U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended June 30, 2003
Commission file number 000-30426
LARGO VISTA GROUP, LTD
(Name of Small Business Issuer in Its Charter)
Nevada 76-0434540
(State of Incorporation) (IRS Employer Identification No.)
4570 Campus Drive Newport Beach, CA 92660
(Address of Principal Executive Offices)
(949) 252-2180
Issuer's Telephone Number
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [x] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 256,921,534 shares of Common Stock
($.001 par value) as of August 19, 2003.
1
LARGO VISTA GROUP, LTD.
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets:
June 30, 2003
Condensed Consolidated Statements of Losses:
Three and Six Months Ended June 30, 2003 and 2002
Condensed Consolidated Statements of Cash Flows:
Six Months Ended June 30, 2003 and 2002
Notes to Condensed Consolidated Financial Information:
June 30, 2003
Item 2. Management's Discussion and Analysis
Item 3. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
2
Item 1. Financial Statements (Unaudited)
LARGO VISTA GROUP, LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 2003
-------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 83,940
Accounts receivable, net 11,053
Inventories, at cost 17,965
Prepaid expenses and other 53,315
-------------
Total current assets 166,273
Property, plant and equipment, net 11,529
Other assets 755
-------------
$ 178,557
=============
LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 432,438
Notes payable to related parties 473,937
Due to related parties 105,302
-------------
Total current liabilities 1,011,676
-------------
Commitments and contingencies --
DEFICIENCY IN STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value per share; 400,000,000
shares authorized, 256,921,534 shares issued and
outstanding at June 30, 2003 256,922
Additional paid-in capital 14,881,416
Accumulated deficit (15,975,157)
Accumulated other comprehensive income:
Foreign currency translation adjustment 3,700
-------------
Deficiency in stockholders' equity (833,119)
-------------
$ 178,557
=============
See accompanying notes to the unaudited condensed consolidated financial
information
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LARGO VISTA GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF LOSSES
(UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30,
2003 2002 2003 2002
-------------- -------------- -------------- --------------
Sales $ 271,734 $ 257,506 $ 284,121 $ 375,468
Cost of sales 276,891 222,502 292,468 337,201
-------------- -------------- -------------- --------------
Gross profit (loss) (5,157) 35,004 (8,347) 38,267
Expenses
Selling and administrative 173,887 396,368 318,316 846,395
Depreciation 4,066 766 8,133 1,370
Interest (income) expense 6,603 10,631 16,588 (4,915)
-------------- -------------- -------------- --------------
Loss from operations, before income
taxes (189,713) (372,761) (351,314) (804,583)
Income (taxes) benefit -- -- -- --
-------------- -------------- -------------- --------------
Net (loss) $ (189,713) $ (372,761) $ (351,314) $ (804,583)
============== ============== ============== ==============
Basic and Diluted net loss per share $ (0.00) $ (0.00) $ (0.00) $ (0.00)
Weighted average common shares
outstanding 256,500,000 240,500,000 253,000,000 238,000,000
See accompanying notes to the unaudited condensed consolidated financial information
4
LARGO VISTA GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For The Six Months Ended
June 30,
2003 2002
---------- ----------
Net cash Provided by (used in) operating activities $ 48,797 $ (65,518)
Net cash provided by (used in) investing activities (6,822) 1,266
Net cash provided by (used in) financing activities 30,791 189,732
Net increase (decrease) in cash and cash equivalents 70,374 125,480
Cash and cash equivalents at beginning of period 11,174 99,343
---------- ---------
Cash and cash equivalents at end of period $ 83,940 $ 224,823
========== ==========
See accompanying notes to the unaudited condensed consolidated financial
statements
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LARGO VISTA GROUP, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
JUNE 30, 2003
(UNAUDITED)
NOTE A - SUMMARY OF ACCOUNTING POLICIES
---------------------------------------
General
-------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Accordingly, the results from operations for the six-month period ended June 30,
2003 are not necessarily indicative of the results that may be expected for the
year ended December 31, 2003. The unaudited condensed consolidated financial
statements should be read in conjunction with the consolidated December 31, 2002
financial statements and footnotes thereto included in the Company's SEC Form
10-KSB.
Reclassification
----------------
Certain reclassifications have been made to conform to prior periods' data to
the current presentation. These reclassifications had no effect on reported
losses.
Business and Basis of Presentation
----------------------------------
Largo Vista Group, Ltd. (the "Company") was incorporated under the laws of the
State of Nevada. The Company is principally engaged in the distribution of
liquid petroleum gas (LPG) in the retail and wholesale markets in South China
and in the purchase of petroleum products for delivery to the Far East.
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, Largo Vista, Inc., Largo Vista Construction,
Inc., Largo Vista International Corp., and Zunyi Shilin Xinmao Petrochemical
Industries Co., Ltd. ("Zunyi"). Largo Vista, Inc. was formed under the laws of
the State of California and is inactive. Largo Vista Construction, Inc. was
formed under the laws of the State of Nevada and is inactive. Largo Vista
International Corp. was formed under the laws of Panama and is inactive. Zunyi
was registered under the laws of the Peoples Republic of China.
All significant intercompany balances and transactions have been eliminated in
consolidation. All amounts in these consolidated financial statements and notes
thereto are stated in United States dollars unless otherwise indicated.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion should be read in conjunction with the Company's
Condensed Consolidated Financial Statements and Notes thereto, included
elsewhere within this Report.
Description of the Company
--------------------------
The Company is principally engaged in the resale and distribution of liquid
petroleum gas (LPG) in the retail and wholesale markets in South China and in
the purchase of petroleum products for delivery to the Far East.
