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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2023

 

or

 

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 000-11596

 

LONGWEN GROUP CORP.

(Exact name of registrant as specified in its charter)

 

Nevada   95-3506403
(State or Other Jurisdiction   (I.R.S. Employer
of Incorporation or Organization)   Identification No.)

 

RM 219, No. 25, Caihe Rd

Shangcheng Dist., Hangzhou, Zhejiang Province, China

(Address of Principal Executive Office)

 

+86 0571 -85128985

(Registrant’s telephone number, including area code)

 

NA 

(Former name, former address and former fiscal year, if changed since last report)

 

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

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Not Applicable    Not Applicable     Not Applicable

 

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 No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

 

 

 

 
 

 

 

 

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

 

  Large accelerated filer Accelerated filer
  Non-accelerated filer Smaller reporting company
      Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 

As of November 17, 2023, the registrant had 79,825,094 shares of common stock outstanding.

 

 

 

 

 

 
 

 

 

 

 

LONGWEN GROUP CORP.

 

QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 2023

 

TABLE OF CONTENTS

 

    PAGE
     
  Note about Forward-Looking Statements 2
     
  PART I - FINANCIAL INFORMATION  
     
Item 1 Financial Statements 3
  Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022 4
  Consolidated Statements of Operations and Other Comprehensive Income (Loss) (unaudited) for the three and nine months ended September 30, 2023 and 2022 5
  Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2023 and 2022 6
  Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (unaudited) for the three and nine months ended September 30, 2023 and 2022 7
  Notes to Unaudited Consolidated Financial Statements 8
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operation 17
Item 3 Quantitative and Qualitative Disclosures About Market Risk 21
Item 4 Controls and Procedures 22
     
  PART II - OTHER INFORMATION  
     
Item 1 Legal Proceedings 22
Item 1A Risk Factors 22
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 22
Item 3 Defaults Upon Senior Securities 22
Item 4 Mine Safety Disclosures 22
Item 5 Other Information 22
Item 6 Exhibits 23
     
SIGNATURES 24
     
EXHIBIT INDEX 25

 

 

 

 

 

 
 

 

 

 

NOTE ABOUT FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements.

 

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section entitled “Risk Factors”, beginning on page 4 of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities & Exchange Commission (“SEC”) on March 29, 2023. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make.

 

We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 

Unless expressly indicated or the context requires otherwise, the terms “Company,” “we,” “us,” and “our” in this document refer Longwen Group Corp., a Nevada corporation.

 

2

 

 

 

 
 

 

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

LONGWEN GROUP CORP.

 

INDEX TO FINANCIAL STATEMENTS

 

Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022 4
   
Consolidated Statements of Operations and Other Comprehensive Income (unaudited) for the three and nine months ended September 30, 2023 and 2022 5
   
Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2023 and 2022 6
   
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (unaudited) for the three and nine months ended September 30, 2023 and 2022 7
   
Notes to Unaudited Consolidated Financial Statements 8 - 15

 

3

 

 

 

 

 
 

  

LONGWEN GROUP CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

   September 30, 2023  December 31, 2022
    (Unaudited)      
ASSETS          
Current assets          
Cash and cash equivalents  $5,638   $68,121 
Accounts receivable, net of allowance   378,155       
Inventories   39,303       
Prepaid expenses and other current assets   13,695    58,413 
Total current assets   436,791    126,534 
           
Property and equipment, net   250,419    274,370 
Intangible assets, net   2,911    3,625 
Goodwill   1,132    1,132 
TOTAL ASSETS  $691,253   $405,661 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current Liabilities:          
Accounts payable and accrued liabilities, including $39,118 and $nil to a related party as of September 30, 2023 and December 31, 2022, respectively  $483,130   $31,962 
Loans from third parties   82,181    12,250 
Shareholder loans   147,982    90,494 
Total current liabilities   713,293    134,706 
           
TOTAL LIABILITIES   713,293    134,706 
           
COMMITMENTS AND CONTINGENCIES          
           
STOCKHOLDERS’ EQUITY (DEFICIT)          
Preferred stock, $0.0001 par value, 50,000,000 authorized, nil shares issued and outstanding            
Common stock, $0.0001 par value, 550,000,000 authorized, 79,825,094 and 74,108,926 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively   7,983    7,411 
Common stock issuable   37       
Deferred share-based compensation   (74,000)      
Additional paid-in capital   20,002,164    19,285,539 
Accumulated deficit   (19,959,957)   (19,027,835)
Accumulated other comprehensive income   1,733    5,840 
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)   (22,040)   270,955 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)  $691,253   $405,661 

 

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

 

 
4

 

 
 

  

LONGWEN GROUP CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND

OTHER COMPREHENSIVE INCOME

(UNAUDITED) 

             
   For the Three Months Ended
September 30,
  For the Nine Months Ended
September 30,
   2023  2022  2023  2022
             
Revenues                    
Consulting service income  $     $11,328   $15,004   $19,307 
    Online product sales               6,082       
    Offline product sales   548,851          1,972,127       
    Total revenues   548,851    11,328    1,993,213    19,307 
                     
Cost of revenues                    
    Online product sales               2,199       
    Offline product sales   550,116          1,836,512       
    Total cost of revenues   550,116          1,838,711       
                     
Gross Profit (Loss)   (1,265)   11,328    154,502    19,307 
                     
Operating Expenses                    
Professional expenses   61,806    30,011    168,001    111,346 
Selling, general and administrative expenses   125,774    21,379    337,095    104,181 
Share-based compensation               576,000       
                     
Total operating expenses   187,580    51,390    1,081,096    215,527 
                     
Loss from operations   (188,845)   (40,062)   (926,594)   (196,220)
                     
Other income (expenses):                    
Interest expense   (104)   (47)   (260)   (375)
Other income (expense), net   (174)   (188)   (2,010)   28 
Total other expense, net   (278)   (235)   (2,270)   (347)
                     
Net loss before income tax   (189,123)   (40,297)   (928,864)   (196,567)
Income tax expense               3,258       
                     
Net loss  $(189,123)  $(40,297)  $(932,122)  $(196,567)
                     
Other comprehensive income (loss)                    
Foreign currency translation gain (loss)   3,673    2,255    (4,107)   157 
                     
Total other comprehensive income (loss)   3,673    2,255    (4,107)   157 
                     
Comprehensive loss  $(185,450)  $(38,042)  $(936,229)   (196,410)
                     
Weighted average shares outstanding:                    
Weighted average shares outstanding: Basic and diluted   79,825,094    65,936,163    78,996,477    65,606,270 
                     
Earnings per share:                    
Earnings per share: Basic and diluted  $(0.00)  $(0.00)  $(0.01)   (0.00)

 

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

5

     

 
 

   

LONGWEN GROUP CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED) 

       
   For the Nine Months Ended September 30
   2023  2022
       
Cash flows from operating activities:          
Net loss  $(932,122)  $(196,567)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation   9,645    1,328 
Share-based compensation   576,000       
Changes in operating assets and liabilities:          
Accounts receivable   (392,588)      
Inventories   (40,803)      
Prepaid expenses and other current assets   43,864    (81,280)
Accounts payable and accrued liabilities   471,988    375 
Net cash used in operating activities   (264,016)   (276,144)
           
Cash flows from investing activities:          
Purchase of equipment         (7,753)
Cash obtained from business acquisition         7 
Net cash used in investing activities         (7,746)
           
Cash flows from financing activities:          
Proceeds from shareholder loans   83,640    86,741 
Proceeds from loans due to third parties   211,415    287,876 
Repayments to shareholder loans   (33,132)      
Repayments of loans due to third parties   (123,710)   (75,757)
Proceeds from common stock issuance   67,234    278,357 
Net cash provided by financing activities   205,447    577,217 
           
Effect of exchange rate changes on cash and cash equivalents   (3,914)   (21,229)
Net (decrease) increase in cash and cash equivalents   (62,483)   272,098 
           
Cash and cash equivalents, beginning balance   68,121       
Cash and cash equivalents, ending balance  $5,638    272,098 
           
Supplemental Disclosures:          
Interest paid  $     $   
Income tax paid  $     $   
           
Supplemental Disclosures of Non-Cash Investing and Financing Activities:          
Acquisition of Hangzhou Longwen Enterprise Management with shareholder loan  $     $993 
Repayment of loans from third parties and interest by a related party on behalf of the Company  $14,050   $   
Common stocks issuable for deferred compensation  $23,221   $   
Acquisition of property by issuance of common stocks  $     $265,178 

