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 September 30, 2002
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:
246,527,861 shares of Common Stock ($.001 par value) as of November 7, 2002.
Transitional small business disclosure format: Yes No x
LARGO VISTA GROUP, LTD.
Quarterly Report on Form 10-QSB for the
Quarterly Period Ending September 30, 2002
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets:
September 30, 2002 and December 31, 2001
Condensed Consolidated Statements of Losses:
Three and Nine Months Ended September 30, 2002 and 2001
Condensed Consolidated Statements of Cash Flows:
Three and Nine Months Ended September 30, 2002 and 2001
Notes to Condensed Consolidated Financial Information:
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
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
ITEM 1. Financial Statements
LARGO VISTA GROUP, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
September 30 December 31
2002 2001
CURRENT ASSETS:
Cash and cash equivalents $ 40,118 $ 99,343
Accounts receivable, net 169,082 2,790
Inventories, at cost 5,637 59,954
Prepaid expenses and other 199,127 52,022
Total current assets 413,964 214,109
Property, plant and equipment, net 12,523 14,216
Other assets 3,150 -
429,637 228,325
LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities 331,079 275,858
Notes payable to related parties 473,937 408,081
Due to related parties 54,806 31,209
Total current liabilities 859,822 715,148
Commitment and contingencies - -
DEFICIENCY IN STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value per
share; 400,000,000 shares authorized, 245,836,992 and
232,175,730 shares issued and outstanding at
September 30, 2002 and December 31, 2001 245,837 232,176
Additional paid-in capital 14,541,897 13,555,870
Accumulated deficit (15,221,619) (14,278,569)
Accumulated other comprehensive income:
Foreign currency translation adjustment 3,700 3,700
Deficiency in stockholders' equity (430,185) (486,823)
429,637 228,325
See accompanying notes to the unaudited condensed consolidated financial
information
LARGO VISTA GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF LOSSES
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
Sales $ 185,835 $ 450,640 $ 561,303 $ 1,643,767
Cost of sales 9,045 553,813 346,246 1,660,123
Gross profit 176,790 (103,173) 215,057 (16,356)
Expenses
Selling and administrative 304,203 311,995 1,150,597 1,017,189
Depreciation 1,866 - 3,236 27,965
Interest (income) expenses 9,189 31,399 4,274 63,366
315,258 343,394 1,158,107 1,108,520
Loss from continuing operation, before
income taxes and discontinued operations (138,468) (446,567) (943,050) (1,124,876)
Income (taxes) benefit - - -
Loss from continuing operations, before
discontinued operations (138,468) (446,567) (943,050) (1,124,876)
Loss from discontinued operations - - - (15,181)
Gain on disposal of discontinued operations - (52,115) - 3,513,318
Net income (loss) (138,468) (498,682) (943,050) 2,373,261
Basic and Diluted net loss per share (0.00) 0.00 (0.00) 0.01
Continuing operations (0.00) (0.00) (0.00) (0.00)
Discontinued operations - 0.00 - 0.01
Weighted average common shares outstanding 244,633,289 223,050,199 240,218,656 220,203,000
See accompanying notes to the unaudited condensed consolidated
financial information
LARGO VISTA GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For The Nine Months Ended
September 30
2002 2001
Net cash Provided by (used in)
operating activities $ (147,566) $ (522,937)
Net cash provided by (used in)
investing activities (1,543) -
Net cash provided by (used in)
financing activities 89,884 759,731
Net increase (decrease) in cash
and cash equivalents (59,225) 236,794
Cash and cash equivalents at
beginning of period 99,343 39,766
Cash and cash equivalents at end
of period 40,118 276,560
See accompanying notes to the unaudited condensed consolidated
financial statements
LARGO VISTA GROUP, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
SEPTEMBER 30, 2002
(UNAUDITED)
NOTE A - SUMMARY OF ACCOUNTING POLICIES
General
The accompanying unaudited consolidated financial statements have
been prepared in accordance with the instructions to Form 10-QSB, and
therefore, do not include all the information necessary for a fair
presentation of financial position, results of operations and cash
flows in conformity with generally accepted accounting principles.
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
nine-month period ended September 30, 2002 are not necessarily
indicative of the results that may be expected for the year ended
December 31, 2002. The unaudited consolidated financial statements
should be read in conjunction with the consolidated December 31, 2001
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., Zunyi
Shilin Xinmao Petrochemical Industries Co., Ltd. ("Zunyi") and Zunyi
Jiahong Gas Co. Ltd. ("Jiahong"). 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 and Jiahong were
registered under the laws of the Peoples Republic of China. On August
27, 2002, the Company entered into an operating agreement with
Jiahong and moved its China operation from Zunyi to Jiahong depot.
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 OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the
Registrant's Consolidated Financial Statements and Notes thereto,
included elsewhere within this Form 10-QSB.
Largo Vista entered into an operating agreement with Zunyi Jiahong
Gas Co. Ltd. on August 27, 2002, whereby the Company agreed to
operate the Zunyi Jiahong Gas Co. Ltd. depot. Largo formerly
operated the Shilin Xinmao Petroleum Co., Lt. depot which was also
located in the City of Zunyi. The new lease agreement provides a 500
cubic meter storage facility, a cylinder inspection center, a three-
story office building and employee housing. The Company agreed to
this new lease agreement at a savings to the Company of approximately
$31,000 annually.
Description of Registrant.
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.
Results Of Operations, for the Three Months Ended September 30, 2002
and 2001 and the Nine Months Ended September 30, 2002 and 2001.
Net Sales. There was a decrease in net sales for the three-month
period ending September 30, 2002 as compared to the three month-
period ending September 30, 2001, with sales of $185,835 and
$450,640, respectively, as well as a decrease in net sales for the
nine-month period ending September 30, 2002 as compared to the nine
month-period ending September 30, 2001, with sales of $561,303 and
$1,643,767, respectively.
