-44444444
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
or
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number
(Exact name of registrant as specified in its charter)
| (State or Other Jurisdiction | (I.R.S. Employer | |
| of Incorporation or Organization) | Identification No.) |
RM 219,
(Address of Principal Executive Office)
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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.
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).
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 | ☐ | |
| ☐ | 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 ☐
As of August 12, 2022, the registrant had shares of common stock outstanding.
Longwen Group Corp.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 2022
TABLE OF CONTENTS
| PAGE | ||
| Note about Forward-Looking Statements | 2 | |
| PART I - FINANCIAL INFORMATION | ||
| Item 1 | Financial Statements | 3 |
| Consolidated Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021 | 4 | |
| Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2022 and 2021 | 5 | |
| Consolidated Statements of Changes in Stockholders’ Deficit (unaudited) for the six months ended June 30, 2022 and 2021 | 6 | |
| Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2022 and 2021 | 7 | |
| Notes to Consolidated Unaudited Financial Statements | 8 | |
| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operation | 14 |
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 16 |
| Item 4 | Controls and Procedures | 16 |
| PART II - OTHER INFORMATION | ||
| Item 1 | Legal Proceedings | 17 |
| Item 1A | Risk Factors | 17 |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 17 |
| Item 3 | Defaults Upon Senior Securities | 17 |
| Item 4 | Mine Safety Disclosures | 17 |
| Item 5 | Other Information | 17 |
| Item 6 | Exhibits | 18 |
| SIGNATURES | 19 | |
| EXHIBIT INDEX | 20 | |
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. 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 June 30, 2022 (unaudited) and December 31, 2021 | 4 |
| Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2022 and 2021 | 5 |
| Consolidated Statements of Changes in Stockholders’ Deficit (unaudited) for the six months ended June 30, 2022 and 2021 | 6 |
| Consolidated Statements of Cash Flows (unaudited) for and six months ended June 30, 2022 and 2021 | 7 |
| Notes to Consolidated Financial Statements | 8 - 13 |
| 3 |
LONGWEN GROUP CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
| June 30, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Equipment, net | ||||||||
| Goodwill | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Commercial loan | $ | $ | ||||||
| Shareholder loans | ||||||||
| Accrued interest | ||||||||
| Total current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, par value, authorized, nil shares issued and outstanding | ||||||||
| Common stock, par value, authorized, and shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ||||||
| TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) | ( | ) | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 4 |
LONGWEN GROUP CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND
OTHER COMPREHENSIVE LOSS
(UNAUDITED)
| For the Three Months Ended June 30, |
For the Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
Consulting service income |
$ | $ | $ | $ | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Professional expenses | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses): | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on debt settlement | ( | ) | ( | ) | ||||||||||||
| Other income (expense), net | (8 | ) | — | 216 | — | |||||||||||
| Total other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss before income tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ( | ) | ( | ) | ||||||
| Other comprehensive loss | ||||||||||||||||
| Foreign currency translation loss | ( | ) | ( | ) | ||||||||||||
| Total other comprehensive loss | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ( | ) | ( | ) | ||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Weighted average shares outstanding: Basic and diluted | ||||||||||||||||
| Earnings per share: | ||||||||||||||||
| Earnings per share: Basic and diluted | $ | ( | ) | $ | ( | ) | ( | ) | ( | ) | ||||||
The accompanying notes are an integral part of these consolidated financial statements
| 5 |
LONGWEN GROUP CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Six Months Ended June 30, | ||||||||||||||||
| 2022 | 2021 | |||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||||||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
| Depreciation | ||||||||||||||||
| Share issuances for debt settlement | ||||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Prepaid expense | ( | ) | ||||||||||||||
| Accrued interest | ||||||||||||||||
| Due to a shareholder | ||||||||||||||||
| Net cash used in operating activities | ( | ) | ||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Purchase of equipment | ( | ) | ||||||||||||||
| Cash obtained from business acquisition | ||||||||||||||||
| Net cash used in investing activities | ( | ) | ||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Proceeds from shareholder loans | ||||||||||||||||
| Proceeds from share issuance | ||||||||||||||||
| Net cash provided by financing activities | ||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||||||||||
| Net increase in cash and cash equivalents | ||||||||||||||||
| Cash and cash equivalents, beginning balance | ||||||||||||||||
| Cash and cash equivalents, ending balance | $ | |||||||||||||||
| 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 | $ | $ | ||||||||||||||
The accompanying notes are an integral part of these financial statements
| 6 |
LONGWEN GROUP CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
Preferred Stock Shares | Preferred Stock Amount | Common Stock Shares | Common Stock Amount | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Shareholder’s (Deficit) Equity | |||||||||||||||||||||||||
| Balance December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Issuance of common stock | — | $ | ||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance June 30, 2022 | $ | $ | $ | $ | ( | ) | ( | ) | $ | |||||||||||||||||||||||
Preferred Stock Shares | Preferred Stock Amount | Common Stock Shares | Common Stock Amount | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Shareholder’s (Deficit) Equity | |||||||||||||||||||||||||
| Balance December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Issuance of common stock for debt settlement | — | |||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balances, June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 7 |
LONGWEN GROUP CORP.
