UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarter ended September 30, 2016
OR
¨ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
For the transition period from ________ to __________
COMMISSION FILE NUMBER: 333-194583
LONGBAU GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware | 46-5011565 | |
(State or other jurisdiction of incorporation or | (IRS Employer Identification No.) | |
organization) |
No.100-11, Sec. 1, Zhongqing Rd.,
North Dist., Taichung City 404,
Taiwan (R.O.C.)
(Address of principal executive offices)
+852 58059452
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
Large Accelerated Filer ¨ | Non-Accelerated Filer ¨ |
Accelerated Filer ¨ | Smaller Reporting Company x |
Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes ¨ No x
As of October 10, 2016, there are a total of 30,000,000 shares of common stock issued and outstanding.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION | F-1 | |
ITEM 1. | CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) | F-1 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 4 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK | 6 |
ITEM 4. | CONTROLS AND PROCEDURES | 7 |
PART II. OTHER INFORMATION | 8 | |
ITEM 1. | LEGAL PROCEEDINGS | 8 |
ITEM 1A. | RISK FACTORS | 8 |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 8 |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 8 |
ITEM 4. | MINE SAFETY DISCLOSURES | 8 |
ITEM 5. | OTHER INFORMATION | 8 |
ITEM 6. | EXHIBITS | 9 |
SIGNATURES | 10 |
2
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This report contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievement expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described under Part 1 Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.
Forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference in this report, or that we filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect.
Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.
OTHER PERTINENT INFORMATION
References in this report to “we,” “us,” “our” and the “Company” and words of like import refer to Longbau Group, Inc. and its subsidiaries.
References to Hong Kong refer to Hong Kong, People’s Republic of China.
References to Taiwan refer to Taiwan, Republic of China.
Our business is conducted in Hong Kong using the Hong Kong Dollar (HKD), the currency of Hong Kong, in Taiwan using NT$, the currency of Taiwan, and our financial statements are presented in United States dollars (“USD” or “$”). In this report, we refer to assets, obligations, commitments and liabilities in our financial statements in USD. These dollar references are based on the exchange rate of NT$ to USD, determined as of a specific date. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of USD which may result in an increase or decrease in the amount of our obligations (expressed in USD) and the value of our assets.
3
Longbau Group, Inc.
Consolidated Balance Sheets
As of September 30, 2016 and December 31, 2015
(Unaudited)
September 30, 2016 | December 31, 2015 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 16,672 | $ | 80,351 | ||||
Prepaid expenses | 919 | 524 | ||||||
Total current assets | 17,591 | 80,875 | ||||||
Property and equipment, net of accumulated depreciation of $2,698 and $1,799, respectively | 866 | 1,756 | ||||||
Other assets | 6,605 | 6,318 | ||||||
Total assets | $ | 25,062 | $ | 88,949 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 260,497 | $ | 190,049 | ||||
Accounts payable and accrued liabilities - related party | 255 | 244 | ||||||
Total liabilities | 260,752 | 190,293 | ||||||
Stockholders’ deficit: | ||||||||
Common stock, $0.00001 par value, 100,000,000 shares authorized, 30,000,000 shares issued and outstanding | 300 | 300 | ||||||
Additional paid-in capital | 149,700 | 149,700 | ||||||
Accumulated deficit | (376,065 | ) | (239,928 | ) | ||||
Other comprehensive loss | (9,625 | ) | (11,416 | ) | ||||
Total stockholders’ deficit | (235,690 | ) | (101,344 | ) | ||||
Total liabilities and stockholders’ deficit | $ | 25,062 | $ | 88,949 |
The accompanying notes are an integral part of these consolidated financial statements.
F-1 |
Longbau Group, Inc.