 

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

 

6

 

 
 

       

  LONGWEN GROUP CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

(UNAUDITED)  

 

                               
   Preferred Stock
Shares
  Preferred Stock
Amount
  Common Stock
Shares
  Common Stock
Amount
  Common stock issuable  Additional
Paid-in
Capital
  Deferred Share-based Compensation  Accumulated
Deficit
  Accumulated Other Comprehensive Income (Loss)  Total Shareholders’ Equity (Deficit)
                               
Balance June 30, 2023        $      79,825,094   $7,983   $37   $20,002,164   $(74,000)  $(19,770,834)  $(1,940)  $163,410 
                                                   
Other comprehensive income   —            —                                    3,673    3,673 
Net loss   —            —                              (189,123)         (189,123)
Balance September 30, 2023        $      79,825,094   $7,983   $37   $20,002,164   $(74,000)  $(19,959,957)  $1,733   $(22,040)

 

                               
   Preferred Stock
Shares
  Preferred Stock
Amount
  Common Stock
Shares
  Common Stock
Amount
  Common stock issuable  Additional
Paid-in
Capital
  Deferred
Share-based
Compensation
  Accumulated
Deficit
  Accumulated Other Comprehensive Income (Loss)  Total Shareholders’ Equity (Deficit)
                               
Balance December 31, 2022   —     $      74,108,926   $7,411   $     $19,285,539   $     $(19,027,835)   5,840   $270,955 
                                                   
Shares issued for compensation   —            5,380,000    538          575,462                      576,000 
Shares issued for cash   —            336,168    34          67,200                      67,234 
Shares issuable for deferred compensation   —            —            37    73,963    (74,000)                  
Other comprehensive loss   —            —                                    (4,107)   (4,107)
Net loss   —            —                              (932,122)         (932,122)
Balance September 30, 2023   —     $      79,825,094   $7,983   $37   $20,002,164   $(74,000)  $(19,959,957)  $1,733   $(22,040)

   

 
 

   

   

   

                         
   Preferred Stock
Shares
  Preferred Stock
Amount
  Common Stock
Shares
  Common Stock
Amount
  Additional
Paid-in
Capital
  Accumulated
Deficit
  Accumulated Other Comprehensive Income  Total Shareholders’ Equity
                         
Balance June 30, 2022               65,762,808   $6,577   $18,452,007   $(18,437,679)  $(2,098)  $18,807 
                                         
Issuance of common stocks for cash   —            876,339    87    87,545                87,632 
Other comprehensive income   —            —                        2,255    2,255 
Issuance of common stocks for property   —            2,651,780    265    264,913                265,178 
Net loss   —            —                  (40,297)         (40,297)
Balance September 30, 2022   —            69,290,927   $6,929   $18,804,465   $(18,477,976)  $157   $333,575 

 

                         
   Preferred Stock
Shares
  Preferred Stock
Amount
  Common Stock
Shares
  Common Stock
Amount
  Additional
Paid-in
Capital
  Accumulated
Deficit
  Accumulated Other Comprehensive Income  Total Shareholders’ Equity
                         
Balance December 31, 2021        $      65,127,061   $6,513   $18,261,346   $(18,281,409)  $     $(13,550)
                                         
Issuance of common stock for cash   —            1,512,086    151    278,206                278,357 
Issuance of common stocks for property   —            2,651,780    265    264,913                265,178 
Other comprehensive loss   —            —                        157    157 
Net loss   —            —                  (196,567)         (196,567)
Balance September 30, 2022               69,290,927   $6,929   $18,804,465   $(18,477,976)  $157   $333,575 

  

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

 
7

  

 
 

  

LONGWEN GROUP CORP. AND SUBSIDIARIES

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES

 

Longwen Group Corp. (the “Company”), was originally incorporated as Expertelligence, Inc in the State of California on March 31, 1980 and reincorporated in the State of Nevada on November 17, 2005.  On January 23, 2017, after a series of various name changes, the Company amended its Articles of Incorporation (“Charter Amendment”) to affect the current name change of Longwen Group Corp with trading symbol of “LWLW”.

 

On or about April 5, 2016, the Company affected a 1 for 750 share reverse split of its issued and outstanding common stocks and reduced to 127,061 shares outstanding. Effective November 29, 2016, 66,667 shares of common stock of the Company were transferred to Longwen Group Corp., a Cayman Island company (“Longwen Cayman”). All of the shares held by Longwen Cayman are restricted securities.  As a result of the transactions, Mr. Xizhen Ye, President of Longwen Cayman, was appointed as a sole Director of the Company, and President and Chief Executive Officer and Chief Financial Officer of the Company. On August 22, 2018, Mr. Lizhong Lu was appointed as a director of Board.

 

On June 9, 2021, Anthony Lombardo (“Lombardo”) filed an Application for Appointment of Custodian (“Application”) with the Eighth Judicial District Court in Nevada to request the custodianship of the Company due to the Company’s non-response and late filing with the State of Nevada. On June 24, 2021, a hearing was held on this Application, where Lombardo was named temporary custodian of the Company. Subsequently after Lombardo’s custodianship, Deanna Johnson was appointed as the CEO, CFO and Secretary of the Company. On September 1, 2021, Deanna Johnson appointed Joseph Passalaqua (“Joseph”) as CEO, CFO and Secretary and resigned from all positions in the Company.

 

On October 25, 2021, Mr. Xizhen Ye (“Ye”), the ex-officer and director of the Company prior to Lombardo’s custodianship, and Longwen Cayman, filed a motion to dissolve custodianship (“Motion”) with the Eighth Judicial District Court of Nevada State. Pursuant to the Settlement Agreement entered on January 12, 2022, by Longwen Cayman, Mr. Ye, Lombardo, Joseph and Deanna Johnson regarding Lombardo’s custodianship, Mr. Ye and Mr. Lizhong Lu were reinstated as the officer and directors of the Company, and 65,000,000 common stocks of the Company was transferred from Joseph to Mr. Ye on February 9, 2022. Further on February 17, 2022, the Eighth Judicial District Court officially terminated Lombardo’s custodianship over the Company.

 

On February 23, 2022, the Company entered into an Acquisition Agreement with a third-party individual to acquire the 100% ownership of Hangzhou Longwen Enterprise Management Co., Ltd. (“Hangzhou Longwen”), a wholly foreign-owned enterprise (“WOFE”) in Hangzhou, the People’s Republic of China (the “PRC”), for a total cash consideration of $1,000. As a result of the acquisition, Hangzhou Longwen became the Company’s wholly owned subsidiary in the PRC. Hangzhou Longwen was originally registered on January 4, 2012 and has minimum operations since its inception. The Company recognize goodwill of $993 upon consummated the acquisition. During 2022, Hangzhou Longwen entered consulting service agreements with various customers to assist in their various business, including but not limit to financial report preparation, business negotiation and business website maintenance and/or publicity, and etc.

 

On October 11, 2022, the Company and its subsidiary, Hangzhou Longwen entered into an Acquisition Agreement with a third-party individual to acquire 100% ownership of Hangzhou Yusu Trading Co., Ltd. (“Hangzhou Yusu”), a limited liability company in Hangzhou, the People’s Republic of China (the “PRC”), for a total cash consideration of RMB 1,000 or about USD $141. Upon consummated Hangzhou Yushu became Hangzhou Longwen’s wholly owned subsidiary in the PRC. Hangzhou Yusu was originally registered on April 20, 2020 and has minimum operations since its inception. The Company recognize goodwill of $139 upon consummated the acquisition. Hangzhou Yusu generated revenues from online product sales and aquaculture product sales..

On March 3, 2023, Hangzhou Longwen established a new subsidiary, Huzhou Wohong Fishery Co., Ltd. (“HWF”), to operate the aquacultural breeding, wholesale and retail of aquaculture products and etc.

 

 

8

  

 
 

  

LONGWEN GROUP CORP. AND SUBSIDIARIES

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    

Principles of Consolidation

 

The accompanying unaudited consolidated financial statements include the accounts of the Company and its subsidiaries as described in Note 1. All significant intercompany transactions and balances have been eliminated in the consolidation.

 

Basis of Presentation

 

The unaudited consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair statement of the financial statements have been included. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

 

Use of Estimates

 

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results may differ from those estimates and assumptions.

