
|
|
-
|
|
Net Cash Provided By (Used
In) Financing Activities
|
|
(14,392
|
)
|
|
7,087
|
|
Effect of foreign exchange rate fluctuation
|
|
20,263
|
|
|
2,912
|
|
Net increase (decrease) in
Cash and Cash Equivalents
|
|
(22,188
|
)
|
|
(7,429
|
)
|
Cash and Cash Equivalents - Beginning of
Period
|
|
33,976
|
|
|
29,429
|
|
Cash and Cash Equivalents
End of Period
|
$
|
11,788
|
|
$
|
22,000
|
|
Operating Activities
Net cash provided by operating activities was $(56,843) for the
three-month period ended March 31, 2017 representing a decrease of $39,415 from
$(17,428) of net cash used in the operating activities for the same period of
2016. The decrease of the cash provided by operating activities was mainly
attributed to the change of the number of account of Net income, Account
receivables, Deposits and prepayment, and other payables.
Cash flows used in Net loss increased by $46,840 to $133,734
for the three months ended March 31, 2017, from $86,894 for the same period in
2016.
Cash flow provided by Account receivables increased by $4,493
to $10,006 for the three months ended March 31, 2017, from $5,513 for the same
period in 2016.
Cash flows used in Other receivables increased by $8,675 to
$10,301 for the three months ended March 31, 2017, from $1,626 for the same
period in 2016.
Cash flows used in Deposits and prepayment decreased by
$15,949, to $2,428 for three months ended March 31, 2017, from $18,377for the
same period in 2016.
Cash flows provided by Inventory increased $19,151, to $17,252
for three months ended March 31, 2017, from $(1,899) for the same period in
2016.
Cash flow provided by other payables decreased $21,840, to
$46,634 for three months ended March 31, 2017, from $68,474for the same period
in 2016.
Investing Activities
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Net cash used in investing activities for the three-month
period ended March 31, 2017 was $0 as compared with $0 of net cash used in
investing activities for the same period of 2016.
Financing Activities
Net cash provided by financing activities for the three-month
period ended March 31, 2017was $14,392 as compared to $7,087 provided by
financing activities for the same period in 2016. Such change was mainly due to
repayment of loans from directors of $131, less proceeds of short-term loan of
$14,523, for the three months ended March 31, 2017.
The Company did not have any bank loans as of March 31,
2017.
We expect to generate approximately $2 million to $2.5 million
of revenues from the sale of our products during the next 12 months. If our cash
on hand and cash flow from operations do not meet our expected capital
expenditure and working capital requirements for the next 12 months, we expect
that our directors will provide more cash as loans to the company. However, we
may in the future require additional cash resources due to changed business
conditions, implementation of our strategy to expand our production capacity or
other investments or acquisitions we may decide to pursue. If our own financial
resources are insufficient to satisfy our capital requirements, we may seek to
sell additional equity or debt securities or obtain additional credit
facilities. The sale of additional equity securities could result in dilution to
our stockholders. The incurrence of indebtedness would result in increased debt
service obligations and could require us to agree to operating and financial
covenants that would restrict our operations. Financing may not be available in
amounts or on terms acceptable to us, if at all. Any failure by us to raise
additional funds on terms favorable to us, or at all, could limit our ability to
expand our business operations and could harm our overall business
prospects.
Critical Accounting Policies
Economic and Political Risks
The Company faces a number of risks and challenges as a result
of having primary operations and marketing in the PRC. Changing political
climates in the PRC could have a significant effect on the Companys business.
Foreign Currencies
The company has determined that RMB to be its functional
currency. The accompanying unaudited consolidated financial statements are
presented in U.S. dollars. The unaudited consolidated financial statements are
translated into US dollars from RMB at year-end exchange rates for assets and
liabilities, and weighted average exchange rates for revenues and expenses.
Capital accounts are translated at their historical exchange rates when the
capital transactions occurred.
|
|
March 31,
|
|
December 31,
|
|
|
2017
|
|
2016
|
|
2016
|
|
|
RMB
|
HK$
|
|
RMB
|
HK$
|
|
RMB
|
HK$
|
|
Balance sheet items, except for equity
accounts
|
6.8993
|
7.7713
|
|
6.4612
|
7.7542
|
|
6.9370
|
7.7551
|
|
|
|
|
|
|
|
|
|
|
|
Items in the statements of income and
comprehensive income, and the statements of cash flows
|
6.8854
|
7.7604
|
|
6.5301
|
7.7738
|
|
6.6401
|
7.7621
|
Use of Estimates
The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
22
Significant Estimates
Several areas require significant
management estimates relating to uncertainties for which it is reasonably
possible that there will be a material change in the near term. The more
significant areas requiring the use of management estimates related to
determination of net realizable value of inventory, allowance for doubtful
accounts, property and equipment, accrued liabilities and, the useful lives for
depreciation.
Restrictions on Transfer of Assets Out of the PRC
Dividend
payments by Beijing SOD are limited by certain statutory regulations in the PRC.
No dividends may be paid by Beijing SOD without first receiving prior approval
from the Foreign Currency Exchange Management Bureau. Dividend payments are
restricted to 85% of profits, after tax.
Revenue Recognition
The Company recognizes revenue in
accordance with Staff Accounting Bulletin No.104 Revenue recognition (ASC
Topic 605). Revenues are recognized as earned when the following four criteria
are met: (1) a customer issues purchase orders or otherwise agrees to purchase
products; (2) products are delivered to the customer; (3) pricing is fixed or
determined in accordance with the purchase order or agreement; and (4)
collectability is reasonably assured.
Inflation
Inflation does not materially affect our business or the
results of our operations.
Seasonality
We may experience seasonal variations in our future revenues
and our operating costs, however, we do not believe that these variations will
be material.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that are
material to investors.
23