Consolidated Statements of Operations and Comprehensive Loss
For the Three and Nine Months Ended September 30, 2016 and 2015
(Unaudited)
Three Months Ended September 30, 2016 | Three Months Ended September 30, 2015 | Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | |||||||||||||
Revenues | $ | - | $ | 97,028 | $ | - | $ | 114,528 | ||||||||
Cost of revenues | - | (24,338 | ) | - | (24,338 | ) | ||||||||||
Gross profit | - | 72,690 | - | 90,190 | ||||||||||||
Operating expenses: | ||||||||||||||||
General and administrative expenses | 50,290 | 45,669 | 135,296 | 186,600 | ||||||||||||
Depreciation expense | 300 | 299 | 890 | 886 | ||||||||||||
Total operating expenses | 50,590 | 45,968 | 136,186 | 187,486 | ||||||||||||
Income (loss) from operations | (50,590 | ) | 26,722 | (136,186 | ) | (97,296 | ) | |||||||||
Other Income | 27 | (731 | ) | 49 | 87 | |||||||||||
Net income (loss) | (50,563 | ) | 25,991 | (136,137 | ) | (97,209 | ) | |||||||||
Other comprehensive income (loss) : | ||||||||||||||||
Foreign currency translation adjustments | 925 | 3,004 | 1,791 | 4,220 | ||||||||||||
Comprehensive income (loss) | $ | (49,638 | ) | $ | 28,995 | $ | (134,346 | ) | $ | (92,989 | ) | |||||
Earnings (loss) per common share - basic and diluted | $ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | $ | (0.00 | ) | |||||
Weighted average common shares outstanding - basic and diluted | 30,000,000 | 30,000,000 | 30,000,000 | 30,000,000 |
The accompanying notes are an integral part of these consolidated financial statements.
F-2 |
Longbau Group, Inc.
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2016 and 2015
(Unaudited)
Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (136,137 | ) | $ | (97,209 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation expense | 890 | 886 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | - | 72,000 | ||||||
Prepaid expenses | (375 | ) | (40,125 | ) | ||||
Accounts payable and accrued liabilities | 70,351 | 67,066 | ||||||
Accounts payable and accrued liabilities - related party | - | (35,882 | ) | |||||
Net cash used in operating activities | (65,271 | ) | (33,264 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | - | (6,601 | ) | |||||
Net cash used in investing activities | - | (6,601 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 1,592 | 6,338 | ||||||
Net decrease in cash and cash equivalents | (63,679 | ) | (33,527 | ) | ||||
Cash and cash equivalents - beginning of period | 80,351 | 106,863 | ||||||
Cash and cash equivalents - end of period | $ | 16,672 | $ | 73,336 | ||||
Supplementary cash flows information: | ||||||||
Interest paid | $ | - | $ | - | ||||
Income taxes paid | $ | - | $ | - |
The accompanying notes are an integral part of these consolidated financial statements.
F-3 |
Longbau Group, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
1. | Nature of Business and Continuance of Operations |
Longbau Group, Inc. (the “Company”) was incorporated in the State of Delaware on December 23, 2013. The Company owns 100% of Longbau Group Limited, which was incorporated in Hong Kong on February 14, 2014. The Company is focusing its business on consultancy for deferred preneed funeral and cemetery receipts held in trust, preneed cemetery activities, preneed funeral activities, preneed funeral and cemetery, burial vaults, cemetery property, and cemetery property revenue.
In September 2014, the Company established Longbau Management Consulting LLC (“Longbau Taiwan”) in Taiwan to provide end-of-life consulting service and sell end-of-life products in Taiwan. Longbau Taiwan is 100% owned by Longbau Group Limited. In 2015, the Company started to sell supplies for funerals and plans to add additional funeral services for the Taiwanese market.
2. | Going Concern |
The Company had suffered recurring losses from operations and has limited recurring source of revenues that raise substantial doubt about its ability to continue as a going concern. The Company’s management is planning to obtain financing either through the issuance of equity or debt instruments. To the extent that funds generated from any private placements, public offerings, and/or bank financings are insufficient, the Company will have to raise additional working capital through other sources. The financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability of the recorded assets or the classification of liabilities that may be necessary should it be determined that we are unable to continue as a going concern.