 

Foreign Currency Transactions

 

The Company’s consolidated financial statements are presented in U.S. dollars ($), which is the Company’s reporting and functional currency. The functional currencies of the Company’s subsidiaries including Hangzhou Longwen, Hangzhou Yushu and Huzhou Wohong, are RMB. The resulting translation adjustments are reported under other comprehensive loss in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 220 (“ASC 220”), “Reporting Comprehensive Income”. Gains and losses resulting from the translation of foreign currency transactions are reflected in the consolidated statements of operations and other comprehensive income. Monetary assets and liabilities denominated in foreign currency are translated at the functional currency using the rate of exchange prevailing at the balance sheet date. Any differences are taken to profit or loss as a gain or loss on foreign currency translation in the consolidated statements of operations and other comprehensive income.

 

The Company translates the assets and liabilities into U.S. dollars using the rate of exchange prevailing at the balance sheet date and the statements of operations and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation from RMB into U.S. dollars are recorded in shareholders’ equity as part of accumulated other comprehensive loss. The exchange rate used for financial statements are as follows:

 

   

Average Rate for the three months ended

September 30,

 

Average Rate for the nine months ended September 30, 

    2023     2022   2023 2022
China yuan (RMB)   RMB 7.2437     RMB 6.8506   RMB 7.0326 RMB 6.6001
United States dollar ($)   $ 1.0000     $ 1.0000   $ 1.0000 $ 1.0000

 

    Exchange Rate at  
   

September 30,

2023

    December 31, 2022  
China yuan (RMB)   RMB  7.3010     RMB  6.8972  
United States dollar ($)   $ 1.0000     $ 1.0000  

    

9

  

 
 

 

  

LONGWEN GROUP CORP. AND SUBSIDIARY

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Inventories

 

Inventories consist of finished products and are stated at the lower of cost or net realizable value. Cost is calculated by applying the weighted -average method and physically applied first-in-first-out method (FIFO) in inventory stock in and out. The Company regularly reviews inventory quantities on hand and writes down to its net realizable value any inventory that it believes to be impaired. Management considers forecast demand in relation to the inventory on hand, competitiveness of product offerings, market conditions and product life cycles when determining excess and obsolescence and net realizable value adjustments. Once inventory is written down and a new cost basis is established, it is not written back up if demand increases.

 

Property and equipment

 

Depreciation on property and equipment is recognized on a straight-line basis over the estimated useful lives of the assets, for which the remaining term of the legal title for the office space and 3 years for office equipment.

 

Intangible Assets

 

Intangible assets with definite use life are amortized on a straight-line basis over the estimate useful lives of the assets.

 

Revenue Recognition

The Company recognizes revenue when a customer obtains control of promised products or services, in an amount that reflects the consideration expected to be received in exchange for those products or services. The Company follows the five-step model prescribed under Topic 606: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies each performance obligation. Revenues are presented net of any sales or value added taxes collected from customers and remitted to the government.

The Company’s consulting service income consists of the delivery of focused insights and recommendations that assist customers with their challenges in developing and executing strategies around their trade business and financial reporting processes. The consulting services provided are fixed-fee arrangements that are generally in one-year term. The Company has concluded that each contract represents a single performance obligation as each is a single promise to deliver a customized engagement and deliverable. For the majority of these services, either practically or contractually, the work performed and delivered to the customer has no alternative use to the Company. Additionally, the Company maintains an enforceable right to payment at all times throughout the contract.

The Company’s online product sales consist of selling products to end customers through online channel, such as apps embedded in Wechat. Revenue is recognized at a point in time when the products are delivered to and accepted by end customers.

The Company’s aquaculture product sales consist of selling aquacultural products to customers through offline channel. Revenue is recognized at a point in time when the products are delivered to and accepted by end customers. The Company concludes the presentation of revenue generated from selling of aquaculture products is at a gross basis as the Company acts as a principal by controlling sales transactions provided to their customers.

 

Concentration

 

During the three months ended September 30, 2023, the Company generated 45%, 24% and 18% of revenues from the top 3 customers, respectively. During the nine months ended September 30, 2023, the Company generated 47%, 13% and 13% of revenues from the top 3 customers, respectively. The Company’s cost of revenues consisted of 88% and 92% purchases from one top vendor for the three and nine months ended September 30, 2023, respectively. The Company’s revenue and cost of revenues were not material during the three and nine months ended September 30, 2022.

 

10

 

 
 

   

LONGWEN GROUP CORP. AND SUBSIDIARY

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 

 

Share-based Compensation

 

The Company accounts for stock options and other equity-based compensation issued in accordance with ASC 718 “Stock Compensation”, which requires the measurement and recognition of compensation expense related to the fair value of equity-based compensation awards that are ultimately expected to vest. Stock-based compensation expense recognized includes the compensation cost for all share-based compensation payments granted to employees and nonemployees, net of estimated forfeitures, over the employees’ requisite service period or the non-employee performance period based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC 718 is also applied to awards modified, repurchased, or cancelled during the periods reported. 

 

Income Taxes

 

The Company accounts for income taxes under ASC 740, “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statements 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. 

   

Related Parties

 

The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. 

 

Fair Value Measurements

 

Fair value accounting establishes a framework for measuring fair value and expands disclosure about fair value measurements. Fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels 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 assets or liabilities, either directly or indirectly, for substantially the full term of the financial instruments.

 

  · Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

 

As of September 30, 2023 and December 31, 2022, the Company did not have any assets or liabilities that were required to be measured at fair value on a recurring basis or on a non-recurring basis. The carrying value of the Company’s cash, accounts receivable, net, loans from third parties, shareholder loans and accounts payable and accrued liabilities approximates the fair value due to the short-term maturity.

 

Segment Reporting

 

Accounting Standards Codification (“ASC”) 280, “Segment Reporting,” requires public companies to report financial and descriptive information about their reportable operating segments. We identify our operating segments based on how our chief operating decision maker internally evaluates separate financial information, business activities and management responsibility. During the three and nine months ended September 30, 2023 and 2022, the Company determined that we have one reportable segment as we manage the business from the geography location.

 

 

11

 

 
 

    

LONGWEN GROUP CORP. AND SUBSIDIARIES

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Accounting Standards Recently Adopted

 

In June 2016, the FASB issued ASU No. 2016-13, (Topic 326), Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments which amends the current accounting guidance and requires the use of the new forward-looking “expected loss” model, which requires all expected losses to be determined based on historical experience, current conditions and reasonable and supportable forecasts, rather than the “incurred loss” model. This guidance amends the accounting for credit losses for most financial assets and certain other instruments including trade and other receivables, held-to-maturity debt securities, loans and other instruments. The Company adopted ASU No. 2016-13 on January 1, 2023, which had no impact on the beginning balance of the Company’s balance as there was no receivable balances as of January 1, 2023.     

 

Accounting Standards Issued but Not Yet Adopted

 

There were updates recently issued. The management does not believe that accounting pronouncements recently issued but not yet adopted will have a material impact on its financial position results of operations or cash flows. 

 

 

NOTE 3 – GOING CONCERN

  

The Company’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business.  During the nine months ended September 30, 2023, the Company incurred a net loss of $932,122. The Company had an accumulated deficit of $19,959,957 as of September 30, 2023. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

  

The Company’s future success is dependent upon its ability to acquire and achieve business with profitable operations, generate cash from operating activities and obtain additional financing. The Company intends to raise funds from the issuance of equity and/or debt securities, but there is no assurance that additional funds from the issuance of equity will be available for the Company to finance its operations on acceptable terms, or at all.  These financial statements do not include any adjustments that might result from the outcome of this uncertainty. 

 

NOTE 4 – EQUIPMENT, NET

 

As of September 30, 2023 and December 31, 2022, equipment consisted of the following:

 

   

September 30,

2023

  December 31, 2022
         
Equipment   $ 7,008     $ 7,419  
Property     256,314       271,319  
Less: accumulated depreciation     (12,903 )     (4,368 )
Total property and equipment, net   $ 250,419     $ 274,370  

 

On September 28, 2022, the Company consummated an office suite purchase agreement with a third party. Pursuant to the agreement, the Company issued 2,651,780 common stocks of the Company to purchase a 118-square-meter office suite located in Hangzhou City, Zhejiang Province, China. The cost of the office suite was measured at the fair value of the issued common stocks on the closing date of $265,178 less value-added tax of $2,108. The difference of $6,756 between the addition of $263,070 and the cost as of September 30, 2023 is due to the fluctuation of foreign exchange rate. The office space is intended for internal use.