NOTES TO THE UNAUDITED 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.
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.
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 $993 goodwill upon consummated the acquisition. The purpose of the Company’s acquisition for Hangzhou Longwen is to seek potential merger and acquisition targets in both China and other countries in Asia.
On March 15, 2022, Hangzhou Longwen entered into a Consulting Service Agreement (the “Service Agreement”) with Yunnan Yusu Import and Export Trading Co., Ltd (China) (“Yunnan Yusu”), pursuant to which, Hangzhou Longwen will provide a series of consulting services to Yunnan Yusu, including to assist in the preparation of jadeite sales and purchase agreement, assist with tax filing, assist with financial report preparation, assist with jadeite business negotiation and business website maintenance.
Currently, the Company’s revenues are mainly derived from the consulting services with Yunnan Yusu, which totaled $7,979 for the six months ended June 30, 2022. The Company is also seeking other potential merger and acquisition targets in both China and other countries in Asia.
| 8 |
LONGWEN GROUP CORP.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying unaudited consolidated financial statements include the accounts of the Company and its subsidiary as described in Note 1. All significant intercompany transactions and balances have been eliminated in the consolidation.
Basis of Presentation
The unaudited consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair statement of the financial statements have been included. Operating results for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.
Use of Estimates
The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results may differ from those estimates and assumptions.
Foreign Currency Transactions
The Company’s consolidated financial statements are presented in U.S. dollars ($), which is the Company’s reporting and functional currency. The functional currency of the Company’s subsidiary is 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 (loss). 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 (loss).
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 June 30, |
|
Average Rate for the Six months ended June 30, | ||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| China yuan (RMB) | RMB | 6.6102 | RMB | - | RMB | 6.4748 | RMB | - | ||||
| United States dollar ($) | $ | 1.0000 | $ | - | $ | 1.0000 | $ | - | ||||
| Exchange Rate at | ||||||||
| June 30, 2022 | December 31, 2021 | |||||||
| China yuan (RMB) | RMB | 6.6981 | RMB | - | ||||
| United States dollar ($) | $ | 1.0000 | $ | - | ||||
| 9 |
LONGWEN GROUP CORP.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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 revenues consist of the delivery of focused insights and recommendations that assist customer with their challenges in developing and executing strategies around jadeite trade business, valuation of jadeite materials and the customer’s financial reporting. The consulting service 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.
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.
Accounting Standards Issued but Not Yet Adopted
Credit Losses
In June 2016, the FASB issued ASU No. 2016-13, (FASB ASC 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 effective date of ASU No. 2016-13 for smaller reporting companies is postponed to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company believes the adoption of ASU No. 2016-13 will not have a material impact on its financial position and results of operations.
There were other updates recently issued. The management does not believe that other than disclosed above, accounting pronouncements the recently issued but not yet adopted will have a material impact on its financial position results of operations or cash flows.
| 10 |
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 six months ended June 30, 2022, the Company incurred a net loss of $
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 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
As of June 30, 2022 and December 31, 2021, prepaid expenses and other current assets comprised as follows:
June 30, 2022 | December 31, 2021 | |||||||
| Prepaid OTC market fee | $ | $ | ||||||
| Prepaid consulting fee | ||||||||
| Prepaid rent and parking lot | ||||||||
| Total | $ | $ | ||||||
NOTE 5 – EQUIPMENT, NET
As of June 30, 2022 and December 31, 2021, equipment consisted of the following:
| June 30, 2022 | December 31, 2021 | |||||||
| Equipment | $ | $ | ||||||
| Less: accumulated depreciation | ( |
) | - | |||||
| Total equipment, net | $ | $ | ||||||
Depreciation expenses were $
| 11 |
LONGWEN GROUP CORP.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
NOTE 6 – COMMERCIAL LOAN
The Company’s commercial loan consisted of the following as of June 30, 2022 and December 31, 2021:
| June 30, 2022 | December 31, 2021 | |||||||
| Loan with a third-party lender; the loan bears a fixed interest at $500 annum and matures on December 31, 2022 | $ | $ | ||||||
| Total loans | 12,250 | 12,250 | ||||||
| Less: current portion of long-term loans | (12,250 | ) | (12,250 | ) | ||||
| Total long-term loans | $ | — | $ | — | ||||
On December 31, 2019, the Company entered into a loan
agreement of $
As of June 30, 2022 and December 31, 2021, the outstanding balances of the borrowing were $12,250 and $12,250, and the interest payables were $1,550 and $1,300, respectively. Total interest expenses for the loan were $125 and $125, respectively, for the three months ended June 30, 2022 and 2021. Total interest expenses for the loan were $250 and $250, respectively, for the six months ended June 30, 2022 and 2021.