3. | Summary of Significant Accounting Policies |
a) | Basis of Presentation |
The accompanying interim unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The interim unaudited consolidated financial statements furnished reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These interim unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2015 and notes thereto contained elsewhere in the Registration Statement on Form 10-K filed with the SEC on April 14, 2016.
b) | Use of Estimates |
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
F-4 |
c) | Principles of Consolidation |
The accompanying consolidated financial statements include the accounts of Longbau Group, Inc and its wholly-owned subsidiaries, Longbau Group Limited and Longbau Taiwan. All significant intercompany transactions and balances were eliminated in consolidation.
d) | Foreign Currency |
Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to other comprehensive loss.
e) | Cash and Cash Equivalent |
The Company considers all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value.
f) | Allowance for Doubtful Accounts |
The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence.
g) | Property and Equipment |
Property and equipment is stated at cost and depreciated using the straight-line method over the shorter of the estimated life of the asset or the lease term, ranging from 3 to 5 years. Computer software developed or obtained for internal use is depreciated using the straight-line method over the estimated useful life of the software, generally 3 years. Repairs and maintenance are charged to expense as incurred.
h) | Income Taxes |
An asset and liability approach is used for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences between income tax and financial reporting and principally relate to recognition of revenue and expenses in different periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws. In addition, a deferred tax asset can be generated by net operating loss carry forwards. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.
i) | Revenue Recognition |
Revenue is recognized when persuasive evidence of an arrangement exists, service has provided or good has been delivered, the fee is fixed or determinable, and collectability is probable.
j) | Earnings (Loss) Per Common Share (“EPS”) |
Basic EPS is computed by dividing net income available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. There were no potentially dilutive securities outstanding for the three and nine months ended September 30, 2016 and 2015.
F-5 |
k) | Subsequent Events |
The Company’s management reviewed all material events from September 30, 2016 through the issuance date of these financial statements for disclosure consideration.
l) | New Accounting Pronouncements |
In February 2016, a pronouncement was issued that creates new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early application permitted. The new standard is to be applied using a modified retrospective approach. The Company is currently evaluating the impact of the new pronouncement on its consolidated financial statements.
The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying consolidated financial statements.
4. | Deposit |
In January 2016, the board of directors agreed to pursue a merger with two Taiwanese companies related to the Company’s Chief Executive Officer and the Company paid approximately $62,000 (NT$2,000,000) as earnest money for the merger. Because the parties couldn’t reach an agreement on the terms, the deposit was refunded to the Company in April 2016. As the date of this report, the Company is still negotiating with these two companies.
5. | Related Party Transactions |
Salary
The Company entered into employment agreements with certain shareholders on February 15, 2014 and agreed to pay these shareholders a total compensation of $6,000 per month. The agreements ended on February 15, 2015. For the nine months ended September 30, 2016 and 2015, the Company recorded salary expense of $0 and $9,000, respectively, to these shareholders.
Office Leases
In September 2014, the Company entered into a one-year lease agreement with its Chief Executive Officer for leasing an office in Taiwan. The Company agreed to pay approximately $30 (NT$1,000) per month to the officer. For the nine months ended September 30, 2015, the Company recorded rent expense of $194. As of September 30, 2016 and December 31, 2015, the Company had accrued rent expense of $254 and $244, respectively.
In July 2015, the Company entered into three lease agreements with its officers for leasing offices in Taiwan. The agreements will expire in July 2018 and the Company agreed to pay a deposit of approximately $6,600 (NT$207,500) and rent of approximately $3,100 (NT$103,750) per month to the officers. For the nine months ended September 30, 2016 and 2015, the Company recorded and paid rent expenses of approximately $28,820 (NT$933,750) and $9,900 (NT$311,250), respectively.
Future minimum lease payments, converted to U.S. dollars using foreign exchange rate at September 30, 2016, for operating leases as of September 30, 2016 are as follows:
Year ending December 31, | Amount | |||
2016 | $ | 9,908 | ||
2017 | 39,629 | |||
2018 | 19,814 | |||
Total | $ | 69,351 |
F-6 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a start-up company actively pursuing a business plan. We do not have significant revenue. We have some minimal assets and have incurred losses since inception. We sell death care management consultant services through Longbau Hong Kong, our operating company in Hong Kong, to public consumers across Taiwan. In September 2014, we established another subsidiary in Taiwan, Longbau Taiwan, to provide end-of-life consulting service and sell end-of-life products across Taiwan. Longbau Taiwan is 100% owned by Longbau Hong Kong.
We will be providing a variety of end-of-life management consultancy services. We consult on the purchase of cemetery property and funeral and cemetery merchandise and services at the time of need and on a preneed basis. In addition, the Company specializes in the consultancy for deferred preneed funeral and cemetery receipts held in trust, preneed cemetery activities, preneed funeral activities, preneed funeral and cemetery, burial vaults, cemetery property, and cemetery property revenue.