6
Forward Looking Statements
--------------------------
This Form 10-QSB contains certain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. All statements included
Herein that address activities, events or developments that the Corporation
expects, believes, estimates, plans, intends, projects or anticipates will or
may occur in the future, are forward-looking statements. Actual events may
differ materially from those anticipated in the forward-looking statements.
Important risks that may cause such a difference include: general domestic and
international economic business conditions, increased competition in the
Company's markets and products. Other factors may include, availability and
terms of capital, and/or increases in operating and supply costs. Market
acceptance of existing and new products, rapid technological changes,
availability of qualified personnel also could be factors. Changes in the
Company's business strategies and development plans and changes in government
regulation could adversely affect the Company. Although the Company believes
that the assumptions underlying the forward-looking statements contained herein
are reasonable, any of the assumptions could be inaccurate. There can be no
assurance that the forward-looking statements included in this filing will prove
to be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company that the objectives
and expectations of the Company would be achieved.
Results of Operations
---------------------
Revenue
-------
During the quarter ended June 30, 2003 the Company realized $271,734 of revenue
compared to $257,506, a 6% increase compared to the same period in the prior
year.
During the first six months of 2003, the Company realized $284,121 of revenues
compared to $375,468, a 24% decrease compared to the same period in the prior
year. The decrease is due to the limited revenues achieved for the first three
months of 2003.
Costs and expenses
------------------
During the quarter ended June 30, 2003 the Company incurred $189,713 of
operating expenses compared to $372,761, a 49% decrease compared to the same
period in the prior year.
During the first six months of 2003, the Company incurred $351,314 of operating
expenses compared to $804,583, a 56% decrease compared to the same period in the
prior year. The decrease is due to better operating efficiencies.
Liquidity and Capital Resources
-------------------------------
As of June 30, 2003, Largo had a deficiency in working capital of $845,000.
During the first six months of 2003, Largo generated cash flow of $70,000 from
operating activities. While we have raised capital to meet our working capital
and financing needs in the past, additional financing is required in order to
meet our current and projected cash flow deficits from operations and
development. We are seeking financing in the form of equity in order to provide
the necessary working capital. We currently have no commitments for financing.
There is no guarantee that we will be successful in raising the funds required.
The effect of inflation on the Company's revenue and operating results was not
significant. The Company's operations are located in mainland China and there
are no seasonal aspects that would have a material effect on the Company's
financial condition or results of operations.
The Company's independent certified public accountant has stated in his report
included in the Company's December 31, 2002 Form 10-KSB, that the Company has
incurred operating losses in the last two years, and that the Company is
dependent upon management's ability to develop profitable operations. These
factors among others may raise substantial doubt about the Company's ability to
continue as a going concern.
7
TRENDS, RISKS AND UNCERTAINTIES
-------------------------------
We have sought to identify what we believe to be the most significant risks to
our business, but we cannot predict whether, or to what extent, any of such
risks may be realized nor can we guarantee that we have identified all possible
risks that might arise. Investors should carefully consider all of such risk
factors before making an investment decision with respect to our Common Stock.
CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS
-------------------------------------------------
Our annual report on December 31, 2002 Form 10-KSB includes a detailed list of
cautionary factors that may affect future results. Management believes that
there have been no material changes to those factors listed, however other
factors besides those listed could adversely affect us. That annual report can
be accessed on EDGAR.
ITEM 3. CONTROLS AND PROCEDURES
The Company's management including the Chief Executive Officer, President and
Chief Financial Officer, have evaluated, within 90 days prior to the filing of
this quarterly report, the effectiveness of the design, maintenance and
operation of the Company's disclosure controls and procedures. Management
determined that the Company's disclosure controls and procedures were effective
in ensuring that the information required to be disclosed by the Company in the
reports that it files under the Exchange Act is accurate and is recorded,
processed , summarized and reported within the time periods specified in the
Commission's rules and regulations.
Disclosure controls and procedures, no matter how well designed and implemented,
can provide only reasonable assurance of achieving an entity's disclosure
objectives. The likelihood of achieving such objectives is affected by
limitations inherent in disclosure controls and procedures. These include the
fact that human judgment in decision making can be fully faulty and that
breakdowns in internal control can occur because of human failures such as
errors or mistakes or intentional circumvention of the established process.
There have been no significant changes in internal controls or in other factors
that could significantly affect these controls subsequent to the date of the
evaluation thereof, including any corrective actions with regard to significant
deficiencies and material weaknesses.
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PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The Company issued 5,952,750 unregistered shares in Q2 2003 valued at
$62,244 to officers and consultants.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
99.1 Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Executive
Officer.
99.2 Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer
(b) Reports on Form 8-K filed during the three months ended June 30, 2003
None
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: August 19, 2003. Largo Vista Group, Ltd.
/s/ Deng Shan
---------------------------------------
Deng Shan, Principal Executive Officer
---------------------------------------
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CERTIFICATION
-------------
I, Deng Shan, Chief Executive Officer, and, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Largo Vista Group,
Ltd.;
2. Based on my knowledge, this quarterly 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 quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures 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 quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
Date: August 19, 2003
/s/ Deng Shan
------------------------------
Name: Deng Shan
------------------------
Title: Chief Executive Officer
10
CERTIFICATION
I, Albert Figueroa, Chief Financial Officer, and, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Largo Vista Group,
Ltd;
2. Based on my knowledge, this quarterly 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 quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures 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 quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
Date: August 19, 2003,
/s/ Albert Figueroa
------------------------------
Name: Albert Figueroa
------------------------
Title: Chief Financial Officer
11