Cost of Sales. There was a decrease in cost of sales for the three-
month period ending September 30, 2002 as compared to the three-month
period ending September 30, 2001, with cost of sales of $9,045 and
$553,813, respectively. This decrease in cost of sales was
attributable to the Company's focus on realizing sales from hook-up
fees from its operations in Zunyi, for which there no cost of sales.
There was also a decrease in cost of sales for the nine-month period
ending September 30, 2002 as compared to the nine-month period ending
September 30, 2001, with cost of sales of $346,246 and $1,660,123,
respectively. There was an increase in the gross profit for the
three-month period ending September 30, 2002 as compared to the
three-month period ending September 30, 2001, with a gross profit of
$176,790 and a loss of $103,173, respectively. There was an increase
in the gross profit for the nine-month period ending September 30,
2002 as compared to the nine-month period ending September 30, 2001,
with a gross profit of $215,057 and a loss of $16,356, respectively.
General and Administrative. General and Administrative expenses
decreased from $311,995 for the three-month period ending September
3, 2001 as compared to $304,203 for the same period in 2002. General
and Administrative expenses increased for the nine-month period
ending September 30, 2002 as compared to the nine-month period ending
September 30, 2001, with General and Administrative expenses of
$1,150,597 and $1,017,189, respectively. General and Administrative
expenses were comprised primarily of compensation, consulting
expenses and office expenses.
Liquidity And Capital Resources for the Nine Months Ended September
30, 2002 and 2001.
The Company has relied primarily on funds generated from the issuance
of common stock and options to finance its operations. As of
September 30, 2002, the Company had cash and cash equivalents of
$40,118, compared to $99,343 at December 31, 2001. Cash used in
operating activities was $147,566 through September 2002, as compared to
cash used in operating activities of $522,937 in 2001.
While the Company has raised capital to meet its working capital and
financing needs in the past, additional financing is required in
order to meet the Registrant's current and projected cash flow
deficits from operations. The Company is seeking financing in the
form of equity in order to provide the necessary working capital.
However, the Company recently received a written commitment from
three of its largest shareholders, Mr. Shan Deng, Mr. Albert Figueroa
and Mr. Dan Mendez to contribute the proceeds from the sale of up to
ten percent of their beneficially owned shares of Largo Vista,
collectively 11,021,759, to finance the continued operation of the
Company until such time as positive cash flow is achieved. In the
event the Company does not achieve positive cash flow by the time
that the contributions by these individuals have ended pursuant to
their agreements, the Company will need to identify other sources of
working capital and financing. There can be no assurances that the
Company will be successful in raising the funds required.
The Company's independent certified public accountants have stated in
their report included in the Company's December 31, 2001 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.
Forward Looking Statements.
The foregoing Managements Discussion and Analysis of Financial
Condition and Results of Operations are "forward looking statements"
within the meaning of Rule 175 under the Securities Act of 1933, as
amended, and Rule 3b-6 under the Securities Act of 1934, as amended,
including statements regarding, among other items, the Registrant's
business strategies, continued growth in the Registrant's markets,
projections, and anticipated trends in the Registrant's business and
the industry in which it operates. The words "believe," "expect,"
"anticipate," "intends," "forecast," "project," and similar
expressions identify 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 Corporation'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 and availability of qualified personnel also
could be factors. Changes in the Corporation's business strategies
and development plans and changes in government regulation could
adversely affect the Company. Although the Corporation 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 Corporation that the objectives
and expectations of the Corporation would be achieved.
The following is a discussion of the financial condition and results
of operations of the Company as of the date of this Annual Report.
This discussion and analysis should be read in conjunction with the
accompanying audited Consolidated Financial Statements of the Company
including the Notes thereto which are included elsewhere in this Form 10-QSB.
Item 3. Controls and Procedures
(a) On September 30, 2002, we made an evaluation of our disclosure
controls and procedures. In our opinion, the disclosure controls and
procedures are adequate because the systems of controls and
procedures are designed to assure, among other items, that 1)
recorded transactions are valid; 2) valid transactions are recorded;
and 3) transactions are recorded in the proper period in a timely
manner to produce financial statements which present fairly the
financial condition, results of operations and cash flows for the
respective periods being presented. Moreover, the evaluation did not
reveal any significant deficiencies or material weaknesses in our
disclosure controls and procedures.
(b) There have been no significant changes in our internal controls
or in other factors that could significantly affect these controls
since the last evaluation.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Lawsuits, claims and proceedings of a nature considered normal to its
business may be pending against our Company and its subsidiaries,
however, at present, there are not any outstanding material lawsuits
or material claims known against our Company and its subsidiaries.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security holders through
the end of the Quarter ending September 30, 2002.
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
Not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Largo Vista Group, Ltd.
Dated: November14, 2002 By: /s/ Shan Deng
Shan Deng, Interim Chief Executive
Officer
CERTIFICATIONS
I, Shan Deng, 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 the 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 ininternal 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
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions, with regard to significant
deficiencies and material weaknesses.
Date: November 14, 2002
/s/ Shan Deng
Shan Deng
Interim Chief Executive Officer
CERTIFICATIONS
I, Albert Figueroa, 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 the 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
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions, with regard to significant
deficiencies and material weaknesses.
Date: November 14, 2002
/s/ Albert Figueroa
Albert Figueroa Treasurer
99.1 Certification pursuant of Chief Executive Officer to 18 U.S.C.
Section 1350, as adopted to Section 906 of the Sarbanes Oxley Act of 2002.
99.2 Certification pursuant of Chief Financial Officer to 18 U.S.C.
Section 1350, as adopted to Section 906 of the Sarbanes Oxley Act of 2002.