In March 2014, we entered into two end-of-life consulting agreements which provided monthly revenues of approximately $8,000. The obligations under these agreements concluded in March 2015.
In July 2015, the Company added two new offices in Kaohsiung city and Changhua city and expanded its office by taking more space in Taichung office. The Company also added a total of 14 employees (including managers and staff) during the month of July. The Company has started to sell supplies for funerals and plans to add additional funeral services for the Taiwanese market in 2015.
Other than the organic growth, we are also looking to acquire businesses in the death care service industry and other related areas.
In January 2016, the board of directors agreed to pursue a merger with two Taiwanese companies related to the Company’s Chief Executive Officer. As the date of this report, the Company is still negotiating with these two companies.
Going Concern
As of September 30, 2016, the Company has limited recurring sources of revenue and has an accumulated loss of $376,065 since inception. Our operation is dependent on funding from our shareholders and officers. The Company expects to incur additional losses in the immediate future due to the start-up nature. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
You should read this Management’s Discussion and Analysis in conjunction with the Consolidated Financial Statements and Related Notes. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements.
Results of Operations
For the nine months ended September 30, 2016 and 2015
Revenues For the nine months ended September 30, 2016 and 2015, we had revenues of $0 and $114,528, respectively. In March 2014, we entered into two end-of-life consulting agreements which provided monthly revenues of approximately $8,000. The agreements ended in March 2015. In addition, we sold end-of-life products of approximately $90,000 in August 2015. We had no revenue in 2016.
Cost of revenues For the nine months ended September 30, 2016 and 2015, we had cost of revenues of $0 and $24,338, respectively. The cost was for the death products sold in August 2015.
General and administrative expenses For the nine months ended September 30, 2016 and 2015, we had general and administrative expenses of $135,296 and $186,600, respectively. The decrease mainly due to the decrease of professional fees and office equipment of approximately $16,000 and $51,000, respectively, partially offset by the increase in rent expense of approximately $18,000.
Net loss For the nine months ended September 30, 2016 and 2015, our net loss was $136,137 and $97,209, respectively. The increase was mainly due to the decrease in revenues.
4
For the three months ended September 30, 2016 and 2015
Revenues For the three months ended September 30, 2016 and 2015, we had revenues of $0 and $97,028, respectively. We sold end-of-life products of approximately $90,000 in August 2015. We had no revenue in 2016.
Cost of revenues For the three months ended September 30, 2016 and 2015, we had cost of revenues of $0 and $24,338, respectively. The cost was related to end-of-life products we sold in August 2015.
General and administrative expenses For the three months ended September 30, 2016 and 2015, we had general and administrative expenses of $50,290 and $45,669, respectively.
Net loss For the three months ended September 30, 2016 and 2015, our net loss was $50,563 and $25,991, respectively. The increase was mainly due to the decrease in revenues.
Liquidity and Capital Resources
As of September 30, 2016, we had cash on hand of $16,672.
We used $65,271 and $33,264 net cash in our operations for the nine months ended September 30, 2016 and 2015, respectively. We used cash in general and administrative activities to expand our business.
In January 2016, the board of directors agreed to pursue an merger with two Taiwanese companies related to the Company’s Chief Executive Officer and the Company paid approximately $62,000 (NT$2,000,000) as earnest money for the merger. Because the parties couldn’t reach an agreement on the terms, the deposit was refunded to the Company in April 2016.
We plan to fund our operations from loans from our major shareholders and we also plan to raise equity capital by offering shares of our common stock to investors. If financing is needed and we are not able to raise the capital necessary to fund our business expansion objectives, we may have to delay the implementation of our business plan.
The estimated budget of our operating expenses for the next twelve months is as follows:
Salaries and benefits | $ | 140,000 | ||
Marketing | 10,000 | |||
Management overhead | 8,000 | |||
Professional fees | 80,000 | |||
Total | $ | 238,000 |
We do not currently have any arrangements for financing. Obtaining additional funding will be subject to a number of factors, including general market conditions, investor acceptance of our business plan and initial results from our business operations. These factors may impact the timing, amount, terms or conditions of additional financing available to us. The most likely source of future funds available to us is through the sale of additional shares of common stock or advances from our major shareholders or directors and, if we are able to obtain equity financing, it will likely result in significant additional dilution to the interests of our current stockholders and may include liquidation or other preferences that adversely affect your right as a stockholder. The Company may obtain financing by issuing debt which may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. There can be no assurance that we will be able to obtain such additional financing is needed and if we cannot receive such financing we may be forced to suspend or cease operations.