 

Depreciation expenses were $3,118 and $598 for the three months ended September 30, 2023 and 2022, respectively, which was included in selling, general and administrative expenses. Depreciation expenses were $9,645 and $1,328 for the nine months ended September 30, 2023 and 2022, respectively. The difference with the change in accumulated depreciation was due to exchange difference.

 

12

  

 
 

 

 

LONGWEN GROUP CORP. AND SUBSIDIARIES

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

 

NOTE 5 – LOANS FROM THIRD PARTIES

 

The Company’s loans from third parties consisted of the following as of September 30, 2023 and December 31, 2022:

 

   September 30, 2023  December 31, 2022
Loan from a third-party lender; the loan bears a fixed interest at $500 per annum and due on demand  $     $12,250 
Loan from a third-party lender; unsecure, bearing an interest rate of 0.5% per annum, and due in one year   82,181       
Loan from two third-party lenders; unsecure, non-interest-bearing, and due on December 30, 2023            
Total loans   82,181    12,250 
Less: current portion   (82,181)   (12,250)
Total non-current portion  $—     $—   

 

On December 31, 2019, the Company entered into a loan agreement of $12,250 with a third-party individual with three-year term. The borrowing bears interest of $300 at the effective date of the contract and fixed rate at $500 per annum, which matured on December 31, 2022 and immediately became due on demand. The loan will be paid off in a single payment of the outstanding balance of principal and accrued interest on or before the expiration date of the loan agreement. As of December 31, 2022, the outstanding balance of the borrowing was $12,250, and the interest payable was $1,800, respectively.  During the three months ended March 31, 2023, the loan and interest payable in the total amount of $14,050 was repaid by the wife of the President, on behalf of the Company (Note 8). Total interest expenses for the loan were $nil and $47, respectively, for the three months ended September 30, 2023 and 2022. Total interest expenses for the loan were $nil and $375, respectively, for the nine months ended September 30, 2023 and 2022.

  

During the three months ended March 31, 2023, the Company borrowed $46,776 (RMB 320,000) from two third-party individuals. The loans are unsecure, non-interest-bearing, and due on December 30, 2023. After the first quarter of 2023, the Company borrowed additional $76,934 (RMB 550,000) and repaid $123,710 (RMB 870,000) to the two individuals. As of September 30, 2023, the loans are fully paid off.

 

During the three months ended March 31, 2023, the Company borrowed $87,705 (RMB 600,000) from a third-party individual. The loans are unsecure, bearing an interest rate of 0.5% per annum, and due in one year. As of September 30, 2023, the total amount owed to this third party is $82,181, with a difference of $5,524 due to foreign exchange fluctuation. During the three and nine months ended September 30, 2023, the Company accrued interest expense of $104 and $260, respectively.

 

  

 

13

 

 
 

    

LONGWEN GROUP CORP. AND SUBSIDIARIES

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 

 

NOTE 6 – INCOME TAX

 

As of September 30, 2023 and December 31, 2022, the Company has incurred an accumulated net loss of approximately $20.0 million and $19.0 million which resulted in a net operating loss for income tax purposes. NOLs can carry forward indefinitely up to offset 80 percent of taxable income after CARES Act effect on December 31, 2017. The deferred tax asset has been fully reserved for valuation allowance as the Company believes they will most-likely-than-not realize the benefits. 

 

Significant components of the deferred tax assets and liabilities for income taxes as of September 30, 2023 and December 31, 2022 consisted of the following: 

   September 30, 2023  December 31, 2022
Deferred tax assets          
Net operating loss carry-forward  $826,721   $630,975 
Total  $826,721   $630,975 
Valuation allowance   (826,721)   (630,975)
Net deferred tax assets - noncurrent  $     $   

 

Reconciliation of income tax provision and the accounting profit multiplied by U.S. federal income tax rate for the three and nine months ended September 30, 2023 and 2022: 

             
  

Three Months Ended

September 30,

 

Nine months ended

September 30,

   2023  2022  2023  2022
Loss at 21% statutory tax rate  $(39,716)  $(8,462)  $(195,746)  $(41,279)
                     
Increase (decrease) in income taxes resulting from:                    
Net operating loss carry forward         —      —      —   
Change in valuation allowance   39,716    8,462    195,746    41,279 
   $     $     $     $   

  

NOTE 7 – STOCKHOLDERS’ EQUITY

 

Common Stocks

 

As of September 30, 2023 and December 31, 2022, the Company had 79,825,094 and 74,108,926 shares of common stock issued and outstanding, respectively.

 

During the nine months ended September 30, 2022, the Company sold 635,747 and 876,339 shares of common stock to forty-five non-U.S. investors at $0.30 and $0.10 per share, respectively. Total $278,357 was received for total 1,512,086 shares of common stocks subscribed. The Company relied upon Regulation S of the Securities Act of 1933, as amended, for the sale of these securities. No commissions were paid regarding the share issuance and the share certificates were issued with a Rule 144 restrictive legend.

 

During the nine months ended September 30, 2023, the Company sold 336,168 shares of common stock to forty-nine non-U.S. investors at $0.10 and $0.20 per share, respectively. Total $67,234 subscription was received. The Company relied upon Regulation S of the Securities Act of 1933, as amended, for the sale of these securities. No commissions were paid regarding the share issuance and the share certificates were issued with a Rule 144 restrictive legend.

 

On September 28, 2022, the Company and its subsidiary, Hangzhou Longwen closed an Assets Sales and Purchase Agreement with a third-party seller to acquire an office suite located in Hangzhou, China by issuing 2,651,780 shares of common stock of the Company, $0.10 per share with a total value of $265,178

 
14

  

 
 

 

  

LONGWEN GROUP CORP. AND SUBSIDIARIES

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 7 – STOCKHOLDERS’ EQUITY (continued)

 

 

2022 Equity Incentive Plan

 

On November 7, 2022, the Board adopted an equity incentive plan to increase stockholder value and to advance the interests of the Company by furnishing a variety of economic incentives (“Incentives”) designed to attract, retain and motivate employees, certain key consultants and directors of the Company (the “2022 Equity Incentive Plan”). Under the 2022 Equity Incentive Plan, the Company can issue up to 10,000,000 shares of common stock of the Company. Incentives may be granted in any one or a combination of: (a) incentive stock options and non-statutory stock options; (b) stock appreciation rights; (c) stock awards; (d) restricted stock; and (e) performance shares. Such incentives may be subject to vesting conditions determined by the Board of Directors at grant. The maximum term of options or other stock-based award granted is ten years or such lesser time as determined by the Board of Directors at the time of grant.

 

On November 10, 2022, the Company granted total 4,250,000 shares of common stock of the Company to four individual consultants, under the 2022 Equity Incentive Plan, vesting immediately upon grant. The fair value of the shares granted totaled $425,000.

 

On January 19, 2023, the Company granted total 5,000,000 shares of common stock of the Company to six employees and one consultant pursuant to the Company’s 2022 Equity Incentive Plan. The fair value of the shares totaled of $500,000 on the grant dates.

 

On June 29, 2023, the Company granted a total of 200,000 shares of common stock of the Company to two employees pursuant to the Company’s 2022 Equity Incentive Plan. The fair value of the shares totaled of $40,000 on the grant date, which was recorded in share-based compensation on the consolidated statement of operations. On the same date, the Company granted 550,000 common stocks issuable to four individuals at a fair value of $0.20 per share, subject to vesting condition in three tranches within six months, with 180,000 vested immediately. During the three months ended September 30, 2023, the vesting of the remaining traches was suspended and subject to further performance review, therefore, no further share-based compensation has been recorded. During the nine months ended September 30, 2023, the Company recognized share-based compensation of $36,000 as a result of the grant of these 550,000 common stocks. As of September 30, 2023, 180,000 common stocks have been issued, and 370,000 common stocks are issuable, and the remaining value of $74,000 was recorded as deferred compensation on the consolidated balance sheet.

 

As of September 30, 2023, the Company’s common shares issuable under the 2022 Equity Incentive Plan totaled 370,000. The following table represents the restricted stock award activities during the nine months ended September 30, 2023.