NOTE 7 – INCOME TAX
As of June 30, 2022 and December 31, 2021, the Company has incurred an accumulated net loss of approximately $18.4 million and $18.3 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 June 30, 2022 and December 31, 2021 consisted of the following:
| June 30, 2022 | December 31, 2021 | |||||||
| Deferred tax assets | ||||||||
| Net operating loss carry-forward | $ | $ | ||||||
| Total | $ | 38,119 | $ | 5,302 | ||||
| Valuation allowance | ( | ) | ( | ) | ||||
| 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 six months ended June 30, 2022 and December 31, 2021:
| Three Months Ended June 30, | Six Months ended June 30, | ||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||
| Income (loss) at 21% statutory tax rate | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Increase (decrease) in income taxes resulting from: | |||||||||||||||||
| Net operating loss carry forward | — | — | — | ||||||||||||||
| Change in valuation allowance | |||||||||||||||||
| $ | — | $ | — | $ | — | $ | — | ||||||||||
| 12 |
LONGWEN GROUP CORP.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
NOTE 8 – STOCKHOLDERS’ EQUITY
Common Stock
On June 28, 2021, the Company issued 65,000,000 shares of common stock to Joseph to retire $6,500 loan borrowed.
In March 2022, the Company sold 386,955 shares of common stock to fifteen non-U.S. investors at $0.30 per share. Total $116,087 was received for 386,955 shares common stocks subscribed in March 2022. Between April 1 and May 31, 2022, the Company sold 248,792 shares of common stock to twenty-six investors for a total amount of $74,638. 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.
NOTE 9 – RELATED PARTY TRANSACTIONS
During the six months ended June 30, 2022, the Company
borrowed total $
NOTE 10 – CONTINGENCIES
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 and Joseph Passalaqua (“Joseph”) were designated as the CEO, CFO and Secretary of the Company in June and September 2021, respectively.
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 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.
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.
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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.
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.
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On February 23, 2022, the Company entered into an Acquisition Agreement with a third-party individual to 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 March 15, 2022, Hangzhou Longwen entered into a Consulting Service Agreement (the “Service Agreement”) with Yunnan Yusu Import and Export Trading Co., Ltd (China) (“Yunnan Yusu”), pursuant to which, Hangzhou Longwen will provide a series of consulting services to Yunnan Yusu, including to assist in the preparation of jadeite sales and purchase agreement, assist with tax filing, assist with financial report preparation, assist with jadeite business negotiation and business website maintenance.
Results of Operation for the three months ended June 30, 2022 and 2021
During the three months ended on June 30, 2022, the Company generated $6,808 of revenue from its consulting services with Yunnan Yusu Import and Export Trading Co., Ltd (China) (“Yunnan Yusu”) compared to $0 revenue for the period of the same quarter of year 2021. During the three months ended June 30, 2022 and 2021, the Company incurred general and administrative and professional expenses of $46,555 and $6,500, respectively. The professional expenses for the three months ended June 30, 2022 mainly included auditing fee, consulting expenses and financial advisor fees. The net loss was ($113,020) and ($15,600,125) for the three months ended on June 30, 2022 and 2021, respectively. The net loss of ($15,600,125) for the three months ended June 30, 2021 was mainly due to the loss on debt settlement which occurred on June 28, 2021.
Results of Operation for the six months ended June 30, 2022 and 2021
During the six months ended on June 30, 2022, the Company generated $7,979 of revenue from its consulting services with Yunnan Yusu Import and Export Trading Co., Ltd (China) (“Yunnan Yusu”) compared to $0 revenue for the six months ended on June 30, 2021. During the six months ended June 30, 2022 and 2021, the Company incurred professional expenses of $81,335 and $nil, respectively. The professional expenses for the six months ended June 30, 2022 mainly included auditing fee, consulting expenses and financial advisor fees. The net loss was ($156,270) and ($15,600,250) for the six months ended on June 30, 2022 and 2021, respectively. The net loss of ($15,600,125) for the six months ended June 30, 2021 was mainly due to the loss on debt settlement which occurred on June 28, 2021.
Liquidity and Capital Resources
As of June 30, 2022 and December 31, 2021, we had an accumulated deficit of ($18,437,679) and $(18,281,409), respectively. As of June 30, 2022, we had cash of $8,917 and working capital of $10,890. As of December 31, 2021, we had cash of $nil and a working capital deficit of ($13,550). The increase in the working capital was primarily due to the fund received from our private placement to individual investors.
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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.
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 June 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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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
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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.
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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: August 12, 2022 | /s/ Xizhen Ye |
| Xizhen Ye, President | |
| (Principal Executive Officer) |
| Date: August 12, 2022 | /s/ Xizhen Ye |
| Xizhen Ye, Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
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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.
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