5
Critical Accounting Policies
Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("US GAAP"). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
We believe the following is among the most critical accounting policies that impact our consolidated financial statements. We suggest that our significant accounting policies, as described in our financial statements in the Summary of Significant Accounting Policies, be read in conjunction with this Management's Discussion and Analysis of Financial Condition and Results of Operations.
Use of Estimates
The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Revenue Recognition
Revenue is recognized when persuasive evidence of an arrangement exists, service has provided or good has been delivered, the fee is fixed or determinable, and collectability is probable.
Recent Accounting Pronouncements
The Company does not expect adoption of the new accounting pronouncements will have a material effect on the Company’s financial statements.
Off-Balance Sheet Arrangements
None.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Not Applicable.
6
ITEM 4. INTERNAL CONTROLS OVER FINANCIAL REPORTING.
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934 are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Our disclosure controls and procedures are also designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, to allow timely decisions regarding required disclosure. Our chief executive officer and chief financial officer have reviewed the effectiveness of our disclosure controls and procedures as of September 30, 2016 and, based on their evaluation, have concluded that the disclosure controls and procedures were not effective.
Management’s assessment identified several material weaknesses in our internal control over financial reporting. A “material weakness” is defined under SEC rules as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls. Our management concluded that we had material weaknesses in our control environment and financial reporting process consisting of the following as of the evaluation date:
1) | lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal control and procedures; and |
2) | ineffective controls over period end financial disclosure and reporting processes. |
Changes in internal control over financial reporting
During the three months ended September 30, 2016, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.
7
None.
Not applicable.
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.
None.
8
(a) Exhibits:
Exhibit | ||
Number | Description of Exhibit | |
31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 | |
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 | |
32.1* | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2* | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
*The certification attached as Exhibits 32.1 accompany this quarterly report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
9
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Quarterly Report on Form 10-Q report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: October 21, 2016 | By: | /s/ Tsai Ko | |
Name: | Tsai Ko | ||
Its: | Chief Executive Officer | ||
(Principal Executive Officer)
| |||
Date: October 21, 2016 | By: | /s/ Yueh-KueiKo | |
Name: | Yueh-KueiKo | ||
Its: | Chief Financial Officer | ||
(Principal Financial Officer) |
10
EXHIBIT 31.1
Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
I, Tsai Ko, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Longbau Group, Inc.;
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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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; and
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 the 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.
Date: October 21, 2016 | /s/ Tsai Ko |
Tsai Ko | |
Chief Executive Officer | |
(Principal Executive Officer) |
EXHIBIT 31.2
Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
I, Yueh-KueiKo, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Longbau Group, Inc.;
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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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; and
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 the 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.
Date: October 21, 2016 | /s/ Yueh-KueiKo |
Yueh-KueiKo | |
Chief Financial Officer | |
(Principal Financial Officer) |
EXHIBIT 32.1
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF TITLE 18,
UNITED STATES CODE)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of Title 18, United States Code), the undersigned officer of Longbau Group, Inc. (the “Company”), does hereby certify with respect to the Quarterly Report of the Company on Form 10-Q for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), that:
(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.
Date: October 21, 2016 | /s/ Tsai Ko |
Tsai Ko | |
Chief Executive Officer | |
(Principal Executive Officer) |
EXHIBIT 32.2
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF TITLE 18,
UNITED STATES CODE)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of Title 18, United States Code), the undersigned officer of Longbau Group, Inc. (the “Company”), does hereby certify with respect to the Quarterly Report of the Company on Form 10-Q for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), that:
(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.