 

    Non-vested Restricted Stock Awards   Weighted Average Grant Date Fair Value
Non-vested at January 1, 2023           $                     —  
Granted     550,000       0.20  
Vested     (180,000 )     0.20  
Forfeited            
Non-vested at September 30, 2023     370,000       0.20  

 

 
15

  

 
 

  

LONGWEN GROUP CORP. AND SUBSIDIARIES

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

 

NOTE 8 – RELATED PARTY TRANSACTIONS

  

During the three months ended March 31, 2022, the Company borrowed total $82,107 from the President of the Company for its normal business operations and the acquisition of Hangzhou Longwen. From July 2022 to December 2022, the Company borrowed additional $9,676 from the President of the Company. As of December 31, 2022, the total amount owed to the President was $90,494, with a difference of $1,289 due to the foreign exchange fluctuation. During the nine months ended September 30, 2023, the Company repaid $17,086 (RMB 123,000) to the President. As of September 30, 2023, the balance of the loan due to our President was $69,339. The difference of $4,069 is due to the fluctuation in foreign exchange. The borrowing is unsecured, non-interest-bearing and due on demand.

 

During the three months ended March 31, 2023, the wife of President of the Company, repaid commercial loan and accrued interest in the total amount of $14,050 on behalf of the Company. During the nine months ended September 30, 2023, the Company received advances of $83,640 in cash from and repaid $16,046 to the wife of President of the Company. As of September 30, 2023, the amount due to this related party was $78,643, with difference of $3,001 due to the fluctuation in foreign exchange.

 

During the nine months ended September 30, 2023, the Company purchased inventory in the total amount of $39,118 from Hangzhou Longwen Culture Media Ltd. (“HZLWCM”), an entity under the control by the daughter of the President of the Company. As of September 30, 2023, the amount payable to HZLWCM totaled $39,118, which was included in accounts payable and accrued liabilities on the consolidated balance sheet.

 

NOTE 9 – COMMITMENTS

 

During the year ended December 31, 2022, the Company entered into leases with third parties for office spaces and a parking spot in Hangzhou, PRC, all with a lease term of 12 months. The remaining minimum lease payments under the three leases as of September 30, 2023 was approximately $nil.

 

NOTE 10 – SUBSEQUENT EVENTS

 

The Company has evaluated all other subsequent events through the date these consolidated financial statements were issued and determine that there were no other subsequent events or transactions that require recognition or disclosures in the consolidated financial statements. 

 

 

 

 

 

 

 

16

 

 
 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

This Quarterly Report on Form 10-Q contains forward-looking statements, particularly those identified with the words, “anticipates,” “believes,” “expects,” “plans,” “intends,” “objectives,” and similar expressions. These statements reflect management’s best judgment based on factors known at the time of such statements. The reader may find discussions containing such forward-looking statements in the material set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” generally, and specifically therein under the captions “Liquidity and Capital Resources” as well as elsewhere in this Quarterly Report on Form 10-Q. Actual events or results may differ materially from those discussed herein. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guarantee, or warranty is to be inferred from those forward-looking statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

 

Overview

 

Longwen Group Corp. (the “Company”), was originally incorporated as Expertelligence, Inc in the State of California on March 31, 1980 and reincorporated in the State of Nevada on November 17, 2005.  On January 23, 2017, after a series of various name changes, the Company amended its Articles of Incorporation (“Charter Amendment”) to affect the current name change of Longwen Group Corp with trading symbol of “LWLW”.

 

The Company underwent a change of control on January 21, 2016, at which time Harold Minsky resigned in all officer positions. G. Reed Petersen and White Rim Cattle Company LLC each purchased 25,000,000 shares of common stock of the Company from Harold Minsky. Mr. Petersen is the Member Manager of White Rim Cattle Company, LLC and thus can be considered a control person of all 50,000,000 shares of stock of the Company. Pursuant to a Board of Directors meeting, Mr. Petersen was elected to and accepted all the officer positions previously held by Harold Minsky.

 

On or about April 5, 2016, the Company affected a 1 for 750 share reverse split of its issued and outstanding common stock. On such date, the Company’s common stock was reduced from 95,164,140 to 127,061 shares outstanding.

 

Effective November 29, 2016, G. Reed Peterson sold 66,667 shares of common stock of the Company to Longwen Group Corporation (Cayman Island), a Cayman Island company (“Longwen Cayman”). All of the shares held by Longwen Cayman are restricted securities.  As a result of the transactions, Mr. Petersen no longer owns any of the Company’s capital stock or securities and he and his affiliates waived all loans and other amounts due to the Company. In addition, on such date, Mr. Petersen resigned in all officer capacities from the Company, and Mr. Xizhen Ye, President of Longwen Cayman, was appointed as a sole Director of the Company and President and Chief Executive Officer and Chief Financial Officer of the Company. On August 22, 2018, Mr. Lizhong Lu was appointed as a director of Board.

 

From August 2018 to June 2021, the Company continued to seek for new business opportunities in order to increase its value of the common stock. However, due to the impact of the Covid-19 pandemic, the progress was delayed and the business goal was not successfully achieved.

 

 

 
17

 

 

 

 
 

 

 

On June 9, 2021, Anthony Lombardo (“Lombardo”) filed an Application for Appointment of Custodian (“Application”) with the Eighth Judicial District Court in Nevada to request the custodianship of the Company due to the Company’s non-response and late filing with the State of Nevada. On June 24, 2021, a hearing was held on this Application, where Lombardo was named temporary custodian of the Company. Subsequently after Lombardo’s custodianship, Deanna Johnson was appointed as the CEO, CFO and Secretary of the Company. On September 1, 2021, Deanna Johnson appointed Joseph Passalaqua (“Joseph”) as CEO, CFO and Secretary and resigned from all positions in the Company, On October 25, 2021, Mr. Xizhen Ye (“Ye”), who was the officer and director of the Company prior to Lombardo’s custodianship, and Longwen Group Corporation, a Cayman Island corporation, filed a Motion to Dissolve Custodianship (“Motion”) with the Eighth Judicial District Court of Nevada State. On January 12, 2022, in accordance with a Settlement Agreement regarding Lombardo’s custodianship, Mr. Ye was reinstated his positions as the officer and director of the Company, along with the reinstatement of the other Company’s director, Lizhong Lu, who was also in place prior to Lombardo’s custodianship. On February 9, 2022, pursuant to the Settlement Agreement, Joseph transferred 65,000,000 common stocks of the Company owned by him to Mr. Ye. On February 17, 2022, the Eighth Judicial District Court formally dismissed Lombardo’s custodianship for the Company. 

  

On February 23, 2022, the Company entered into an Acquisition Agreement with a third-party individual to acquire the 100% ownership of Hangzhou Longwen Enterprise Management Co., Ltd. (“Hangzhou Longwen”), a wholly Foreign-Owned Enterprise (“WOFE”) in Hangzhou, the People’s Republic of China (the “PRC”), for a total cash consideration of $1,000. As a result of the acquisition, Hangzhou Longwen became the Company’s wholly owned subsidiary in the PRC. Hangzhou Longwen was originally registered on January 4, 2012 and has minimum operations since its inception and the Company recognize $993 goodwill as a result of the business acquisition.

 

On October 11, 2022, the Company and its subsidiary, Hangzhou Longwen entered into an Acquisition Agreement with a third-party individual to acquire the 100% ownership of Hangzhou Yusu Trading Co., Ltd. (“Hangzhou Yushu”), a limited liability company in Hangzhou, the People’s Republic of China (the “PRC”), for a total cash consideration of RMB 1,000 or about USD $141. Upon consummated HZYS became Hangzhou Longwen’s wholly owned subsidiary in the PRC. Hangzhou Yushu was originally registered on April 20, 2020 and has minimum operations since its inception.

 

On March 3, 2023, Hangzhou Longwen established a new subsidiary, Huzhou Wohong Fishery Co., Ltd. (“Huzhou Wohong”), to operate the aquacultural breeding, wholesale and retail of aquaculture products and etc.

 

Results of operation for the three months ended September 30, 2023 and 2022

 

Revenue

 

During the three months ended on September 30, 2023, the Company generated $nil of revenue from its consulting services compared to $11,328 for the period of the same quarter of year 2022. As of June 30, 2023, the Company has terminated the consulting agreements with Linhai Dingji Auto Service Co., Ltd (China) (“Linhai Dingji”) and Yunnan Yusu Import and Export Trading Co., Ltd (China) (“Yunnan Yusu”) due to the Company’s business strategy adjustment. The managements of the Company have decided to be more focus on the aquaculture product sales segment from the year 2023.  

 

On March 3, 2023, Hangzhou Longwen established a new subsidiary, Huzhou Wohong Fishery Co., Ltd. (“HWF”), to operate the aquacultural breeding, wholesale and retail of aquaculture products and etc. During the three months ended on September 30, 2023, the Company generated $548,851 of revenue from its aquaculture product sales through HWF compared to $nil revenue for the three months ended September 30, 2022. We expect our newly added aquaculture product sales segment will become an important source of revenue for the Company in the year 2023.

 

 

 

 
18

 

 

 
 

 

 

    For the three months ended September 30,        
    2023   2022   Increase (Decrease)   Percentage Change
                 
                 
Consulting services   $     $ 11,328     $ (11,328 )     (100 )%
Online product sales     —         —         —         —   %
Aquaculture product sales     548,851       —         548,851       100 %
    $ 548,851     $ 11,328     $ 537,523       4,745 %

  


Cost of Revenues

 

For the three months ended September 30, 2023, our cost of revenues amounted to $550,116 as compared to $nil for the three months ended September 30, 2022, an increase of $550,116 or 100%. The increase was mainly due to the increased sales of the aquaculture product which was added to our sales segments in the first quarter of this year.  

 

     
    For the three months ended September 30,        
    2023   2022   Increase (Decrease)   Percentage Change
                 
                 
Consulting services   $ —       $ —       $ —         —   %
Online product sales     —         —         —         —   %
Aquaculture product sales     550,116       —         550,116       100 %
    $ 550,116     $ —       $ 550,116       100 %

 

 Operating Expense

 

For the three months ended September 30, 2023, our operating expense amounts to $187,580, as compared to $51,390 for the three months ended September 30, 2022, an increase of $136,190. The increase was mainly due to the increased office and professional expenses as two subsidiaries were set up after the second quarter of 2022.

 

During the three months ended September 30, 2023 and 2022, the Company incurred other general and administrative and professional expenses of $187,580 and $51,390, respectively. The professional expenses mainly included consulting expenses and financial advisor fees.

 

Net Loss

 

The net loss was $189,123 and $40,297 for the three months ended on September 30, 2023 and 2022, respectively. The increase in net loss in the current quarter was mainly due to the increase expenses of selling, general and administrative and professional. 

 

 

 
19

 

 
 

 

Results of operation for the nine months ended September 30, 2023 and 2022

 

Revenue

 

During the nine months ended on September 30, 2023, the Company generated $15,004 of revenue from its consulting services compared to $19,307 of revenue for the period of the same quarter of year 2022. During the nine months ended on September 30, 2023, the Company generated $6,082 of revenue from its online product sales through HZYS compared to $nil revenue for the nine months ended September 30, 2022. In December 2022, the Company’ subsidiary, HZYS, worked with a third-party platform developer, formally launched our online store, Huanyumeiyuan Mall (the “HYMY”), through Tencent’s Wechat platform.

 

During the nine months ended on September 30, 2023, the Company generated $1,972,127 of revenue from its aquaculture product sales through HWF compared to $nil revenue for the nine months ended September 30, 2022.

 

    For the nine months ended September 30,        
    2023   2022   Increase (Decrease)   Percentage Change
                 
                 
Consulting services   $ 15,004     $ 19,307     $ (4,303 )     (22) %
Online product sales     6,082       —         6,082       100 %
Aquaculture product sales     1,972,127       —         1,972,127       100 %
    $ 1,993,213     $ 19,307     $ 1,973,906       10,224 %

 

 Cost of Revenues

 

For the nine months ended September 30, 2023, our cost of revenues amounted to $1,838,711 as compared to $nil for the nine months ended September 30, 2022, an increase of $1,838,711 or 100%. The increase was mainly due to the increased sales of our online product sales and the aquaculture product sales which added to our sales segments in the first quarter of this year.

 

Cost of revenue totaled $1,836,512 for aquaculture product sales for the nine months ended September 30, 2023 comparing to $nil for the same quarter in 2022. Our cost for online product sales was $2,199 for the nine months ended on September 30, 2023 compared to $nil for the same quarter in 2022.

 

    For the nine months ended September 30,        
    2023   2022   Increase (Decrease)   Percentage Change
                 
                 
Consulting services   $ 2,199     $ —       $ 2,199       100 %
Online product sales     —         —         —         —   %
Aquaculture product sales     1,836,512       —         1,836,512       100 %
    $ 1,838,711     $ —       $ 1,838,711       100 %

 

 Operating Expense

 

For the nine months ended September 30, 2023, operating expense amounts to $1,081,096 as compared to $215,527 for the nine months ended September 30, 2022, an increase of $865,569. The increase was mainly due to $576,000 stock-based compensation due to the issuance of 5,380,000 common shares of the Company grant and increased expenses and fees due to the business development and expansion.

 

During the nine months ended September 30, 2023 and 2022, the Company incurred other general and administrative and professional expenses of $505,096 and $215,527 respectively. The professional expenses mainly included consulting expenses and financial advisor fees.

 
20

 

 
 

 

 

Net Loss

 

The net loss was $932,122 and $196,567 for the nine months ended on September 30, 2023 and 2022, respectively. The increase in net loss in the current quarter was mainly due to the increase expenses of selling, general and administrative, professional expenses and share issuance for employee compensation as a result of the Company’s sustained operations.  

 

Liquidity and Capital Resources

 

As of September 30, 2023 and December 31, 2022, we had an accumulated deficit of $19,959,957 and $19,027,835, respectively. As of September 30, 2023, we had cash of $5,638 and a working capital deficit of $276,502. As of December 31, 2022, we had cash of $68,121 and a working capital deficit of $8,172. The increase in the working capital deficit was primarily due to cash used in operating activities.

 

Going Concern Assessment

 

The Company demonstrates adverse conditions that raise substantial doubt about the Company’s ability to continue as a going concern. These adverse conditions are negative financial trends, specifically cash outflow from operating activities, operating losses, accumulated deficit and other adverse key financial ratios.

 

Management’s plan to alleviate the substantial doubt about the Company’s ability to continue as a going concern include attempting to improve its business profitability, its ability to generate sufficient cash flow from its operations to meet its operating needs on a timely basis, obtain additional working capital funds from the majority shareholder and the President of the Company to eliminate inefficiencies in order to meet its anticipated cash requirements. However, there can be no assurance that these plans and arrangements will be sufficient to fund the Company’s ongoing capital expenditures and other requirements.

 

The unaudited condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.

 

Off-Balance Sheet Arrangements

 

We have no 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 is material to stockholders.

 

Critical Accounting Policies

 

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires making estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

The critical accounting policies are discussed in further detail in the notes to the unaudited financial statements appearing elsewhere in this 10-Q report. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

As a “smaller reporting company” we are not required to provide this information under this item pursuant to Regulation S-K.

 

 

 

21

 

 
 

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this report on Form 10-Q, our President (principal executive officer) and our Chief Financial Officer performed an evaluation of the effectiveness of and the operation of our disclosure controls and procedures as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act. Based on that evaluation, our President and Chief Financial Officer each concluded that as of the end of the period covered by this report on Form 10-Q, our disclosure controls and procedures were not effective in timely alerting them to material information relating to Longwen Group Corp. required to be included in our Exchange Act filings.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the quarter ended September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

None

 

Item 1A. Risk Factors

 

As a “smaller reporting company”, we are not required to provide this information under this item pursuant to Regulation S-K.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None

 

Item 3. Defaults Upon Senior Securities

 

None

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None

 
22

 

 

 

 

 
 

 

 

 

Item 6. Exhibits

 

 

Exhibit

Number

  Description of Exhibit
31.1*   Certification of Chief Executive Officer pursuant to the Securities Exchange Act Rules 13a-14(a) and 15d-14(a)
     
31.2*   Certification of Chief Financial Officer pursuant to the Securities Exchange Act Rules 13a-14(a) and 15d-14(a)
     
32.1*   Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350
     
101.INS   Inline XBRL Instance Document
     
101.SCH   Inline XBRL Taxonomy Extension Schema Document
     
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Filed herewith.

 

 

 
23

 

 

 

 

 
 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  LONGWEN GROUP CORP.
   