Date: October 21, 2016 | /s/ Yueh-KueiKo |
Yueh-KueiKo | |
Chief Financial Officer | |
(Principal Financial Officer) |
Document And Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Oct. 10, 2016 |
|
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | LONGBAU GROUP INC | |
Entity Central Index Key | 0001602706 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | LNGB | |
Entity Common Stock, Shares Outstanding | 30,000,000 |
Consolidated Balance Sheets - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Current assets: | ||
Cash and cash equivalents | $ 16,672 | $ 80,351 |
Prepaid expenses | 919 | 524 |
Total current assets | 17,591 | 80,875 |
Property and equipment, net of accumulated depreciation of $2,698 and $1,799, respectively | 866 | 1,756 |
Other assets | 6,605 | 6,318 |
Total assets | 25,062 | 88,949 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 260,497 | 190,049 |
Accounts payable and accrued liabilities - related party | 255 | 244 |
Total liabilities | 260,752 | 190,293 |
Stockholders’ deficit: | ||
Common stock, $0.00001 par value, 100,000,000 shares authorized, 30,000,000 shares issued and outstanding | 300 | 300 |
Additional paid-in capital | 149,700 | 149,700 |
Accumulated deficit | (376,065) | (239,928) |
Other comprehensive loss | (9,625) | (11,416) |
Total stockholders’ deficit | (235,690) | (101,344) |
Total liabilities and stockholders’ deficit | $ 25,062 | $ 88,949 |
Consolidated Balance Sheets (Parenthetical) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Accumulated depreciation | $ 2,698 | $ 1,799 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 30,000,000 | 30,000,000 |
Common stock, shares outstanding | 30,000,000 | 30,000,000 |
Consolidated Statements of Operations and Comprehensive Loss - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Revenues | $ 0 | $ 97,028 | $ 0 | $ 114,528 |
Cost of revenues | 0 | (24,338) | 0 | (24,338) |
Gross profit | 0 | 72,690 | 0 | 90,190 |
Operating expenses: | ||||
General and administrative expenses | 50,290 | 45,669 | 135,296 | 186,600 |
Depreciation expense | 300 | 299 | 890 | 886 |
Total operating expenses | 50,590 | 45,968 | 136,186 | 187,486 |
Income (loss) from operations | (50,590) | 26,722 | (136,186) | (97,296) |
Other Income | 27 | (731) | 49 | 87 |
Net income (loss) | (50,563) | 25,991 | (136,137) | (97,209) |
Other comprehensive income (loss) : | ||||
Foreign currency translation adjustments | 925 | 3,004 | 1,791 | 4,220 |
Comprehensive income (loss) | $ (49,638) | $ 28,995 | $ (134,346) | $ (92,989) |
Earnings (loss) per common share - basic and diluted | $ (0.00) | $ (0.00) | $ (0.00) | $ (0.00) |
Weighted average common shares outstanding - basic and diluted | 30,000,000 | 30,000,000 | 30,000,000 | 30,000,000 |
Nature of Business and Continuance of Operations |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2016 | ||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Nature of Business and Continuance of Operations |
Longbau Group, Inc. (the “Company”) was incorporated in the State of Delaware on December 23, 2013. The Company owns 100% of Longbau Group Limited, which was incorporated in Hong Kong on February 14, 2014. The Company is focusing its business on consultancy for deferred preneed funeral and cemetery receipts held in trust, preneed cemetery activities, preneed funeral activities, preneed funeral and cemetery, burial vaults, cemetery property, and cemetery property revenue. In September 2014, the Company established Longbau Management Consulting LLC (“Longbau Taiwan”) in Taiwan to provide end-of-life consulting service and sell end-of-life products in Taiwan. Longbau Taiwan is 100% owned by Longbau Group Limited. In 2015, the Company started to sell supplies for funerals and plans to add additional funeral services for the Taiwanese market. |
Going Concern |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2016 | ||||
Going Concern [Abstract] | ||||
Going Concern |
The Company had suffered recurring losses from operations and has limited recurring source of revenues that raise substantial doubt about its ability to continue as a going concern. The Company’s management is planning to obtain financing either through the issuance of equity or debt instruments. To the extent that funds generated from any private placements, public offerings, and/or bank financings are insufficient, the Company will have to raise additional working capital through other sources. The financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability of the recorded assets or the classification of liabilities that may be necessary should it be determined that we are unable to continue as a going concern. |
Summary of Significant Accounting Policies |
9 Months Ended | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | ||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||
Summary of Significant Accounting Policies |
The accompanying interim unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The interim unaudited consolidated financial statements furnished reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These interim unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2015 and notes thereto contained elsewhere in the Registration Statement on Form 10-K filed with the SEC on April 14, 2016.