Date: November 20, 2023 /s/ Xizhen Ye
  Xizhen Ye, Chief Executive Officer
   

 

Date: November 20, 2023 /s/ Xizhen Ye
  Xizhen Ye, Chief Financial Officer
   

 

 

 
24

 

 

 

 
 

 

 

 
 

 

EXHIBIT INDEX

 

Exhibit

Number

  Description of Exhibit
31.1*   Certification of Chief Executive Officer pursuant to the Securities Exchange Act Rules 13a-14(a) and 15d-14(a)
     
31.2*   Certification of Chief Financial Officer pursuant to the Securities Exchange Act Rules 13a-14(a) and 15d-14(a)
     
32.1*   Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350
     
101.INS   Inline XBRL Instance Document
     
101.SCH   Inline XBRL Taxonomy Extension Schema Document
     
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Filed herewith.

 
25

EXHIBIT 31.1

 

CERTIFICATION

 

I, Xizhen Ye, certify that:

 

1. I have reviewed this report on Form 10-Q of Longwen Group Corp.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

  a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

  a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

  /s/ Xizhen Ye
  Xizhen Ye
  Chief Executive Officer
  November 20, 2023

 

 

 

EXHIBIT 31.2

 

CERTIFICATION

 

I, Xizhen Ye, certify that:

 

1. I have reviewed this report on Form 10-Q of Longwen Group Corp.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

  a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

  a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

  /s/ Xizhen Ye
  Xizhen Ye
  Chief Financial Officer
  November 20, 2023

 

 

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the report of Longwen Group Corop. (the “Company”) on Form 10-Q for the period ending September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

  /s/ Xizhen Ye
  Xizhen Ye
  Chief Executive Officer
  November 20, 2023
   
  /s/ Xizhen Ye
  Xizhen Ye
  Chief Financial Officer
  November 20, 2023

 

 

 

v3.23.3
Cover - shares
9 Months Ended
Sep. 30, 2023
Nov. 17, 2023
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Sep. 30, 2023  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2023  
Current Fiscal Year End Date --12-31  
Entity File Number 000-11596  
Entity Registrant Name LONGWEN GROUP CORP.  
Entity Central Index Key 0000723533  
Entity Tax Identification Number 95-3506403  
Entity Incorporation, State or Country Code NV  
Entity Address, Address Line One No. 25  
Entity Address, Address Line Two Caihe Rd  
Entity Address, Address Line Three Shangcheng Dist.  
Entity Address, City or Town Hangzhou  
Entity Address, Country CN  
Entity Address, Postal Zip Code 310000  
City Area Code 86 0571  
Local Phone Number 85128985  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company true  
Elected Not To Use the Extended Transition Period false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   79,825,094
v3.23.3
CONSOLIDATED BALANCE SHEETS - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Current assets    
Cash and cash equivalents $ 5,638 $ 68,121
Accounts receivable, net of allowance 378,155
Inventories 39,303
Prepaid expenses and other current assets 13,695 58,413
Total current assets 436,791 126,534
Property and equipment, net 250,419 274,370
Intangible assets, net 2,911 3,625
Goodwill 1,132 1,132
TOTAL ASSETS 691,253 405,661
Current Liabilities:    
Accounts payable and accrued liabilities, including $39,118 and $nil to a related party as of September 30, 2023 and December 31, 2022, respectively 483,130 31,962
Loans from third parties 82,181 12,250
Shareholder loans 147,982 90,494
Total current liabilities 713,293 134,706
TOTAL LIABILITIES 713,293 134,706
STOCKHOLDERS’ EQUITY (DEFICIT)    
Preferred stock, $0.0001 par value, 50,000,000 authorized, nil shares issued and outstanding
Common stock, $0.0001 par value, 550,000,000 authorized, 79,825,094 and 74,108,926 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 7,983 7,411
Common stock issuable 37
Deferred share-based compensation (74,000)
Additional paid-in capital 20,002,164 19,285,539
Accumulated deficit (19,959,957) (19,027,835)
Accumulated other comprehensive income 1,733 5,840
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) (22,040) 270,955
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $ 691,253 $ 405,661
v3.23.3
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Statement of Financial Position [Abstract]    
Accounts Payable, related party $ 39,118  
Preferred Stock, Par or Stated Value Per Share $ 0.0001 $ 0.0001
Preferred Stock, Shares Authorized 50,000,000 50,000,000
Common Stock, Par or Stated Value Per Share $ 0.0001 $ 0.0001
Common Stock, Shares Authorized 550,000,000 550,000,000
Common Stock, Shares, Issued 79,825,094 74,108,926
Common Stock, Shares, Outstanding 79,825,094 74,108,926
v3.23.3
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Revenues        
Consulting service income $ 11,328 $ 15,004 $ 19,307
    Online product sales 6,082
    Offline product sales 548,851 1,972,127
    Total revenues 548,851 11,328 1,993,213 19,307
Cost of revenues        
    Online product sales 2,199
    Offline product sales 550,116 1,836,512
    Total cost of revenues 550,116 1,838,711
Gross Profit (Loss) (1,265) 11,328 154,502 19,307
Operating Expenses        
Professional expenses 61,806 30,011 168,001 111,346
Selling, general and administrative expenses 125,774 21,379 337,095 104,181
Share-based compensation 576,000
Total operating expenses 187,580 51,390 1,081,096 215,527
Loss from operations (188,845) (40,062) (926,594) (196,220)
Other income (expenses):        
Interest expense (104) (47) (260) (375)
Other income (expense), net (174) (188) (2,010) 28
Total other expense, net (278) (235) (2,270) (347)
Net loss before income tax (189,123) (40,297) (928,864) (196,567)
Income tax expense 3,258
Net loss (189,123) (40,297) (932,122) (196,567)
Other comprehensive income (loss)        
Foreign currency translation gain (loss) 3,673 2,255 (4,107) 157
Total other comprehensive income (loss) 3,673 2,255 (4,107) 157
Comprehensive loss $ (185,450) $ (38,042) $ (936,229) $ (196,410)
Weighted average shares outstanding: Basic and diluted 79,825,094 65,936,163 78,996,477 65,606,270
Earnings per share: Basic and diluted $ (0.00) $ (0.00) $ (0.01) $ (0.00)
v3.23.3
CONSOLIDATED STATEMENTS OF CASH FLOWS
9 Months Ended
Sep. 30, 2023
USD ($)
Sep. 30, 2022
USD ($)
Cash flows from operating activities:    
Net loss $ (932,122) $ (196,567)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation 9,645 1,328
Share-based compensation 576,000
Changes in operating assets and liabilities:    
Accounts receivable (392,588)
Inventories (40,803)
Prepaid expenses and other current assets 43,864 (81,280)
Accounts payable and accrued liabilities 471,988 375
Net cash used in operating activities (264,016) (276,144)
Cash flows from investing activities:    
Purchase of equipment (7,753)
Cash obtained from business acquisition 7
Net cash used in investing activities (7,746)
Cash flows from financing activities:    
Proceeds from shareholder loans 83,640 86,741
Proceeds from loans due to third parties 211,415 287,876
Repayments to shareholder loans (33,132)
Repayments of loans due to third parties (123,710) (75,757)
Proceeds from common stock issuance 67,234 278,357
Net cash provided by financing activities 205,447 577,217
Effect of exchange rate changes on cash and cash equivalents (3,914) (21,229)
Net (decrease) increase in cash and cash equivalents (62,483) 272,098
Cash and cash equivalents, beginning balance 68,121
Cash and cash equivalents, ending balance 5,638 272,098
Supplemental Disclosures:    
Interest paid
Income tax paid
Supplemental Disclosures of Non-Cash Investing and Financing Activities:    
Acquisition of Hangzhou Longwen Enterprise Management with shareholder loan 993
Repayment of loans from third parties and interest by a related party on behalf of the Company 14,050
Common stocks issuable for deferred compensation 23,221
Acquisition of property by issuance of common stocks $ 265,178
v3.23.3
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY - USD ($)
Preferred Stock [Member]
Common Stock [Member]
Common Stock Issuable [Member]
Additional Paid-in Capital [Member]
Deferred Share-based Compensation
Retained Earnings [Member]
AOCI Attributable to Parent [Member]
Total
Beginning balance, value at Dec. 31, 2021 $ 6,513   $ 18,261,346   $ (18,281,409) $ (13,550)
Shares, Issued at Dec. 31, 2021 65,127,061            
Issuance of common stock for cash $ 151   278,206   278,357
Shares issued for cash, shares   1,512,086            
Issuance of common stocks for property $ 265   264,913   265,178
Issuance of common stocks for property, shares   2,651,780            
Other comprehensive loss     157 157
Net loss     (196,567) (196,567)
Ending balance, value at Sep. 30, 2022 $ 6,929   18,804,465   (18,477,976) 157 333,575
Shares, Issued at Sep. 30, 2022 69,290,927            
Beginning balance, value at Jun. 30, 2022 $ 6,577   18,452,007   (18,437,679) (2,098) 18,807
Shares, Issued at Jun. 30, 2022 65,762,808            
Issuance of common stock for cash $ 87   87,545   87,632
Shares issued for cash, shares   876,339            
Issuance of common stocks for property $ 265   264,913   265,178
Issuance of common stocks for property, shares   2,651,780            
Other comprehensive loss     2,255 2,255
Net loss     (40,297) (40,297)
Ending balance, value at Sep. 30, 2022 $ 6,929   18,804,465   (18,477,976) 157 333,575
Shares, Issued at Sep. 30, 2022 69,290,927            
Beginning balance, value at Dec. 31, 2022 $ 7,411 19,285,539 (19,027,835) 5,840 270,955
Shares issued for compensation $ 538 575,462 576,000
Shares issued for compensation, shares   5,380,000            
Issuance of common stock for cash $ 34 67,200 67,234
Shares issued for cash, shares   336,168            
Shares issuable for deferred compensation 37 73,963 (74,000)
Other comprehensive loss (4,107) (4,107)
Net loss (932,122) (932,122)
Ending balance, value at Sep. 30, 2023 $ 7,983 37 20,002,164 (74,000) (19,959,957) 1,733 (22,040)
Shares, Issued at Sep. 30, 2023 79,825,094            
Beginning balance, value at Jun. 30, 2023 $ 7,983 37 20,002,164 (74,000) (19,770,834) (1,940) 163,410
Shares, Issued at Jun. 30, 2023 79,825,094            
Other comprehensive loss 3,673 3,673
Net loss (189,123) (189,123)
Ending balance, value at Sep. 30, 2023 $ 7,983 $ 37 $ 20,002,164 $ (74,000) $ (19,959,957) $ 1,733 $ (22,040)
Shares, Issued at Sep. 30, 2023 79,825,094            
v3.23.3
NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES
9 Months Ended
Sep. 30, 2023
Accounting Policies [Abstract]  
NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES