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
The accompanying consolidated financial statements include the accounts of Longbau Group, Inc and its wholly-owned subsidiaries, Longbau Group Limited and Longbau Taiwan. All significant intercompany transactions and balances were eliminated in consolidation.
Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to other comprehensive loss.
The Company considers all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value.
The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence.
Property and equipment is stated at cost and depreciated using the straight-line method over the shorter of the estimated life of the asset or the lease term, ranging from 3 to 5 years. Computer software developed or obtained for internal use is depreciated using the straight-line method over the estimated useful life of the software, generally 3 years. Repairs and maintenance are charged to expense as incurred.
An asset and liability approach is used for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences between income tax and financial reporting and principally relate to recognition of revenue and expenses in different periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws. In addition, a deferred tax asset can be generated by net operating loss carry forwards. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.
Revenue is recognized when persuasive evidence of an arrangement exists, service has provided or good has been delivered, the fee is fixed or determinable, and collectability is probable.
Basic EPS is computed by dividing net income available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. There were no potentially dilutive securities outstanding for the three and nine months ended September 30, 2016 and 2015.
The Company’s management reviewed all material events from September 30, 2016 through the issuance date of these financial statements for disclosure consideration.
In February 2016, a pronouncement was issued that creates new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early application permitted. The new standard is to be applied using a modified retrospective approach. The Company is currently evaluating the impact of the new pronouncement on its consolidated financial statements. The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying consolidated financial statements. |
Deposit |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2016 | ||||
Deposit [Abstract] | ||||
Deposit |
In January 2016, the board of directors agreed to pursue a merger with two Taiwanese companies related to the Company’s Chief Executive Officer and the Company paid approximately $62,000 (NT$2,000,000) as earnest money for the merger. Because the parties couldn’t reach an agreement on the terms, the deposit was refunded to the Company in April 2016. As the date of this report, the Company is still negotiating with these two companies. |
Related Party Transactions |
9 Months Ended | ||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||
Related Party Transactions |
Salary The Company entered into employment agreements with certain shareholders on February 15, 2014 and agreed to pay these shareholders a total compensation of $6,000 per month. The agreements ended on February 15, 2015. For the nine months ended September 30, 2016 and 2015, the Company recorded salary expense of $0 and $9,000, respectively, to these shareholders. Office Leases In September 2014, the Company entered into a one-year lease agreement with its Chief Executive Officer for leasing an office in Taiwan. The Company agreed to pay approximately $30 (NT$1,000) per month to the officer. For the nine months ended September 30, 2015, the Company recorded rent expense of $194. As of September 30, 2016 and December 31, 2015, the Company had accrued rent expense of $254 and $244, respectively. In July 2015, the Company entered into three lease agreements with its officers for leasing offices in Taiwan. The agreements will expire in July 2018 and the Company agreed to pay a deposit of approximately $6,600 (NT$207,500) and rent of approximately $3,100 (NT$103,750) per month to the officers. For the nine months ended September 30, 2016 and 2015, the Company recorded and paid rent expenses of approximately $28,820 (NT$933,750) and $9,900 (NT$311,250), respectively. Future minimum lease payments, converted to U.S. dollars using foreign exchange rate at September 30, 2016, for operating leases as of September 30, 2016 are as follows:
|
Summary of Significant Accounting Policies (Policies) |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2016 | ||||
Accounting Policies [Abstract] | ||||
Basis of Presentation |
The accompanying interim unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The interim unaudited consolidated financial statements furnished reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These interim unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2015 and notes thereto contained elsewhere in the Registration Statement on Form 10-K filed with the SEC on April 14, 2016. |
|||
Use of Estimates |
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
|||
Principles of Consolidation |
The accompanying consolidated financial statements include the accounts of Longbau Group, Inc and its wholly-owned subsidiaries, Longbau Group Limited and Longbau Taiwan. All significant intercompany transactions and balances were eliminated in consolidation. |
|||
Foreign Currency |
Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to other comprehensive loss. |
|||
Cash and Equivalent |
The Company considers all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. |
|||
Allowance for Doubtful Accounts |
The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. |
|||
Property and Equipment |
Property and equipment is stated at cost and depreciated using the straight-line method over the shorter of the estimated life of the asset or the lease term, ranging from 3 to 5 years. Computer software developed or obtained for internal use is depreciated using the straight-line method over the estimated useful life of the software, generally 3 years. Repairs and maintenance are charged to expense as incurred. |
|||
Income Taxes |
An asset and liability approach is used for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences between income tax and financial reporting and principally relate to recognition of revenue and expenses in different periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws. In addition, a deferred tax asset can be generated by net operating loss carry forwards. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. |
|||
Revenue Recognition |
Revenue is recognized when persuasive evidence of an arrangement exists, service has provided or good has been delivered, the fee is fixed or determinable, and collectability is probable. |
|||
Earnings (Loss) Per Common Share (“EPS”) |
Basic EPS is computed by dividing net income available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. There were no potentially dilutive securities outstanding for the three and nine months ended September 30, 2016 and 2015. |
|||
Subsequent Events |
The Company’s management reviewed all material events from September 30, 2016 through the issuance date of these financial statements for disclosure consideration. |
|||
New Accounting Pronouncements |
In February 2016, a pronouncement was issued that creates new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early application permitted. The new standard is to be applied using a modified retrospective approach. The Company is currently evaluating the impact of the new pronouncement on its consolidated financial statements. The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying consolidated financial statements. |
Related Party Transactions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||
Related Party Transactions | Future minimum lease payments, converted to U.S. dollars using foreign exchange rate at September 30, 2016, for operating leases as of September 30, 2016 are as follows:
|
Nature of Business and Continuance of Operations (Details Textual) |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Schedule of Equity Method Investments [Line Items] | |
Entity Incorporation, State Country Name | Delaware |
Entity Incorporation, Date of Incorporation | Dec. 23, 2013 |
Longbau Group Limited [Member] | |
Schedule of Equity Method Investments [Line Items] | |
Entity Incorporation, State Country Name | Hong Kong |
Entity Incorporation, Date of Incorporation | Feb. 14, 2014 |
Noncontrolling Interest, Ownership Percentage by Parent | 100.00% |
Longbau Taiwan [Member] | |
Schedule of Equity Method Investments [Line Items] | |
Noncontrolling Interest, Ownership Percentage by Parent | 100.00% |
Summary of Significant Accounting Policies (Details Textual) |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Computer software [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 3 years |
Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 3 years |
Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Deposit (Details Textual) - Jan. 31, 2016 |
USD ($) |
TWD |
---|---|---|
Chief Executive Officer [Member] | ||
Deposits Assets, Current | $ 62,000 | TWD 2,000,000 |
Related Party Transactions (Details) |
Sep. 30, 2016
USD ($)
|
---|---|
Operating Leased Assets [Line Items] | |
2016 | $ 9,908 |
2017 | 39,629 |
2018 | 19,814 |
Total | $ 69,351 |
Related Party Transactions (Details Textual) |
1 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Feb. 15, 2014
USD ($)
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2016
TWD
|
Sep. 30, 2015
USD ($)
|
Sep. 30, 2015
TWD
|
Sep. 30, 2016
TWD
|
Dec. 31, 2015
USD ($)
|
Sep. 30, 2014
USD ($)
|
Sep. 30, 2014
TWD
|
|
Share-based Compensation | $ 6,000 | ||||||||
Salaries, Wages and Officers' Compensation, Total | $ 0 | $ 9,000 | |||||||
Lease Agreement [Member] | Officer [Member] | |||||||||
Operating Leases, Rent Expense | 28,820 | TWD 933,750 | 9,900 | TWD 311,250 | |||||
Lease Agreement Fees payable To Officer | $ 3,100 | TWD 103,750 | |||||||
Lease Expiration Date | Jul. 31, 2018 | Jul. 31, 2018 | |||||||
Deposit For Lease Rent | $ 6,600 | TWD 207,500 | |||||||
Lease Agreement [Member] | Chief Executive Officer [Member] | |||||||||
Operating Leases, Rent Expense | $ 194 | ||||||||
Accrued Liabilities | $ 254 | $ 244 | |||||||
Lease Agreement Fees payable To Officer | $ 30 | TWD 1,000 |
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