 

Longwen Group Corp. (the “Company”), was originally incorporated as Expertelligence, Inc in the State of California on March 31, 1980 and reincorporated in the State of Nevada on November 17, 2005.  On January 23, 2017, after a series of various name changes, the Company amended its Articles of Incorporation (“Charter Amendment”) to affect the current name change of Longwen Group Corp with trading symbol of “LWLW”.

 

On or about April 5, 2016, the Company affected a 1 for 750 share reverse split of its issued and outstanding common stocks and reduced to 127,061 shares outstanding. Effective November 29, 2016, 66,667 shares of common stock of the Company were transferred to Longwen Group Corp., a Cayman Island company (“Longwen Cayman”). All of the shares held by Longwen Cayman are restricted securities.  As a result of the transactions, Mr. Xizhen Ye, President of Longwen Cayman, was appointed as a sole Director of the Company, and President and Chief Executive Officer and Chief Financial Officer of the Company. On August 22, 2018, Mr. Lizhong Lu was appointed as a director of Board.

 

On June 9, 2021, Anthony Lombardo (“Lombardo”) filed an Application for Appointment of Custodian (“Application”) with the Eighth Judicial District Court in Nevada to request the custodianship of the Company due to the Company’s non-response and late filing with the State of Nevada. On June 24, 2021, a hearing was held on this Application, where Lombardo was named temporary custodian of the Company. Subsequently after Lombardo’s custodianship, Deanna Johnson was appointed as the CEO, CFO and Secretary of the Company. On September 1, 2021, Deanna Johnson appointed Joseph Passalaqua (“Joseph”) as CEO, CFO and Secretary and resigned from all positions in the Company.

 

On October 25, 2021, Mr. Xizhen Ye (“Ye”), the ex-officer and director of the Company prior to Lombardo’s custodianship, and Longwen Cayman, filed a motion to dissolve custodianship (“Motion”) with the Eighth Judicial District Court of Nevada State. Pursuant to the Settlement Agreement entered on January 12, 2022, by Longwen Cayman, Mr. Ye, Lombardo, Joseph and Deanna Johnson regarding Lombardo’s custodianship, Mr. Ye and Mr. Lizhong Lu were reinstated as the officer and directors of the Company, and 65,000,000 common stocks of the Company was transferred from Joseph to Mr. Ye on February 9, 2022. Further on February 17, 2022, the Eighth Judicial District Court officially terminated Lombardo’s custodianship over the Company.

 

On February 23, 2022, the Company entered into an Acquisition Agreement with a third-party individual to acquire the 100% ownership of Hangzhou Longwen Enterprise Management Co., Ltd. (“Hangzhou Longwen”), a wholly foreign-owned enterprise (“WOFE”) in Hangzhou, the People’s Republic of China (the “PRC”), for a total cash consideration of $1,000. As a result of the acquisition, Hangzhou Longwen became the Company’s wholly owned subsidiary in the PRC. Hangzhou Longwen was originally registered on January 4, 2012 and has minimum operations since its inception. The Company recognize goodwill of $993 upon consummated the acquisition. During 2022, Hangzhou Longwen entered consulting service agreements with various customers to assist in their various business, including but not limit to financial report preparation, business negotiation and business website maintenance and/or publicity, and etc.

 

On October 11, 2022, the Company and its subsidiary, Hangzhou Longwen entered into an Acquisition Agreement with a third-party individual to acquire 100% ownership of Hangzhou Yusu Trading Co., Ltd. (“Hangzhou Yusu”), a limited liability company in Hangzhou, the People’s Republic of China (the “PRC”), for a total cash consideration of RMB 1,000 or about USD $141. Upon consummated Hangzhou Yushu became Hangzhou Longwen’s wholly owned subsidiary in the PRC. Hangzhou Yusu was originally registered on April 20, 2020 and has minimum operations since its inception. The Company recognize goodwill of $139 upon consummated the acquisition. Hangzhou Yusu generated revenues from online product sales and aquaculture product sales..

On March 3, 2023, Hangzhou Longwen established a new subsidiary, Huzhou Wohong Fishery Co., Ltd. (“HWF”), to operate the aquacultural breeding, wholesale and retail of aquaculture products and etc.

 

 

Principles of Consolidation

 

The accompanying unaudited consolidated financial statements include the accounts of the Company and its subsidiaries as described in Note 1. All significant intercompany transactions and balances have been eliminated in the consolidation.

 

Basis of Presentation

 

The unaudited consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair statement of the financial statements have been included. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

 

Use of Estimates

 

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results may differ from those estimates and assumptions.

 

Foreign Currency Transactions

 

The Company’s consolidated financial statements are presented in U.S. dollars ($), which is the Company’s reporting and functional currency. The functional currencies of the Company’s subsidiaries including Hangzhou Longwen, Hangzhou Yushu and Huzhou Wohong, are RMB. The resulting translation adjustments are reported under other comprehensive loss in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 220 (“ASC 220”), “Reporting Comprehensive Income”. Gains and losses resulting from the translation of foreign currency transactions are reflected in the consolidated statements of operations and other comprehensive income. Monetary assets and liabilities denominated in foreign currency are translated at the functional currency using the rate of exchange prevailing at the balance sheet date. Any differences are taken to profit or loss as a gain or loss on foreign currency translation in the consolidated statements of operations and other comprehensive income.

 

The Company translates the assets and liabilities into U.S. dollars using the rate of exchange prevailing at the balance sheet date and the statements of operations and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation from RMB into U.S. dollars are recorded in shareholders’ equity as part of accumulated other comprehensive loss. The exchange rate used for financial statements are as follows:

 

   

Average Rate for the three months ended

September 30,

 

Average Rate for the nine months ended September 30, 

    2023     2022   2023 2022
China yuan (RMB)   RMB 7.2437     RMB 6.8506   RMB 7.0326 RMB 6.6001
United States dollar ($)   $ 1.0000     $ 1.0000   $ 1.0000 $ 1.0000

 

    Exchange Rate at  
   

September 30,

2023

    December 31, 2022  
China yuan (RMB)   RMB  7.3010     RMB  6.8972  
United States dollar ($)   $